In re Co-operative Law Co.

On the 23d of November, 1901, The Co-operative Law Company, the appellant in this proceeding, claims to have been lawfully organized under the Business Corporations Law with power to carry on the business of practicing law. Its objects as stated in the certificate of incorporation are “to furnish to its subscribers legal advice and service; to operate in connection with the above a department of law and collections for the use and benefit of the subscribers of the company only, and to accomplish these objects said company proposes to employ and maintain a staff of competent attorneys and counsellors at law to give such advice; and to prosecute or defend, through such counsel, any claim or suit entrusted to its care by subscribers.” Its original capital was $500, which was subsequently increased to $25,000. As it states under the oath of its president: “ The company transacts through its staff of attorneys and counsellors at law, a general law business, including the prosecution and defense of suits; incorporation of business enterprises; drawing of contracts, leases and agreements, drawing and probating of wills, management of estates, etc. The company’s legal staff ud general counsel are selected by the board of directors and ill matters of general policy, including the general schedule f fees for legal services, are under the direct supervision and ontrol of the directors.”

By chapter 483 of the Laws of 1909 it was made unlawful or any corporation to practice law, to render or furnish legal ervices or advice, to furnish attorneys or counselors for that urpose, or to advertise for or solicit legal business. (Penal aw, § 280.) Violation of the statute by a corporation or its cers was made a misdemeanor. The last sentence of the

Although the statute did not take effect until the first of September, 1909, still in June of that year the Co-operative Law Company applied ece parte to the Appellate Division of the Second Department “ for an order pursuant to Chapter 483 of the Laws of 1909 approving the existence of your petitioner and the continuance of its business for the purposes mentioned in its certificate of incorporation.” On the 18th of June, 1909, said court “ ordered that the existence, organization and incorporation of said Co-operative Law Company, I a corporation organized under the Business Corporations Law I of the State of New York and lawfully engaged in a bus! I ness authorized by the provisions of that statute, is hereby! approved, and that the corporation be and the same hereby is! permitted, to continue its .business pursuant to the terms of its certificate of incorporation.”

In November, 1909, an application was made by Charles Jl McDermott, Esq., a member of the Kings county bar and the chairman of the committee on grievances of the Brooklyn Bar Association, upon notice to the Co-operative Law. Com! pany and to the attorney-general, to vacate said order, amf after a hearing the Appellate Division vacated its previor order and denied the application for approval. While nl opinion was written it was recited in the order “ That pen

We agree with the learned counsel for the appellant that the vital question is whether, prior to the act of 1909, a corporation could be lawfully organized to practice law. He claims that authority may be found in that part of the Business Corporations Law which provides that “ three or more persons may become a stock corporation for any lawful business.” (Business Corporations Law, § 2.) This means a business lawful to all who wish to engage in it. The practice of law is not a business open to all, but a personal right, limited to a few persons of good moral character, with special qualifications ascertained and certified after a long course of study, both general and professional, and a thorough examination by a state board appointed for the purpose. The right to practice law is in the nature of a franchise from the state conferred only for merit. It cannot be assigned or inherited but must be earned by hard study and good conduct. It is attested by a certificate of the Supreme Court and is protected by registration. Ho one can practice law unless lie has taken an oath of office and has become an officer of the court, subject to its discipline, liable to punishment for contempt in violating his duties as such, and to suspension or removal. It is not a lawful business except for members of the bar who have complied with all the conditions required by statute and the rules of the courts. As these conditions cannot be performed by a corporation, it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot indirectly by employing competent lawyers to practice for it, as that would be an evasion which the law will not tolerate. Qucmdo aliquid prohibetur ex directo, prohibetur et per obliquium. (Co. Lit. 223.)

The relation of attorney and client is that of master and servant in a limited and dignified sense, and it involves the highest trust and confidence. It cannot be delegated with

A corporation can neither practice law nor hire lawyers to carry on the business of practicing law for it any more than it can practice medicine or dentistry by hiring doctors or dentists to act for it. (People v. Woodbury Dermatological Institute, 192 N. Y. 454 ; Hannon v. Siegel-Cooper Co., 167 N. Y. 244 , 246.) The legislature in authorizing the formation of corporations to carry on “ any lawful business ” did not intend to include the work of the learned professions. Such'an innovation with the evil results that might follow would require the use of specific language clearly indicating the intention. Recent legislation simply emphasizes and protects the established policy of the state and although ex post facto tends to show that

The Appellate Division was clearly right in vacating its inadvertent order of approval, for it had no power to approve of an organization not authorized bylaw. (Clark v. Scovill, 198 N. Y. 279 .) The appellant was not “ a corporation lawfully engaged in a business authorized by the provisions of any existing statute,” and according to no possible construction of the final sentence of section 280 could its “existence, organization or incorporation ” be lawfully approved by the Appellate Division. These remarks are not intended to cover title guaranty companies, organized under the Insurance Law and authorized to examine titles, guarantee the correctness of searches and insure against loss by reason of defective titles. (§ 170.) The searching of titles is open to all and guaranty companies may employ either lawyers or laymen to transact their business. It is not claimed that they prosecute or defend the rights of others, but only their own, including such as the contract to indemnify gives them.

The appearance of the Attorney-General in this proceeding, pursuant to the notice served on him by order of the Appel

The order appealed from should he affirmed, with costs.

Cüllen, Oh. J., Gray, Haight, Werner and Hiscock, JJ., concur.

Order affirmed.