Motion by defendant seeking to dismiss the complaint based on a lack of personal jurisdiction.

On December 13, 2020, Helen L. Mohr died a resident of Warren County, New York, and letters testamentary were issued on February 3, 2021 appointing him as the sole executor of Mohr's estate. Prior to her death, Mohr executed Transfer on Death Agreements (TODs) for six stock holdings, purportedly intending to effectuate the transfer of such assets directly to Yankee Golden Retriever Rescue, Inc. (YGRR) upon her passing.

In April 2021 and on additional subsequent dates, Clements contacted YGRR's executive director regarding Mohr's death and the TODs, requesting that the stocks be re-registered to YGRR. When such re-registration did not occur, Plaintiff estate eventually filed the instant action, seeking judgment pursuant to CPLR 3001 declaring that YGRR has refused the gift of stock and that Mohr's estate therefore holds ownership of the six stocks. It is undisputed that Clements in his role as executor continues to receive notices and dividend checks from the corporations that [*2]had issued said stock, nearly four years subsequent to Mohr's passing.

Here, YGRR moves to dismiss ^[FN1] pursuant to CPLR 3211 (a) (8) for lack of personal jurisdiction. According to the affirmation of John F. Sullivan, director of YGRR's board, YGRR has not disclaimed or refused the stock. Sullivan asserts that upon learning about the action now before the Court, YGRR hired a financial advisor to effectuate the transfer, and learned that the account registration for the stock in question was not properly completed, requiring further documentation from Clements as executor. Additionally, Sullivan asserts that YGRR has no presence in New York State, attesting that it is a Massachusetts corporation headquartered in Hudson, without real estate or offices in New York State, and that it does not regularly conduct business in New York State. YGRR is registered with the New York State Attorney General's Office because it solicits contributions for persons residing in New York. The affidavit of service indicates that service of the summons and complaint was made by personal delivery to YGRR's acting director in Massachusetts (NY St Cts Elec Filing [NYSCEF] Doc No. 2).^[FN2] Plaintiff opposes, asserting that the Court properly has in rem jurisdiction because Mohr, a New York domiciliary, owned the stock in the State of New York.

Stocks are Property under New York's Transfer-on-Death Security Registration

Although not explicitly mentioned in the complaint but as acknowledged in plaintiff's memorandum of law (NYSCEF Doc No. 19 at 3), the allegations appear to implicate New York's Transfer-on-Death Security Registration Act (TODSRA) (EPTL 13-4.1 et seq.). TODSRA "provides the statutory scheme under which an owner of securities can automatically transfer the securities to a designee upon the owner's death, without the securities passing through probate" (Marinello v Marinello, 2020 NY Slip Op 32923[U], **22 [Sup Ct, Kings County 2020]; see Arroyo-Graulau v Merrill Lynch Pierce, Fenner & Smith, Inc., 135 AD3d 1 [1st Dept 2015] [discussing TODSRA]). "Property" is defined in the statute as including "personal property or any interest therein and means anything that may be the subject of ownership" (EPTL 13-4.1 [g]). "Security" is defined as "a share, participation or other interest in property, in a business or in an obligation of an enterprise or other issuer, and includes a certificated security, an uncertificated security and a security account" (id. [j]). Thus, as used in the statute, shares of stock, whether certificated or not, constitute property. YGRR does not dispute that Mohr owned the six separate stocks (NYSCEF Doc No. 7, ¶ 11).

The court also observes that the Act contemplates the potential for disputes among beneficiaries "and other claimants to ownership of the security transferred or its value or proceeds" (EPTL 13-4.8 [d]). It is also noted that "a declaratory judgment action is an appropriate vehicle to determine stock ownership" (Kyle v Kyle, 111 AD2d 537, 538-539 [3d Dept 1985], citing Lirosi v Elkins, 89 AD2d 903 [2d Dept 1982]; see also Estate of Essig v 5670 58 St. Holding Corp., 50 AD3d 948 [2d Dept 2008]; Marinello, 2020 NY Slip Op 32923[U], **21).

