Opinion
January 10, 1908.
Dallas Flannagan, for the appellant.
John Larkin, for the respondents.
Present — PATTERSON, P.J., INGRAHAM, LAUGHLIN, CLARKE and SCOTT, JJ.
The reason assigned for the reversal of this judgment was that, as it did not appear from the complaint that the plaintiff was a foreign stock corporation, and as that fact was not set up in the answer, the defense that the plaintiff had not complied with section 15 of the General Corporation Law (Laws of 1892, chap. 687) was not available. Since the decision in this case the Court of Appeals, in Wood Selick v. Ball ( 190 N.Y. 217, decided December 17, 1907), has held that a complaint in an action brought by a foreign corporation to recover upon a contract made within this State, which fails to allege that the plaintiff has received a license to do business within this State under section 15 of the General Corporation Law, does not state a cause of action. In that case it appears from the statement of facts that it was proved upon the trial, without objection, that the plaintiff was a stock corporation. That fact, however, was not adverted to in the opinion, but it was stated that the case of Welsbach Co. v. Norwich Gas Electric Co. ( 180 N.Y. 533) held that in an action by a foreign corporation to recover upon a contract made within this State the complaint was demurrable if it failed to allege compliance with section 15 of the General Corporation Law; that "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." In deciding this case we applied a rule which we supposed was well settled, that in order to support an objection to a cause of action sought to be maintained in violation of a statutory prohibition, the facts upon which that objection depended must appear in the pleadings. This general rule is instanced by the defense of usury, where the statute makes the contract actually void where excessive interest is paid or agreed to be paid for a loan of money; by the Statute of Limitations, which must be pleaded, and by the Statute of Frauds, by which contracts of certain classes are not enforcible unless in writing. In this class of cases we have understood that unless the facts upon which the alleged invalidity of the contract was based were alleged in the pleadings the defense was not available. It would seem that in applying this rule to an action prohibited by section 15 of the General Corporation Law, we were in error; that where it is alleged that the plaintiff is a foreign corporation, there is a presumption that it is a foreign stock corporation and thus within the prohibition contained in section 15 of the General Corporation Law. The basis of this presumption would appear from the case of South Bay Co. v. Howey ( 190 N.Y. 240, also decided December 17, 1907) to be that as a corporation organized under the laws of the State of New York could not have been organized to do the business in which the corporation in question was engaged under the Membership Corporations Law (Laws of 1895, chap. 559), it must be presumed that no corporation not a stock corporation could be organized under the laws of any other State to do such business. The court in that case said: "The plaintiff could have been incorporated in this State as a stock corporation, and it could not have been incorporated in this State for manufacturing purposes under the Membership Corporations Law. It will be assumed that its incorporation in another State was for the purpose of exercising the rights and performing the work in which it was engaged for pecuniary profit;" although membership corporations authorized to make contracts, such as mutual insurance companies, have been incorporated in this State. In view of this final determination of the question by the Court of Appeals, and as by it the rule is established 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," and "the cases holding otherwise should be regarded as overruled and the conflict of authority ended" ( Wood Selick v. Ball, supra), this court should of its own motion order a reargument in this case, so that it can be decided in compliance with the principle established by the Court of Appeals in the case above cited.
A reargument is, therefore, ordered.
Reargument ordered. Settle order on notice.