54 N.Y.2d 640 (1981)
A correspondent bank relationship alone is insufficient to establish personal jurisdiction over a foreign bank in New York.
Summary
Banco Ambrosiano, S.P.A. sued Artco Bank, S.A., as guarantor of a foreign trade acceptance. The New York Court of Appeals affirmed the dismissal of the action for lack of personal jurisdiction. The court held that a correspondent bank relationship between Artco Bank and Credit Lyonnais, coupled with the trade acceptance connected to that relationship, was insufficient to establish that Artco Bank was doing business in New York and therefore subject to the court’s jurisdiction. The court also clarified that an attachment of the defendant’s New York funds after service of the summons could not establish quasi in rem jurisdiction.
Facts
Banco Ambrosiano, S.P.A. (plaintiff) sought to sue Artco Bank, S.A. (defendant) in New York as the guarantor of a foreign trade acceptance.
The plaintiff attempted to establish jurisdiction over Artco Bank based on Artco’s correspondent banking relationship with Credit Lyonnais in New York.
After serving the summons, the plaintiff attached Artco Bank’s funds held in New York.
Procedural History
The trial court initially heard the case.
The Appellate Division dismissed the action for lack of jurisdiction. Specifically, the Appellate Division order dated November 3, 1978, was appealed, and the order dated August 1, 1977, was brought up for review.
The New York Court of Appeals affirmed the Appellate Division’s dismissal.
Issue(s)
Whether a correspondent bank relationship and a trade acceptance connected to that relationship are sufficient to establish personal jurisdiction over a foreign bank in New York.
Whether the attachment of a defendant’s New York funds after service of the summons can form the predicate for quasi in rem jurisdiction.
Holding
No, because a correspondent bank relationship and a trade acceptance, standing alone, are insufficient to demonstrate that the defendant is doing business in New York.
No, because the attachment of funds must precede service of the summons to establish quasi in rem jurisdiction.
Court’s Reasoning
The Court of Appeals reasoned that merely having a correspondent bank relationship does not equate to “doing business” within the state for jurisdictional purposes. The court cited Amigo Foods Corp. v Marine Midland Bank-N. Y., 39 NY2d 391 to support this proposition.
The Court emphasized that the plaintiff needed to show more than just a correspondent relationship to establish the defendant’s presence in New York for jurisdictional purposes. The connection to the trade acceptance, stemming from the correspondent relationship, was also deemed insufficient, as it didn’t demonstrate the defendant’s systematic and regular business activity within the state.
Regarding the attachment of funds, the court relied on CPLR 314(3) and Pennoyer v Neff, 95 US 714, to clarify that the attachment must occur before service of the summons to establish quasi in rem jurisdiction. The attachment here, occurring after service, was ineffective for jurisdictional purposes.
The court explicitly declined to address the scenario where the attachment precedes service of the summons, referencing Shaffer v Heitner, 433 US 186, indicating an awareness of the evolving standards for asserting jurisdiction over out-of-state defendants based on their property within the state.
The court stated, “Nothing in the record supports the bald assertion that defendant is doing business and thus present in New York. All that appears is a correspondent bank relationship between defendant and Credit Lyonnais and the trade acceptance connected to that relationship. These factors standing alone are insufficient to support an exercise of in personam jurisdiction”.