Great Northern Moulding Co. v. Bonewur — 128 A.D. 831

Majority

p. 831

Great Northern Moulding Company, Respondent, v. Solomon Bonewur, Appellant.

(No. 1.)

Second Department,

November 20, 1908.

Headnote

Foreign corporations — suit on note — evidence — oral proof of failure of consideration.

A foreign corporation may sue in this State on a note made in another State, although it has not complied with section 15 of the General Corporation Law so as to be entitled to do business here.

Although the rule that the terms of a written instrument cannot be contradicted or varied by parol applies to promissory notes, the consideration and conditions of delivery may be shown as between the original parties. Thus the maker, when sued by the payee, may show by parol that the latter failed to discontinue an action in settlement of which the note was given.

Appeal by the defendant, Solomon Bonewur, from a judgment of the Municipal Court of the city of New York, borough of

p. 832

Brooklyn, in favor of the plaintiff, rendered on the loth day of May, 1908.

• Herman J. Rubenstien, for the appellant.

Marian C. Ansorge, for the respondent.

The defendant appeals from a judgment in favor of the plaintiff in an action on a promissory note. The points are made (a) that the plaintiff, a foreign corporation, cannot maintain the action for failure to comply with section 15 of the General Corporation Law,^[1] which provides, inter ctlia,^ 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, * * *. 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; ” (b) that the court erred in excluding evidence tending to show failure of consideration.

The complaint alleges that the note sued on was made at the city of Chicago, 111. That allegation is not put in issue by the answer, and we find nothing in the record tending to disprove it. It is unnecessary, therefore, to consider whether the plaintiff was “ doing business in this State ” within the meaning of said- statute, as the suit is not brought upon a contract made by it in this State.

The answer alleged, in effect, that the plaintiff contracted to sell certain goods, wares and merchandise to the defendant, but failed to perform its contract and to. deliver all of the goods so sold ; that it brought a suit in- the City Court of New York to recover for the goods actually delivered, in which suit the defendant interposed a defense; that .the note in suit was executed and delivered pursuant to and in consideration of an agreement of compromise wherein it was agreed that the plaintiff should discontinue the action pending in the City Court and deliver the goods which it had theretofore

* See Laws of 1892, chap. 687, § 15, as amd. by Laws of 1901, chaps. 96, 538, and Laws of 1904, chap. 490.—[Rep.

p. 833

failed to deliver pursuant to its contract, but that the plaintifE had failed and refused to perform its said agreement to discontinue the said action and deliver said goods. On the trial the defendant sought to show the agreement pursuant to which the note was delivered, but the evidence was excluded on the authority of Jamestown Business College Association v. Allen ( 172 N. Y. 291 ). The evidence in that case did tend to vary the terms of a note which had been unconditionally delivered. That case merely held that the general rule, that it is not competent to show the verbal arrangements for the purpose of contradicting or varying a written instrument, applies to a promissory note. But the consideration and the conditions of delivery are always open to inquiry, and it is permissible between the original parties to show a failure of consideration or a failure to comply with the conditions of delivery. (Higgins v. Ridgway, 153 N. Y. 130 .) We are unable to determine the effect of the evidence, as it is not in the record; and merely hold now that the defendant should have been permitted to prove, if he could, that the plaintifE had refused to perform the agreement pursuant to which the note was delivered.

The judgment is reversed.

Woodward, Hooker, Gaynor and Rich, JJ., concurred.

Judgment of the Municipal Court reversed and new trial ordered, costs to abide the event.

Cases cited

Jamestown Business College Ass'n v. Allen 172 N. Y. 291 N.Y. 1902-10-21 p. 833
Higgins v. Ridgway 153 N. Y. 130 N.Y. 1897-05-14 p. 833