Case ID: ad_40/html/0268-01.html
Source: Caselaw Access Project
Author: {"author": "Van Brunt, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Atlantic Construction Company, Appellant, v. Arnold Kreusler, Respondent.
    
      A foreign corporation not having a Secretary of State’s certificate — it may sue in Mew York State on contracts made prior to the General Corporation Law — stock subscription contract as evidence of a right to issue stock.
    
    Section 15 of the General Corporation Law, passed May 18, 1892 (Chap. 687), providing, that no foreign stock corporation other than a moneyed corporation shall do business in the State of New York without having proclired from the Secretary of State the certificate required by that section, and that “No such corporation now doing business in this State shall do business herein after December 81,1892, without having procured such certificate from the Secretary of State, but any lawful contract previously made by the corporation may be performed and enforced within the State subsequent to such date. No foreign' stock corporation doing business in this State without such certificate shall maintain any action in this State upon any contract made by it in this State until it shall have procured such certificate,” does not preclude a foreign corporation which has not obtained such a certificate from maintaining an action in the State of New York upon a stock subscription contract, made prior tO' the passage of the General Corporation Law.
    The last clause of section 15 was intended to apply only to contracts made rvithin the State of New York after the date fixed in the statute.
    A statement in a stock subscription contract to the effect that the plaintiff had been formed in New Jersey with an authorized capital" of §1,500,000 and had issued §500,000 thereof as fully paid non-assessable stock, is sufficient to establish prima facie the plaintiff’s authority to issue stock.
    
      Appeal by the plaintiff, the Atlantic Construction Company, "from a judgment of the Supreme Court in favor of the defendant, entered in the office of the cleric of the county of New York on the 27th day of January, 1899, upon the dismissal of the complaint by direction of the court after a trial at the New York Trial Term.
    
      Henry B. Culver, for the appellant.
    
      D. H. Hunt, for the respondent.
   Van Brunt, P. J.:

This action was brought to recover a subscription by the defendant to the capital stock of the plaintiff, a foreign corporation. Upon the trial the plaintiff offered in evidence the stock subscription book containing the agreement of subscription and showing that the defendant had subscribed for 20 shares ($1,000) of its capital stock. It was admitted that the defendant had paid $250 on account of such subscription. At the close of the plaintiff’s case the defendant offered in evidence the certificate of the Secretary of State of New York that the plaintiff had not obtained from the' said secretary the authority to do business within the State required by sections 15 and 16 of the General Corporation Law (being chap. 687 of the Laws of 1892). The complaint ivas then dismissed upon the ground that the plaintiff had made no proof that the corporation had any power to issue stock; and upon the further ground that no certificate of designation as required by the statute had been filed.

It seems to us that the construction placed upon section 15 of the General Corporation Law by the court below was erroneous. This law was passed on the 18th of May, 1892, and the contract of subscription in question was made prior to that date.

The provisions of section 15 are as follows :

“No foreign stock corporation other than a monied 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. * * *
“ No such corporation now doing business in this State shall do business herein after December 31st, 1892, without having procured such certificate from the Secretary of State, but any lawful contract previously made by the corporation may be performed and enforced within the State subsequent to such date.
No foreign stock corporation doing business in this State without such certificate shall maintain any action in this State upon any contract made by it in this State until it shall have procured such certificate.”’'

It will be seen that by the express provisions of the statute all lawful contract^ made prior to the 31st of December, 1892, may be enforced by the corporation within the State subsequent to such date. It is true that this is followed by a provision that no foreign stock corporation doing.business in this State -without the certificate mentioned shall maintain an action in this State upon any contract made by it in this State until it shall have procured such certificate. But it is apparent that this last clause of the section under consideration was intended to apply only to contracts which might be made within the State after the date fixed in the statute. The construction contended for by the respondent would result in a nullification of the provisions of the law in respect to contracts previously entered into by the clause immediately following. No such inconsistency of construction is to be adopted unless the two -provisions are absolutely irreconcilable. It is apparent that the intention of the Legislature was in the future to prevent foreign corporations from doing business within this State and from maintaining actions in the State in respect to such business after the date mentioned in the act without the filing of the certificate. But it was not intended to cut off rights in respect to contracts which had been previously made by the corporation. The corporation was to be at liberty to cause to be performed and enforced such contracts within the State, notwithstanding the passage of the act. This construction gives full effect to the ■ whole of the statute and prevents a result apparently never intended by the Legislature, namely, the impossibility of enforcing rights which had been acquired prior to any legislation which in any way interfered with their enforcement.

In view of the condition of the pleadings, it was not necessary for the plaintiff to establish its corporate existence. There was no affirmative allegation that the plaintiff was not a corporation, which was necessary under section 1776 of the Code of Civil Procedure in order to put the plaintiff upon proof of its due incorporation.

It is, however, claimed that there was no evidence as to the plaintiffs corporate authority; that there was nothing to show that it ln.d the right to issue stock. It seems to us that this was entirely unnecessary in view of the admissions which the defendant had made. He asserted in his subscription to the stock that the Atlantic Construction Company had been formed in New Jersey with an authorized capital of $1,500,000, shares $50 each, and had issued $500,000 thereof as full-paid and non-assessablé stoqk. Here was a distinct admission that this corporation had authority to issue $1,500,000 of stock, and that it had issued $500,000 thereof. Then follows a subscription by the defendant for twenty shares. This certainly was sufficient, so far as he was concerned, to make out a prima facie case; and, if he desired to dispute or contradict his own admission as to the authority of the plaintiff, it was- necessary for him to introduce evidence either disputing the making of that admission or establishing affirmatively that the corporation had no power whatever to issue its stock, and that, therefore, the subscription was without consideration. The admission of a party that certain facts exist has always been held sufficient evidence, at least in the first instance, to establish the facts admitted. As we have already seen, there was an express admission of the incorporation of the plaintiff with an authorized capital of $1,500,000 ; that it had issued part of it and was taking subscriptions for the balance, or at least a portion thereof, and that the defendant subscribed for twenty shares. This seems to have made out a prima facie case for the plaintiff; and in the absence of any evidence upon the part of the defendant, the plaintiff was entitled to a recovery.

The judgment should, therefore, be reversed and a new trial ordered, with costs to the appellant to abide the event.

Patterson, O’Brien, Ingraham and McLaughlin, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellant to abide event.