Mahar v. Harrington Park Villa Sites

• Decision Date: 23 January 1912
• Citation: 204 N.Y. 231,97 N.E. 587
• Parties: MAHAR v. HARRINGTON PARK VILLA SITES et al.
• Court: New York Court of Appeals Court of Appeals

204 N.Y. 231

97 N.E. 587

MAHAR

v.HARRINGTON PARK VILLA SITES et al.

Court of Appeals of New York.

Jan. 23, 1912.

Appeal from Supreme Court, Appellate Division, First Department.

Action by, Henry W. Mahar against the Harrington Park Villa Sites, impleaded with another. From an order of the Appellate Division of the Supreme Court in the First Department (146 App. Div. 756,131 N. Y. Supp. 514), reversing a determination of the Appellate Term of the Supreme Court (71 Misc. Rep. 430,128 N. Y . Supp. 620), which reversed a judgment of the Municipal Court of the City of New York overruling a demurrer to the complaint, on the ground that it did not state facts sufficient to constitute a cause of action, the Harrington Park Villa Sites appeals. Order reversed.

Alexander Thain, for appellant.

Robert Lyon, for respondent.

WILLARD BARTLETT, J.

The question certified to this court by the Appellate Division (131 N. Y. Supp. 1127) is as follows: ‘Does the complaint state facts sufficient to constitute a cause of action against the defendant, Harrington Park Villa Sites?’

The complaint alleges that at the city of New York, about July 27, 1909, the plaintiff had negotiations with the defendants regarding the sale by the defendants and the purchase by the plaintiff of certain lots of land situated at Harrington Park, N . J.; that thereafter the defendants and plaintiff entered into a written agreement for the sale of said property to the plaintiff; that the contract required plaintiff to pay to the Harrington Park Villa Sites, as a part payment thereon, the sum of $500, and plaintiff delivered to said defendant a check on the Carnegie Trust Company, drawn to its order, which check as afterwards duly indorsed by said defendant and paid; that the Harrington Park Villa Sites, at the time named, was a foreign corporation, other than a money corporation, organized and existing under the laws of New Jersey, and had an office for the transaction of its business in the city of New York, and the transaction relating to and the making of the agreement above named took place in the city and state of New York; that at the time of the making of said agreement the Harrington Park Villa Sites had not filed with the Secretary of State of New York the statement required by law, and had not paid the tax or obtained a certificate to enable it, as a foreign stock corporation, other than a money corporation, to do business in the state of New York, and at said times was doing business in violation of section 15 of the general corporation law; and that the plaintiff under said contract deposited with the defendants the said sum of $500, and before the commencement of this action demanded from them the aforesaid sum, no part of which has been paid. Upon these facts the plaintiff demanded judgment against the defendants for the sum of $500 and costs.

The Harrington Park Villa Sites demurred, on the ground that the complaint did not state facts sufficient to constitute a cause of action, and on the additional ground that the court had no jurisdiction of the subject-matter, inasmuch as the action was brought to avoid a contract under seal in respect to real estate in New Jersey. The Municipal Court held that the complaint was good; the Appellate Term held that it was bad; the Appellate Division in turn has held that it was good, and the question now comes here.

The theory upon which the complaint has been upheld by the Appellate Division is that the contract therein mentioned was void, because made by a foreign stock corporation, other than a moneyed corporation, doing business in the state of New York in violation of the provision of section 15 of the general corporation law (Laws of 1909, c. 28 [Consol. Laws 1909, c. 23]); and hence that there was a failure of consideration for the payment of the $500 by the plaintiff, and an action lies to recover back the money. It is assumed in the prevailing opinion that this court held, in the case of Wood & Selick v. Ball, 190 N. Y. 217, 225,83 N. E. 21, 23, that noncompliance with the requirements of that section has the effect or 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 section 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.’ It is true that Judge Vann, in the course of the opinion, said that no such corporation could lawfully make contracts in this state without obtaining the required certificate in advance, and that he also spoke of contracts made by a corporation which had not obtained the certificate as ‘unlawful,’ and said that, in the absence of the certificate, a foreign stock corporation could not carry on business here, ‘except in violation of law.’ None of these expressions, however, necessarily imports that a contract thus made is absolutely void. 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.’ Cons. Laws, c. 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 ...