New York Law Review

Tag: full faith and credit

  • Fiore v. Oakwood Plaza Shopping Center, Inc., 78 N.Y.2d 572 (1991): Enforceability of Cognovit Judgments and Waiver of Due Process

    Fiore v. Oakwood Plaza Shopping Center, Inc. , 78 N.Y.2d 572 (1991)

    A cognovit judgment from another state is enforceable in New York if the judgment debtor voluntarily, knowingly, and intelligently waived their due process rights to notice and a hearing.

    Summary

    This case addresses whether a Pennsylvania cognovit judgment should be given full faith and credit in New York. The plaintiffs sold land in Pennsylvania to the defendants, who executed a bond and warrant containing a cognovit clause allowing confession of judgment. After the defendants defaulted, the plaintiffs obtained a judgment in Pennsylvania and then sought to enforce it in New York. The New York Court of Appeals held that the Pennsylvania judgment was enforceable because the defendants, as sophisticated parties represented by counsel, had voluntarily, knowingly, and intelligently waived their due process rights.

    Facts

    Plaintiffs contracted to sell land to defendants in Pennsylvania. The defendants, Oakwood Plaza Shopping Center, and its principals, Aronow and Galioto, executed a “bond and warrant” that included a cognovit clause authorizing the plaintiffs’ attorney to confess judgment against them if they defaulted on their payment obligations. After defendants failed to make the required payments, plaintiffs obtained a judgment by confession in Pennsylvania.

    Procedural History

    Plaintiffs obtained a judgment in Pennsylvania Court of Common Pleas. Defendants’ petition to open or strike the judgment was denied. Plaintiffs then commenced an action in New York seeking to enforce the Pennsylvania judgment. Supreme Court granted summary judgment to plaintiffs, and the Appellate Division affirmed. This appeal followed.

    Issue(s)

    Whether a Pennsylvania cognovit judgment is entitled to full faith and credit in New York, where the defendants claim they did not knowingly waive their due process rights.

    Holding

    Yes, because the defendants, as sophisticated commercial parties represented by counsel, voluntarily, knowingly, and intelligently waived their rights to notice and a hearing by agreeing to the cognovit clause.

    Court’s Reasoning

    The court reasoned that while cognovit judgments are viewed with disfavor, the U.S. Supreme Court in Overmyer Co. v. Frick Co., 405 U.S. 174 (1972), established that they are not per se unconstitutional. Instead, the enforceability of such judgments depends on whether the debtor made a voluntary, knowing, and intelligent waiver of their due process rights. The court distinguished its prior holding in Atlas Credit Corp. v. Ezrine, 25 N.Y.2d 219 (1969), noting that subsequent Supreme Court decisions clarified the issue. The court emphasized that the defendants were sophisticated commercial parties, represented by counsel, and that the cognovit clause was part of a bargained-for exchange. The court noted, “where the contract is one of adhesion, where there is great disparity in bargaining power, and where the debtor receives nothing for the cognovit provision, other legal consequences may ensue.”(Overmyer Co. v. Frick Co., 405 U.S. at 188). The court found that the defendants understood they were giving the plaintiff a significant advantage should default occur, and upheld the Pennsylvania judgment. The court also noted that the Pennsylvania cognovit procedure had been amended since Atlas to provide more judicial oversight and better notice to the debtor.

  • In re Acheson’s Trust, 28 N.Y.2d 155 (1971): Full Faith and Credit to Domiciliary’s Will Construction

    In re Acheson’s Trust, 28 N.Y.2d 155 (1971)

    A New York court must give full faith and credit to a California court’s construction of a will executed by a California domiciliary, especially when the interested parties have submitted to the California court’s jurisdiction, even if the will exercises a power of appointment over a New York trust.

    Summary

    This case concerns the application of full faith and credit to a California court order construing the will of a California domiciliary, Acheson, which exercised a power of appointment over a trust located in New York. Acheson’s will created a trust for his daughter, Linda Belle, potentially violating the rule against perpetuities. The California court construed the will to avoid this violation. Acheson’s other children challenged this in New York. The New York Court of Appeals held that the California court’s construction was entitled to full faith and credit because the California court had personal jurisdiction over the contesting parties, and its interpretation of the testator’s intent was binding.

