Wood Selick v. . Ball

Vann, J. 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 *222 amount of its capital stock within this state, the same license fee shall be due and payable upon any such increase. The tax imposed by this section on a corporation not heretofore subject to its provisions shall be paid on the first day of December, 1901, to be computed upon the basis of the amount of capital stock employed by it within the state during the year preceding such date, unless on such date such corporation shall not have employed capital within the state for a period of thirteen months in which case it shall be paid within the time otherwise provided by this section. No action shall be maintained or recovery had in any of the courts in this state by such foreign corporation without obtaining a receipt for the license fee hereby imposed within thirteen months after beginning such business within the state, or if at the time this section takes effect such a corporation has been engaged in business within this state for more than twelve months, without obtaining such receipt within thirty days after such tax is due.” (L. 1896, ch. 908, § 181 ; L. 1901, ch. 558, § 1.) 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 *223 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.” (L. 1892, ch. 687, §15; L. 1901, ch. 538, §1.) 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. *224 The procuring of a license must precede the transaction of business or the contracts of the corporation are not lawful. Aside from the provision withholding legal remedies, no such corporation can lawfully make contracts in this state without obtaining the certificate in advance. The object of this statute is not to raise revenue, but to require certain foreign corporations, once for all time, to comply with such conditions as the legislature deemed necessary for the protection of our own citizens. Those requirements appear in section 1G and the certificate provided for in section 15 is conclusive evidence that they have been performed. Thus the corporation is required to file with the secretary of state a sworn copy of its charter and a statement setting forth the business which it proposes to carry on in this state; to designate a place of business within this state which is to be its principal place of business here and to appoint a j>erson upon whom legal process may be served in this state. These are the conditions upon which it is permitted to enter the state for the purpose of carrying on business. Until it complies with them and procures a certificate from the secretary of state that it has complied with them it cannot carry on business here except in violation of la-w. The command is that it “ shall do no business in this state without first ” procuring the certificate of compliance. “ Without,” as thus used, is a word of exclusion, and excludes from the right to do business in this state every foreign corporation of the kind specified which has not obeyed the statute. “The legislature has said that the thing shall not be done and. that is enough.” (Jackson v. Walker, 5 Hill, 27, 32 ; Foley v. Speir, 100 N. Y. 552; Johnston v. Dahlgren, 166 N. Y. 354, 358.) 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 *225 state subsequent to such date.” The saving clause inserted to protect contracts already made when the act was passed indicates that contracts made after that date are unlawful unless the statute is complied with. 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. *226 The judgment appealed from should be affirmed, with costs.