Court Opinion

ID: 5460498
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:34:43.679067+00
Date Added: 2024-06-11T08:32:51.637382
License: Public Domain

Morgan, J. (dissenting.)
I concur in the general conclusions of the learned judge upon the several questions involved in this case, except the single one as to the personal liability of Abram Van Santvoord. The Steam Navigation Company was incorporated by the laws of the state of Connecticut, and was one of the five companies constituting the towing company, which was a voluntary association engaged in towing boats on the Hudson river between Albany and New York. Abram Van Santvoord was a stockholder of the Connecticut Steam Navigation Company, and one of its directors and agents, residing in the city of New York. The Connecticut company owned, the barges known as the Swiftsure line, and this line formed part of the towing company. The principal business of the Connecticut company was done in the city of New York, by its agents residing there, except the formal election of directors. Abram Van Santvoord was not a proprietor in the towing company, except as a shareholder in the Steam Navigation Company of Connecticut. The Connecticut corporation became a proprietor of the Hudson river towing company, in its corporate capacity, and Abram Van Santvoord was not otherwise connected with the towing company than as a shareholder in that corporation and one of its agents residing in New York.
The charter óf the Ste.am Navigation Company exempts *591the stockholders from personal liability for the debts of the corporation.
If the corporation, therefore, was authorized and incorporated by the laws of this state instead of the laws of Connecticut, there would be no ground for making the stockholders individually liable for the damages in this action.
It is suggested by the respondents’ counsel that there is evidence to show that he was a proprietor of the towing company, without reference to his stock in the Steam Navigation Company ; but that fact is not found by the judge. On the contrary, the counsel of the defendants requested the judge to hold, that as a shareholder in the Steam Navigation Company, he was not liable for the demand for which this action is brought; but the judge declined to hold as requested. It is stated in the opinion of the learned judge that Van Santvoord acted as a corporation, and he is made liable on the ground that he was a stockholder in a foreign corporation, doing business here in its name. We cannot therefore sustain the judgment upon another ground now suggested for the first time in the argument, and upon which there is no finding of fact, as suggested.
Although it is stated in the opinion of the learned judge that Van Santvoord acted as a corporation, the facts as found by him in connection with the documentary evidence do not show that he signed the charter of the Cayuga on behalf of the corporation, or that he assumed to be the corporation, or that he was a party to the contract of the towing company except as one of the stockholders of a foreign corporation, and one of the agents of the corporation in the transaction of its corporate business in this state.
The plaintiff, to maintain this action, is obliged to bring forward the Steam Navigation Company of Connecticut and show that it was one of the contracting parties. Prim'a facie, that corporation is liable—for its name appears among the proprietors of the Hudson Steam Company. Mr. Van Santvoord did not put his name there, nor did he sign the *592name of the Steam Navigation Company to the charter, hut he was a stockholder and one of its agents in New York city. As agent alone, it is not sought to make him personally liable for the contracts of a foreign corporation, for he did not put its name to the charter. Nor is it suggested that the corporation did hot authorize the contract with the Yandewaters, so far at least as a foreign corporation could authorize the transaction of business in this state.
It is admitted that if the Steam Navigation Company had remained at home, it could -have made a valid contract in this state, and could sue and be sued in our courts as an artificial person. Although not expressly decided in this state, I think it is implied that, in such a case, the corporation, and not the stockholders, would be alone liable on the contract in question. (2 Kern. 495, 569. 20 Wend. 614.)
But it is claimed that this Steam Navigation Company has emigrated and taken up its abode in the city of New York, and that except the mere election of directors, its whole business is transacted here instead of Connecticut. And upon this ground the learned judge held, that by the comity of nations as administered in this state, our courts will not recognize its existence as a corporation. Judge Denio, in Bard v. Poole, (2 Kernan 507,) says: “I concede that it would be a violation of our sovereignty for a foreign corporation to remove from the country or state where it was created, to locate itself wholly within this state.” Chief Justice Taney, in the Bank of Augusta v. Earle, (13 Peters, 519,) says: “ It is very true that a corporation can have no legal existence out of the boundaries of the sovereignty by which it was created. It exists only in contemplation of law and by force of the law, and when that law ceases to operate and is no longer obligatory, the corporation can have no existence. It must dwell in the place of its creation and cannot emigrate to another sovereignty.” In the case of The People v. The Trustees of Geneva College, (5 Wend. 211,) it was *593decided that the corporation could exercise no powers heyond the place to which it is restricted by its charter.
