Richmond Cedar Works v. Buckner

LACOMBE, Circuit Judge. This is an action brought by the Richmond Cedar Works, a corporation of the state of Virginia, against the members of a Lloyd’s insurance association, composed of individuals residing for the most part in Canada and known as the “New York Commercial Underwriters.” Nine out of the 31 defendants are citizens of New York, resident in the Southern district thereof. They have appeared and demurred to the complaint. The grounds of demurrer are: (1) That this court has no jurisdiction of the controversy, because most of the defendants are aliens and nonresidents, and two of them are residents, respectively, of Pennsylvania and Maryland. (2) That the plaintiff has not legal capacity to sue, because it has not taken out a certificate to do business in New York, nor paid the license tax. (3) On the ground that the complaint does not state facts sufficient to constitute a cause of action. 1. The action is brought upon a policy of insurance executed by individual underwriters, who agreed “jointly and severally” to insure a cargo of lumber belonging to the plaintiff against the perils oí the sea. The nonresident defendants are not indispensable parties, the action has been brought against the nine residents only, and it [426] will'' not "fail because the others are named, as defendants, but not served. Section 456 of the New York Code of Civil Procedure provides that: ■ “Where -a summons issued against two or more defendants alleged to be severally liable is served upon some but not upon all of them, the plaintiff may proceed against those upon whom it is served as if they were the only defendants named therein,” etc. In Hagan v. Walker, 14 How. 29, 14 L. Ed. 312, the United States Supreme Court held: ■ “It does not defeat the jurisdiction of the court that a person named as defendant is not an inhabitant of or found within the district where the suit is brought. The court may still adjudicate between the parties who are properly before it, and the absent parties are not to be concluded or affected by the decree.” Upon the record as it stands this court has jurisdiction to hear and determine the controversy between the plaintiff and the nine resident defendants who have appeared. 2. Defendants rely upon two statutes. The first is section 181, of the New York tax law (chapter 62 of the Laws of 1909), which provides that every foreign corporation doing business in this state, with certain exceptions, shall pay a license tax and obtain a receipt therefor, and in default thereof “no action shall be maintained or recovery had in any of the courts of this state by such foreign corporation.” Manifestly this prohibition refers only to actions brought in the state courts. ., The other statute relied upon is section 15 of the general corporation law of the state of New York, being chapter 28 of the Laws of 1909, which provides that no foreign corporation other than a moneyed 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 no such corporation shall maintain any action in this state upon any contract made by it in this state unless prior to the making thereof it shall have procured such certificate. This objection is disposed of by the decision of the United States Circuit Court of Appeals, Second Circuit, in Johnson v. New York Breweries (April, 1910) 178 Fed. 513, holding that: “Until the state Legislature enacts a law declaring such contracts void, or the highest court of the state construes the present law as so declaring, we think the federal courts should not close their doors to actions arising under such contracts.” Moreover, in the absence of binding authority to the contrary, this court is not inclined to hold that the effecting of insurance here upon a single item of its' property is the “doing business” within the state which the statute undertakes to regulate. 3. The only other objection is that the complaint does not sufficiently charge that the cárgo of lumber which defendants insured was lost. It avers that it was laden on the schooner Jennie N. Huddell, to be carried from Norfolk to New York, and that thereafter said vessel sailed from Norfolk on the voyage described, and while proceeding therein was by the perils of the sea wrecked and .totally [427] lost. It also alleges that until the said loss plaintiff was the owner, of said insured property. The complaint is, in this respect, somewhat inartificially drawn, but it seems sufficient to warrant proof upon the trial that the lumber was lost. The demurrer is overruled, with leave to answer within 20 days.