Personal and In Rem Jurisdiction

a. The Court's Exercise of In Rem Jurisdiction

The distinction between an action in personam and one in rem was recently thoroughly addressed by the Court of Appeals in Hetelekides v County of Ontario (39 NY3d 222 [2023]). "An action in personam, giving the persons all the rights and remedies incident to a judgment in such action, is very different from a proceeding by special process in rem, either against specified property, or the property at large of the debtor" (id. at 232, quoting Lowry v Inman, 46 NY 119, 128 [1871]). "An action or proceeding in rem has for its subject specific property which is within the jurisdiction and control of the court to which application for relief is made" (id., quoting Hanna v Stedman, 230 NY 326, 335 [1921]). The Court of Appeals explained:

"The foundation of [in rem] jurisdiction is physical power (McDonald v Mabee, 243 US 90, 91 [1917], and in an action in rem, a court obtains jurisdiction over the 'res'—the property at issue in the proceeding (see Hanson v Denckla, 357 US 235, 246 [1958]). Thus, '[an] action [in rem] proceeds against such specific property and its object is to have the court define the rights therein of various and conflicting claimants' (Hanna, 230 NY at 335; see e.g. Freeman v Alderson, 119 US 185, 187 [1886]). The result of such an action is a judgment which operates upon the property and which has no element of personal claim or personal liability (Hanna, 230 NY at 335; see Hanson, 357 US at 246 n 12 ['A judgment in rem affects the interests of all persons in designated property']).

"In contrast, an action in personam is initiated against a person to determine their personal rights and obligations (see e.g. Lowry, 46 NY at 128; Black's Law Dictionary [11th ed 2019], action in personam). Thus, '[a] judgment in personam imposes a personal liability or obligation on one person in favor of another' (Hanson, 357 US at 246 n 12). In such an action, 'a state court base[s] its jurisdiction upon its authority over the defendant's person' (Mennonite Bd. of Missions v Adams, 462 US 791, 796 n 3 [1983])." (Hetelekides at 232 [some citations and parentheticals omitted]).

"Indeed, CPLR 301 provides that a court may maintain jurisdiction over property as had been done under the common law, including through an action in rem" (id. at [*3]233, citing Alexander, Prac Commentaries, CPLR C301:1). The Court thusly rejected plaintiff's argument that the distinction between in rem and in personam actions had over time been eroded, noting that both it and the Supreme Court "have continued to recognize the 'usefulness of distinctions between actions in rem and those in personam in many branches of law'" (id. at 233 [collecting cases]).^[FN3] Rather, "an action in rem, like the tax foreclosure proceeding here, is not an action against a person, but rather the subject property on which the tax was charged and due. Put another way, the County did not sue the owner of the property; it merely took steps to notify the owner and others with a potential interest in the property so that they could protect their interests if they so chose" (id. at 234).

In the instant case, the Court would be exercising in rem jurisdiction pursuant to CPLR 301. The exercise of its jurisdiction is over the stocks for the sole purpose of adjudicating title to and the parties' interests therein. In personam jurisdiction is not required or implicated, because the complaint does not seek to impose a liability or obligation upon YGRR; its object is to seek judgment declaring the parties' rights to the stocks (see e.g. Cerrone v Trans World Airlines, 148 NYS 2d 162 [Sup Ct, NY County 1955] [in rem jurisdiction obtained to adjudicate rights of all persons, including non-residents, to ownership of stock certificates]).

b. Notice Due of an In Rem Action

Adequate notice of an in rem action consonant with applicable statutory and constitutional law is still required. The United States Supreme Court has "recognized that property owners and interested parties are owed adequate process where their property rights are at stake" relative to the property at issue (Hetelekides at 235). "Put another way, case law relating to notice and due process set forth 'requirements of service imposed in the modern era to address concerns of due process. These are not matters which go to the jurisdiction of the court to entertain the action on its merits" (id., quoting Matter of Foreclosure of Tax Liens [Goldman], 165 AD3d 1112, 1127 [2d Dept 2018, Scheinkman, P.J., dissenting]; see Hanna, 230 NY at 335 ["Jurisdictional control of the property affords the basis for service beyond its jurisdiction upon those who may be interested in its disposition"]).

