Banco Ambrosiano v. Artoc Bank & Trust Ltd.
476 N.Y.S.2d 64, 464 N.E.2d 432, 62 N.Y.2d 65 (1984)
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Rule of Law:
Quasi-in-rem jurisdiction can be exercised over a non-domiciliary's property when the property's presence within the state, combined with the defendant's purposeful activities related to the property and the litigation, satisfies the minimum contacts requirement of due process, even if statutory in personam jurisdiction is unavailable under the state's long-arm statute.
Facts:
- Plaintiff Banco Ambrosiano (Ambrosiano) is an Italian banking corporation with a representative office in New York City.
- Defendant Artoc Bank and Trust Limited (Artoc) is a banking corporation organized under the laws of Nassau, Bahamas, that regularly engages in international transactions involving United States dollars.
- Artoc maintained a correspondent bank account with Brown Brothers Harriman and Co. (Brown Brothers) in New York City for handling U.S. dollar transfers.
- Ambrosiano allegedly loaned Artoc $15 million through three separate transactions, which Ambrosiano claims Artoc has not repaid.
- The transaction memoranda indicated that Ambrosiano was to deposit these sums into Artoc’s account with Brown Brothers in New York, and repayment was to be made to Ambrosiano’s New York correspondent bank account.
- All negotiations concerning the loan agreement and communications between the parties took place among the Bahamas, Italy, and Peru, outside of New York.
- Artoc contended that the purpose of the transaction was to reloan the funds to Ambrosiano’s controlled subsidiary in Peru and that repayment was contingent on the ultimate recipient repaying Artoc.
Procedural Posture:
- Banco Ambrosiano commenced this action by obtaining an ex parte restraining order, enjoining Brown Brothers from transferring the funds in Artoc’s account.
- Ambrosiano filed a motion to confirm the attachment, which Artoc challenged.
- Special Term (the trial court) granted Ambrosiano's motion, finding a sufficient relationship between the property and the cause of action for quasi-in-rem jurisdiction, while noting a lack of in personam jurisdiction.
- The Appellate Division (the intermediate appellate court) unanimously affirmed Special Term's decision.
- Artoc appealed to the Court of Appeals of New York after leave was granted by the Appellate Division.
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Issue:
Does the exercise of quasi-in-rem jurisdiction over a foreign bank's New York correspondent account, based on the account's direct relationship to the underlying loan transaction and the bank's regular use of the account for international business, satisfy due process minimum contacts requirements, even if New York's long-arm statute does not provide for in personam jurisdiction?
Opinions:
Majority - Wachtler, J.
Yes, the exercise of quasi-in-rem jurisdiction in this case satisfies due process minimum contacts requirements because the defendant's property in New York is directly related to the cause of action and reflects purposeful activity within the state. The court affirmed that while Shaffer v. Heitner extended the International Shoe minimum contacts analysis to quasi-in-rem jurisdiction, a 'gap' exists in New York law where minimum contacts sufficient for due process are present, but CPLR 302 (New York's long-arm statute) does not authorize in personam jurisdiction. In such instances, quasi-in-rem jurisdiction can appropriately fill this gap. Artoc's New York correspondent account was not merely coincidentally located within the state; it was the very account through which the transaction at issue was effectuated. Artoc directed Ambrosiano to pay funds to this account and presumably directed their transfer out, utilizing this account regularly for its international banking business. Furthermore, Artoc agreed to repay the funds to Ambrosiano's New York account. These factors—the direct relationship between the cause of action and the property, the activities performed in New York under the agreement, and Artoc's other ties with New York—combine to render the exercise of quasi-in-rem jurisdiction appropriate and not offensive to due process. The court also found no abuse of discretion in the lower courts' refusal to dismiss on the grounds of forum non conveniens, as Artoc failed to meet its burden of demonstrating New York was an inappropriate forum, and held that Ambrosiano, as a foreign banking corporation, could properly maintain the action under Banking Law § 200-b(2)(a) because the contract called for performance within the state.
Analysis:
This case clarifies New York's unique application of quasi-in-rem jurisdiction post-Shaffer v. Heitner, demonstrating its continued viability in situations where due process minimum contacts are present, but statutory in personam jurisdiction under CPLR 302 is not. It highlights that commercial use of New York banking channels, especially when directly linked to the underlying dispute, can establish sufficient purposeful availment to justify the exercise of jurisdiction. The decision reinforces New York's position as a significant forum for international commercial disputes where assets or transactional activities occur within the state, even for foreign entities without a physical presence.
