Case Name: South Bay Company, Appellant, v. William J. Howey, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-05-11
Citations: 113 A.D. 382
Docket Number: 
Parties: South Bay Company, Appellant, v. William J. Howey, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 113
Pages: 382–388

Head Matter:
South Bay Company, Appellant, v. William J. Howey, Respondent.
First Department,
May 11, 1906.
Corporations --- pleading when foreign corporation need not " allege authority to-do business in this-State — in order to bar suit by corporation not authorized to do business it must be shown to be a stock corporation — place of contract of insurance determined by delivery of ' policy — a foreign corporation by insuring its buildings in this State is not doing business in this State. .
When it does not appear in the complaint of a foreign corporation suing in this State that it is a stock corporation, the complaint should not be dismissed because it does not set out. that the corporation was authorized to do business in this' State as required by section 15 of the General Corporation Law. The presumption is that a foreign corporation has a right to sue in this State, and none but foreign'stock corporations are within the prohibition.
Mor does proof at trial that the plaintiff did business within the State bring it within, the prohibition of said section 15, if it be not also proved- that the pl.iintiif was a foreign stock corporation.
A provision in a policy of fire insurance that an action thereon must be brought in the Supreme Court of the county of New York is not a 'waiver by the insurance company of any defense available under section 15 of the General Corporation Law.
A policy of fire insurance executed in this State and'issued to aforeign corporation by a New York company, is not a contract made in this State within the terms of said statute, unless it is shown to have been delivered here. It is the delivery, not the execution of the contract, that determines the place where it is made.
Moreover, a contract of fire insurance issued on property in this State owned by a foreign corporation, is not a contract the enforcement of which is forbidden by said statute, unless the foreign corporation be authorized to do business here. The contracts on which suit is forbidden are those made as part of a general business, and a contract for the protection of corporate property is not of that nature.
O’Brien, P. J., and Clarke, J., dissented.
Appeal by the plaintiff, the South Bay Company; from an order of the Supreme Court, made at the New York Trial Term and entered in the office of the clerk of the county of New York on the 8th day of January, 1906, setting aside the verdict of a jury in favor of the plaintiff rendered by direction of the court after a trial at the New York Trial Term.
John David Lannon, for the appellant.
Mortimer M. Menken, for the respondent.

Opinion:
Ingraham, J.:
The first question presented on this appeal is whether a cause of action was alleged without an allegation that the plaintiff had obtained from the Secretary of State a certificate that it had complied with the requirements of law which authorized it to do business in this State.
In Parmele Co. v. Haas (171 N. Y. 581) it is said that " when a foreign corporation brings a suit in the courts of this State and states a good cause of action in the complaint, it will be assumed that it is rightfully in the State and properly in court Until the contrary is- .made' to- appear." Welsbach Co. v. Norwich Gas & El. Co. (96 App. Div. 52 ; affd., 180 N. Y. 533) held on demurrer to the complaint that obtaining such á certificate being a condition precedent to maintaining an action in the courts of this State, it was a fact necessary to be proven and, therefore, necessary to be alleged. In the opinion in the Welsbach Go. case it- was stated that it appeared from the complaint that the corporation wás a foreign stock corporation within the provision of section 15 of the General Corporation Law (Laws of 1892, chap. 687), as amended by chapter 538 of the La-ws of 1901, and the decision of the court rested on that assumption. It, therefore, appeared from the complaint that the plaintiff was not rightfully within this State and not properly in court, and it follows that no cause of action was alleged. .
' The fact that the plaintiff was a foreign stock corporation, within the provision of section 15 of the General Corporation Law (as amd. supra), did not appear in the. complaint in this case. The only allegation in this complaint is that the plaintiff is a foreign corporation. The defendant is a resident of this State., Section 1779 -of the Code of Civil Procedure provides that " An action may be maintained by a foreign corporation, in like manner, and subject to the same regulations, as where the action is.brought by a domestic_corporation, except as. other wise specially prescribed by law." The complaint' alleges that the plaintiff is a foreign corporation, and that being con- ceded, it had a right to bring this action, unless restricted by section 15 of the General Corporation Law (as amd. supra) which applies - only to stock corporations. I think, therefore, that as it did not appear from the complaint that the plaintiff was"a stock corporation, the motion that the complaint should be dismissed because it did not state facts sufficient to constitute á cause of action was, properly overruled.
It- was then proved that the plaintiff did business within this íátaté, and one of the facts necessary to bring it within .the provision " ¿f 'séction'15 of the General Corporation Law (as amd. supra) was' proved, but there was no proof that plaintiff was a stock corporation., I do hot know, that there is any presumption of law that a membership corporation organized under the laws of the State of 27ew' Jersey could not engageJn business as a manufacturer of' &nd dealer in fish fertilizers. I agree with the court below that the provision of 'the policy as to the maintenance of actions in the Supreme Court of the county of Mew York was not a waiver of- this prohibition contained in the statute which is for the benefit of the State and not for parties to contracts; but to entitle a defendant to a dismissal óf a complaint on this ground, it must appear in the record that the plaintiff is a stock corporation. If that fact did not appear from the complaint, it must be proved upon the trial. The answer alleged that plaintiff was a stock corporation, but failed to prove that fact, and defendant was not, therefore, entitled to a dismissal of the complaint on that ground.
