J. SKELLY WRIGHT, Circuit Judge:
This appeal challenges the District Court's refusal to give full faith and credit to a New York judgment. The District Judge found no jurisdiction in the New York courts over appellees. For the reasons stated below, we affirm.
On July 4, 1961, appellant was injured by the negligent acts of the crew of the SS HUDSON BELLE while she was aboard that excursion boat during a cruise on the Hudson River in New York. She brought suit in the New York courts against the corporation which ran the chartered cruise, Wilson Line of New York, obtaining a default judgment for $15,000 on February 7, 1963.
When appellant attempted to enforce the judgment, she discovered that Wilson Line of New York had gone out of business, and that the HUDSON BELLE was now in Washington, D. C., plying the Potomac under the name GEORGE WASHINGTON. The ship's new owner was a company called Wilson Line of Washington, the president of the Washington Line being Joseph Goldstein, former president of the defunct Wilson Line of New York. Appellant then moved in the New York court to amend her original complaint to add as new defendants Wilson Line of Washington and Joseph Goldstein.
Appellant's amended complaint stated that Wilson Line of Washington was a corporation which "did transact business in the State of New York," and that the transfer of the HUDSON BELLE to the Washington corporation was a fraudulent transfer of the assets of Wilson Line of New York, the transfer being carried out by Goldstein with the purpose of defrauding creditors. Wilson Line of Washington, which had its offices in Washington, D. C., and Goldstein, who lived in Maryland, were served pursuant to New York's Long-Arm Statute.
Appellant then brought suit in the District Court here to enforce her New York judgment against Goldstein and Wilson Line of Washington. Appellant's case consisted of putting into evidence the New York judgment. The District Judge ruled that the New York judgment raised a prima facie case of valid jurisdiction and that the burden shifted to appellees to demonstrate that there was no jurisdiction.
Appellees introduced several documents relating to the transfer of the ship, and Goldstein testified regarding the activities of the various corporations and the transfer of the ship. After hearing the evidence the judge held that Wilson Line of Washington had never conducted any business in New York, and that the transfer of the ship was a bona fide arm's length transaction, involving third parties as well as the various Wilson corporations, and thus was not fraudulent. Since appellant's apparent bases of jurisdiction, as indicated by her amended complaint and by her counsel's approach in the District Court, were rebutted by appellees, the judge ruled that there had been no valid jurisdiction over appellees. Accordingly, he denied enforcement of the New York judgment.
There are, of course, two constitutional principles at stake here. First is the obligation to give full faith and credit to a judgment rendered by a court in another jurisdiction. Second is the principle that due process is violated when a state renders a judgment against a person
The Supreme Court has elucidated and balanced these principles in a long line of decisions, from Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1878), to Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). It is clear that a judgment may be collaterally attacked on the ground that there was no jurisdiction
The apparent theory of jurisdiction upon which appellant proceeded was that Wilson Line of Washington and Goldstein came within Section 302(a) of New York's Long-Arm Statute, which reads: "[A] court may exercise personal jurisdiction over any nondomiciliary * * * who in person or through an agent: 1. transacts any business within the state * * *." Wilson Line of Washington was simply alleged to have transacted business in New York, and Goldstein was alleged to have participated in the fraudulent transfer which, presumably, would have been a transaction which would bring him within the statute.
The District Judge required appellees to rebut these allegations; after
On appeal, appellant urges a new basis for upholding the jurisdiction of the New York court. Appellant argues here that the corporate "veil" of Wilson Line of New York should be "pierced" to reach Goldstein. The argument is that that corporation was simply a dummy, and that under New York law the corporation would be pierced (as would its parent corporation, Wilson Steamship Corporation) and Goldstein would be found to be the real party at interest. Thus, the argument concludes, it was really Goldstein who was "transacting business" in New York, not Wilson Line of New York.
We need not decide the question whether service of process on a corporation doing business within New York would be considered service on the individual controlling party if the corporate entity is disregarded.
Piercing a corporate veil is a task which a court undertakes reluctantly; there is a presumption of corporate
Given the record in this unenlightening state, given the fact that appellant never appeared to be proceeding on this theory, and given the fact that the determination whether the New York courts would pierce the veil of a particular corporation is best made by those courts, we decline appellant's invitation to rule on this matter.
New York appears to follow this general analysis in determining jurisdiction. See, e. g., Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915 (1917); Peters v. Robin Airlines, 281 App.Div. 903, 120 N.Y.S.2d 1 (1953); Greenberg v. Lamson Bros. Co., 273 App.Div. 57, 75 N.Y.S.2d 233 (1947). For a general discussion, see Developments in the Law, State-Court Jurisdiction, 73 Harv.L.Rev. 909 (1960). For a thorough treatment of long-arm jurisdiction in the federal courts, and the relationship of such jurisdiction to the problem of federalism, see Foster, Long-Arm Jurisdiction in Federal Courts, 1969 Wis.L.Rev. 9.
Thus in order to make out a case against Goldstein appellant would have to show that the Wilson Line of New York and the Wilson Steamship Corporation were really just doing the business of Goldstein, and that Goldstein had a substantial stake in their operation and control over their activities. See, in addition to the cases cited above, Rapid Transit Subway Const. Co. v. City of New York, 259 N.Y. 472, 182 N.E. 145 (1932); International Aircraft Trading Co. v. Manufacturers Trust Co., 297 N.Y. 285, 79 N.E.2d 249 (1948); Alfred P. Sloan Foundation, Inc. v. Atlas, 42 Misc.2d 603, 248 N.Y.S.2d 524 (1964), affirmed, 23 A.D.2d 820, 258 N.Y.S.2d 807 (1965); Glassman v. Glassman, 19 A.D.2d 801, 243 N.Y.S.2d 194 (1963); Petrovich v. Felco Chemical Corp., 194 Misc. 111, 86 N.Y.S.2d 327 (1949).
If this were the import of the presumption of jurisdiction, the consequences would be quite harsh. It is well known that proving a negative is often a hopeless task. Further, it is often not clear what all the possible bases for jurisdiction are (e. g., in this case it is a novel question whether piercing a corporate veil to get to an individual would bring the individual within the court's jurisdiction under New York's statute). Also, the possible basis for jurisdiction might have a counter-presumption of its own (e. g., a heavy burden usually rests on the person seeking to pierce the corporate veil to show that the corporation is really a sham).
We think the presumption of jurisdiction should be read flexibly to cover only the stated bases for jurisdiction (if any), plus any other apparent or obvious bases. Further, it would be helpful if, in the enforcing forum, the party introducing the judgment informs the court prior to the proceedings of the various realistic predicates for jurisdiction.
Whether the situations will be frequent in which this problem arises we do not know; hopefully the cases will tend to be litigated (as have the Supreme Court cases dealing with the issue) within the narrow confines of a defendant attempting to disprove the agreed upon sole basis for jurisdiction.