    Facts

    Margaret Maher Acheson created a trust in New York with Morgan Guaranty as trustee, providing a life interest for her son, Edward Jr., then a share for her grandson, Acheson, with a power of appointment to Acheson. Acheson, domiciled in California, died in 1965, exercising the power of appointment in his will to create trusts for his wife, Helen, and daughter, Linda Belle. Linda Belle’s trust was to last for 21 years after the death of the last survivor of his wife, daughter, and the daughter’s children living at his death, potentially violating the rule against perpetuities.

    Procedural History

    Morgan Guaranty initiated a proceeding in New York to settle its account. Acheson’s executor, Bank of America, started an heirship proceeding in California to construe the will to avoid violating the rule against perpetuities. The New York court stayed its proceeding pending the California decision. The California court construed the will to terminate Linda Belle’s trust 21 years after Helen’s death. Acheson’s other children sought relief from the California order, which was denied. The New York Special Term gave full faith and credit to the California order, which the Appellate Division affirmed.

    Issue(s)

    Whether a California court order construing the will of a California domiciliary, which exercises a power of appointment over a New York trust, is entitled to full faith and credit in New York, where the construction avoids a potential violation of the rule against perpetuities and the interested parties submitted to the California court’s jurisdiction.

    Holding

    Yes, because the California court had personal jurisdiction over the appellants, and the full faith and credit clause requires New York to respect the California court’s interpretation of the testator’s intent under California law.

    Court’s Reasoning

    The court reasoned that New York law dictates that the law of the testator’s domicile governs the interpretation of their will regarding personal property. Since Acheson was domiciled in California, California law controls the interpretation of his will. The California Superior Court, with full authority to interpret wills of California domiciliaries, construed Acheson’s will to terminate the trust for Linda Belle within 21 years after Helen’s death, thus avoiding the rule against perpetuities.

    The court emphasized that the appellants, Acheson’s other children, had submitted to the California court’s jurisdiction by seeking to vacate the instruction order, constituting a general appearance. This barred them from re-litigating the issue in New York. The court quoted Milliken v. Meyer, 311 U.S. 457, 462, stating that courts in other states are precluded from “any inquiry into the merits of the cause of action, the logic or consistency of the decision, or the validity of the legal principles on which the judgment is based.”

    The court also addressed the argument that Morgan Guaranty, the New York trustee, was an indispensable party in the California proceeding. It stated that the California court did not rule on the validity of the trust indenture itself or Acheson’s exercise of his power of appointment, so the trustee was not a necessary party. The California court merely directed the California executor to receive the trust corpus if and when the New York court ordered the turnover.

    In conclusion, the court found that the California instruction order, to the extent it interprets the will by finding an intention to limit the duration of the trusts to avoid violating the rule against perpetuities, is entitled to full faith and credit concerning all appellants in the New York proceeding. The court noted, “[P]arties may not a second time challenge the validity of their adversaries’ right which has ripened into a judgment.”

  • Rosenstiel v. Rosenstiel, 16 N.Y.2d 64 (1965): Recognition of Foreign Divorce Decrees Based on Comity

    16 N.Y.2d 64 (1965)

    A state court may recognize a divorce decree from another jurisdiction, even if not entitled to full faith and credit, based on principles of comity and estoppel, especially when a party has participated in obtaining the decree and a significant amount of time has passed.

    Summary

    The New York Court of Appeals addressed whether a Surrogate was correct in recognizing an Alabama divorce decree, even if the decree was potentially subject to attack in Alabama for lack of actual residence. The Court held that the Surrogate was entitled to recognize the Alabama decree based on factors like the wife’s initial consent, the extended period since the divorce was granted, and the lack of demonstrable benefit to the wife from the divorce. The Court emphasized that while full faith and credit might not mandate recognition, comity and estoppel principles allowed the New York court to acknowledge the decree’s validity.

    Facts

    The decedent and his wife married in New York in 1948 and remained residents of New York. In 1959, the decedent obtained an Alabama divorce, allegedly without establishing bona fide residence. The wife signed an appearance and power of attorney for the Alabama proceedings. She claimed she didn’t understand the documents and only learned of the divorce after her husband’s death. The couple continued to file joint tax returns as husband and wife and the decedent provided partial support to the wife.

