Case Name: Henry W. Mahar, Appellant, v. Harrington Park Villa Sites, a Corporation, and Laura A. Skinner, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1911-11-03
Citations: 146 A.D. 756
Docket Number: 
Parties: Henry W. Mahar, Appellant, v. Harrington Park Villa Sites, a Corporation, and Laura A. Skinner, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 146
Pages: 756–759

Head Matter:
Henry W. Mahar, Appellant, v. Harrington Park Villa Sites, a Corporation, and Laura A. Skinner, Respondents.
First Department,
November 3, 1911.
Corporation — action against foreign corporation not authorized to do business here — contract made ■ in this State invalid — recovery of money paid on void contract — pleading — complaint — allegations showing that defendant did business here without authority.
Where a foreign, stock corporation, other than a moneyed corporation, does business in this State without being authorized to do so, as required by section 15 of the General Corporation Law, its contracts made in this State are illegal and void.
Where a resident of this State pays money on such void contract he may sue to recover it.
A single transaction by a foreign corporation in this State does not necessarily constitute' doing business here; but if. it be part of a general attempt to transact business in violation of the statute, the first transaction is as illegal as subsequent ones.
A complaint in an action to recover from a foreign corporation moneys paid on a .contract by the plaintiff to purchase lands owned by the defendant in a foreign State, which alleges in substance that the defendant is a foreign corporation other than a moneyed corporation, has an office for the transaction of business in this State, that the transactions relating to the agreement took place in the State, an'd that the. defendant at the time had not complied with the requirements of section 15 of the General Corporation Law, so as to entitle it to do business here, sufficiently shows on demurrer that the defendant was doing business in this State without authority.
Dowling and Clarke, JJ., dissented, with memoranda.
Appeal by the plaintiff, Henry W. Mahar, from an order of the .Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on the 23d day of March, 1911, reversing a judgment of the Municipal Court of the city of New York in favor of the plaintiff.
Robert Lyon, for the appellant.
Alexander Thain, for the respondents.

Opinion:
Scott, J.:
This is an appeal from a determination' of the Appellate Term, reversing a judgment of the Municipal Court in favor of plaintiff against both defendants. The 'cause came to trial upon a written complaint and a demurrer thereto for general insufficiency. The complaint alleged that at the city of New York on divers dates the plaintiff had various meetings and negotiations with defendants regarding the sale by defendants of certain real property situated at Harrington Park, N. J., and that on July 27, 1909, the defendants and plaintiff entered into a written agreement for the sale to plaintiff of the above-mentioned property; that said contract required plaintiff to pay to the defendant Harrington Park Villa Sites as part payment on said contract the sum of $500, and plaintiff delivered to the defendant Harrington Park Villa Sites, to its order or Laura A. Skinner, a check for $500 which was afterwards paid. It is then alleged as follows: "Fourth. That the defendant Harrington Park Villa Sites, at the times named was a foreign corporation, other than a money corporation, organized and existing under the laws of the State of New Jersey, and had an office for the transaction" of its business in the City and State of New York, and that the transaction relating to and the making of the agreement above named took place in the said City and State of New York.
" Fifth. That at the time of holding the last negotiations, and the making of said agreement, the defendant, Harrington Park Villa Sites, had not filed with the Secretary of the State of New York the statement required by law, and had not paid the tax nor obtained a certificate to enable it as a foreign stock corporation other than a money corporation, to do business in the State of New York, and at said times was doing business in violation of section 15 of the General Corporation Laws of the State of New York." Demand and non-payment are duly-alleged.
The plaintiff relies upon the following provision of section 15 of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28): "No foreign stock corporation; other than a' moneyed corporation, shall do business in this State without having first procured' from the Secretary of. State a certificate that it has complied with all the requirements of law to authorize it to do business in this State." His contention is that under the statute the defendant corporation is absolutely forbidden to do business in this State, and consequently that any contract attempted to be undertaken by it in contravention of the statute. is illegal and void, and affords no. consideration for the payment of money to it. If the contract is void the plaintiff took nothing for the money which he paid, and theré was a failure of consideration, and an action to recover back the money paid will lie. (Flandrow v. Hammond, 148 N. Y. 134.) That the .contract was illegal seems to be definitely settled by the decision of the Court of Appeals in Wood & Selick v. Ball (190 N. Y. 223) in which the court had occasion to consider the effect of the statute quoted above. " Aside from the provision withholding legal remedies no such corporation can lawfully make contracts in this State without obtaining the certificate in advance. These are the conditions upon which it is permitted to enter the State for the purpose of carrying on business. Until it complies with them and procures a certificate from the Secretary of State that it has' complied with them it cannot carry on business here, except in violation of law. The command is that it ' shall do no business in this State without first ' procuring the certificate of compliance. 'Without ' as thus used is a word of exclusion, and excludes from the right to do business in this State every foreign corporation of the kind' specified which has not obeyed the statute.
' The Legislature has said that the thing shall not be done and that is enough.' " It is true that a single transaction does not necessarily constitute such a doing of business as is forbidden by the statute. (Penn Collieries Co. v. McKeever, 183 N. Y. 98.) Whether or not it does fall within the statute depends upon whether it constitutes a part of a general attempt- to transact business in violation of the, statute. If it does the first transaction is as -illegal as the second or third or twentieth. Since the question before us arises upon demurrer we must accept the allegations of the complaint as confessed.. These allegations are, not only that the transaction in question took place in this State, but also that the defendant corporation had " an office for the transaction of its business in the City and State of New York," and "was doing business" in this State. From these allegations the fair inference is that the transaction with plaintiff was entered into as a part of a general scheme to do business in this State. We are unable to see that the complaint states any cause of action against the individual defendant Laura A. Skinner.
It follows that the determination appealed from must be affirmed, with costs, as to the defendant Laura A. Skinner. As to the defendant Harrington Park Villa Sites, it must be reversed and the judgment of the Municipal Court affirmed, with costs to plaintiff in this court and in the Appellate Term, with leave, however, to said defendant to withdraw its demurrer and to answer within twenty days upon payment of said costs and the costs included in the judgment of the Municipal Court.
Ingraham, P. J., and Laughlin, J., concurred; Dowling, J., dissented in memorandum; Clarke, J., dissented on last ground stated by Dowling, J,