Case ID: ad_156/html/0323-01.html
Source: Caselaw Access Project
Author: {"author": "Rich, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Martin J. Sinnott, Respondent, v. John H. Hanan, Appellant.
    Second Department,
    April 18, 1913.
    Attachment — action upon undertaking — defense — dissolution of foreign corporation against which attachment was issued prior to judgment.
    Where, in an action upon an undertaking given to discharge the levy of an attachment in an action in the Supreme Court against a foreign corporation, it appeared that after the levy had been released, but before judgment was recovered against the foreign corporation, it was dissolved under a statute of the foreign State for neglect or refusal to pay taxes, ■ the complaint in the action upon the undertaking should be dismissed. As the court w;as without jurisdiction to try the action against such corporation after its dissolution, the judgment entered against it was void.
    Appeal by the defendant, John H. Hanan, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 20th day of April, 1912, upon the decision of the court, rendered after a trial at the Kings County Trial Term, a jury having been waived.
    
      Edwards H. Childs, for the appellant.
    
      De Witt Bailey, for the respondent.
   Rich, J.:

This appeal is from a judgment in favor of the plaintiff in an action brought to recover of the defendant as surety upon an undertaking, given to discharge the levy of an attachment.

It appears that in 1901 an action was pending in the Supreme Court brought by the plaintiff • against the Expanding Tread Company, a New Jersey corporation, in which an attachment was issued; that for the purpose of procuring the discharge of the lien of the attachment the defendant and another executed the undertaking in suit. It further appears that after the levy under the attachment had been released, and before judgment was recovered, the Expanding Tread Company was dissolved by a proclamation of the Governor of the State of New Jersey under a statute of that State which provided that if any corporation should for two consecutive years neglect or refuse to pay any tax that had been duly assessed against it, “the charter of .such corporation shall be void, and all powers conferred by law upon such corporation are hereby declared inoperative and void.” It is claimed by the defendant that the judgment against the tread company was void because the company had been dissolved before it was rendered.

The • undertaking provides: “We * * "x" jointly and severally undertake pursuant to the statute in such case made and provided, in the sum of Two thousand ($2,000) dollars, that the defendant will, on demand, pay to the plaintiff the amount of any judgment which may he recovered in the action against the. defendant, the Expanding Tread Company, not exceeding the above mentioned sum, with . interest.” Ho proof was made upon the trial of any demand upon the appellant for payment except such a demand as may be inferred from the issuance and return of an execution upon the judgment.

The appellant contends that the court was without jurisdiction to try the action against the tread company, and in this I think he is clearly right. Want of jurisdiction may always he alleged against a judgment sought to be enforced, or upon which a cause of action is claimed. (Latham v. Edgerton, 9 Cow. 227; Bonnet v. Lachman, 65 Hun, 554; Ferguson v. Crawford, 70 N. Y. 253.) By the common law (and our attention is called to no statute of this State to the contrary) the dissolution of a defendant corporation, or a revocation of its charter pending suit, operates to abate an action and all proceedings taken therein. (Pendleton v. Russell, 144 U. S. 640; McCulloch v. Norwood, 58 N. Y. 562; People v. Knickerbocker Life Ins. Co., 106 id. 619; Matter of Palmer, 115 id. 493; Rodgers v. Insurance Co., 148 id. 34.)

The plaintiff claims, however, that the court bad jurisdiction to render judgment against the tread company, and calls our attention to a statute of the State of Hew Jersey as follows: “ All corporations, whether they expire by their own limitation or be annulled by the Legislature or otherwise ■dissolved, shall be continued' bodies corporate for the purpose of prosecuting and defending suits by or against them, and of enabling them to settle and close their affairs, to dispose of and convey their property and to divide their capital, but not for the purpose of continuing the business for which they were estab-. lished ” (Laws of 1896, chap. 185, § 53), but this statute does not aid the plaintiff, for while the corporate existence depends upon the law of its domicile, the question of continuing or reviving actions depends upon the law of the place where the action was brought, in the case at bar upon the laws of our own State, (Union National Bank v. Chapman, 169 N. Y. 538; Sturges v. Vanderbilt, 73 id. 384; Northern Pacific Railroad v. Babcock, 154 U. S. 190; Baltimore & Ohio R. R. Co. v. Joy, 173 id. 226.) In any event it is clear that the section did not govern the proceeding in an action pending at the time, but applied only to an action commenced after the dissolution, the procedure in a pending action being governed by section 59, which reads: “Any action, now pending or to be hereafter begun, against any corporation which may become dissolved before final judgment, shall not abate by reason thereof, but no judgment shall be entered therein except upon notice to the trustees or receivers of the corporation.” It is not pretended that this procedure was followed. The statute law of this State relating to the abatement of actions is found in sections 755-766 of the Code of Civil Procedure. The general statute relating to corporations and their dissolution does not apply to foreign corporations. (Coats v. Donnell, 94 N. Y. 168; Vanderpoel v. Gorman, 140 id. 563.) Section 755 of the Code of Civil Procedure provides that actions shall not abate if the cause of action survives; and section 757 (which applies to both foreign and domestic corporations [Wamsley v. Horton & Co., 12 App. Div. 312]) provides that in case of the death of a sole plaintiff or a sole defendant, if the cause of action survives, the action may be continued by or against the representative or successor in interest; and section 765 of the same title provides that the entry of a judgment against a party who dies before the verdict, report or decision is void. The effect of this section is to stay all further proceedings excepting only an application to the court for leave to continue the action.

It is contended by respondent that the court obtained jurisdiction to render the judgment because the company actually appeared by counsel on the trial and participated therein. The answer to this is that the attorney who appeared at the trial was the same attorney who represented the corporation when the.action was commenced, but his authority terminated with the death of his client — in this case with the dissolution of his client. (Wamsley v. Horton & Co., 87 Hun, 347.) It is also urged that where an attachment is issued the courts of this State • will retain jurisdiction notwithstanding the dissolution of the defendant foreign corporation. Conceding that this is true, the property in the State could not be reached except by the procedure created by our laws, which have been ignored. In' Willitts v. Waite (25 N. Y. 577), cited by respondent, the corporation had not been dissolved, and in Hammond v. National Life Assn. (58 App. Div. 453) the court held that the plaintiff, who claimed to have been appointed receiver' of a foreign corporation in this State after it had been dissolved by the court in the State of its domicile, could not be heard to say that an attachment was void, for if it was,, his appointment as receiver was likewise void.

It is also urged that the courts of this.State will not recognize a foreign corporation as extinct because of the revocation of its charter for non-payment of taxes, in the absence of a judicial decree to that effect. The two cases cited to sustain this contention (Kincaid v. Dwinelle, 59 N. Y. 548; New England Iron Co. v. Gilbert El. R. R. Co., 91 id. 153) each involve a domestic corporation which had not been dissolved, and they do not sustain respondent’s contention. Kincaid v. Dwinelle I regard as an authority to the contrary'. ■ The court says:. “ A corporation may by virtue of proceedings against it, or by reason of its pecuniary condition, cease to exist for all practical purposes, all the purposes for which it was created or for which a corporation may exist, but it cannot be held to be actually dissolved till so adjudged and determined, either by judicial sentence or the sovereign power.” In the case at bar the corporation was dissolved by the sovereign power.” . .

I am, therefore, of the opinion that the judgment against the defendant was void, and it follows that the judgment must be reversed and the complaint dismissed, with costs.

Jenks, P. J., Thomas and Carr; JJ., concurred.

Judgment reversed, and complaint dismissed, with costs.