notwithstanding what is said by Judge Denio in Bard v. Poole, the court held in that case, that a foreign corporation may make and enforce within this state contracts which by its charter it is competent to enter into, and which are not forbidden by the laws or contrary to the policy of this state; and that a loan made in this state by the American Life Insurance and Trust Company, incorporated by the legislature of Maryland, and which was secured by a mortgage upon real estate in this state, was valid, and could be enforced here. The remark of Judge Denio, above quoted, was therefore a general one, without any practical illustration to give it point.
In the Bank of Augusta v. Earle, the same doctrine was declared, but the plaintiffs were permitted to sue and recover on bills of exchange in. Alabama, discounted by the agents of the plaintiffs in Mobile, Alabama. The plaintiffs’ bank was located at Augusta, Georgia, and incorporated by the ■legislature of that state. What was said in the opinion of Chief Justice Taney in that case as to the migration of a corporation from one sovereignty into another, was asserted as a general proposition, but not in a case where the rule, if admitted, could be made available.
The question in The People v. The Trustees of Geneva College arose upon a quo warranto, and was decided upon the express ground that the charter restricted the location to Geneva, and that it was a matter affecting the public at large. The judgment divested the trustees of certain corporate powers which they exercised in the city of Hew York, upon the ground that it was a usurpation of a franchise. It will be seen that the question was not decided, whether an individual who had made a contract with the corporation, beyond the limits of its authority, could enforce it against the corporation, or against the individual corporators, or against either.
*594It may be assumed that if the Steam Navigation Company'had done any act which the laws of this state had forbidden to be done by any corporation or by any association of individuals, without express authority of law, no suit could be maintained by it founded upon such act or any obligation growing out of it, express or implied. The statutes of this state have regulated and defined the principles of international law or international comity applicable to foreign corporations attempting to enforce contracts made by them, in this state. (2 R. S. 457, § 2.) Can our courts go further and deny such a corporation the protection of law, merely because it has confined its principal business to this state ?
If they do not engage in acts opposed to the policy of the laio or condemned by the legislature, it would seem as if they were entitled to the protection of the courts.
If I understand the effect of the decision in this case, it virtually oxitlaws this corporation, not because it is engaged in an improper business, but because it confined its business to the state of New Yoi’k, except the formal election of its officers. Doubtless, according to the doctrine as enunciated by the judges in some of the cases cited, this Steam Navigation Comjxany cannot change its location to this state. This would seem, however, to be more a question of law than of fact. It cannot, says Chief Justice Taney, have a legal existence out of the boundaries of the sovereignty by which it is created. But by international comity in some states, and by force of the revised statutes in this state, the legal existence of a foreign corporation is recognized by the courts, although that existence depends upon .the legislature of another state.' Its contracts, when not opposed to the policy of our laws, may be enforced in this state. This Steam Navigation Company owns several bai’ges in this state. Suppose a stranger should seize them and the navigation company should bring a suit for the wrong, in its corporate, name ? Could the defendant defend such a suit on the ground that the Steam'Navigation Company was outlawed in this state, *595because its chief business was done in the city of ¡New York instead of Connecticut? Would this court try such a question as a question of fact in such an action ? Would it even listen to the objection ? If the question can be raised at all,
• I think it must be raised by quo warranto, or in a direct proceeding to test it, and that the inquiry will be by what authority the persons engaged in the business exercise the franchises of a corporation in this state. After judgment of ouster, and not before, could the objection be taken in a private suit between such a corporation and a person who had contracted with it in a matter not forbidden by the laws of the land. Such would certainly be the rule in respect to domestic corporations, which had forfeited their franchises. (Slee v. Bloom, 19 John. 456. S. C., 5 John. Ch. 366. Mech. Ch. Building Association v. Stevens, 5 Duer, 676. And see U. S. Bank v. Stearns, 15 Wend. 315, 316, Savage, Ch. J.; McFarlan v. The Triton Ins. Co., 4 Denio, 397, Bronson, Ch. J.; Meth. Epis. Union Church v. Pickett, 19 N. Y. Rep. 485, Selden, J.) In McFarlan v. The Triton Ins. Co., above cited, Bronson, Oh. J. remarked, that