Case Name: Le Roy F. Hovey, Respondent, v. The De Long Hook and Eye Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1911-12-29
Citations: 147 A.D. 881
Docket Number: 
Parties: Le Roy F. Hovey, Respondent, v. The De Long Hook and Eye Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 147
Pages: 881–891

Head Matter:
Le Roy F. Hovey, Respondent, v. The De Long Hook and Eye Company, Appellant.
First Department,
December 29, 1911.
Corporation — foreign corporation — refusal to allow inspection of stock book — penalty — constitutional law — interstate commerce.
Section 33 of the Stock Corporation Law, requiring foreign stock corporations, other than moneyed and railroad corporations, having an office for the transaction of .business in this State, to keep a stock book containing the names of stockholders and imposing a penalty for- a refusal to allow an inspection of said book by stockholders and. judgment creditors, has no relation to the provisions of the statutes requiring foreign corporations doing business in this State to obtain a certificate permitting them to do so and to pay a tax,
Hence, a foreign corporation having an office for the transaction’ of business in this State which refuses to allow an inspection of said stock book by a stockholder is liable, for the penalty although it.has not been licensed to do business here. ■ .
,'Said section 38 of the Stock Corporation Law is not. unconstitutional on ' the theory that it is in restraint of interstate commerce.
Miller and Scott, JJ., dissented, with opinion.
Appeal by the defendant, The De Long Hook and Eye Company, 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 4th day. of May, 1911, reversing a judgment of the Municipal Court of the city of New York in favor of the defendant and granting a new trial.
Charles E. Rushmore, for the appellant..
Lester S. Kafer, for the respondent.

Opinion:
Ingraham, P. J.:
This action was brought to recover a penalty under section 33 of the Stock Corporation Law (Consol. Laws, chap. 59; Laws of 1909, chap. 61). It is there provided that "Every foreign stock corporation having an office for the transaction of business in this State, except moneyed and railroad corporations, shall keep therein a book to be known as a stock book, containing tlie names, alphabetically arranged,, of all persons who are stockholders of the corporation . Such stock book shall be open daily, during business hours, for the inspection of its stockholders and judgment creditors, and any officer of the State authorized by law to investigate'the affairs of any such .corporation. . For any-refusal to allow such book to be inspected, such corporation and the officer or agent so refusing shall each forfeit the sum of two hundred, and fifty dollars to be recovered by the person to whom such refusal was made." I do not agree with Mr. Justice'Miller that this section is to-be read in connection with other sections of the General Corporation Law, the Stock Corporation Law and the Tax Law which require a corporation doing business in this State to obtain a certificate authorizing it to- do such business, and to pay a tax for the privilege of doing such business, or which provide for the taxation .of the property of a foreign corporation invested in this State, and which also regulate said business. There is nó question of taxation; no question of the regulation of business; no attempt to interfere in any way with any foreign corporation doing business in this State, regulating its business or restricting its authority to transact business or to procure an office in this State for the transaction of business, and no attempt to interfere in the slightest degree with any of its business transactions. By that section the Legislature has made it the duty of a foreign corporation which has an office for the' transaction of business in this State to keep in such office a book containing the names of all persons who are stockholders of the corporation.' Any foreign corporation may or may not have an office in this State for the transaction of its business. It is not even necessary to show that business has actually been transacted in that office. As long as it has an office in this State for the transaction of business it is the duty of the corporation maintaining such an office to comply with this provision of the statute. It seems to me clear from the testimony that this defendant does maintain such an office and that any one wishing to transact business with the defendant can transact such business as the corporation desires to transact in this State at such office, and that the facts bring this corporation within the provisions of this statute, and that there was imposed upon this corporation the duty to keep in its office the stock book described. If the Legislature has power to require a foreign corporation that maintains such an office to keep such a book it certainly has power to prescribe a penalty for refusing to obey its commands. If it had been intended to limit' this provision to a corporation actually doing business in' this State the Legislature would have used the same language that it has used when requirements are made for a corporation doing business in this State. ' Here, as before stated, the statute is not confined to a corporation doing business here or "having an office in which business is transacted, -but provides for a corporation having an office for the transaction of business, and where a corporation has such an office it is required to keep therein a book containing a list of the stockholders.
Nor do I think that this construction of the law could affect its validity under the Constitution of the United States. The statute, as before stated, does not attempt to regulate the business of the corporation or restrict it in any way in transacting its business in the State of New York whether that business is interstate business or not. A violation of its provisions does not. in any way affect its subsequent transaction of business. It does not affect its right to continue to maintain an office for the transaction of business or for any other purpose. Ho tax is imposed upon the corporation or upon its business, interstate or otherwise, but it gives to the person for whose benefit this book is to be maintained a right of action to recover a penalty for a violation of its provisiohs. notwithstanding the great extension of Federal interference with the action of the States, I cannot agree that a foreign corporation or a resident of another State coming- to this State and opening an office here for the transaction of its business is so far beyond State control that, while maintaining such an office, the State cannot control its occupancy of the office and prescribe that while here occupying* an office the corporation cannot refuse to observe the same regulations that the State imposes upon its own corporations for the benefit of -their stockholders and creditors, and thus give to foreign corporations maintaining offices in this State a privilege which is not awarded to domestic corporations, or exempting such foreign corporations from the same obligations that rest upon domestic corporations. A foreign corporation would thus become the master of the State, and conduct its operations here without being subject to any State control merely because it is engaged in interstate commerce. I cannot believe that a State has been rendered so impotent that it must not only allow a foreign corporation to bring its goods and merchandise within this State for sale, but can own or occupy offices and business facilities here superior to any State regu- ' lation necessary for the protection of the citizens of this State who deal with it.
I think, therefore, the determination of the. Appellate Term should be affirmed.
Laughlin and Clarke, JJ., concurred; Miller and Scott, JJ., dissented.