Case Name: New-Hope Delaware Bridge Company vs. The Poughkeepsie Silk Company
Court: New York Supreme Court of Judicature
Jurisdiction: New York
Decision Date: 1841-10
Citations: 25 Wend. 648
Docket Number: 
Parties: New-Hope Delaware Bridge Company vs. The Poughkeepsie Silk Company.
Judges: 
Reporter: Wendell's Reports
Volume: 25
Pages: 494–496

Head Matter:
New-Hope Delaware Bridge Company vs. The Poughkeepsie Silk Company.
A foreign corporation keeping an office in this state for receiving deposits and discounting notes without being expressly authorized by the laws of this state to do so, cannot maintain an action for the money loaned either on a note or other security token on such loan, or on the count for money lent.
The cases in this court avoiding the note, but allowing a recovery on the count for money lent, questioned.
Demurrer to declaration. The plaintiffs, describing themselves, as the president and managers of the New-Hope Delaware Bridge company, a foreign corporation duly and legally created by the laws of the state of New-Jersey, declared in assumpsit for $30,000 for money lent and advanced. The defendants pleaded as to $15,333.75, parcel of the said sum of $30,000, the plaintiffs ought not to have or maintain their action, because they say that at the several times of the loan of the said sum of $15,333.75 the plaintiffs being a foreign corporation created by the legislature of [ *649 ] the *state of New-Jersey, kept an office in the city of New-York for the purpose of discounting notes and bills, and issuing the promissory notes, commonly called bank notes, of the New-Hope and Delaware Bridge Company, and other promissory notes and evidences of debt to be put in circulation as money at and in the said city and county of New-York; the said company not being thereto authorized by law. The defendants then go on and aver the discounting by the plaintiffs at their office of various promissory notes made by the defendants, amounting together to the sum of $15,833.75; and as to the residue of the sum of $30,000 they plead non assumpsit. To this plea the plaintiffs answered by demurring to all that part of it which relates to the sum of $15,333.75; and as to the residue, they say that the defendants did promise, &c. The defendants joined in the demurrer.
S. A. Foot, for the plaintiffs,
insisted that though the notes , taken on the loan of the moneys which the plaintiffs claim to recover may probably be void under the decisions heretofore made by this court, still the court have repeatedly held, that under similar circumstances the action may be sustained on the common count for money lent, 8 Cowen, 20 ; 3 Wendell, 296 ; 4 Id. 652. These cases have never been directly overruled, although there have been intimations looking that way. It is submitted, however, whether the legislature could have intended to place foreign corporations on a footing different from our own corporations ; and if they did so intend, whether the act prohibiting foreign corporations from keeping an office in this state, and loaning money, when by their charters they are authorized to carry on such business in the states where they are granted, is a valid act, and can be sustained in reference to the rights of the citizens of this Union. 1
S. Stevens, for the defendants,
relied upon 1 R. S. 708, § 6 and 7, which prohibit persons and bodies corporate, except such as are expressly authorized by law from keeping an office for the purpose of discounting notes, or issuing bills *as private bankers for the purpose of loan- [ *650 ] ing them, and subject parties offending to a penalty of $1,000. He also cited 2 R. S. 373, § 2, by which it is enacted, that where by the laws of this state any act is forbidden to be done by any corporation, without express authority by law, and such act shall be done by a foreign corporation, it shall not be authorized to maintain any action founded upon such act, or upon any liability or obligation express or implied, arising out of, or made or entered into, in consideration of such act. He further insisted, that independent of the statute last cited, an action would not lie to recover the money loaned, cited 17 Wendell, 173 ; and 20 Id. 390, S. C. in error.

Opinion:
By the Court,
Nelson, C. J.
This action is brought to recover a large sum of money loaned to the defendants on discounting promissory notes in express violation of the restraining act, which prohibits all corporations not authorized by the laws of this state from keeping an office for the purpose of discount or deposite. 1 R. S. 708, § 6.
It is insisted that though the securities for the moneys loaned be void, the contract of the loan itself is valid, and may be enforced according to several cases decided by this court, viz. 8 Cowen, 20 ; 3 Wendell, 296; 4 Id. 652. Whether the doctrine of these cases is well founded and may be upheld upon established principles or not, or whether the result was not materially influenced by the peculiar phraseology and powers of the charter of the Utica insurance company, in respect to which they arose, it is not necessary at present to examine. I am free to say in either aspect I should have great difficulty in assenting to them. See 7 Wendell, 276 ; 17 Id. 173 ; and 20 Id. 390.
It is sufficient here that the plaintiffs are met by a positive enactment of law. In 2 R. S. 373, § 2, it is provided that where by the laws of this state any act is forbidden to be done by a corporation, or any association of individuals, without express authority of law, and such act be done by a foreign corporation, it shall not be authorized to maintain any action found- ed upon such act or upon any liability or obligation, express or [ *651 ] implied, arising out of, or made, or entered 'into, in consideration of such act. How this company is prohibited from keeping an office for the purpose of receiving deposits or discounting promissory notes. They have kept such an office and loaned the money in question in pursuance thereof, as conceded by the demurrer. The contract of loan has grown out of the prohibited act; it was the very purpose for which the illegal act was committed.
Judgment for defendant.