it was “ unnecessary to inquire what may be the rights of the people in relation to this corporation; or as against the individuals who were engaged in getting it up and setting it in motion. The defendant does not represent the sovereign power, and has nothing to do with the question whether the company should be dissolved. So long as the state does not interfere, the company may sue or do any' other lawful act, whatever sins may have been committed in bringing the body into existence.” Is there any difference in the principle when the corporation is created by the laws of another state ? The evidence of the right of a foreign corporation to sue in our courts, is substantially the same as in case of a domestic corporation. (U. S. Bank v. Stevens, above cited.) If it misbehaves itself, so as to forfeit the protection of our laws, how is the question to be met ?. Here it is claimed that the gteam Navigation Company, although having a charter regu*596larly granted by the legislature of Conneticut, has abused its franchises by locating its agents in the city of New York, and transacting the principal part of its business in this state. It is admitted that it cannot emigrate into this state; but this does not necessarily imply any thing more than that« it is legally impossible for the corporation thus to emigrate. It may do business in this state through its authorized agents residing here. This is conceded. It may then claim the protection of the courts; may sue and be sued in its corporate entity, and may enforce its contracts, when they do not contravene our laws. (Cary v. Cleveland and Toledo R. R. Co., 29 Barb. 51, 52, Allen, J.) In these respects it stands upon as favorable ground as though it had been chartered here. Who is to determine when it has gone too far in confining its business to this state, and what should be the limit of our forbearance ? I think if there is a limit beyond which it cannot go, without subjecting itself to the charge of having emigrated into another sovereignty, and of having exercised franchises here which cannot be tolerated by the comity or law of the state into which it has emigrated, that it is for the sovereign power to decide upon the usurpation, and not for the defendant, who is sued upon a contract which he has made with it in its corporate name.
Assuming, therefore, that a foreign corporation, as well as a domestic one, may exercise its franchises- until it is dissolved, or has surrendered them, or has been deprived of them by judgment of law, and that an individual dealing with it cannot dispute its corporate existence, when sued upon his contracts made with it within the scope of its general powers, and not objectionable in other respects as against the policy of the laws authorizing it to transact business in this state, there is no sufficient ground upon which we can deny to the Steam Navigation Company the privileges and immunities which the statute gives to any other foreign corporation, doing business in this state. In The Bank of Augusta v. Earle, (13 Peters, 519,) the court held that *597“whenever a corporation makes a contract, it is the contract of the legal entity, of the artificial being created by the charter, and not the contract of the individual members.”
[Onondaga General Term,
January 3, 1860.
In Ex parte Van Riper, (20 Wend. 617,) Judge Cowen ■ looked into the charter of the Manufacturers’ Bank of Belle-ville, New Jersey, to determine the personal liability of one of the directors, and says: “No doubt a state may pass a law tying a creditor up to a certain remedy on a contract, where the law is passed prior to the contract being made. As the creditor then knew the law, he contracts cum onere.”
I think Van Santvoord is not, therefore, individually liable upon the contract in question, and that the learned judge erred in allowing the plaintiffs in this action to avail themselves of a principle of law, which could only be invoked on behalf of the state whose sovereignty was encroached upon by persons coming here under the protection of a charter granted to them by another state. It is not without considerable hesitation that I have arrived at this result; but in the absence of any express adjudication to the contrary, so far as I can discover, I think that a party who contracts with a foreign corporation, having a legal and valid charter in the state which grants it, stands in the same position towards it as he does towards a corporation granted by the legislature of this state. The state may, perhaps, proceed by quo warranto, and examine by what authority certain persons in New York city exercise the franchises of a foreign corporation within the limits of this state; and if they are violating the laws of comity by the conduct complained of in this case, the court may perhaps give judgment against them and take away their franchises, so far at least as they attempt to exercise any of them here. It may, however, be a grievance which the legislature alone can remedy.
I think the judgment should be reversed and a new trial granted, costs to abide the event. Judgment affirmed.
Bacon, Allen Mullin and Morgan, Justices.]