    Procedural History

    The Surrogate Court recognized the Alabama divorce decree and denied the wife’s application for letters of administration after the husband died intestate. The Appellate Division affirmed the Surrogate’s decision. Justice Munder dissented, arguing that the Alabama decree was void and not entitled to full faith and credit.

    Issue(s)

    Whether the Surrogate Court was required to give full faith and credit to the Alabama divorce decree, potentially invalid under Alabama law, thus precluding the wife from receiving letters of administration as the surviving spouse.

    Holding

    No, because even if the Alabama divorce decree wasn’t entitled to full faith and credit, the Surrogate court could recognize it based on comity and estoppel principles, considering the wife’s participation in the divorce proceedings, the significant delay before challenging it, and the absence of demonstrable benefit to the wife from the divorce.

    Court’s Reasoning

    The Court considered Alabama law regarding collusive “quickie” divorces, noting that such decrees could be vacated in Alabama, even on the court’s own motion. However, the Court also acknowledged that Alabama courts might not automatically set aside void decrees, especially if there was a significant delay or if the party seeking vacatur had obtained benefits from the divorce. Referencing Hartigan v. Hartigan, 272 Ala. 67, the court noted that void decrees are vacatable by the court in which they were rendered, if void on their face. The Court distinguished cases where parties were estopped from challenging divorces due to having received benefits. The Court reasoned that, despite the potential invalidity of the Alabama divorce under Alabama law, the nine-year lapse between the divorce and the challenge raised a strong likelihood of laches. Furthermore, the Court emphasized that the Hartigan case focused on the *power* of the court to vacate, not an *obligation* to do so. More importantly, the court noted that the doctrine of comity allowed New York courts to recognize judgments from sister states even when full faith and credit did not apply. As the court stated, “Full faith and credit may compel New York to recognize a judgment of a sister State. The absence of full faith and credit does not mandate ignoring the judgment of a sister State”. The court concluded that preventing someone who participated in a fraud on another state’s court from benefiting by changing their position in New York was a valid basis for estoppel. The Court highlighted that it was not dealing with issues of personal jurisdiction or due process violations as in Griffin v. Griffin, 327 U.S. 220. Therefore, the Surrogate was correct in recognizing the Alabama divorce decree.

  • Matter of Einstoss, 26 N.Y.2d 181 (1970): Jurisdiction Over Estate After Death

    Matter of Einstoss, 26 N.Y.2d 181 (1970)

    A judgment entered against a deceased individual without proper substitution of their estate representative is a nullity and not entitled to full faith and credit.

    Summary

    The New York Court of Appeals addressed whether an Alaskan judgment against a deceased New York resident, obtained without substituting the New York administrator of the estate, was enforceable in New York. The court held that the Alaskan judgment was not entitled to full faith and credit because the Alaskan court lacked personal jurisdiction over the deceased for the tax claim and failed to properly substitute the New York administrator after his death, rendering the judgment a nullity.

    Facts

    Sigmund Einstoss, a New York resident, owned land in Alaska and operated a salmon cannery. In 1954, a mortgagee initiated foreclosure proceedings due to Einstoss’ default. Alaska, holding a lien for unpaid franchise taxes, was named as a defendant. Einstoss, in Seattle, appeared in the foreclosure action based on the mortgagee’s promise to satisfy any judgment from the property. Alaska then filed a cross-complaint against Einstoss for unpaid taxes, serving him in Seattle with court authorization under 28 U.S.C. § 1655. Einstoss died shortly before the answer was due. Unaware of his death, Alaska obtained a default judgment against him. Alaska ultimately prevailed regarding the lien priority and obtained a judgment against Einstoss for unpaid taxes. Einstoss’ property was sold, but a deficiency remained. Eleven years after Einstoss’ death, Alaska sought to enforce the judgment against Einstoss’ estate in New York.

    Procedural History

    The Surrogate’s Court disallowed Alaska’s claim against the estate. The Appellate Division affirmed, holding that the Alaskan judgment had no binding effect since the New York administrator was never made a party. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the Alaskan court had personal jurisdiction over Einstoss for the tax claim, considering his initial appearance was in the foreclosure action?

    2. Whether the Alaskan judgment, entered after Einstoss’ death without substituting the New York administrator, is entitled to full faith and credit and enforceable against his New York assets?

    Holding

    1. No, because Einstoss’ appearance in the mortgage foreclosure action did not subject him to jurisdiction for the Territory’s unrelated cross-claim for taxes.