While "actual notice is not required, . . . any attempted notice must be reasonably calculated to provide the recipient with the intended advisement under the particular circumstances of the case" (Hetelekides at 237). Absent guidance in [*4]TODSRA, the court looks to CPLR 314 (2) (Service without the state not giving personal jurisdiction in certain actions) for what may be considered adequate process:

"Service may be made without the state by any person authorized by section 313 in the same manner as service is made within the state: . . . (2) where a judgment is demanded that the person to be served be excluded from a vested or contingent interest in . . . specific . . . personal property within the state; or that such an interest . . . in favor of either party be . . . defined or limited; or otherwise affecting the title to such property."

"CPLR 314(2) describes actions in which in rem jurisdiction will permit service of process on the defendant outside New York. Such jurisdiction, which is preserved by CPLR 301, is dependent on the presence within New York of 'specific . . . personal property' [in] which the plaintiff is asserting an interest" (Vincent C. Alexander, Prac Commentaries, McKinney's Cons Laws of NY, CPLR C314:3). In turn, CPLR 313 permits

"[a] person . . . subject to the jurisdiction of the courts of the state under section 301 . . . [to be] served with the summons without the state, in the same manner as service is made within the state, . . . by any person authorized to make service by the laws of the state . . . in which service is made."

Here, according to the affidavit of service, the deputy sheriff of the Middlesex Sheriff's Office of Massachusetts attests that he personally delivered the summons and complaint and other legal papers to defendant's acting executive director at 110 Chapin Road in Hudson, Massachusetts. For purposes of CPLR 313, service is authorized upon a corporation by personal delivery of the summons to an officer, director, managing or general agent; additionally, a not-for-profit corporation may be served pursuant to Not-for-Profit Corporation Law §§ 306 or 307 (CPLR 311; see N-PCL 307 [b] [2] [personal delivery of notice and copy of process constitutes sufficient service]). YGRR does not specifically contradict or dispute the process server's allegations of personal service (see State of New York v Konikov, 182 AD3d 750, 753 [3d Dept 2020]), but rather has objected to any exercise of the court's in personam jurisdiction, which, as discussed above, is inapplicable. Title to the six shares is at issue, and YGRR received actual notice of this action to determine the ultimate question of ownership. The court concludes that YGRR received adequate notice of this declaratory action.

Situs of Mohr's Shares of Stock

Next, the parties dispute the situs of the stocks allegedly owned by Mohr at the time of her death. Plaintiff alleges that the "situs of intangible, book-entry, [*5]registered stock owned by a New York domiciliary is New York in any dispute as to the ownership of that stock." YGRR, however, maintains that "the situs of the stock is the place of incorporation, none of which [is] in New York," citing Holmes v Camp (219 NY 359, 368 [1916]) (NYSCEF Doc No. 20 at 5).

TODSRA does not provide within its framework guidance regarding where an action may be commenced in the event a dispute such as this arises. However, the law is well settled "that the legal situs of the stock of a corporation is where the corporation exists or where the stockholder has his [or her] domicile" (Matter of McMullen, 199 App Div 393, 396 [1st Dept 1922], affd 236 NY 518 [1923]; Hotel 71 Mezz Lender LLC v Falor, 58 AD3d 270, 273 [1st Dept 2008], citing Matter of Enston, 113 NY 174, 181 [1889], and Sweeney, Cohn, Stahl & Vaccaro v Kane, 6 AD3d 72, 79 [2d Dept 2004]; see also Matter of Bronson, 150 NY 1, 9 [1896] ["In legal contemplation the property of the shareholder is either where the corporation exists, or at his domicile; accordingly as it is considered to consist in his contractual rights, or in his proprietary interest in the corporation").

