Case ID: ny-st-rep_35/html/0380-01.html
Source: Caselaw Access Project
Author: {"author": "Daly, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hugh J. Barron, Resp’t, v. Fernando Yost et al., App’lts.
    
      (New York Common Pleas, General Term,
    
    
      Filed January 5, 1891.)
    
    1. Business names—Fictitious name.
    It is not every case of transacting business under a fictitious name that is within the statute, but to make the act illegal it must appear that credit was given to and reliance placed upon the false designation, and that credit was given to the person or persons using the false designation.
    2. Same.
    In an action for work done and materials furnished, the defendant asked leave to amend the answer by alleging that plaintiff did business under the name of H. J. Barrow & Co., which name was fictitious, in that he had no partner represented by the designation “&Co.,” and that the contract sued on was made in such fictitious name. Feld, that leave was properly refused, as these facts alone, if proved, would constitute no defense.
    Appeal by defendant Yost from an order of the special term of this court refusing leave to serve an amended answer setting up that the contract for doing the work and furnishing the materials alleged in the complaint was made by the plaintiff under the name of “H. J. Barrow & Co.,” which name was fictitious, in that there was no actual partner or partners represented by the designation “ & Co.,” and that plaintiff was carrying on business under said fictitious name in violation of the Penal Code, § 363.
    
      Eugene K. Sackett, for app’lts; Frank M. Avery and Edgar J. Phillips, for resp’t
   Daly, Ch. J.

■— In the case of Lane v. Arnold, 11 Daly, 293, following the current of decision in the courts of original jurisdiction in this state, it was held that a person violating the statute of 1833 by doing business in the name of a party not a member of the firm lost the right to recover for goods sold by him in that name, for although there was only a technical violation of the statute, a wrongful intent must be inferred from the intentional doing of the wrongful act; but in view of the observation, in Wood v. Erie R. R. Co., 72 N. Y., 198, that the object of the act of 1833 was “ to prevent persons from obtaining credit on the strength of a name that has been withdrawn or which they have no authority to use,” we allowed an appeal to the court of appeals (the case having come to us from the marine court, now the city court), in order that the court of last resort “ might apply the law in a more liberal spirit,” we not feeling at liberty to place a construction upon the statute which would save persons violating the law, even innocently, from the consequences of their lapse from strict conformity to its provisions.

In a case decided shortly after, Gay v. Seibold, 97 N. Y., 472, in the court of last resort, it was held that the statute was highly penal, should be strictly construed, and that a case is outside the statute, though within the letter, not within the intention of the statute; that the purpose of the statute was to protect persons giving credit to the fictitious firm on the faith of the fictitious designation, and was not needed for the protection of those who obtained credit from such a firm; and although in that particular case it was found that the defendant knew who actually constituted the firm and consciously transacted the business with them in their true names, and it might well be said that the statute was not even in form violated, yet the court placed its decision’on the ground that “ no credit was given to, and no reliance placed upon, the false designation, and, in fact, no credit whatever was given to the plaintiff.” It was also added that all the parties to the transaction knew who the real parties were and no person was deceived, and there was no possibility that any of the parties would be imposed upon or harmed by the false designation.

This decision establishes the rule that it is not every case of transacting business under a fictitious name that is within the statute, but that to make the act illegal it must appear that credit was given to, and reliance placed upon, the false designation, and that credit was given to the person, or persons, using the false designation. In the case before us the proposed defense merely alleges the use of the fictitious name by the plaintiff in doing the work for the defendant and furnishing the materials and in making the contract therefor, and the carrying on of the business by plaintiff under the fictitious name, and that, therefore, the contract entered into by defendant with him was illegal and void. These facts alone, if proved, would constitute no defense under the case quoted, and the motion to amend the answer by setting them up was properly denied.

The order appealed from should be affirmed, with costs.

Bischoff and Pryor, JJ., concur.