Court Opinion

ID: 5347107
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:23:04.695546+00
Date Added: 2024-06-11T08:29:40.240991
License: Public Domain

Dore, J. (dissenting).
In Fosdick v. Investors Syndicate (266 N. Y. 130) it was held that failure of a foreign investment corporation to comply with a statute forbidding it to do business within the State of New York unless licensed by the Superintendent of Banks, did not entitle persons to recover back moneys paid to such corporation while it was doing business in the State without being licensed. It is true in that case the action was by the purchaser to recover back payments made to an unlicensed seller and not by the seller to enforce the contract by recovery of the purchase price. But the court, after pointing out the provisions that conditionally restrained in this State every activity in the nature of the business of an investment company by a foreign corporation, said: “ The plaintiff, therefore, is bound to maintain that default of the defendant in observing the conditions so prescribed for the prosecution of its business in this State rendered all such business subject to being denounced as void, at the mere election of those with whom the business was done. In our opinion so sweeping a resolution of the law-making power is not to be implied from the context and structure of the statute.” The court so held, although it also ruled that the general purpose of the banking legislation in question was the regulation of all investment companies, domestic and foreign, and that the safeguarding of persons in the situation of the plaintiff was an object consistent with such purpose. Indicating, however, the basis of its decision, the court said: “‘A transaction not in itself immoral is not to be held unlawful on a conjectural view of the policy of a statute.’ (Pollock on Principles of Contract [9th ed.], p. 358.) Here no penalty was specifically annexed to any transaction of particular character.’ * * * It seems to us that the implication more plainly is that a sanction elsewhere provided was deemed sufficient,” and pointed out that, under section 663 of the Penal Law, engaging in this State in the business of a foreign investment corporation without a license was made a misdemeanor.
In the present case the Milk Control Law (Agriculture and Markets Law, art. 21 [Laws of 1934, chap. 126]) was enacted *233to supervise and regulate the entire milk industry of the State of New York. The aim of the law is not health protection primarily but economic control through price-fixing; i. e., preventing the economic anarchy in the milk business that resulted from the devastating effects of limitless free competition therein. The act* expressly provided that nothing contained therein should be construed to abrogate or affect the force and operation of any provision of the Public Health Law, the State’s sanitary code, or any local' health ordinance or regulation. No claim is made that plaintiff violated these health laws regulating the sale and distribution of pure milk. The sole violation is of section 257, requiring every milk dealer to be licensed. But no particular penalty is prescribed by the act of 1934 for failure to be licensed. The penalties are elsewhere provided. Section 41 of the Agriculture and Markets Law (formerly Farms and Markets Law) makes violation of the act a misdemeanor punishable by a fine of not less than twenty-five dollars nor more than two hundred dollars, or by imprisonment for not less than one month nor more than six months, or by both such fine and imprisonment for the first offense, and by not more than one year’s imprisonment for the second offense.
In this case, as in the Fosdick case, it was necessary for the party who alleged that the contract was unenforcible by reason of the seller’s failure to have a license, to maintain that default in securing the license rendered all business done without such license subject to being denounced as void “ at the mere election of those with whom the business was done.” Here, as in the Fosdick case, so sweeping a resolution of the law-making power is not to be implied from the context of the milk control statute or its purpose. Here, as there, no penalty was specifically annexed to any transaction but the sanction was elsewhere provided.
In Nebbia v. New York (291 U. S. 502, 531) the Supreme Court of the United States said: “ We may as well say at once that the dairy industry is not, in the accepted sense of the phrase, a public utility. * * * It goes without saying that those engaged in the business are in no way dependent upon public grants or franchises for the privilege of conducting their activities.”
Legislative intent must be sought in each particular case and though it may be generally true that the imposition of a penalty makes the contract illegal, that is not invariably the case. (American Law Institute, Restatement of the Law of Contracts, § 580.) On the construction of the majority opinion herein the license is made the equivalent of a necessary condition precedent, in the *234nature of a franchise, for engaging in the business of selling milk since it is held that no recovery whatever may be had by the seller unless licensed. Distinguishing the cases that are cited for the general rule that contracts in violation of statutory prohibition are unenforcible, it may be pointed out that the Milk Control Act does not expressly state that any contract made without a license is void or unenforcible or that the possession of a license is a condition precedent to be alleged and proved before recovery may be had, as required by other statutes requiring licenses; e. g., section 442-d of the Real Property Law.
If a plaintiff, though culpable, has not been guilty of moral turpitude, and if the loss he will suffer by being denied relief’is wholly out of proportion to the requirement either of public policy or of appropriate individual punishment, he may be allowed to recover the consideration with which he has parted. (Williston Contracts [1920], vol. 3, § 1789, p. 3101.)
Cases refusing a recovery by unlicensed persons such as lawyers, physicians, adjusters of insurance losses, master plumbers, etc., can be distinguished because the primary purpose of such statutes is the protection of public health or morals by restraining persons from engaging in the profession or the business in question unless they are personally qualified by experience and competent skill. That is not the primary aim of the Milk Control Act.
It is also to be noted that in the Fosdick case the equities were all with the defendant. The defendant had not defaulted or committed any breach, nor was there any failure of consideration on its part. On the contrary, the plaintiff and her assignors had defaulted. On the issues raised between the parties on this motion, the plaintiff has fully performed its contract but the defendants have defaulted. Between March 15 and April 1, 1936, defendants ordered, accepted and received from the plaintiff quantities of milk aggregating the total price of $11,058.53, for which they have not paid, and on this motion they seek to avoid payment solely on the ground that the seller was unlicensed. Clearly the Milk Control Law was not enacted for the protection of such defaulting purchasers. As between these parties every principle of fairness and natural justice and all the equities are in favor of plaintiff.
The chief purposes of the Milk Control Law, price fixing and economic control, can equally well be enforced through the drastic penalties provided in section 41 of the Agriculture and Markets Law. If the Legislature had intended to declare that all contracts for the sale of milk by an unlicensed dealer were absolutely void and unenforcible it could easily have said so. As the Court of Appeals said in the Fosdick Case (supra): “ So sweeping a reso*235lution of the law-making power is not to be implied from the context and structure of the statute.”
Accordingly I dissent and vote to affirm the orders striking out the first affirmative defense and denying the motion to dismiss the complaint.
Orders reversed, with twenty dollars costs and disbursements, the motion of plaintiff to strike out the first affirmative defense denied, and defendants’ motion to dismiss the complaint granted.

 See § 254, subd. (a).— [Rep.