Case ID: misc_26/html/0136-01.html
Source: Caselaw Access Project
Author: {"author": "Giegerich, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Carl Muehlenbeck, Respondent, v. The Babylon, North Shore Railroad Co., Appellant.
    (Supreme Court, Appellate Term,
    January, 1899.)
    Corporations — Estoppel as to services for preliminary surveys, although its organization was incomplete.
    A corporation, which has duly filed and published a certificate of incorporation under the Railroad Law (Laws of 1890, chap. 565) but to which no certificate has been issued by the Railroad Commissioners and which has not paid its organization tax, is estopped from resisting payment for services rendered to it at its request in making preliminary surveys for its line and in preparing a map and profile for the same, and this although its failure to procure the certificate and pay the tax, prevent it .by statute from the exercise of its corporate powers and from carrying on business in the State of New York.
    Appeal by the defendant from a judgment of the Municipal Court of the City of New York, Borough of Manhattan, first district, rendered in favor of the plaintiff upon a trial had before the court without a jury.
    Action to recover on a quantum meruit the sum of $250, a balance claimed to be due for work, labor and services performed by the plaintiff in making the preliminary surveys of the defendant’s proposed line of railroad from Babylon to Northport and along Eaton’s Neck, Long Island, and preparing the map and profile of the same.
    The pleadings were oral and the answer a general denial.
    The opinion states the material facts.
    Charles L. Easton, for appellant.
    J. M. Ferguson, for respondent.
   Giegerich, J.

The evidence adduced for the plaintiff was amply sufficient to support his recovery for the services in suit, as upon a substantial compliance with the agreement entered into between the parties, and it appears to be undisputed that the amount awarded as damages was not excessive.

The main contention is that the defendant is not, a corporation and so may not be sued as such, the facts being that, while a certificate of incorporation under the Railroad Law was executed, filed and published by the incorporators, no certificate had been issued by the Railroad Commissioners such as was required by section 59 of the said law (chap. 39, G. L., 2 R. S., Banks & Bros. 9th ed., p. 1285; Laws of 1890, chap. 565, as amended by chap. 676, Laws of 1892, and further amended by chap. 545, Laws of 1895), and without which the statute declared that “Ho railroad corporation * * * shall exercise the powers conferred by law upon such corporations.” Further, it appeared that the organization tax had not been paid and the Tax Law (chap. 26, G. L., 5 R. S., Banks & Bros. 9th ed., p. 3280; Laws of 1896, chap. 908, provided as to this (§ 180) that “ no corporation shall have or exercise any corporate franchise or powers, or carry on business in this state until such tax shall have been paid.”

The life of a corporation dates from its organization and not from the time it begins to do business (Thompson’s Comm. Corp. § 217), and, under the Railroad Law (supra, § 2), the subscribers of the certificate “ become a corporation ” by executing, acknowledging and filing the paper, such certificate being presumptive evidence of incorporation. General Corporation Law, § 9, chap. 35, G. L., 2 Banks & Bros. 9th ed., 978.

From the wording of the restrictions above quoted, as to the certificate of the railroad coimnissioners and the payment of the tax, it is apparent that the organization of the corporation precedes the restriction and that the corporate existence is recognized, the benefits of incorporation to be deferred until the condition is complied with. See Thompson’s Comm. Corp., §§ 226, 241.

We have not to determine whether the defendant’s existence as a corporation could be successfully assailed in a direct proceeding on the part of the State, the rule being that where an action is brought against an alleged corporation by a party contracting with it, the corporate existence is to be upheld if, color-ably, there has been an organization under the statute, it being held that the corporation exists, de facto, for the purposes of the case and that both parties are estopped from asserting the contrary. Buffalo & Allegany R. R. Co. v. Cary, 26 N. Y. 75, 77; United States V. Co. v. Schlegel, 143 id. 537, 543; Thompson’s Comm. Corp., §§ 218, 3683 et seq.

In the present case the dealings of the parties were carried on throughout with acquiescence in the fact that the defendant was a corporation, and any defense that the defendant had no power to make the contract, because not authorized to do business, cannot be entertained.

It would seem, certainly, that this very agreement — one for the making of a preliminary survey and maps — was within the defendant’s powers and expressly reserved from the restriction above noted (Railroad Law, § 59) ; but, assuming the contrary, the agreement being executed and the purported corporation having had the benefit of it, the plea of ultra vires could not be interposed, for the transaction was opposed to no principle of public policy and the defendant was estopped from availing itself of this defense. Whitney Arms Co. v. Barlow, 63 N. Y. 62, 70; Peck v. Doran & Wright Co., 32 N. Y. St. Repr. 405; Thompson’s Comm. Corp., §§ 6015, 6016.

The judgment should, therefore, be affirmed, with costs.

Beekman, P. J., and Gildersleeve, J., concur.

Judgment affirmed, with costs.