East Coast Oil Co. v. Hollins

Page, J.: The complaint alleges that the plaintiff is a foreign corporation organized and existing under the laws of the Republic of Mexico; that the plaintiff operated petroleum-producing territory upon which it had opened certain petroleum wells and upon which it proposed to open other petroleum wells, and that on or about the 1st day of July, 1912, at New York city, in the State of New York, the plaintiff and the Toltec Mexican Oil Company, a foreign corporation organized and existing under and by virtue of the laws of the State of Delaware, duly entered into an agreement in writing, a copy of which is annexed to the complaint, and that at the time of the making of the said contract the defendants duly signed and delivered to the plaintiff at the city of New York a contract wherein and whereby they unconditionally guaranteed to the [69] plaintiff the due performance and observance of said agreement by the Toltec Mexican Oil Company. The complaint then alleges certain modifications of the contract with the consent of the defendants, and delivery during the months of March and April, 1914, of 60,006 barrels of petroleum, for which the Toltec Mexican Oil Company was indebted to the plaintiff in the sum of $30,003; that the Toltec Mexican Oil Company wholly neglected and refused to pay said sum, and that the defendants have wholly failed and refused to pay, and that the plaintiff has duly performed all the terms of the contracts on its part to be performed. The second cause of action is to recover for certain other petroleum in addition to that alleged in the first cause of action and under the same contract, amounting to $19,250. The third cause of action alleges the tender to the Toltec Mexican Oil Company of certain other petroleum that it had in storage pursuant to the same contract, and the refusal on the part of the Toltec Company to receive the same, and further alleges that on or about June nineteenth the said Toltec Company wholly repudiated said contract and refused to be bound thereby and notified said plaintiff that it had canceled said contract, and that as a result of the breach of the contract the plaintiff has been damaged in the sum of $2,500,000, no part of which has been paid, although demanded. By reference to the contract which is annexed to the complaint and becomes a part thereof, it appears that the plaintiff agreed to sell to the Toltec Mexican Oil Company its entire production of oil from the wells then opened or to be opened for a period of ten years from the date thereof, and that payments therefor 'were to be made to the plaintiff at its office in the city of New York, and furthermore that all notices to be given thereunder by the purchaser to the vendor should be given at the latter’s office in New York or at any other point, as the vendor might from time to time request; and the 15th paragraph provides that this contract is to be interpreted according to the laws of the State of New York. The defect in the complaint, which is the ground of demurrer, is that there is no allegation that the corporation, prior to the making of this contract, had complied with section 15 of the General Corporation Law and obtained a certificate [70] authorizing it to do business in this State. The plaintiff’s counsel argued that the plaintiff had not transacted any business in this State and had no office therein. The complaint does not admit of that construction. The contract upon which the action is founded was made within the State. It provided that the performance of the contract, as to the payment for its entire product, for the succeeding ten years, should be made at its office in the city of New York. It thus speaks of a present office. The language is not at an office hereafter to be established in the city of New York. Furthermore, by the very terms of the contract, it is a New York contract, to be interpreted according to the laws of this State. It is, therefore, a condition precedent to the maintenance of the .action that section 15 of the General Corporation Law should have been complied with prior to entering into the contract. (Consol. Laws, chap. 23 [Laws of 1909, chap. 28], § 15, as amd. by Laws of 1917, chap. 594; Wood & Selick v. Ball, 190 N. Y. 217; Woodridge Heights Const. Co. v. Gippert, 92 Misc. Rep. 204, 206.) If there were any facts that would have excused compliance with the condition precedent, they should have been set forth. The orders sustaining the demurrers to the complaint were right and should be affirmed, with ten dollars costs and disbursements, with leave to plaintiff to serve an amended complaint upon payment of said costs and the costs awarded upon the motion at Special Term. Clarke, P. J. and Laughlin, J., "concurred; Smith and Shearn, JJ., dissented.