Court Opinion

ID: 5249920
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:10:20.688429+00
Date Added: 2024-06-11T08:27:55.621596
License: Public Domain

Smith, J. (dissenting):
The plaintiff, a Mexican corporation, made a contract in New York city with the Toltec Mexican Oil Company, a Delaware corporation, for the sale and delivery to the Toltec Company of the output of the Mexican Company’s oil wells located in Mexico, the delivery to be made at Tampico, Mex., to commence within ten months after the date of the contract, and payments were to be made by the Toltec Company sixty days after delivery in each month at the Mexican Company’s “ office in New York.” The defendants herein *71are' guarantors of the above contract under the name of H. B. Hollins & Co. The complaint does not allege that the plaintiff had obtained the certificate of authority to do business in this State required by section 15 of the General Corporation Law, and the defendants have separately demurred to the complaint as not stating a cause of action, claiming that it appears on the face of the complaint that plaintiff was doing business in the State of New York when it executed the contract in question.
A foreign corporation has the right to appeal to the courts of this State to enforce a contract made in this State, without having obtained the certificate provided for in section 15 of the General Corporation Law, unless it had been actually doing business in this State when the contract was made. The section 15 above mentioned so far as applicable to this case is as follows:
“ No foreign stock corporation other than a moneyed corporation, shall do business in this State without having first procured from the Secretary of State a certificate that it has complied with all the requirements of law to authorize it to do business in this State. * * * 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 such certificate.” (See Consol. Laws, chap. 23 [Laws of 1909, chap. 28], § 15, as amd. by Laws of 1917, chap. 594.)
On demurrer the facts stated must be taken as true and all doubtful or uncertain statements must be construed favorably to the complaint. A complaint in an action by a foreign corporation is not demurrable for the failure to allege compliance with the above section 15, unless it appears on the face of the complaint that the corporation is doing business in this State and that it made the contract sued upon in this State. It is stated in Frick Co. v. Fultz (162 App. Div. 209, 212): “ Under this authority a complaint states a good cause of action and is not demurrable unless it appears on the face of the complaint that the foreign corporation was doing business in this State and that it made the contract sued upon in this State.” And in Acorn Brass Mfg. Co. v. Rutenberg (147 App. Div. 533, 535) it is stated: “ Before the obtaining of such *72certificate becomes a material fact in connection with such an action, two things must concur, the corporation must be a foreign stock corporation, other than a moneyed corporation, doing business in this State, and the contract which is the basis of the action must have been made within the State.” The connection of the two facts, namely, doing business and making the contract in this State as prerequisites to the requirements that the certificate should have been obtained, shows conclusively that the making of the contract is not evidence of doing business in this State.
The making of a single contract or of two connected contracts is not doing business in this State. In Haddam Granite Company, Inc., v. Brooklyn Heights R. R. Co. (131 App. Div. 685, 687) it is stated: “ At the outset there was an attempt to negotiate a single contract and, pending the negotiations, after the price of the material had been agreed upon, but before all the particulars of the contract, with respect to quantities and times of delivery, had been settled, deliveries were made on the terms as to price, which were to be incorporated in the. contract which was then being negotiated. The negotiations originated in this State, but were continued largely by correspondence between the officers of the respective corporations, one of which was within and the other without the State. These facts do not show that the plaintiff was either continuously or permanently engaged in business in this State.” And in Singer Mfg. Co. v. Granite Spring W. Co. (66 Misc. Rep. 595), it is said: “ I think the statute intended to refer only to the doing of the regular and customary business for which the corporation was organized.”
Doing businéss in this State relates to the ordinary business a corporation is organized to do. In Cummer Lumber Co. v. Associated Mfrs. Ins. Co. (67 App. Div. 151, 156; affd., 173 N. Y. 633) it is said: “ Its purpose was not to avoid contracts, but to . provide an effective supervision and control of the business proposed to be carried on here by foreign corp.orations.” And in Penn Collieries Co. v. McKeever (183 N. Y. 98, 103) it is said: “ To bring into operation the statutory provision, the facts should show more than a solitary, if not accidental, transaction as was the one before us. They should establish that the corporation was conducting a con*73tinuous business. To be ‘ doing business in this State/ implies corporate continuity of conduct in that respect; such as might be evidenced by the investment of capital here, with the maintenance of an office for the transaction of its business, and those incidental circumstances, which attest the corporate intent to avail itself of the privilege to carry on a business.”