    2. No, because the Alaskan court never obtained jurisdiction over the New York administrator, as required by Federal law, rendering the judgment a nullity.

    Court’s Reasoning

    The court reasoned that the underlying tax claim was unenforceable outside Alaska. Therefore, Alaska needed a binding Alaskan judgment entitled to full faith and credit in New York. The court found the Alaskan judgment deficient on two grounds. First, Einstoss’ appearance in the mortgage foreclosure action did not confer jurisdiction over him for the unrelated tax cross-claim. Citing Reynolds v. Stockton, 140 U.S. 254 (1891), the court explained that jurisdiction based on an appearance is limited to the subject matter of the initial suit. “Under the guise of continuing jurisdiction be subjected to what is essentially a new suit”. Once Alaska sought to serve Einstoss outside the territory under 28 U.S.C. § 1655 for the tax claim, it acknowledged that Einstoss was not yet subject to the court’s jurisdiction for that claim. Secondly, the court emphasized that Einstoss’ death before the judgment, without substitution of the New York administrator, was fatal to the judgment’s validity. Federal Rule of Civil Procedure 25(a)(1) requires substitution of the personal representative; failure to do so abates the action. The court stated, “The procedure for revival of an action by .substitution of the personal representative, far from being a mere technical formality, is, rather, the recognized means by which a court obtains jurisdiction over the personal representative.” Because the New York administrator was never made a party, the Alaskan court lacked jurisdiction, and the judgment was no more valid “than it would have been if rendered for a like amount against a dead man”. Thus, the judgment was not entitled to full faith and credit.

  • Berlin v. Berlin, 21 N.Y.2d 371 (1968): Child Custody Modification Based on Best Interests Despite Prior Orders

    Berlin v. Berlin, 21 N.Y.2d 371 (1968)

    A court may modify a prior custody order from another state when the best interests of the child require it, even if the prior order is entitled to full faith and credit, particularly when circumstances have changed significantly since the prior order was issued.

    Summary

    Joseph and Barbara Berlin divorced in Maryland, with Barbara initially receiving custody of their two children. After Barbara moved to New York with the children, Joseph obtained a Maryland order granting him custody, alleging interference with his visitation rights. Barbara then sought custody in New York. The New York Supreme Court awarded custody to Barbara, finding it was in the children’s best interest. The Appellate Division affirmed the custody award but reinstated Joseph’s visitation rights. The New York Court of Appeals affirmed the custody award, holding that the welfare of the children is paramount and justified modifying the Maryland decree, while also remanding the case for appropriate safeguards to ensure the children’s return after visitation with their father.

    Facts

    Joseph and Barbara Berlin divorced in Maryland, with a property and custody agreement incorporated into the divorce decree awarding custody of their two children to Barbara, and visitation rights to Joseph. Barbara was allowed to move the children from the area. Six months later, she moved with the children to New York City. Difficulties arose regarding Joseph’s visitation rights. Maryland courts held Barbara in contempt for interfering with visitation. In 1963, at Joseph’s request, Maryland awarded custody to him, citing a probation report, Barbara’s contempt, and the children’s best interests.

    Procedural History

    The Maryland courts initially granted a divorce and custody to the mother. Subsequently, after the mother moved to New York, the Maryland courts modified the decree to award custody to the father. The mother challenged this modification in Maryland, but the Maryland Court of Appeals upheld the change. Following the Maryland determination, the mother sought custody in New York Supreme Court. The New York Supreme Court awarded custody to the mother. The Appellate Division affirmed the custody award but modified the order concerning visitation rights. The case then went to the New York Court of Appeals.

    Issue(s)

    1. Whether a New York court is required to give full faith and credit to a prior custody decree from Maryland, preventing it from modifying the order based on the best interests of the children.
    2. Whether the father’s visitation rights should be suspended due to his prior attempt to forcibly remove the children from New York.

    Holding

    1. No, because the Maryland Court of Appeals had already stated that the award of custody to the father was subject to modification upon a showing that a change in custody would serve the best interests of the children.
    2. No, but the case should be remanded to consider proper conditions to the exercise of visitation rights to ensure the children’s return to New York, because the prior Maryland order, pursuant to which he attempted to forcibly remove the children, was still in effect.

