Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13 (1970)

A defendant’s failure to act while physically present in one state does not constitute a tortious act committed in another state, even if the omission has consequences in the latter.

Summary

This case addresses the scope of New York’s long-arm statute concerning personal jurisdiction over non-residents. The plaintiff, a New York corporation, sued a Florida resident, who was a director, for failing to perform his duties in New York. The defendant remained in Florida and did not attend meetings or perform any director duties in New York. The court held that the defendant’s failure to act in New York while physically in Florida did not constitute a tortious act committed within New York, precluding personal jurisdiction under CPLR 302(a)(2). The court distinguished between acts and omissions, emphasizing that an omission cannot be an act in a particular place unless the person is physically present there.

Facts

1. Franklyn, the defendant, resided in Florida.
2. Parke-Bernet Galleries, Inc., the plaintiff, was a New York corporation.
3. Franklyn was a director of the plaintiff corporation.
4. The plaintiff sued Franklyn for failing to attend director’s meetings in New York and neglecting his director duties, resulting in corporate losses.
5. Franklyn never came to New York for any corporate business. Instead, he executed consents, waivers of notice, and a certificate in lieu of a meeting, all in Florida.

Procedural History

The plaintiff served the defendant with process in Florida. The defendant challenged the court’s jurisdiction under New York’s long-arm statute. The Special Term initially sustained jurisdiction, as did the Appellate Division. This appeal followed after the Court of Appeals decision in Feathers v. McLucas, which clarified the requirements for long-arm jurisdiction in tort cases.

Issue(s)

1. Whether a director’s failure to attend meetings or perform duties in New York, while physically remaining in Florida, constitutes a “tortious act” committed within New York under CPLR 302(a)(2), thus establishing personal jurisdiction.
2. Whether the defendant’s actions in Florida related to the directorship constitute transacting business within New York under CPLR 302(a)(1).

Holding

1. No, because the failure to act while physically present in one state is not an “act” committed in another, even if it has consequences there.
2. No, because the defendant never conducted any business in New York related to the corporation.

Court’s Reasoning

The court reasoned that CPLR 302(a)(2) requires the defendant to commit a tortious act “within the state.” The court emphasized the distinction between an act and an omission, stating, “The failure of a man to do anything at all when he is physically in one State is not an ‘act’ done or ‘committed’ in another State. His decision not to act and his not acting are both personal events occurring in the physical situs.” The court referenced Feathers v. McLucas to support its interpretation of the statute’s plain words. The court distinguished this case from Gray v. American Radiator & Sanitary Corp., an Illinois case with a similar statute, as it would not support jurisdiction under these facts even if the Gray rule were applied in New York. Furthermore, the court rejected the argument that the defendant transacted business in New York under CPLR 302(a)(1), stating that the defendant never entered New York to conduct any business related to the corporation. The court emphasized that accepting the directorship and executing documents in Florida were insufficient to establish jurisdiction in New York. The court noted legislative proposals to broaden New York’s long-arm statute but observed that even the proposed language would not encompass jurisdiction over the defendant in this case. In essence, the court adhered to a strict interpretation of the long-arm statute, requiring a physical connection to New York for a tortious act to be deemed committed within the state.