The making of one or two sales in this State is not doing business here. In Vaughn Machine Co. v. Lighthouse (64 App. Div. 138, 141) it is said: “ The statute quoted * * * contemplates a location, a domicile, having an office and the investment of some part of its capital within the State. Orders can then be transmitted and dealings had with it at this office, and the conduct of its business is thus transferred, in a measure at least, to the headquarters established within the territorial limits of this State. It thus settles within the State and enjoys the benefits incident to a domestic corporation, and the Legislature imposes requirements and obligations upon it by reason of the privilege conferred of doing business like a body corporate organized in this State. It was never intended to hamper trade and restrict interstate commerce by bringing within its ban every corporation which .happens to cross the State boundary with its wares to supply customers who have ordered them from the home office.”
In Ozark Cooperage Co. v. Quaker City Cooperage Co. (112 App. Div. 62, 64) it is said: “ The complaint charges only two distinct sales, and we must assume the business conducted in this State is limited to these two transactions. This is not necessarily 1 doing business ’ within the meaning of the statute. In Penn Collieries Co. v. McKeever (183 N. Y. 98) the plaintiff, a foreign corporation, sued to recover for a cargo of coal sold in the State of New York. It kept no coal, books of account nor bank deposit in this State. The sale was an isolated transaction. The defendant endeavored to defeat a recovery for the reason that the plaintiff had not procured a certificate authorizing it to transact business in this State. The Court of Appeals held that the plaintiff was not 1 doing business ’ within the contemplation of the statute. The court used this language (at p. 103): ‘ To be ‘ doing business in this State ’ implies corporate continuity of conduct in that respect; such as might be evidenced by the investment of *74capital here, with the maintenance of an office for the transaction of its business, and those incidental circumstances, which attest the corporate intent to avail itself of the privilege to carry on a business. In short, it should appear, as it was intimated in the opinion in People ex rel. Armstrong Cork Co. v. Barker (157 N. Y. 159, 165), that the corporation and its officers intended ‘ to establish a continuous business in the City of New York and not one of a temporary character.’ ”
The maintaining of an office in this State is not alone proof of doing business here. (System Co. v. Advertisers’ Cyclopedia Co., 121 N. Y. Supp. 611, wherein it is said at page 612: “ The fact that a foreign corporation has an office within this State, and employs solicitors to transmit orders obtained to the home office for acceptance, does not of itself constitute doing business within the meaning of the statute. Such action is merely incidental to the business which the foreign corporation conducts in another State.”)
The first act of the plaintiff in this State, as alleged in the complaint, is the making of the two contracts above, both made at the same time and parts of one transaction. There was to be no performance of the contract in this State except as to payment for the oil. The oil was to be delivered to the Toltec Company in Mexico. There was to be no payment until sixty days after the oil began to be delivered, which could not occur for some considerable time because of the necessity of the construction of “ pipe line, tanks and loading facilities ” after the making of the contract. The only mention of an office of the plaintiff in New York is in connection with the payments to be made in all probability not less than six months to a year after the date of the contract and certainly in not less than sixty days, and in connection with notices which might be served on plaintiff by the Toltec Company, which would not be called for under the contract until May 1, 1913, ten months after the making of the contract. While the complaint alleges that the contracts were executed in New York, that alone is not proof that plaintiff was doing business at that time, particularly as the business provided for was all to be performed in the future outside of the State — in fact, outside of the United States. The payments provided to be made were also far *75in the future and the mention of an office at which such payment could be made is no evidence of the fact that plaintiff had any office here at the time of making the contract. The fact is that no payments were made, as the Toltec Company declined to pay for any oil delivered and there was no reason for plaintiff maintaining an office for the purpose of receiving payment or notice. There is no allegation in the complaint that plaintiff had or has an office in New York, except the above implication that it would have an office in New York city in time to receive any possible payments or notices.
The section of the General Corporation Law relied on by the defendants and on which they have succeeded below, is in the nature of a forfeiture and to support a forfeiture no resort should be had to presumption. There being no direct allegation that plaintiff ■ had or has an office in this State, the presumption possible from the wording of the contract should not be made use of to enable the. defendants to defeat a just and lawful claim.
The making of such a contract to be entirely performed far away from the State of New York could not by any stretch of imagination be construed as interfering in any way with New York State business enterprises and the payment of money in New York State from business so conducted could only be of benefit to New York enterprises.
The business the plaintiff was organized and was attempting to do was the production, sale and delivery of oil in Mexico. The plaintiff did make the contract in question .in the city of New York, but the facts recited in the complaint do not constitute doing business in New York so as to make section 15 of the General Corporation Law applicable.
The orders appealed from should be reversed, with ten dollars costs and disbursements.
Shearn, J., concurred.
Orders affirmed, with ten dollars costs and disbursements, and with leave to plaintiff to amend on payment of costs.