    Court’s Reasoning

    The Court of Appeals emphasized that even assuming custody decrees are entitled to full faith and credit, the Maryland Court of Appeals itself acknowledged that the custody award was subject to modification if the children’s best interests warranted it. The court noted the children had been in their mother’s continuous custody for almost eight years, attended school in New York, and had established friendships. A change in custody would be disruptive and potentially harmful. The court stated that while reluctance to modify out-of-state decrees is sometimes appropriate, particularly when a child is brought into the state to avoid a recent custody decree, the focus should always be on the child’s best interest. The court quoted Stumberg, Conflict of Laws, stating, “Upon a change in the child’s residence the decree at the former residence should be given full faith and credit, at least as to conditions existing at the time of its rendition, and the one asserting changed conditions should be compelled to show that they are such as to make him more, or another less, fit to have custody of the child.” The court also stated, “A child is not a chattel” and the key question is the best interest of the child. Regarding visitation, the court agreed with the Appellate Division that suspending visitation was unwarranted, but protective measures were needed given the father’s prior attempt to remove the children. The court suggested considering a bond and a stipulation agreeing to vacate the prior Maryland decree. However, limiting visitation to New York in the presence of a third party was deemed too harsh unless no other option could ensure compliance.

  • In re Estate of Bachman, 1 N.Y.2d 581 (1956): Comity and Enforcement of Foreign Custody Orders

    In re Estate of Bachman, 1 N.Y.2d 581 (1956)

    Principles of comity may warrant the enforcement of foreign custody decrees, even if full faith and credit does not compel it, particularly when the foreign court had jurisdiction and the decree was entered with the consent of the parties.

    Summary

    This case concerns the enforceability in New York of a Puerto Rican court order regarding child custody. The mother initially sought custody in Puerto Rico but then left with the child before a final decision, violating a court order. The New York Court of Appeals reversed the lower court’s decision, finding that comity did not require recognizing the Puerto Rican order under the specific circumstances where the mother was no longer domiciled in Puerto Rico. The dissent argued that principles of comity should have been applied to respect the Puerto Rican court’s decision, especially since the mother initially invoked its jurisdiction.

    Facts

    The parents were in a dispute over the custody of their child. The mother initiated custody proceedings in Puerto Rico. During the proceedings, and prior to a final custody determination, the mother left Puerto Rico with the child, in violation of a court order prohibiting her from doing so. She then established residence in New York. The father sought to enforce the Puerto Rican custody order in New York.

    Procedural History

    The lower court in New York refused to enforce the Puerto Rican custody order. The Appellate Division affirmed. The New York Court of Appeals initially affirmed the Appellate Division order, but upon reargument, reversed, holding that the Puerto Rican decree was not enforceable in New York based on the lack of continuing jurisdiction.

    Issue(s)

    Whether principles of comity require New York courts to recognize and enforce a child custody order issued by a court in Puerto Rico, where the mother, who initially sought the Puerto Rican court’s jurisdiction, subsequently left Puerto Rico with the child in violation of a court order and established residence in New York.

    Holding

    No, because under the specific facts, especially considering the mother’s change of domicile, comity did not require enforcement where the Puerto Rican court seemingly lacked a basis for continuing jurisdiction over the child’s custody.

    Court’s Reasoning

    The court reasoned that while full faith and credit might not apply to custody decrees, principles of comity could still warrant their enforcement. However, in this instance, the court found that the mother’s departure from Puerto Rico with the child, in violation of the court order, and her subsequent establishment of a new domicile in New York, altered the circumstances. The court implied that it appeared the Puerto Rican court lacked continuing jurisdiction when it issued a final order after the mother had left the jurisdiction. The decision suggests a reluctance to reward the mother’s actions in defying the Puerto Rican court. The dissent, however, strongly argued that the mother’s initial decision to invoke the jurisdiction of the Puerto Rican court should estop her from later challenging its authority, and that comity should have been extended as a matter of respect for the Puerto Rican judicial system. Judge Fuld, in dissent, stated, “To sanction appellant’s course in this case — first invoking the jurisdiction of the courts of Puerto Rico in order to have determined the very question of custody here involved and then, when the case seemed to be going against her, leaving Puerto Rico and flouting the order of its court — must inevitably lead to disrespect for courts in general and disruption of the orderly administration of justice. Our courts of New York should do to other courts and their judgments what we would have them do to us and our decisions.”