Case ID: ad_145/html/0568-01.html
Source: Caselaw Access Project
Author: {"author": "Woodward, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Eclipse Silk Manufacturing Company, Appellant, v. Egmont N. Hiller, Respondent.
    Second Department,
    June 9, 1911.
    Corporation — sale — action by foreign corporation — complaint — necessary allegations.
    Where a foreign corporation brings suit in the courts of this State and sets out a good cause of action it will be assumed that it is rightfully in the State and properly in court until the contrary is made to appear.-.
    
      In respect to all contracts, except those made in this State, a foreign corporation has the same rights in our courts as a domestic corporation.
    Where the complaint in an action by a foreign corporation to recover on a contract of sale contains no allegation 'that the contract was made here, or that the plaintiff is doing business in this State, it is not necessary to allege that at the time the contract was made the plaintiff had procured a certificate to do business here, or, in the alternative, that it was not doing business within this State, and it is error to dismiss the complaint on the opening on the ground that in omitting such allegations it failed to state a cause of action.
    Appeal by the plaintiff, the Eclipse Silk Manufacturing Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Kings on the 25th day of January, 1911, upon the dismissal of the complaint by ' direction of the court at the opening of the case on a trial at the Kings County Trial Term.
    
      Philip H. Leifert, for the appellant.
    
      Frederick L. Ouggenheimer,- for the respondent.
   Woodward, J.:

The complaint in this action alleges that at the times hereinafter mentioned the plaintiff was and still is a corporation, created and existing undei the laws of the State of New Jersey; ” that the defendant was doing business under the name or style of the E. N. Hiller Company,” and that on or about and between the dates' of October 11th and December 12th, 1907, the plaintiff sold and delivered to the defendant certain merchandise, at agreed prices, amounting in all to the sum of' one thousand and two and ⅛⅜- dollars, the same being the reasonable value thereof,” and that no part of this sum has been paid, and demands judgment for the amount. This complaint was verified by the attorney of the plaintiff, because the plaintiff “ is a foreign corporation,” and the defendant, answering, alleged that the ‘‘ plaintiff was a foreign corporation doing business in the State of New York. ⅜ ⅞ ⅞ That said alleged contract of sale,'if. made at all, was made in the State of" New York,” and that the plaintiff had not procured the certificate required by the provisions of section 15 of the General Corporation Law to authorize the plaintiff to do business in this State, or to maintain this action. (See Gen. Laws, chap 35 [Laws of 1892, chap. 687], § 15, as amd. by Laws of 1904, chap, 490; now Consol. Laws, chap. 23 [Laws of 1909, chap. 28], § 15.)

At the opening of the case defendant’s counsel moved to dismiss the complaint on the ground that it did not state facts sufficient to constitute a cause of action, in that there was a failure to allege that the plaintiff, a foreign corporation had procured the necessary certificate, and upon the further ground that the complaint, while showing that the plaintiff was a foreign corporation, did not allege that it was not doing business within the State of New York. The learned court appears to have accepted both propositions as stating the law, and held that in the event of the plaintiff’s not moving to amend the complaint the same would be dismissed. Plaintiff’s attorney refused to move for an amendment,, and the complaint was dismissed, the plaintiff appealing to this court from the judgment entered upon such decision.

There seems to be some confusion in referencó to the requirements under the provisions of section 15 of the General Corporation Law, notwithstanding the effort of the Court of Appeals in Wood & Selick v. Ball (190 N. Y. 217) to end the conflict of authority. Section 1779 of the Code of Civil Procedure provides that an action may he maintained by a foreign corporation, in like manner, and subject to the same regulations, as where the action is brought by. a domestic corporation, except as otherwise specially prescribed by law; ” and section 3 of article 8 of the State Constitution provides that “ all corporations shall have the right to sue . and shall he subject to be sued in all courts in like' cases as natural persons.” If John Smith, residing in New Jersey, had come into the courts of the State of New York and had alleged the same facts which appear in this complaint, other than the allegation of being a corporation, no one would suggest that there was any failure on the part of the pleader to state a good cause of action, and when a foreign corporation brings a suit in the courts of this State and states a good cause of action in the complaint, it will he assumed that it is rightfully in the State and properly in court until the contrary is made to appear. (Parmele Co. v. Haas, 171 N. Y. 579, 583.) The plaintiff being a foreign corporation, and stating a cause of action ■which would be good if stated by a domestic corporation, it only remains to determine whether it was “made to appear” judicially to the court below that the plaintiff was not “rightfully in the State and properly in court.” The.law clearly contemplates that a foreign corporation may come into this State, through its attorney or agent, and maintain a cause of action (Code Civ. Proc. § 525, subd. 3), and we have only to determine whether it has been “ otherwise specially prescribed by law ” in the case of the plaintiff, to reach a correct determination upon the question here presented. The only thing before the court was the plaintiff’s complaint, for the allegations of the answer, setting up new matter, must be deemed to be controverted (Code Civ. Proc. § 522), and we are to examine the complaint in connection with the law, to determine whether it does or does not state such a cause of action as the court was called upon to hear, try and determine.

