Case Name: HALSEY v. HENRY JEWETT DRAMATIC CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-07-12
Citations: 99 N.Y.S. 1122
Docket Number: 
Parties: HALSEY v. HENRY JEWETT DRAMATIC CO.
Judges: 
Reporter: West's New York Supplement
Volume: 99
Pages: 1122–1127

Head Matter:
HALSEY v. HENRY JEWETT DRAMATIC CO.
(Supreme Court, Appellate Division, First Department.
July 12, 1906.)
Corporations—Foreign Corporation—Failure to Pay License Fee-Suit by Assignee.
Tax Law, Laws 1896, p. 856, c. 908, § 181, requires foreign corporations to pay a license tax as a condition precedent to maintaining any action in the state. Held, that the assignee of a foreign corporation cannot maintain an action on a contract made in the state, when the fee required had not been paid when the action was commenced, and the payment of such fee between the service of the complaint and answer was insufficient.
[Ed. Note.—For cases in point, see vol. 12, Cent. Dig. Corporations, §§ 2442, 2445.]
O’Brien, P. J., and Houghton, J., dissenting.
Appeal from Special Term, New York County.
Action by Henry C. Halsey against the Henry Jewett Dramatic Company. From a judgment overruling demurrers to certain defenses, plaintiff appeals.
Reversed.
Argued before O’BRIEN, P. J., and McLAUGHLIN, LAUGHLIN, CLARKE, and HOUGHTON, JJ.
Maxwell C. Katz, for appellant.
Nathan Ottinger, for respondent.

Opinion:
McLAUGHLIN, J.
The complaint in this action alleges that on the 38th of September, 1899, in the city of New York, the H. A. Thomas & Wiley Lithographing Company, a foreign corporation, entered into a contract with the defendant by which it agreed, for a specified consideration, to do certain lithographing, and deliver the same in the city of New York on or about the 30th of September following; that the defendant failed to perform by neglecting to make certain payments specified in the contract, and by reason thereof the plaintiff, the assignee of the lithographing company, is entitled to recover the damages alleged to have been sustained, for which judgment is demanded.
The defendant in its amended answer, and as a separate and distinct defense, alleges that on the 30th of June, 1898, the plaintiff's assignor, a foreign corporation, not exempt from the license fee required to be paid under section 181 of the tax law (Laws 1896, p. 856, c. 908), procured from the Secretary of State of New York a certificate of authority, as prescribed by section 15 of the general corporation law (Laws 1892, p. 1805, c. 687), authorizing it to do business in the state of New York; that it then and ever since has had an office and been engaged in business in such state; that the alleged cause of action set forth in the complaint, nor the alleged assignment thereof, did not accrue until more than 13 months after such contract was made; that, although such corporation was authorized to do business in the state of New York, it did not, nor did the plaintiff, as its assignee, prior to the commencement of the action, pay to the Treasurer of the State of New York the license fee required by section 181 of chapter 908, p. 856, of the Laws of 1896, as amended by chapter 558, p. 1364, of the Laws of 1901. By a supplemental answer the defendant alleges substantially the same facts, and, in addition thereto, that the action was begun on the 27th of June, 1901, and that the license fee was paid and a receipt obtained therefor on the 3d of July, 1902. The plaintiff demurred to each defense upon the gjround that the same were insufficient in law upon the face thereof. The demurrers were overruled, and the plaintiff appeals.
The questions presented are: (1) Whether the assignee of a foreign corporation authorized to do business in this state, and liable to pay a license fee therefor, under section 181 of the tax law, can maintain an action upon a contract made in this state when the fee required by the section referred to has not been paid when the action is commenced; and (2) whether such action can be maintained if the fee be paid intermediate the service of the complaint and answer.
