Wood & Selick v. Ball

The question presented by this appeal has led to some conflict of opinion. (Fuller v. Schrenck, 58 App. Div. 222 ; Welsbach Co. v. Norwich Gas & Electric Co., 96 App. Div. 52 .) 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 fifteen of the General Corporation Law renders a complaint demurrable, and have also held that the failure to allege compliance with section 181 of the Tax Law does not render a complaint demurrable. ( Welsbach Co. v. Norwich Gas & Electric Co., 180 N. Y. 533 ; Parmele Co. v. Haas, 171 N. Y. 579 .)

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 Ave uoav hope to dispel.

In the Parmele case Ave had before us the Tax Luav, Avhich is a revenue act." As written when that case was decided it provides that"“ Every foreign corporation,” Avith certain exceptions not uoav material, “authorized to do business under the General Corporation Luav, 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 Avithin 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

In the Welsbaoh 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

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 employees for that purpose. (L. 1895, ch. 210.) 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 thirteen 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 thirty days after the taxis 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 Welsbaoh case, is a condition precedent to the right of a foreign stock corporation to lawfully do business in this state.

The intention of the legislature is made emphatic by its command addressed to corporations already engaged in business here when the original act took effect. “Ho such corporation now doing business in this state shall do business herein after December 31st, 1892, without having procured such certificate, but any lawful contract previously made by the corporation may be performed and enforced within the

The Welsh aeh case came before us upon a certificate of the Appellate Division, presenting the following questions for decision:

“ 1. Was the complaint demurrable upon the ground that it appears upon the face thereof that the plaintiff did not have legal capacity to sue ?

“2. Was the complaint demurrable on the ground that facts are not therein stated sufficient to constitute a cause of action ? ”

We affirmed the order appealed from and answered both questions in the affirmative. The only defect claimed to exist in the complaint in that case was the omission to allege compliance with section 15 of the General Corporation Law. The same defect exists in the complaint now before us. There is no allegation, either general or specific, that the condition precedent in the statute has been performed. -(Code Civ. Pro. § 533.) Such an allegation is essential in order to set forth a cause of action, and the objection that the complaint does not state facts sufficient to constitute a cause of action is not waived by the failure to raise it by demurrer or answer. (Id. § 499.)

It is suggested that a recovery ought to be permitted, if possible, because the defendant had the goods,' and it is equitable that she should be compelled to pay for them, but that which a statute prohibits is not equitable, and, as was said below, “ the logic of that suggestion might do away with the statute in every instance.”

We think 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. The cases holding otherwise should be regarded as overruled and the conflict of authority ended.

(dissenting). This action was brought by the plaintiff, a foreign corporation, to recover the price of goods sold and delivered to the defendant. On the trial the plaintiff gave proof of the sale and delivery of the goods and the amount due, and rested. The defendant moved for a nonsuit on the ground that the plaintiff was not entitled to recover since the complaint did not state upon its face that the plaintiff had procured from the secretary of state the certificate entitling it to do business in this state, as required by section 15 of the General Corporation Law. The motion was granted, as the learned court stated, on the ground that the complaint did not state a cause of action, since the material allegation that the certificate had been obtained was absent and that the prohibition against foreign corpoi-ations maintaining actions in the courts of this state contained in that section was operative upon the face of the complaint. The judgment was affirmed at the Appellate Division and the plaintiff has appealed to this court.

It is obvious that the decision of the learned county judge and the exception taken thereto at the trial present no question except one of pleading. The question then is, whether a complaint in an action by a foreign corporation, which does not state affirmatively that the plaintiff has procured the required certificate from the secretary of state, is subject to demurrer as not containing a cause of action. All that the plaintiff was obliged to state in the complaint, according to the provisions of the Code, was a plain and concise statement of the facts constituting his cause of action, and he did state the facts in regard to the sale and delivery of the goods and the non-payment. The facts in regard to the plaintiff’s right to do business in this state were not of the substance of the cause of action.

.During a period of at least eighty years the right of a foreign corporation to sue in the courts of this state has been

So that we have to deal now with two statutes: One contained in the sections of the Code above referred to; the other and subsequent enactment is section 15 of the Corporation Law. The former statute, beyond all doubt, enabled the

It was held in the case of Rowell v. Janvrin ( 151 N. Y. 60 ) that where a general statute authorized the plaintiff to bring an action, and a subsequent statute restricted that right conditionally in a particular case, that the pleader, that is, the plaintiff, might state his case upon the general statute and leave it to his opponent to plead the subsequent statute which restricted the right of action by way of defense. That decision was unanimous and this question of pleading was fully discussed. That is this case. We have an earlier statute, under which the complaint in this action is undoubtedly good. We have a subsequent statute restricting, in particular cases, the right of action; and hence, the restriction is no part of the plaintiff’s prima facie case, but is matter of defense. This case was followed in Parmele Co. v. Haas ( 171 N. Y. 579 ), where the same question was involved in regard to another statute containing a similar prohibition against the right of a foreign corporation to maintain actions in the courts of this state. The same rule of pleading was followed and approved in Shepard v. Fulton ( 171 N. Y. 193 , 194) and in People v. Stedeker ( 175 N. Y. 66 , 67), where it was distinctly held that where there is a restriction or exception against a right of action in a subsequent statute it is a matter of defense to be shown by the defendant. These cases have been followed in numerous decisions in the Supreme Court. (N. Y. Arch. Terra Cotta Co. v. Williams, 102 App. Div. 1 ; Emmerich Co. v. Sloane, 108 App. Div. 330 , and many other cases to he found in the reports.) In Fuller & Co. v. Schrenk ( 58 App. Div. 222 ) it was held that the prohibition against actions in the courts of this state brought by foreign corporations was matter of

The question now is, which of these conflicting decisions on the same question we should follow. I do not think that there is any principle of law or rule of practice that requires us to follow an erroneous decision simply because it is the last one. I am in favor of following the decision that appears to be correct. There are many reasons for following an older decision, even though erroneous, which do not apply to another and later decision. Under the old decision rights and interests may have grown up that it would be unwise and unjust to disturb, even though the later decision would seem to be the more correct; but certainly these reasons can have no application to a later decision, which appears to be wrong, made by inadvertence or mistake. In this case it is apparent that the current of authority on the question of pleading was fully announced in the earlier decision, while the later one was a departure from all decisions preceding it so far as the

The judgment should be reversed and a new trial granted, with costs to abide the event.

Cullen, Ch. J., Gray, Werner, Willard Bartlett and Chase, JJ., concur with Vann, J.; O’Brien, J., reads dissenting opinion.

Judgment affirmed.