Hyperlawhypertext legal database Manufacturers' Commercial Co. v. Blitz 131 A.D. 17

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Manufacturers' Commercial Co. v. Blitz

131 A.D. 17 Court First Department, Decision date 1909-03-05 English

Delivered by Houghton, J.:

Contents

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Manufacturers’ Commercial Company, Respondent, v. Henry Blitz, Appellant.
First Department,
March 5, 1909.

Headnote

Corporation — when foreign corporation presumed to be stock corporation— right of foreign corporation to sue on note made in this State —license to do business prerequisite—bills and notes — transfer of instrument payable to order without indorsement—when transferee not holder in due course.
Where the business of a foreign corporation is “ buying and selling accounts, making contracts and purchasing outstandings,” it will be presumed to be a stock corporation in the absence of proof to the-contrary.
A negotiable instrument is presumed to have been made where it is dated, and, hence, an action upon a promissory note dated in the city of New York must be deemed to be brought upon a contract made in this State.
Where the payee of a note made in this State is a foreign stock corporation, its assignee suing on the instrument in this State must allege and prove that the payee prior to the delivery of the note had obtained a certificate authorizing it to do business in this State as required by section 15 of the General Corporation Law.
Where a note payable to order was transferred without indorsement, the negotiation for the purpose of determining whether the transferee is a holder in due course takes effect as of the time when the indorsement is actually made
p. 18
(section 79 of the Negotiable Instruments Law), and, hence, when there was no subsequent indorsement by the -payee, a foreign corporation, and there is no proof that the transferee took the instrument in good faith before maturity, he is not a holder in due .course so as to bring himself within the exception per-j initting a holder of a negotiable instrument taken from a foreign corporation : in good faith and before maturity to recover without showing that the corporation was authorized to do business here.
■ Appeal by the defendant, Henry Blitz, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Hew York on the 2Íst day of October,. 1908, upon the verdict of a jury rendered by direction of the court after a trial at the Hew York Trial Term.
Alfred Epstein, for the appellant.
Elbridge L. Adams, for the respondent.

The action is upon a promissory note given by the defendant June 10, 1904, to the Manufacturers’ Commercial Company, a Hew Jersey corporation, or order,' payable in one year.

The plaintiff, bearing the same name, is a Hew York corporation and is the successor of the Hew Jersey corporation,, and the complaint alleges that' it is the owner of the note in suit by assignment and transfer. This allegation of the complaint was admitted by the defendant’s answer. The note does not bear the indorsement of the payee, but was produced upon the trial by the plaintiff, and •it is fair to. assume, from such evidence as appears, that the plaintiff was organized for the -purpose of taking over the assets of the foreign corporation and succeeding to its business, and that it took over' such assets, including the note in suit. The business of the plaintiff,-which is the same as that carried on by its predecessor which it took over, is described as being that of “ buying and selling accounts, making contracts and purchasing outstandings.” From the nature of such business, and in the absence of proof to the contrary, it must be assumed that the Hew Jersey company was a stock corporation. The note is dated at the city of Hew York, and is payable at the office of the corporation in said city. By the express provisions of section 76 of the negotiable Instruments Law (Laws of 1897, chap. 612) every indorsement of an instrument is pre

p. 19
sutned to have been made where it is dated, and the same presumption follows front the place of date (Chemical Nat. Bank v. Kellogg, 183 N. Y. 92 ), and hence the contract upon which the suit is brought must be assumed to have been made in this State.

It was neither alleged in the complaint nor proved upon the trial that the Hew Jersey corporation had obtained the certificate permitting it to do business in this State according to the requirements of section 15 of the General Corporation Law (Laws of 1892, chap. 687, as amd. by Laws of 1901, chap. 538, and Laws of 1904, chap. 490).

At the close of the plaintiff’s case the defendant moved to dismiss the complaint on the ground that the plaintiff had failed to allege and prove the obtaining of such certificate. This motion was denied, and on request of the plaintiff, the court directed a verdict against the defendant. Plaintiff not having proved that its predecessor, the payee of the note, had obtained such certificate, could not maintain as assignee an action thereon in this State. A foreign stock corporation doing business in this Stat.e must allege and prove that it had obtained the license to do business provided by section 15 of the General Corporation Law, prior to the making of the contract upon which the action is brought, and if it fails to do this, neither it nor the assignee can maintain any action on such contract. (South Bay Co. v. Howey, 190 N. Y. 240 ; Welsbach Co. v. Noriwich Gas & Electric Co., 180 id. 533.) Proof of compliance with section 15 of the General Corporation Law must be made by the plaintiff, and in that respect it differs from proof of non-compliance with section 181 of the Tax Law (Laws of 1896, chap. 908, as amd. by Laws of 1901, chap. 558, and Laws of 1906, chap. 474), which is a matter of defense, and must be plead and proved by the defendant. (Halsey v. Jewett Dramatic Co., 190 N. Y. 231 .)

The learned counsel for the respondent concedes.that the law is as stated, but insists that the plaintiff comes within the exception pointed out in Halsey v. Jewett Dramatic Co. (supra), in that this action is brought upon a negotiable instrument taken from the foreign corporation in good faith and before maturity. There is no proof in the record that the plaintiff took the note before maturity. The plaintiff holds the note, and has possession of it, and produced it upon the tidal. The plaintiff is not, however, the payee nor

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the indorsee, because the original payee never indorsed it over to the plaintiff by actual indorsement. Section 79 of the Negotiable Instruments Law provides that where the holder of an instrument payable to his order transfers it for value without indorsing it, the transferee obtains such title as the transferor had; but for the purpose of determining whether the transferee is a holder in due course the negotiation takes effect as of the time when the indorsement is actually made.' Such indorsement never having been made, plaintiff cannot be deemed to be a holder in due course as defined by sections 2, 60, 61, 91 and 98 of the Negotiable Instruments Law. The plaintiff, therefore, failed to prove that it was the holder of .the note in suit, which it took in good faith before maturity, and did not bring itself within the exception stated in Halsey v. Jewett Dramatic Co. (supra) so as to relieve it from proving that its transferor or assignor, the New Jersey corporation, held a certificate permitting it to do business in this State.

The omission to make such proof being in our judgment fatal, the judgment was erroneous and must be reversed, and a new trial ordered, with costs to appellant to abide the event.

Ingraham, McLaughlin, Clarke and Scott, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellant to abide event.

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