#### Walter Althause, Respondent, *v.*The Guaranty Trust Company of New York, Appellant.

(Supreme Court, Appellate Term, First Department,

November, 1912.)

Stock Corporation Law, § 33 — penalty for refusal of a corporation to exhibit its stock book — foreign corporations.

The provisions of section 33 of the Stock Corporation Law, imposing a penalty for the refusal of a foreign corporation to exhibit its stock book for the inspection of a stockholder, have no application to a foreign corporation which has no office in this state for the transaction of business.

*182Where a foreign corporation, having no office in this state, employed defendant, a trust company in the city of New York, to deliver stock certificates executed in blank to persons who should surrender an equivalent amount of old certificates properly indorsed, actual transfer of the stock being made at the home office of the corporation, the office of its stock transfer agent is not in any sense the office of the corporation “ for the transaction of business ” within the meaning of section 33 of the Stock Corporation Law, and said agent is not liable for the penalty provided by said section for a refusal to permit a stockholder to inspect a so-called stock book of said corporation, which, while containing a list of stockholders, the number of shares held by them, respectively, and the time when they became stockholders, docs not show the amount paid on such stock.

Gut, J., dissents.

Appeal by the defendant from a judgment of the Municipal Court of the city of Hew York, borough of the Bronx, second district, in favor of plaintiff, awarding him $250 as the penalty provided in section 33 of the Stock Corporation Law.

Davies, Auerbach, Cornell & Barry (Julien T. Davies and Herbert Barry, of counsel), for appellant.

James A. Allen, for respondent.

Bijur, J.

There is no dispute as to the facts involved in this case. The American Woolen Company is a Hew Jersey corporation having its main office, where it keeps all its books, including its ultimate stock transfer book, in the state of Hew Jersey. It has no office in the state of Hew York, and so far as appears does no business here. It employs the defendant as a stock transfer agent, delivering to such agent certificates of stock duly executed in blank which the agent in turn delivers to persons who surrender an equivalent amount of old certificates properly indorsed. The actual transfer of stock is made at the Woolen Company’s Hew Jersey office. The transfer agent has a so-called stock book of the Woolen Company, which contains an alphabetical list of stockholders, their place of *183residence, the number of shares held by them, and the time when they became stockholders, but does not show the amount paid upon such stock.

Plaintiff, a stockholder, duly demanded of defendant an opportunity to inspect such book during business hours and was refused. Both sides agree that the issue raised is the construction of section 33 of the law as applied to this situation. The statute so far as involved here, reads: “ Every foreign stock corporation having an office for the transaction of business in this state, except moneyed and railroad corporations, shall keep therein a book to be known as a stock book. * * * Such stock book shall be open daily * * * for the inspection of its stockholders. * * * If any *such*foreign stock corporation has in this state a transfer agent * " "" such stock book *may*be deposited in the office of such agent and shall be open to inspection” in the same way. The penalty for refusal to exhibit the book is $250.

The respondent contends that the function exercised by the transfer agent is the *“*transaction of business ” within the state, in the sense in which the term is used in the statute; and that, consequently, the transfer agent is liable for the penalty in the case at bar. I am, by no means, prepared to accept that definition of the phrase “ transaction of business,” although it is supported by People ex rel. Miles v. Montreal & Boston Copper Co., 40 Misc. Rep. 282. On the other hand, a contrary view is indicated in Honeyman v. Col. F. & I. Co., 133 Fed. Rep. 96, and Union Trust Co. of Rochester v. Sickels, 125 App. Div. 105.

However, respondent’s contention in this respect is somewhat beside the point. The statute imposes no obligation upon a foreign stock corporation which transacts business in this state, but only on one *“ having an office for the transaction of business in this state ”*and that distinction is recognized in Hovey v. DeLong Hook & Eye Co., 147 App. Div. 881, in which the prevailing opinion, interpreting this very section, holds that it is the having of the office for the transaction of its business, and not the doing of the business or the extent thereof, which determines the application of the law.

*184The real question, therefore, is whether, through leaving its blank stock certificates and its stock book with the defendant herein, the American Woolen Company “ has an office for the transaction of business in this state,” a question which I think the language and context of the law require to be answered in the negative. The statute provides, in substance, that if a foreign corporation *has*an office in this state, it shall keep a certain book *therein;*and adds, that if any *such*foreign corporation, namely one having an office in this state, has a transfer agent also, it “ may,” *at its*option, deposit the stock book *in the office of such agent.*Plainly two offices are contemplated: the one which the foreign corporation *has-,*and the other the office of the agent.

The structure of the sentence points to the same conclusion. If the legislature had contemplated that every foreign corporation having merely a transfer office in this state should keep a stock book, the statute would have read: “ Every foreign stock corporation having an office, etc., in this state, and every foreign stock corporation having a transfer agent in this state, shall keep either in its own office or the office of such agent, respectively, such stock book, etc.”

Finally, I do not see how, without doing violence to the commonly accepted meaning of ordinary terms, the office of a trust company in this city with which the American Woolen Company has some administrative arrangement for exchanging stock certificates, can be denominated or regarded as the office of the American Woolen Company — whether for the transaction of business or otherwise. To have an office implies, in ordinary or in techanical parlance, to have that control of an office which an owner or lessee, or, at least, a common licensee, would exercise; and, in the case at bar, no such control is indicated or even supposable.

The judgment should be reversed, with costs, and the complaint dismissed, with costs.

Seabury, J. (concurring).

