Case ID: ad_166/html/0064-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The United States Asphalt Refining Company, Appellant, v. Comptoir National D’Escompte De Paris, Respondent.
    First Department,
    February 5, 1915.
    Foreign corporation—jurisdiction of action by one foreign corporation against another — defendant must be doing business within State — Code of Civil Procedure, section 1780, subdivision 4, construed—conversion—pleading — sufficiency of general allegation.
    Section 1780 of the Code of Civil Procedure, providing that “ An action against a foreign corporation may be maintained by another foreign corporation, * * * 4. Where a foreign corporation is doing business within this State,” applies only to the defendant and does not give the court jurisdiction where the plaintiff only is doing business within this State.
    Hence, a complaint in an action by one foreign corporation against another foreign corporation which fails to allege that the defendant ■ is doing business within this State, does not state a cause of action.
    
      Quaere, as to whether a general allegation that a defendant “converted" certain property to its own use is a sufficient allegation of facts showing conversion.
    Appeal by the plaintiff, The United States Asphalt Refining Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 19th day of October, 1914, pursuant to an order made at Special Term, granting defendant’s motion for judgment sustaining its demurrer, and dismissing the complaint, and also an appeal from two orders entered in said clerk’s office on the 6th day of October, 1914, one denying plaintiff’s motion to strike out the demurrer and for judgment on the complaint, and the other granting defendant’s motion for judgment on its demurrer. The latter order was the one pursuant to which the judgment was entered.
    
      William H. Blymyer, for the appellant.
    
      Howard Thayer Kingsbury, for the respondent.
   Laughlin, J.:

The defendant demurred to the complaint on the ground that it fails to state facts sufficient to constitute a cause of action, and that the court is without jurisdiction over the subject of the action, and then brought its demurrer on for a hearing on motion.

The plaintiff alleges that it is-a corporation organized under the laws of South Dakota and is doing business in the borough of Manhattan, New York; that the defendant is a corporation organized under the laws of France, with its principal office in the city of Paris, and a branch office for the transaction of banking business in the city of London, England, and that on or prior to December Thirteenth, 1913, the defendant collected on six certain drafts drawn by the plaintiff against A. Grimwood & Co., Ltd., of London, England, the sum of Six Hundred One Pounds and Five Shillings (£601/5), from which it deducted Eight Shillings and Six Pence (£-/8/6) as commission, leaving a balance in its hands of (£600/17/6) or Two thousand nine hundred and twenty-four 25/100 Dollars ($2,924.25) of United States money, belonging to the plaintiff, and then and there the defendant wrongfully converted said sum of Six Hundred Pounds, Seventeen Shillings and Six Pence (£600/17/6) to its own use and to the plaintiff’s damage-” These are the only material allegations of the complaint. Judgment is demanded for said amount of $2,924.25, together with interest and costs.

I am of opinion that the complaint shows that the court has not jurisdiction of the action, for the reason that it is not alleged that the defendant was doing business within this State. The jurisdiction of the court to entertain an action by one foreign corporation against another foreign corporation is prescribed hi section 1780 of the Code of Civil Procedure. Section 1779 of the Code of Civil Procedure prescribes when a foreign corporation may sue. This indicates that the Legislature by the one section intended to' prescribe when a foreign corporation may sue, and by the other when a foreign corporation may be sued. Section 1780, the heading of which is “When foreign corporation may be sued,” contains four subdivisions, and the decision of the question now presented depends upon the construction of the fourth, which was added by chapter 60 of the Laws of 1913, entitled “An act to amend the Code of Civil Procedure, relating to when a foreign corporation may be sued,” which indicates that the Legislature intended logically to continue the distinction between the two sections. Section 1780, as thus amended, so far as material, is as follows: “ § 1780. When foreign corporation may be sued. An action against a foreign corporation may be maintained by a resident of the State, or by a domestic corporation, for any cause of action. An action against a foreign corporation may be maintained by another foreign corporation, or by a non-resident, in one of the following cases only: * * • * 4. Where a foreign corporation is doing business within this State.” The learned counsel for the appellant contends on this branch of the appeal that subdivision 4 gives, the court jurisdiction where either of the foreign corporations, that is to say, either plaintiff or defendant, is doing business within this State. I am of opinion that it was the intention of the Legislature to confine the provisions of said subdivision 4 to the defendant in the action. Our attention has not been drawn to any decision construing this section on the point now under consideration, and we have found none. The Legislature by enacting the four subdivisions of this section attempted to prescribe, not when a foreign corporation may sue, but when such a corporation may be sued within this jurisdiction. It is perfectly plain that where the action is brought by a non-resident, the 4th subdivision relates to the foreign corporation which is made a defendant, and there is, I think, no ground for holding that in the same sentence and by the same phraseology the Legislature intended to authorize an action against a foreign corporation by a plaintiff foreign corporation doing business here. That construction would impute to the Legislature an intention to confer greater rights on a foreign corporation doing business here than on a non-resident individual, for under it he could not sue even though all his business were transacted here unless the defendant also did business here. Subdivision 4 evidently was intended to relate to the defendant in either instance. Prior to the enactment of this amendment it had been held that the courts have only such jurisdiction over foreign corporations as is expressly conferred by statutory law (Anglo-American Provision Co. v. Davis Co., 50 App. Div. 273; affd., 169 N. Y. 506), and that in an action against a foreign corporation it is necessary to plead the jurisdictional facts. (Ladenburg v. Commercial Bank, 87 Hun, 269; affd., 146 N. Y. 406.) I am, therefore, of opinion that it was not the intention of the Legislature to authorize a foreign corporation, merely on account of its doing business here, to sue in the courts of this State another foreign corporation not doing business here.

In this view of the case it is unnecessary to decide whether in the circumstances the bare allegation that the defendant, which on the facts alleged presumably was authorized to collect the drafts, converted the proceeds to its own use, is a sufficient allegation of facts showing conversion; but without expressing a decided opinion on the point it may be observed that while the courts have quite uniformly held that general charges of negligence, fraud, conspiracy or unlawfulness, or that an act was done wrongfully or maliciously or arbitrarily, without setting forth the facts, are mere characterizations of acts or facts not stated, and, therefore, legal conclusions (Knowles v. City of N. Y., 176 N. Y. 430; Talcott v. City of Buffalo, 125 id. 280; De Jong v. Behrman Co., 148 App. Div. 37; Nillson v. Lawrence, Id. 678; Peerrot v. Mount Morris Bank, 120 id. 247; People v. Equitable Life Assurance Society, 124 id. 714; Petty v. Emery, 96 id. 35), and although there is a dictum in Saratoga Gas & Electric Light Co. v. Hazard (55 Hun, 251) to the effect that a bare charge of conversion is insufficient, yet there is considerable authority for the proposition that the word “convert” or “conversion” imports the essential facts to show the act an unauthorized exercise of dominion and that proof of any acts constituting conversion may be made thereunder. (Thayer v. Gile, 42 Hun, 268; Berney v. Drexel, 33 id. 34, cited with approval in Rochester R. Co. v. Robinson, 133 H. Y. 242; Duggan v. Wright, 157 Mass. 228 ; 2 Abb. Tr. Brief [2d ed.], 1564; Abb. Law Dict, definition of “ conversion; ” Century Diet, and Cyclopedia, definition of “ convert.”)

Since there is a jurisdictional defect which cannot be corrected it follows that the judgment and orders should be affirmed, with costs.

Ingraham, P. J., McLaughlin, Scott and Hotchkiss, JJ. concurred.

Judgment and orders affirmed, with costs.