YGRR does not dispute that "Mohr died a resident of Warren County, New York" (NYSCEF Doc No. 7, ¶ 9). Mohr's estate is located in Warren County, New York. The res or property was owned by Mohr prior to and at the time of her death. This Court holds and concludes that the legal situs of the stocks is properly in New York for purposes of adjudicating title to the six stocks, i.e., whether pursuant to Mohr's registration of the TOD accounts, ownership passed to YGRR upon her death. While defendant asserts that plaintiff "is wasting the time and resources of all parties involved," if the court were to accept defendant's legal premise, disputes such as this would need to be commenced in the place of incorporation, potentially requiring both plaintiff and defendant to litigate in multiple jurisdictions, which could result in inconsistent judicial holdings and necessitate the parties' greater expenditure of financial resources.

Finally, defendant for the first time raises in its reply memorandum of law the issue of plaintiff's failure to give notice of this action to the Attorney General. Pursuant to EPTL 8-1.4 (e) (1), "any trustee or other person, holding property or any income therefore, which may be required at any time to be devoted to charitable purposes, shall file in any court in this state . . . (C) any petition respecting the disposition or distribution of such property or income" must serve notice of the action or proceeding upon the Attorney General. "Trustee" includes an executor "holding and administering property for charitable purposes, whether pursuant to . . . other instrument or agreement . . . or otherwise pursuant to law, over which the attorney general has enforcement or supervisory powers" (EPTL 8-1.4 [a] [1]). "A disposition is a transfer of property either during a person's lifetime or by will. Contrast the word 'distribution,' which is how property passes by intestacy" (Margaret Valentine Turano, Prac Commentaries, McKinney's Cons Laws of NY, [*6]EPTL 1-2.4 [defining disposition]).

The passage of TODSRA in 2005 created "a method of owning securities in a manner that would allow them to automatically transfer to an owner's designee upon death" (Arroyo-Graulau v Merrill Lynch Pierce, Fenner & Smith, Inc., 135 AD3d at 5, citing L 2005, ch 325). "The primary advantage of TODSRA is that securities need not pass through probate in order to be transferred upon the death of the owner (id., citing Margaret Valentine Turano, Prac Commentaries, McKinney's Cons Laws of NY, Book 17B, EPTL art 13, part 4 at 695). An enforceable contractual relationship is formed, "requiring the registering entity to act in accordance with the designation," only when an owner requests that a security be held in beneficiary form and the entity holding the security accepts the designation (id. at 5-6, citing EPTL 13-4.9).

This proceeding does not concern a disposition or distribution of property by plaintiff executor pursuant to an agreement. Rather, the only relief sought is a judgment declaring ownership. If plaintiff prevails, the shares would be owned by Mohr's estate for disposition in accordance with any will. If defendant prevails, the stock would be owned by YGRR pursuant to the TOD designation on the beneficiary form, transferred in accordance with the contract made between Mohr and the "registering entity," not plaintiff executor. The Court finds no case law to support defendant's proposition. In view of TODSRA and provisions of EPTL article 8, notice to the Attorney General is not required in this instance.

For the reasons set forth above, the Court holds that it has in rem jurisdiction over the six stocks to determine and declare under CPLR 3001 who owns them, and further, that defendant received actual notice of, and may participate in, this action in order to protect its interests in the six shares of stock. This action is properly sited in New York because Mohr, a resident of Warren County, owned the six stocks prior to and at the time of her death, and her estate is located in Warren County, New York. Finally, notice of this action to the Attorney General pursuant to EPTL 8-1.4 (e) (1) is not required.

Accordingly, it is hereby

ORDERED, that defendant's motion to dismiss is denied; and it is further

ORDERED, that defendant shall file and serve and answer to the complaint within thirty (30) days of the date of notice of entry of this decision and order; and it is further

ORDERED, that after the filing of the answer, the Court shall schedule a preliminary conference.

The above constitutes the Decision and Order of the Court. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provision of that section with respect to filing, entry [*7]and notice of entry.