This is an.action to recover a penalty under section 33 of the New York Stock Corporation Law. The action is brought by the plaintiff as a stockholder of the American Woolen Company against the *185Guaranty Trust Company of New York, upon the ground of an alleged refusal by the defendant to permit the plaintiff to examine certain books kept by the defendant as a “ transfer agent ” of the American Woolen Company. Section 33, as I understand it, refers only to a foreign corporation having an office for the transaction of business in this state. The duty to deposit the stock book with the transfer agent, which is imposed by this section, applies only to *“*such foreign corporations.” It is conceded that the American Woolen Company is a foreign corporation, and that it has no office for the transaction of business in this state, unless the transactions conducted by the Guaranty Trust Company of New York may be construed as a matter of law to constitute the transaction of business by the American Woolen Company in the state of New York. The Guaranty Trust. Company of New York was the agent of the American Woolen Company in New York only for the purpose of receiving certificates of stock as an incident to their transfer, and for delivering new certificates after the transfer had been made' in the state of New Jersey. This single duty, which the American Woolen Company employed the Guaranty Trust Company of New York to perform in this state, does not establish that the American Woolen Company had *“*an office for the transaction of business in this state.” It follows that the defendant trust company did not have in its custody or control any “ stock books,” which the stockholders of the American Woolen Company were entitled to inspect under the provisions of section 33 of the New York Stock Corporation Law. Whatever may be the rule on this question which shall ultimately be adopted, I feel that this court should adhere to the rule applied in Hovey v. Lawyers’ Title Insurance Co., App. Term, December, 1911, affirming a judgment involving this precise question.

The judgment appealed from should be reversed with costs, and the complaint dismissed, with costs.

Guy, J. (dissenting).

Plaintiff sues as a stockholder of a foreign corporation to recover the penalty provided by section 33 of the Stock Corporation Law for refusing to permit *186a stockholder to inspect the stock book of a foreign corporation deposited in this state, pursuant to the provisions of said law.

The foreign corporation in question is the American Woolen Company, a Hew Jersey corporation, of which plaintiff was admittedly a stockholder at the time when he demanded an inspection. There is no proof that said company has an office in this state for the transaction of other business, or does actually transact other business within the state, than as connected with the transfer of its shares of stock through the defendant, its transfer agent. The method followed in connection with such transfers is that' the American Woolen Company delivers to the defendant certificates of stock duly executed in blank, which the defendant, in turn, delivers to persons who surrender an equivalent amount of old certificates properly indorsed, the actual entry of the transfer of stock being subsequently made at the office of the American Woolen Company in Hew Jersey.

The issue raised upon this appeal is the construction of section 33 of the Stock Corporation Law, which, so far as it is applicable to the present case, provides as follows: “ Every foreign corporation having an office for the transaction of business in this state * * * shall keep therein a book to be known as a stock book * * * such stock book shall be open daily * * * for the inspection of its stockholders * * * . If any such foreign corporation has in this state a transfer agent * * * such stock book may be deposited in the office of such agent and shall be open to inspection” in the same way; and the act prescribes a penalty of $250 for refusal to exhibit the book upon demand during business hours.

It is contended by the defendant-appellant that the having an office for the transfer of stock in this state does not bring the foreign corporation within the meaning of the statute, and it cites in support of.this contention several decisions of the federal courts holding that such an office would not constitute *doing business within the state*to an extent which would subject such corporation to service of process here. But section 33 is not made applicable merely to foreign cor*187porations doing business within the state; it applies to all such corporations having an office for the transaction of business in the state, and directs that they shall keep a stock book in such office. The statute further provides, as an alternative, that any such foreign corporation having a transfer agent in this state, may deposit the stock book with the transfer. agent, and that such book shall be “ open for inspection,” meaning thereby that .when such stock book shall have been deposited by a foreign corporation with its transfer agent in this state, such book shall be deemed to have been so deposited pursuant to the provisions of the statute, and shall be open to inspection, and that the custodians thereof shall be liable under the penalty prescribed in the statute for a refusal to permit its inspection by a stockholder upon proper demand.

One of the purposes of the statute is to protect the rights of residents of this state, who are stockholders of foreign corporations, wherever such foreign corporations can be brought within the jurisdiction of this state, to the same extent that our laws protect stockholders of domestic corporations.

The business to which the statute refers is not merely general business, such as is contemplated by other provisions of our laws relating to taxation and the *doing of business*within the state by foreign corporations, but such business as is customarily transacted either directly or through transfer agents, between foreign corporations and resident stockholders thereof, such as the surrender by the stockholders of old certificates and receiving new certificates in lieu thereof. The fact that the actual transfer is entered upon the books of the corporation subsequently in a foreign state is immaterial. The business of the transfer is transacted here, and the transfer agent’s office is an office established by the corporation for the transaction of such business within the meaning and purpose of the statute. In this case the foreign corporation has recognized its duty by actually depositing a stock book with its transfer agent, and the statute directs the custodian of such book, so deposited by the corporation in obedience to the statute, or by reason of the *188permissive provisions of the statute, to keep it open for inspection by stockholders. The corporation having availed itself of the permission of the statute and brought itself voluntarily within the jurisdiction of the state for that purpose, it does not lie with the custodian of such book to question the statute.

In Miles v. Montreal & Boston Copper Co., 40 Misc. Rep. 282, 285, in a learned opinion by Mr. Justice Leventritt, this court bas decided that the having of a transfer agent within the state for the purpose of accepting the surrender of old certificates and the issuance of new certificates is having an office for the transaction of business within the meaning of the statute; and I entirely concur in that opinion. But, irrespective of that, the book is now within the jurisdiction of this state, having been deposited by the foreign corporation in a place designated by the statute, and is, in the hands of the custodian thereof, subject to the provisions of the statute.

The defendant, therefore, having, by refusal to obey the statute, rendered itself liable for the penalty prescribed thereunder, the judgment appealed from should be affirmed with costs.

Judgment reversed, with costs, and complaint dismissed, with costs.