Case Name: Portland Company, Appellant, v. Hall & Grant Construction Company and Charles Ward Hall, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1908-01-10
Citations: 123 A.D. 495
Docket Number: 
Parties: Portland Company, Appellant, v. Hall & Grant Construction Company and Charles Ward Hall, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 123
Pages: 495–497

Head Matter:
Portland Company, Appellant, v. Hall & Grant Construction Company and Charles Ward Hall, Respondents.
First Department,
January 10, 1908,
Pleading — action by foreign corporation — allegations as to authority to do business.
A foreign corporation, suing on a contract made in this State, must allege and prove a compliance with section 15 of the General Corporation Law, governing the right of foreign stock corporations to do business and sue in this State.
Where a plaintiff, suing upon a contract made in this State, alleges that it is a foreign corporation, there is a presumption that it is a foreign stock corporation and within the prohibition contained in section 15 of the General Corporation Law.
Motion for a reargument of an appeal by the plaintiff, the Portland Company, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 28th day of Hovember, 1.906, upon the dismissal of the complaint by direction of the court at the close of the plaintiff’s case upon a trial at the New York Trial Term.
The opinion handed down upon the original argument of the appeal will be found in. 121 Appellate Division, 779.
Dallas Flannagan, for the appellant.
John Larkin, for the respondents.

Opinion:
Per Curiam:
The reason assigned for the reversal of this judgment was that, as it did not appear from the complaint that the plaintiff was a foreign stock corporation, and as that fact was not set up in the answer, the defense that the plaintiff had not complied with section 15 of the General Corporation Law (Laws of 1892, chap. 687 ) was not available. Since the decision in this case the Court of Appeals, in Wood & Selick v. Ball (190 N. Y. 217, decided December 17,1907), has held that a complaint in an action brought by a foreign corporation to recover upon a contract made within this State, which .fails to allege that the plaintiff lias received a license to do business within this State under section 15 of the General Corporation- Law-, does not state a cause of action. In that case it appearafrom the statement of facts that it was proved upon the tidal, without objection, thaif/. the plaintiff was a stock corporation. That fact, however, was not adverted to in the opinion, but it was stated that the case of Welsbach Co. v. Norwich Gas & Electric Co. (180 N. Y. 533) held that in an action by a foreign corporation to recover upon a contract made within this State the..complaint was 'demurrable if it failed to allege compliance with section 15 of the General Corpora; tion Law; that " such an allegation is essential in order to set forth a cause of action,, and the objection'that the complaint does'not state- - facts sufficient to constitute a cause of action is not waived by the ^ failure to raise it by demurrer or answer." . In. deciding this case . we applied a rule which vve. supposed was well settled, that in order to support an objection to a cause of action sought to be maintained in violation of a statutory prohibition, the facts upon which that - objection depended must appear in the pleadings. This general • rule is instanced by the defense of usury, where the-statute makes the contract actually void where excessive interest is paid or agreed to be paid-for a loan of money; by the'Statute of Limitations, which must be pleaded, and by the Statute of Frauds; by which contracts . of certain classes are not enforcible unless in waiting. In this, class of cases wm have understood that unless the facts upon which the alleged invalidity of the contract was -based were alleged \ in the pleadings the defense was not available. It Avould seem that in applying' this rule to an action prohibited by section 15.. of the General Corporation Law,- we .were in error that where ^ it is alleged that the plaintiff is a foreign corporation, there-is a presumption that it is a foreign stock corporation and thus within the prohibition contained in section 15 of the General Corporation Law. The basis of this presumption would appear from the case of South Bay Co. v. Howey (190 N. Y. 240, also decided. December II, 1901) to. be that as a corporation organized under the laxvs of the State of Nbav York could not have been organized to do the business in which the corporation in'question was engaged under the Membership Corporations Law (Laws of 1895, chap. 559), it must be pré sumed that no corporation not a stock corporation could be organized under the laws of any other State to do such business. The court in that case said : " The plaintiff could have been incorporated^ in this State as a stock corporation, and it could not. have been incorporated in this State for manufacturing purposes under the ! Membership Corporations Law. It will be assumed that its incorporation in another State was for the purpose of exercising the lights and performing' the work in which it was engaged for pecuniary profit;" although membership cprporations authorized to make contracts, such as mutual insurance companies, have been incorporated'in this State. In view of this final determination of the question by the Court of Appeals, and as by it the rule is established that "compliance with section 15 of the General Corporation Law should be alleged arid proved by a foreign corporation such as the plaintiff, -in order to establish a cause of action in the courts of this State," and " the cases holding otherwise should be regarded as 'overruled and the conflict of authority ended " (Wood & Selick v. Ball, supra), this court should of its own motion order a reargument in this case, so that it can be decided in compliance with the principle established by the Court of Appeals in the case above cited.
A reargnment is, therefore, ordered.
Present — Pattekso'n, P. J., Ingraham, Laughlin, Clarke and Scott, JJ. "
Reargument ordered. Settle order on notice.
See Laws of 1830, chap. 687, § 15, as amd. by Laws of 1901, chaps. 96, 538, and Laws of 1904, chap. 490.— [Rep,