Island Wholesale Wood Supplies Inc. v. Blanchard Industries Inc

In Island Wholesale Wood Supplies Inc. v. Blanchard Industries Inc., 101 AD2d 878 (2d Dept 1984), plaintiff commenced an action to recover damages arising out its purchase of a firewood processing machine from Blanchard Industries (Blanchard) and serviced by defendant Abbott Machine Co. (Abbot). Both defendants were residents of New Hampshire. The terms of sale between Blanchard and plaintiff included the words "F.O.B. Wilton, N.H." Plaintiff picked up the machine in New Hampshire and transported it back to New York. After delivery, one of Blanchard's employees went to plaintiff's place of business in New York to "set up the machine." In addition, Blanchard hired defendant Abbot to provide one service visit and the ship parts to plaintiff on three occasions. The Appellate Division considered whether personal jurisdiction existed under CPLR 302(a)(1). Defendants argued that they did not supply goods or services in New York within the meaning of CPLR 302 because the contract was F.O.B. point of origin. However, the Court declined to decide the jurisdictional issue on that basis because "if [CPLR 302] were held to apply to a mere contract to ship goods F.O.B. an out-of-state location, serious constitutional problems would be raised" (Id. at 879). Instead, the Court gave "broad construction to the phrase supply goods and services in the state'" (Id.) and found that, regardless of the method of shipment, it could assert jurisdiction over both defendants because, by servicing the machine in New York, defendants availed themselves of the privilege of conducting activities in the State (Id.). Moreover, the "minimum contacts" requirement of the due process clause was satisfied because defendants sent their employees into New York to set up and service the machine "in the performance of [their] contractual duties" (Id. at 880). In other words, minimum contacts were established because the set up and service visits arose out of a contractual duty.