## Facts

- TACA International Airlines, S.A., sued for property damage arising from the destruction of its aircraft in Nicaragua, alleging negligence related to a Rolls-Royce engine.
- Rolls-Royce of England, Ltd. was a British parent corporation with no office or officers in New York and was not authorized to do business there.
- Rolls-Royce, Inc. was a Delaware corporation authorized to do business in New York, with a New York City office and officers.
- A Canadian affiliate owned all stock of Rolls-Royce, Inc.; the British parent owned all stock of the Canadian affiliate.
- TACA attempted to serve the British parent in New York by delivering process to Rolls-Royce, Inc. in New York and to an individual (Wilfred Bruce Thomson).
- The trial-level court vacated service, finding the British parent was not doing business in New York and the subsidiary was a separate entity not suitable for service.
- The Appellate Division reversed, concluding the New York subsidiary operated as a department of the British parent.
- The British parent appealed, contesting New York personal jurisdiction and the validity of service made through the subsidiary.

## Issues

1. Whether a foreign parent corporation may be deemed to be “doing business” in New York through a local subsidiary such that New York courts may exercise personal jurisdiction over the parent.
2. Whether service of process on an officer of the New York subsidiary constitutes valid service on the foreign parent when the subsidiary functions as the parent’s department or instrumentality.

## Decision

- The Court of Appeals affirmed the Appellate Division.
- The court held the New York subsidiary functioned as a separately incorporated department or instrumentality of the foreign parent.
- Because the parent was doing business in New York through the subsidiary, service on an officer of the subsidiary was valid service on the parent.
- The order vacating service was rejected, and the parent remained a properly served defendant in the New York action.

## Legal Principles

- For in personam jurisdiction, courts examine whether a foreign corporation is present in the forum through business conducted with permanence and continuity, including through a local agent or instrumentality.
- Separate incorporation does not control when the record shows the subsidiary operates in substance as the parent’s department.
- Factors supporting “mere department” treatment include complete (or effectively complete) ownership and strong financial and operational integration, including the subsidiary’s role in carrying out the parent’s business in the forum.
- When a subsidiary is a department or instrumentality of the parent, service on an appropriate subsidiary officer in the forum may constitute valid service on the parent.

## Conclusion

The court sustained New York personal jurisdiction over the foreign parent because its New York subsidiary operated as the parent’s department, making the parent “present” in New York through the subsidiary and permitting service on the parent via service on a subsidiary officer.


TACA Int'l Airlines, S.A. v. Rolls-Royce of Eng., Ltd., 15 N.Y.2d 97, 204 N.E.2d 329, 256 N.Y.S.2d 129 (1965)