McNamara v. Keene

Giegerich, J. The learned trial judge first directed a verdict for the plaintiff, as a matter of convenience, there being no question of fact, and, later, after considering the question of law involved, granted a motion to set aside the verdict and to dismiss the complaint. The plaintiff is the assignee of a foreign corporation. The cause of action assigned arose on contracts made in 1900. At that time, and until the amendment of 1901 (Chap. 538) to section 15 of the General Corporation LaWj the assignee of a foreign corporation could sue upon a claim, although the corporation might not be able to do so, because of its failure to comply with the provisions of that section. Lindheim v. Sitt, 33 Misc. Rep. 62; Box Board & Lining Co. v. Vincennes Paper Co., 45 id. 1. The amendment of 1901 extended the prohibition to the assignee, and it was subsequently to such amendment that the assignment herein to the plaintiff was made. The question is whether such amendment can be made applicable to contracts in existence at the time it was passed, without violating the constitutional provisions protecting contract obligations from impairment. In People ex rel. Reynolds v. Common Council, 140 N. Y. 300-307, it was said: “All contract obligations are protected from impairment by state legislation by the provisions of the Federal Constitution. The obligation of a contract is impaired in the constitutional sense, by any law which [454] prevents its enforcement, or which materially abridges the remedy for enforcing it which existed when it was contracted, and does not supply an alternative remedy equally adequate and efficacious ” (citing McGahey v. Virginia, 135 U. S. 662). In Lewis Publishing Company v. Lenz, 86 App. Div. 451-454, in speaking of the prohibition against- the corporation itself bringing the action under the statute in question, the court said: “ If this provision, enacted subsequent to the making of the contract in this case, be read as retroactive, then it is vicious as impairing the obligation of such contract.” The respondent relies on the following language used in Neuchatel Asphalt Co. v. Mayor, 155 N. Y. 373, 377, viz.: “ This statute was simply declaratory of the policy of the state that foreign stock corporations should not carry on any business in this state, which similar corporations organized under its laws could not lawfully conduct. Its purpose was not to avoid contracts; but to provide for an effective supervision and control of the business proposed to be carried on here by foreign corporations. It provided no penalty, in the event of a non-compliance, other than the suspension of civil remedies. Such, and such only, were the consequences of the violation of the statute and none others will be implied as intended by the legislature.” All that was necessary, as the statute stood when the last case arose, was for the foreign corporation to comply with the law and then begin its action. As the statute was amended later, however, and as it stands now, such power of subsequent compliance was taken away from the delinquent company, the act now requiring such compliance not only before suit brought, but before the contract is made. All the Court of Appeals decided in that case was that a suspension- of civil remedies until the company had complied with the act was not an avoidance of the contract. The present case is quite different. If the act be construed and applied in the manner it was in the court below, then we have not a case of suspension of remedy nor of an alternative remedy (namely, by assignment), but a case of absolute withdrawal of all remedy in our courts. _ [455] This, I think, brings the case within the principle enunciated in People ex rel. Reynolds v. Common Council, 140 N. Y. 300, and above quoted. The order appealed from should be reversed and judgment entered on the verdict, with the costs in this court and the court below.