Mor does it appear in the record that the contract sued on, viz., the policy of insurance, was made by the defendant in this State; The statute provides that no foreign, stock corporation doing business in this State shall maintain any action in this State upon any contract made by it in this State, unless prior to the making of, such contract it shall have procured the certificate. The complaint ' alleges that the defendant and others by their attorney "or deputy attorney, duly authorized thereto, made and delivered to the plaintiff a policy of insurance by which they agreed to indemnify the plaintiff against loss or damage by fire. The answer admits the making of the contract; but when and where it was made is not alleged. The contract sued on is annexed to the complaint. In the attestation clause it is stated that " In, witness whereof, the said underwriters have hereunto respectively subscribed their names and the several sums insured by them separately subject to the limitations herein stated as to their individual liability, by their attorney or their duly authorized deputy, at the city of Mew York, this 21st day of August, 1902." .
It, therefore, appeared that the instrument was subscribed by the defendant's attorney in fact in the city of Mew York, but its delivery was an essential part of the contract and it did not become a contract with the plaintiff until it was delivered. The plaintiff did not, execute the policy of insurance and, therefore, delivery was essential to the making of the contract. It does not appear in this record that the "contract was made by the plaintiff, a foreign corporation, by a delivery to it of the policy within this State. The prohibition extends Only to contracts made by the foreign corpora-, tioii within this State. A contract of" insurance is made by the .insured when the contract is .delivered to him-and the premium paid, or agreed to be paid. There is certainly no presumption that an insurance company makes its contract of insurance at its home office. Many foreign insurance companies do business within this State and make many contracts of insurance here, and many domestic'insurance companies make contracts of. insurance in other States and.countries, and thus contracts of insurance are made in the State or country in which (¡he policy is delivered. The plaintiff being a foreign corporation, and the defendants having a home office in this "State and executing a policy here but, delivering it in another State, the contract would clearly be a Contract made within the State where the policy was delivered, and thus not a-contract made within this- State.
Applying the principle established in Parmele Co. v. Haas (171 N. Y. 581), that " Before these statutes were passed the plaintiff could maintain this ^action under general provisions of law containing no restrictions whatever of the character referred to; " that " The statutes in themselves give no right of action and are not essential elements of the cause- of action stated- in the complaint; " that " They are mere revenue .-regulations, compliance with which is made necessary in .order -to acquire the right to do business here and to enforce causes of action in our courts;" that " They may possibly be matters .of defense, but not essential to be stated as part of the cause of action or right to sue; " and that " When a' foreign corporation brings a- suit in the courts of this State and states a good cause of action in the'complaint it will -be assumed 'that it is rightfully in the State and properly-in court until the contrary is made to appear)" unless it appears in tlfe record that .the contract sued on is a contract made by the - plaintiff within this. State, the objection would'not prevent the plaintiff from maintaining its action. The Welsbach Co. Case (Supra), relied on by the. defendant, does not in any way overrule the Pa/rmele Co. case, for the question there arose upon a demurrer to the complaint, and in deciding, the question the court assumed that from the complaint it appeared that the contract sought to be enforced was within the statute prohibiting such a contract from being enforced in the courts-of this Staté; The defend- ant did not demur to this complaint, but answered, alleging.as an affirmative defense that the contract sought to be enforced was within the prohibition of the .statute. It was thus bound to prove the facts bringing the contract to be enforced within the statute, and having failed to prove that this contract was delivered within this State, there was no proof that the defendant made the contract here, and that the contract was one which a foreign corporation could not enforce here.
In this connection the question arises whether a contract of insurance is such a contract as was embraced' within the prohibition contained in suction 15 of the General Corporation Law (as amd. supra). . The policy of insurance was not a contract made in the usual course of its business carried on here. The intent of the statute is to prevent a foreign corporation from transacting within this -State the -business for which the'corporation was organized without having procured the certificate therein required. I nssume that a foreign corporation, having property in this State, could enter into a contract with an insurance company to insure that property without-violating this statute, and although such a corporation did business in this State, a contract of insurance would not be a violation of the statute as a contract incapable of enforcement here. I assume that if this corporation had made a contract to sell its manufactured plants in this State, and liad taken a mortgage to secure the payment of the purchase money, this statute would not prevent the enforcement of such a mortgage; and so a contract by a foreign corporation, having property within this State, with an insurance company to indemnify it against a destruction of that property by fire, is not a contract relating to its business, which is prohibited by this statute. The prohibition as to a foreign stock corporation enforcing contracts made in this. State must be read in connection with the provision of the statute which prohibits a foreign stock corporation, other than a moneyed corporation, from doing business in the State and making contracts in relation to such business. It appears that this company was engaged in manufacturing fertilizers in tliis State.' Undoubtedly, the sale of such goods here without , obtaining the certificate would be prohibited by this provision of the statute, and maintaining an action for the recovery of the purchase price of such goods manufactured and sold in the regular course' of its business in this State is prohibited; but when it comes to the ordinary contracts for the protection of its property, not a part óf its. general business, such contracts are not within those contemplated by this provision. '
For these reasons; I think the order, setting aside the verdict and granting a new trial should be reversed, and the motion to set aside the verdict denied, with costs, . -
, McLaughlin and Houghton, JJ., concurred; O'BriEn, P. J., and Clarke, J., dissented.
Order reversed arid motion denied, with costs. Order filed.