Sparrow v. Kohn

Mr. Justice Paxson delivered the opinion of the court, This action was brought to recover certain arrears of rent. The demised premises are situated in the city of New York and the contract was made there. The defendant below resisted payment upon the ground that the verbal lease under which he held the premises was void under the statute of the state of New York which prohibits any one from transacting business in the name of a partner not interested in the firm. The plaintiffs below are a Philadelphia firm with a branch office in New York. The name of their firm is Kohn, Adler & Co., and at the time of this transaction Mr. Adler was dead, and there was no person of that name in the firm. In 1882 they rented a vacant portion of their building in New York to the defendants. Was this transacting business within the meaning of the New York statute? The learned judge of the court below held that it was not, and we see no reason to question the soundness of his ruling. In construing a New York statute we naturally turn to the decisions of the courts of that state for light. We do not find a ruling upon the very point. The nearest approach to it is the ease of Wood v. Erie R. R. Co., 72 N. Y., 196. It was there said by the court of errors and appeals in considering this statute: “ The Act is highly penal, and will not be ex- tended by implication or construction to cases within the mischief, if they are not at the same time within the terms of the Act fairly interpreted. We must also consider the purpose of an Act of this character in construing the same, and the mischief it was designed to suppress. It is quite obvious that the object in view was to prevent an individual engaged in business from continuing to use the name of a member of the firm with whom such persons had been associated, after such member had retired from the concern, or of using the name of [363] a person not interested in such firm, and thus to induce credit to be given by those trading with such persons, and to impose on tlie public. Such being the manifest object of the law, it evidently related mainly to dealings between the individual who used the name of the old firm, or of one not interested, and tlie person who transacted business arising out of said dealings with Mm. These would be mainly between the vendor and the vendee, or the employer and the employee, or the person wbo performed labor or rendered services, and the one for whom it was rendered. Business transactions between parties occupying such a relationship would clearly come within the operation of the statute referred to, and were intended to be embraced within its provisions. It was against fraud and imposition which might be practised upon innocent parties wbo dealt with the persons who transacted business in the name of a party whose interest had ceased, or who never had any interest in tlie same, that the statute was directed. These were the evils intended to be remedied and clearly within the terms of the statute. Beyond this the statute cannot be extended by implication, or even by a liberal construction.” The case in which the foregoing language was used by Justice Miller was in tort, and therefore essentially different in its facts from the one in hand. It is valuable however as being a well considered construction of the statute. We are of opinion that in leasing this property the plaintiffs were not transacting business within the meaning of the New York statute. They were not real estate agents or brokers in any sense. They were in the millinery and straw goods business. The leasing of a part of their premises was not an ordinary incident of their business; it was done merely because it happened to be vacant. The Act was never intended to cover such a ease as tliis, and as it is highly penal we will not extend it beyond its plain object and meaning. Judgment affirmed.