David Lupton Sons Company v. Automobile Club of America

• Decision Date: 07 June 1912
• Docket Number: No. 137,137
• Citation: 225 U.S. 489,32 S.Ct. 711,56 L.Ed. 1177
• Parties: DAVID LUPTON'S SONS COMPANY, Plff. in Err., v. AUTOMOBILE CLUB OF AMERICA
• Court: U.S. Supreme Court

225 U.S. 489

32 S.Ct. 711

56 L.Ed. 1177

DAVID LUPTON'S SONS COMPANY, Plff. in Err.,

v AUTOMOBILE CLUB OF AMERICA.

No. 137.

Argued December 20, 1911.

Decided June 7, 1912.

Messrs. William Ford Upson and William Forse Scott for plaintiff in error.

[Argument of Counsel from page 490 intentionally omitted] Mr. William W. Niles for defendant in error.

[Argument of Counsel from pages 491-493 intentionally omitted] Mr. Justice Hughes delivered the opinion of the court:

The plaintiff in error, David Lupton's Sons Company, a Pennsylvania corporation, was engaged in the business of manufacturing and installing metal window frames and sash. Its factory was in Pennsylvania. In 1905 it entered into a contract in New York with the defendant, the Automobile Club of America, by which it agreed to manufacture and to place in position frames and sash for the defendant's building, to be erected in the city of New York, for the sum of $10,344. While the Lupton Company was putting in the frames a strike occurred, and all the other persons employed by the defendant in the construction of the building stopped work on account, as it is found, 'of the character and condition of labor' employed by the Lupton Company, and the material it furnished, of which complaint had been made by a New York labor union. After various negotiations, the defendant—under an adjustment by the architect, and in order to get its building constructed—employed another concern to complete the work embraced in the contract with the Lupton Company. The latter received, for what it did, $5,837.72; the defendant paid for the completion $3,796.76; and if this were credited against the contract price there would remain a balance of $709.52.

The Lupton Company, insisting that it was wrongfully prevented from performance, brought this suit in the circuit court of the United States to recover the sum of $5,000 as the damages sustained by the alleged breach. The defendant pleaded several defenses, as well as a counterclaim for damages for breach by the plaintiff. Among the defenses was one that the Lupton Company could not maintain this action because it was a foreign corporation doing business in the state of New York without a certificate of authority, in violation of § 15 of the general corporation law of that state. Laws of 1890, chap. 563, § 15; Laws of 1892, chap. 687, § 15, as amended.

Upon written stipulation the action was referred to a referee to hear and determine the issues. The referee reported his findings of fact and conclusions of law, holding that the contract was void under the statute and that the complaint should be dismissed. Upon the plaintiff's application, the report was recommitted in order that further findings might be proposed. The referee then passed on numerous requests submitted by the plaintiff, and on the filing of his supplemental report, which left unchanged the original conclusions of law, judgment was entered for the defendant. The Lupton Company brings the case here on writ of error to the circuit court, upon the ground that the New York statute, as applied to the transaction in question, was in contravention of the Constitution of the United States, as an unwarrantable interference with interstate commerce.

As the trial was had before the referee, pursuant to the stipulation, the only question presented here is whether there is any error of law in the judgment rendered by the court upon the facts found by the referee. The findings of fact are conclusive in this court. We cannot review any of the exceptions to these findings or to the refusal of the referee to find facts as requested. Roberts v. Benjamin, 124 U. S. 64, 71, 74, 31 L. ed. 334, 336, 337, 8 Sup. Ct. Rep. 393; Shipman v. Straitsville Min. Co. 158 U. S. 356, 361, 39 L. ed. 1015, 1016, 15 Sup. Ct. Rep. 886; Chicago, M. & St. P. R. Co. v. Clark, 178 U. S. 353, 364, 44 L. ed. 1099, 1105, 20 Sup. Ct. Rep. 924; Hecker v. Fowler, 2 Wall. 123, 17 L. ed. 759; Bond v. Dustin, 112 U. S. 604, 28 L. ed. 835, 5 Sup. Ct. Rep. 296; Paine v. Central Vermont R. Co. 118 U. S. 152, 158, 30 L. ed. 193, 195, 6 Sup. Ct. Rep. 1019.

Under § 15 of the general corporation law of the state of New York a foreign stock corporation, other than a moneyed corporation, is prohibited from doing business in the state without having first procured from the secretary of state a certificate that it has complied with certain prescribed conditions. The corporation is required (§ 16) to file with the secretary of state a sworn copy of its charter and a statement setting forth the business which it proposes to carry on in the state; to designate its principal place of business within the state, and to appoint a person upon whom legal process may be served. Wood & Selick v. Ball, 190 N. Y. 217, 224, 83 N. E. 21. Section 15 provides: '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.' In his original report, the referee found that the Lupton Company was doing business in the state of New York, within the meaning of the statute, without a certificate of authority; and after the report was recommitted, he made additional findings with respect to the nature of its business, upon which the plaintiff in error bases it contention that the statute has been held to apply to transactions in interstate commerce which were not subject to the state's interdiction. It is not necessary, however, to review these findings, for the statute has received a construction by the highest court of the state of New York which precludes it, in any aspect of the case, from being regarded as a bar to the maintenance of this action.

The referee's ruling that the contract was void was based upon the statement in the opinion in Wood & Selick v. Ball, supra, that 'the procuring of a license must precede the transaction of business, or the contracts of the corporation are not lawful.' But in Mahar v. Harrington Park Villa Sites, 204 N. Y. 231, ——, L.R.A.(N.S.) ——, 97 N. E. 587, the court of appeals of New York has declared that a contract made by a foreign corporation doing business within the state without certificate of authority is not absolutely void; that the only penalty prescribed by the general corporation law for a disregard of the provisions of § 15 is a disability to sue upon such a contract in the courts of New York; and that the contract remains valid and effective in all other respects.

In the Mahar Case, the action was brought to recover a sum deposited under a contract made in New York with the defendant, a foreign corporation, which it was alleged was transacting business in the state without authority at the time the contract was made. It was asserted, in support of the action, that the contract was void, and hence that there was a failure of consideration. The court of appeals held that the complaint did not state a cause of action. In the opinion delivered by Willard Bartlett, J., in which the majority of the court concurred, it is said:

'It is assumed in the prevailing opinion' (that is, the opinion below, 146 App. Div. 756, 131 N. Y. Supp. 514) 'that this court held in the case of Wood & Selick v. Ball, 190 N. Y. 217, 83 N. E. 21, that noncompliance with the requirements of that section has the effect of rendering any contracts made by such a corporation in this state absolutely void. Such is not my understanding of the purport of that decision. The only proposition decided in that case was 'that compliance with- § 15 of the general corporation law should be alleged and proved by a foreign corporation such as the plaintiff, in order to establish a cause of action in the courts of this state.' . . . The only penalty which the general corporation law itself prescribes for a disregard of the provisions of this section is a disability to sue upon such a contract in the courts of New York. '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.' Consol. Laws, chap. 23, § 15. This prohibition would be effective to prevent the appellant from suing the respondent upon the contract alleged in the complaint; but in my opinion it is not operative to wholly invalidate the contract. I think that the penalty imposed upon a foreign stock corporation for doing business in New York, without the certificate of authority required by § 15...