Court Opinion

ID: 5274734
Source: CourtListenerOpinion
Date Created: 2022-01-06 21:35:34.70946+00
Date Added: 2024-06-11T08:28:17.124594
License: Public Domain

Smith, J. (dissenting):
The plaintiff is a foreign corporation. I think it is fairly shown that it was doing business within this State, and that the contract in question upon which the recovery has been had was made and performed within this State, and no certificate has been obtained authorizing this corporation to do business within this State.
In Mahar v. Harrington Park Villa Sites (204 N. Y. 231) it is held that under section 15 of the General Corporation Law of 1909 the only penalty prescribed for doing business within this State by such a foreign corporation without such a certificate is contained in the same provision of the statute which provides that no such corporation “ 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 such certificate.” The law is further stated: “ The latter provision does not wholly invalidate a contract the only infirmity in which is the disability on the part of a foreign corporation to sue thereon in this State. It remains a valid and effective instrument in all other respects. The statute imposes only on a foreign corporation, which has not complied with these provisions, the penalty of being unable to maintain any action upon a contract made by it, not upon the other party to the contract.” This interpretation of the law would seem to leave the plaintiff with a valid contract and a valid claim without the right to sue in this State thereupon. The objection would seem to go to the capacity of the plaintiff to sue, rather than to the jurisdiction of the court which is a court of general jurisdiction. There is no question that the plaintiff was required, in the absence of a counterclaim, to show the certificate in the complaint in order to maintain the action if the objection has not been waived.
By section 278 of the Civil Practice Act it is provided that an objection appearing upon the face of a pleading is waived unless taken by motion where the objection is that the plaintiff has not legal capacity to sue. By rule 106 of the Rules of Civil Practice it is provided that motion to dismiss a complaint for want of legal capacity to sue may be made within twenty days after the service of the complaint where the defect appears upon the face thereof, and by *746rule 107 of the Rules of Civil Practice it is provided where the defect does not appear upon the face of the complaint that the defendant may make such a motion within twenty days. (See, also, Code Civ. Proc. §§ 488, 490, 498, 499; Civ. Prac. Act, § 1569.) It would seem, therefore, under the interpretation of the General Corporation Law of 1909 set forth in the Mahar Case (supra), and under the Civil Practice Act and the Rules of Civil Practice, the defendants have waived the objection that the plaintiff has not legal capacity to sue, and upon that ground „the appellants have not sustained their right to reverse the judgment.
There is another ground upon, which I think we may well hold that the defendants have waived the incapacity of the plaintiff to sue in this State. A "counterclaim was set up. A motion was made at the close of the plaintiff’s case and renewed at the close of the defendants’ case “ for a dismissal.” That was clearly understood by all parties to mean for a dismissal of the complaint, and that it was so understood is clearly shown by the statement in the appellants’ brief, which is to the effect “ counsel for the defendants at the close of plaintiff’s case, moved for a dismissal of the complaint upon the ground that it affirmatively appeared from the plaintiff’s own case that the plaintiff was a foreign corporation doing business within this State upon a contract made here, and that it had not complied with Section 15 of the General Corporation Law.” There was no offer by the defendants to withdraw their counterclaim. If the complaint had been dismissed the defendants could still insist upon their counterclaim and the plaintiff would have been barred from offsetting against the counterclaim any claim for damages by reason of a breach of this contract. The counterclaim is in effect a cross action, and if the defendants had brought an action in this State against the plaintiff upon the same matter alleged in the counterclaim, the plaintiff would have had a right to plead as an offset or counterclaim, moneys due upon the contract, even though it had not conformed to section 15 of the General Corporation Law. (See Mahar v. Harrington Park Villa Sites, supra.) The effect of dismissing this complaint, therefore, without an offer to withdraw the counterclaim would have been to leave the plaintiff without the right to offset as against this counterclaim his cause of action upon this contract. The complaint demanded judgment for the sum of $163.51. The counterclaim of Bertha J. Werner demanded judgment for $1,500. The verdict of the jury was in favor of the plaintiff for $85. Even if it could be held that the defendants have not otherwise waived their objection to the capacity of the plaintiff to sue in this State, nevertheless, to dismiss the complaint without withdrawing the counterclaim *747would leave the plaintiff without the right to make any offset to the counterclaim, which under the Mahar Case (supra), it would have had the right to do, and the motion was properly denied.
Complaint is also made on the ground that costs were taxed at the full amount. The venue of the action was laid in New York county, and the defendants appeared generally. The defendants were residents of the county of Rockland. Neither the City Court, nor the Municipal Court, therefore, had jurisdiction of actions against them. In such case the right to tax costs prevails as in counties in other parts of the State, and the costs were properly taxed at the full amount. (See Civ. Prac. Act, §§ 1470, 1474.)
The judgment and order should, therefore, be affirmed, with costs.
Judgment and order reversed, with costs, and complaint dismissed, with costs.