The answer to the first question seems to be settled by the decision of Kinney v. Reid Ice Cream Co., 57 App. Div. 206, 68 N. Y. Supp. 325. It was there determined that an assignee of a foreign corporation stands in no better position than the corporation itself, and that unless the corporation can maintain an action its assignee cannot. This is a decision of the Second Department, but one which we should follow unless it has been overruled by the Court of Appeals, or is in conflict with a decision of our own department. It has not, so far as I have been able to discover, been overruled by the Court of Appeals, but it is contended by appellant's counsel that it is in conflict with at least two decisions of this department—Box Board & Lining Company v. Vincennes Paper Company, 45 Misc. Rep. 1, 90 N. Y. Supp. 836, affirmed, without opinion, 98App.Div.623, 90 N. Y.Supp.1089,andEmmerich Co. v. Sloane, 46 Misc. Rep. 513, 95 N. Y. Supp. 39, affirmed 108 App. Div. 330, 95 N. Y. Supp. 39, on opinion of court at Special Term. A reference to the record on appeal in the Box Board Company Case will show that the only thing which was necessary to a decision was that it was unnecessary to show affirmatively, in order to procure an attachment, compliance with section 15 of the general corporation law or section 181 of the tax law. A reference to the record in the Emmerich Case will show that the demurrer there interposed was that it did not appear from the complaint that the plaintiff had obtained the certificate authorizing it to do business in this state, as provided in section 15 of the general corporation law. It is true there are expressions in the opinions in each case which in some respects sustain the contention of appellant's counsel, but such statements were entirely unnecessary to the decisions, and are therefore, at most, mere dictum. That the Kinney Case was correctly decided is strengthened by the amendment which was subsequently made to section 181 of the tax law. The section was originally enacted by chapter 908, p. 795, of the Laws of 1896. The Kinney Case was decided in January, 1901, and on the 26th of April following the Legislature amended the section (chapter 658, p. 1364, of the Laws of 1901) by changing the amount of tax required to be paid, but in all other respects material in this case. The language of the amended section was identical with that in the original, and this notwithstanding section 15 of the general corporation law was amended by chapter 538, p. 1326, of the Laws of 1901, so as to make it applicable to an assignee. The Legislature is presumed to have had knowledge of the decision in the Kinney Case, and the construction which the court had put upon the statute, and the fact that it did not amend the section by making it applicable to the assignee of a corporation must be deemed a legislative interpretation of the section as it had been judicially construed, and that as it stood without amendment it appljed not only to a foreign corporation but its assignee. There is abundant authority for the proposition that the re-enactment of a statute which has previously received judicial construction in the same or substantially the same terms amounts to a legislative adoption of such construction. Pulitzer v. City of New York, 48 App. Div. 6, 62 N. Y. Supp. 587; Hakes v. Peck, 30 How. Prac. 104; People ex rel. Outwater v. Green, 56 N. Y. 466; United States v. Gilmore, 8 Wall. (U. S.) 330, 19 L. Ed. 396.
It has been held that, unless it appears in the complaint in an action brought by a foreign corporation that it has obtained the certificate referred to in section 15 of the general corporation law, facts are not stated sufficient to constitute a cause of action. Welsbach Co. v. Norwich Gas & Electric Co., 96 App. Div. 52, 89 N. Y. Supp. 284, affirmed 180 N. Y. 533, 72 N. E. 1152; Emmerich v. Sloane, supra. The objection, however, that a foreign corporation has not complied with section 181 of the tax law is a matter of defense, and must be taken by demurrer if it appears on the face of the complaint (section 488, Code Civ. Proc.), and by answer if it does not so appear (section 498, Code Civ. Proc.). If not taken by demurrer or answer, it is deemed to have been waived. Parmele Co. v. Haas, 171 N. Y. 579, 64 N. E. 440; Dunbarton Flax Spinning Co. v. G. & J. Ry. Co., 87 App. Div. 21, 83 N. Y. Supp. 1054. The language of section 181 of the tax law is that every foreign corporation not excepted, authorized to do business under the general corporation law, shall pay a license tax within the time prescribed, or else it shall not maintain any action in the courts of the state. The answers demurred to allege that this tax had not been paid when the action was commenced, and, if that be true, then the action cannot be maintained. The fact that the tax was paid after the action was commenced does not change the situation. The plaintiff had no right to bring the action, and, having brought it without right, he cannot, notwithstanding the payment of the tax thereafter made, continue and maintain an action which he, in the first instance, had no right to bring.
I am of the opinion, therefore, that the interlocutory judgment appealed from is right, and should be affirmed, with costs, with leave to the plaintiff to withdraw his demurrers on payment of costs in this court and in the court below. All concur, except O'BRIEN, P. J., and HOUGHTON, J., who dissent.