The only exception to the general rule laid down in the Code of Civil Procedure, in so far as the case now before us is concerned, is found in section 15 of the General Corporation Law, which provides as follows: “No foreign stock corporation other than a moneyed corporation, shall do business in this State without having first procured from the Secretary of State a certificate that it has complied with all the requirements of law to authorize it to do business in this State, and that the business of the corporation to be carried on in this State is such as may be lawfully carried on by a corporation incorporated under the laws of this State for such or. similar business. ⅜ ⅜ ⅜ No foreign stock corporation doing business in this State shall maintain any action in this State upon any contract made by it in this State, unless prior to the making of such contract it shall have procured such certificate.” It will be noticed that the prohibition does not extend to contracts generally, but to “any contract made by it in this State.” In respect to all other contracts it has the same rights »as a domestic corporation; it has the same right to equitable relief in a proper case, to an action on tort, and to any and all processes which are open to domestic corporations. It is only when a foreign corporation, “ doing business in this State,” in competition with domestic corporations, has made a contract within this State, that it is denied, the aid of our .courts in its enforcement unless it has complied with the statute, and has become, in practical effect, a domestic corporation for all purposes. A reading of section 16 of the General Corporation Law. (Gen. Laws, chap. 35 [Laws of 1892, chap. 687], as amd. by Laws of 1895, chap. 672; now Consol. Laws, chap. 23; Laws of 1909, chap. 28) will show that this is the purpose of the provision; that it is demanded that in return for the privilege of suing upon local contracts in the courts of this State, the foreign corporation must place itself in a situation where it can he sued with equal convenience within this State.. To bring the plaintiff within the requirements of this provision of the General Corporation Law (§ 15) it must appear that it is a foreign corporation doing business in this State,” and that it has made the contract sued upon in this State. No such facts appear upon the face of the complaint. It is alleged that the plaintiff ⅛ a “ corporation, created and existing under the laws of the State' of New Jersey,” and such a corporation has a perfect right to sue in the courts of this State on a contract made with a citizen of the State of New York either within or without, the State, provided it has not located in the State of New York for the purpose of doing business within the State. It may send its agent into this State and make a lawful contract and enforce the same within our courts; It is only when it comes . in here and takes up its' principal place of business ” within • this State (Gen. Corp. Law, § 16), and thus comes into direct competition with domestic corporations, .that it is required to have the certificate mentioned in section 15 of the act. The complaint in this action not only does not allege that the plaintiff is doing business in the State of New York, but it does not allege that the contract was made in the State of New York,. or even that, the defendant was a resident or an inhabitant of the State of New York at the time the.contract was made. Eor'all-that appears in the complaint the defendant may have been a resident of the State of New Jersey, or « of California, and the contract may have .been made in New Jersey or in any other State in the Union, or it may have been made within this State -by an agent of the plaintiff sent here for the purpose of making such contract. It has not, then, been “ made to appear ” that the plaintiff, which has stated a good cause of action in its complaint, is not ‘ ‘ rightf ully in the State and properly in court ” (Parmele Co. v. Haas, supra), and it was clearly error for the court to dismiss the complaint upon the grounds stated by the defendant’s counsel.

In the case of Wood & Selick v. Ball (190 N. Y. 217), relied upon by the defendant, it was alleged in the complaint that the plaintiff was “ a foreign corporation, duly organized under the laws of the State of New Jersey, and having its principal office for the transaction of business in the City of New York, N. Y.,” and that the defendant resided at Watertown, N. Y., and that “plaintiff sold and delivered to defendant, at her request at Watertown, N. Y.,- all the goods, wares,” etc., so that it fully appeared upon the face of the complaint that the plaintiff was a foreign corporation doing business in this State, and that the contract sued upon was made within this State, and the case merely held that it should “be alleged and proved by a foreign corporation such as the plaintiff, in order to establish a Cause of action in the courts of this State,” that the provisions of section 15 of the General Corporation Law have been complied with. It was of a “ foreign corporation such as the plaintiff ” in that action ■— a foreign corporation “doing business in this State” as shown on the face of the complaint, of which the court was speaking, and not of a foreign corporation which merely alleges an organization and existence under the laws of New Jersey, where its business is presumptively transacted..

The same situation existed in the case of Welsbach Co. v. Norwich Gas & El. Co. (96 App. Div. 52; affd., 180 N. Y. 533), and the suggestion that the plaintiff is bound to plead that it is not doing business in the State of New York is absurd. Stating a good cause of action under the provisions of section 1779 of the Code of Civil Procedure, the presumption is that the plaintiff is rightfully in the State and properly in court until the contrary is made, to appear. (Parmele Co. v. Haas, supra.) If, upon the trial, it should be developed that the plaintiff is a foreign corporation doing business, in New York, and that the contract in question was made within this State, the' objection that the complaint does not state facts sufficient to constitute a cause of action, or that the facts proved do not constitute a cause of action, is open to the defendant (Wood & Selick v. Ball, 114 App. Div. 743; affd., 190 N. Y. 217), but with nothing before the court to show that the plaintiff is a foreign corporation doing business in this State, or that the contract sued upon was' made within this State, there was no justification for dismissing the complaint. The judgment appealed from should be reversed, with costs.

Jbnks, P. J., Thomas, Oarr and Bich, JJ., concurred.

Judgment reversed and new trial granted, costs to abide the event.