Wood & Selick v. Ball

• Decision Date: 17 December 1907
• Citation: 83 N.E. 21,190 N.Y. 217
• Court: New York Court of Appeals Court of Appeals
• Parties: WOOD & SELICK v. BALL.

190 N.Y. 217

83 N.E. 21

WOOD & SELICK

v.BALL.

Court of Appeals of New York.

Dec. 17, 1907.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by Wood & Selick against Annie M. Ball. From a judgment of the Appellate Division (100 N. Y. Supp. 119,114 App. Div. 743), affirming a judgment on a nonsuit, plaintiff appeals. Affirmed.

This action was commenced on the 28th of November, 1904, in the County Court of Jefferson county. The following is a copy of the complaint, aside from the title and demand for judgment: ‘For a complaint against defendant, plaintiff alleges that it is a foreign corporation, duly organized under the laws of the state of New Jersey, and having its principal office for the transaction of business in the city of New York, N. Y., and that the defendant is a resident of the city of Watertown, Jefferson county, N. Y. Plaintiff further alleges that on or about the dates mentioned in Schedule A, hereto annexed and made to form a part hereof, plaintiff sold and delivered to defendant, at her request at Watertown, N. Y., all the goods, wares, and merchandise mentioned in said Schedule A, and consisting of an article used by bakers and known to the trade as ‘Liquid Egg’; that said goods were reasonably worth $97.44 and for which defendant promised to pay plaintiff that sum; that said goods were sold upon a credit of 30 days net or cash less 1 per cent., which term of credit has long since expired; that no part of said sum of $97.44 has been paid, and defendant is indebted to plaintiff therefor in the sum of $97.44 and interest thereon from the 29th day of April, 1904.' Annexed to the complaint was a schedule showing that the goods were sold between the 15th of October and the 4th of December, 1903. The answer contained a partial denial and a counterclaim for breach of warranty, to which a reply was served. There was no allegation in any pleading, nor any evidence, that the plaintiff either had or had not complied with section 15 of the general corporation law. Upon the trial plaintiff produced evidence tending to support every allegation of the complaint. It was also proved without objection that the plaintiff is a stock corporation. The defendant put in no evidence, but moved for a nonsuit, and the court granted the motion upon the ground that the complaint did not set forth a cause of action, in that it contained no allegation of compliance by the plaintiff with section fifteen of the general corporation law. Upon appeal to the Appellate Division, the judgment was affirmed; one of the justices dissenting. The plaintiff appealed to this court.

O'Brien, J., dissents.

George S. McCartin and John N. Carlisle, for appellant.

J. A. McConnell, for respondent.

VANN, J. (after stating the facts as above).

The question presented by this appeal has led to some conflict of opinion. Fuller v. Schrenk, 58 App. Div. 222,68 N. Y. Supp. 781;Welsbach Co. v. Norwich Gas & Electric Co., 96 App. Div. 52,89 N. Y. Supp. 284. While we regard the conflict as now settled, a few words may remove a doubt which has arisen, because we have held that the failure of the plaintiff to allege compliance with section 15 of the general corporation law (Laws 1892, p. 1805, c. 687) renders a complaint demurrable, and have also held that the failure to allege compliance with section 181 of the tax law, Laws 1896, p. 856, c. 908, does not render a complaint demurrable. Welsbach Co. v. Norwich Gas & Electric Co., 180 N. Y. 533, 72 N. E. 1152;Parmele Co. v. Haas, 171 N. Y. 579, 64 N. E. 440. These decisions are not in conflict. Each rests upon a statute peculiar to itself, which differs so essentially from that governing the other as to effect a different purpose and call for the application of a different rule in pleading. An examination of the decisions, the one rendered with an opinion and the other by simply answering questions certified, without comparing the statutes upon which they are founded, has led to some confusion which we now hope to dispel. In the Parmele Case we had before us the tax law, which is a revenue act. As written when that case was decided, it provides that ‘every foreign corporation,’ with certain exceptions not now material, ‘authorized to do business under the general corporation law, shall pay to the State Treasurer, for the use of the state, a license fee of one-eighth of one per centum for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, to be computed upon the basis of the capital stock employed by it within this state, during the first year of carrying on its business in this state; and if any year thereafter any such corporation shall employ an increased amount of its capital stock within this state, the same license fee shall be due and payable upon any such increase. The tax imposed by this section on a corporation not heretofore subject to its provisions shall be paid on the first day of December, 1901, to be computed upon the basis of the amount of capital stock employed by it within the state during the year preceding such date, unless on such date such corporation shall not have employed capital within the state for a period of thirteen months in which case it shall be paid within the time otherwise provided by this section. No action shall be maintained or recovery had in any of the courts in this state by such foreign corporation without obtaining a receipt for the license fee hereby imposed within thirteen months after beginning such business within the state, or if at the time this section takes effect such a corporation has been engaged in business within this state for more than twelve months, without obtaining such receipt within thirty days after such tax is due.’ Laws 1896, p. 856, c. 908, § 181; Laws 1901, p. 1364, c. 558, § 1. In the Welsbach Case we had before us the general corporation law, which is not a revenue act, but is designed to regulate domestic corporations of all kinds, and to prescribe the conditions upon which foreign stock corporations may do business in this state. It provides that ‘no foreign stock corporation other than a monied 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, and that the business of the corporation to be carried on in this state is such as may be lawfully carried on by a corporation incorporated under the laws of this state for such or similar business. * * * No such corporation now doing business in this state shall do business herein after December 31st, 1892, without having procured such certificate from the secretary of state, but any lawful contract previously made by the corporation may be performed and enforced within the state subsequent to such date. No foreign stock corporation doing susiness 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.’ Laws 1892, p. 1805, c. 687, § 15; Laws 1901, p. 1364, c. 538, § 1.

The provision of the tax law, which led to the result reached in the Parmele Case, is a condition subsequent. There is a command to pay a license fee for the privilege of carrying on business in this state, but not until business has been carried on for a longer or shorter period, varying according to circumstances. The amount is to be fixed by the Comptroller, who is authorized to examine books, records, and employés for that purpose. Laws 1895, p. 133, c. 240. It cannot be paid in advance, for it must first be computed and the computation is made on the basis of the capital stock employed in this state, which cannot be known in advance. When computed on that basis, it is to be paid ‘within thirty days after such tax is due.’ Unless it is paid within 13 months after the commencement of business in this state, or if the corporation has already carried on business in this state for a certain length of time within 30 days after the tax is due, no action can be maintained in our courts by the corporation in default. There is no express prohibition against doing business without a license, but a penalty is imposed through the withholding of the right to sue, unless a license fee is paid within the period prescribed. We therefore held that a complaint which did not allege compliance with this section was not defective for that reason, but that noncompliance was a matter of defense, to be availed of by answer. This is in accordance with the general rule that performance of a condition subsequent, which continues in force a right already acquired, need not be pleaded, while performance of a condition precedent, by which the right itself is acquired in the first instance, must be pleaded. On the other hand, the requirement of section 15 of the general corporation law, which led to the result in the Welsbach Case, is a condition precedent to the right of a foreign stock corporation to lawfully do business in this state. The procuring of a license must precede the transaction of business or the contracts of the corporation are not lawful. Aside from the provision withholding legal remedies, no such corporation can lawfully make contracts in this state without obtaining the certificate in advance. The object of this statute is not to raise revenue, but to require certain foreign corporations, once for all time, to comply with such conditions as the Legislature deemed necessary for the protection of our own citizens. Those requirements appear in section 16, and the certificate provided for in section 15 is conclusive evidence that they have been performed. Thus the corporation is required 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...