Novelty Tufting Machine Co. v. Hutkoff

The plaintiff brought this action to recover upon two promissory notes for the sum of $50 each. Defendants appeared in the action by the same attorneys, and interposed a demurrer to the complaint on the ground that it did not on the face of the complaint appear that plaintiff had legal capacity to sue, as plaintiff did not allege compliance with section 15 of the general corporation law (Laws 1892, p. 1805, c. 687), as amended by chapter 538, p. 1326,. of the Laws of 1901. The demurrer was overruled, and both defendants interposed answers, which admitted the making and indorsement of the notes sued upon. The defendant Nathan Hutkoff by his answer put in issue due presentation, nonpayment, and notice of dishonor. After formal proof tending to establish the liability of defendants, upon cross-examination of the president of the plaintiff corporation it was elicited that plaintiff was incorporated under the laws of the state of Wisconsin and dealt with a number of people in this state; that plaintiff dealt in the last eight years with about 35 or 36 people; that the witness traveled once in a while, and came to this state as a representative of plaintiff, and as a rule, when coming to transact business, remained as long as two or three days; that the notes in question were given in payment for some machines that had been formerly sold by plaintiff to other persons, but fhat the original sales were canceled, and the machines were transferred to defendants. Upon this state of facts defendants’ counsel moved to dismiss the complaint upon various grounds, including the failure to show compliance with the statute,, which had been duly pleaded by defendants. In granting the motion the trial justice said:

“I think, on the whole, that you have come squarely within the statute; that it affirmatively appears that your company [plaintiff] is a foreign stock corporation; that this contract was made in the state, and these notes were-given in conformity with that contract.”

We think this ruling was erroneous, for the reason that it did not appear that plaintiff corporation was doing business in the state within the meaning of the statute. There was no proof that it had a branch office in the state, or that it stored any merchandise in the state, or that it had a bank account in the state, or any established domicile for the transaction of business within the state. A reasonable conclusion to-be drawn from the testimony is that it manufactured its machines in the state of Wisconsin, and occasionally shipped them to this state, pursuant to orders taken by agents within the state. To bring a foreign corporation within the purview of the statute, the establishment of an agency or branch office within the state must appear. As stated in Vaughn v. Lighthouse, 64 App. Div. 138 , 71 N. Y. Supp. 799 , “the

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

I concur. The evidence does not sustain a finding that the plaintiff is doing business in this state. The phrase “doing business in this state” has been held to imply corporate continuity of conduct, “such as might be evidenced by the investment of capital here, with the maintenance of an office for the transaction of business, and those incidental circumstances which attest the corporate intent to avail itself of the privilege to carry on a business.” Penn. Collieries Co. v. McKeever, 183 N. Y. 98 , 75 N. E. 935 , 2 L. R. A. (N. S.) 127 . In this case there is not an evidentiary fact or circumstance indicative either of action or intent on the part of the plaintiff.

ERLANGER,. J., concurs.