Alsing Co.v.New England Quartz Co.

Appellate Division of the Supreme Court of New York, First DepartmentDec 1, 1901
66 App. Div. 473 (N.Y. App. Div. 1901)
66 App. Div. 47373 N.Y.S. 347

December Term, 1901.

James C. Cropsey, for the appellant.

George C. Lay, for the respondent.


The appellant relies upon four grounds for reversing the judgment, the principal one of which is that there was error in the exclusion of the evidence offered to show that the defendant had not complied with section 15 of chapter 687 of the Laws of 1892. The plaintiff presented evidence which, if admitted, would have tended to prove that the defendant corporation doing business in the State of New York had not procured the certificate required by section 15, chapter 687 of the Laws of 1892, and by chapter 240 of the Laws of 1895.

The former act, which is part of the General Corporation Law, required that a foreign corporation, before doing business in this State, shall obtain a certificate of authority so to do, and the penalty fixed by the statute for a failure to procure it is as follows: "No foreign stock corporation doing business in this State without such certificate shall maintain any action in this State upon any contract made by it in this State until it shall have procured such certificate." Chapter 240 of the Laws of 1895 provides: "No action shall be maintained or recovery had in any of the courts of this State by such foreign corporation doing business in this State without obtaining the certificate of authority prescribed by law and a receipt for the license fee hereby imposed."

In the earlier statute the language is that the corporation may not " maintain any action;" while the statute of 1895 provides that "no action shall be maintained or recovery had in any of the courts of this State." The later enactment is thus more comprehensive, and it requires not only the obtaining of a certificate but also a receipt for a license fee. Under the act of 1892 it is clear, we think, that a foreign corporation which has been made a party in an action in our courts has a right, in addition to contesting the claim made against it, to recover upon a counterclaim based upon the same transaction. The defendant, having been brought into court and thus made to defend, should be allowed, unless there is a distinct provision to the contrary, not only to defend but also to litigate any question arising out of the transaction that has been made the basis of the plaintiff's complaint. There is no such prohibitive provision in this statute, and, therefore, the obtaining of the certificate would not be a prerequisite to a recovery upon the counterclaim in question.

The act of 1892 prohibits a foreign corporation from doing business in this State without obtaining the permit prescribed by the act; and for refusal to comply, the penalty referred to is attached, that no action can be maintained in the courts of this State. The act of 1895, it will be noticed, however, is in effect a tax law, and imposes a penalty upon the foreign corporation which fails to pay the license fee therein prescribed. It is true that in fixing the penalty the language was not limited to the mere failure to pay the license fee, there being a reiteration of the same penalty to be imposed for a failure to obtain the certificate as prescribed by law.

This latter provision, however, need not be considered further, because it must be regarded as superseded by section 181 of chapter 908 of the Laws of 1896, which is the general law affecting corporations, and which upon this subject of the license tax to be imposed upon foreign corporations prescribes the penalty in entirely different language, as follows: "No action shall be maintained or recovery had in any of the courts in this State by such foreign corporation without obtaining a receipt for the license fee hereby imposed, within thirteen months after beginning such business within the State." It will, therefore, be noticed that, in determining the question of what is the penalty imposed upon the foreign corporation for doing business in this State without first obtaining the certificate from the Secretary of State, resort must be had to the act of 1892, which regulates that subject; whereas, when the question is as to the penalty for a failure to pay the license tax, resort must be had to the law just quoted (Laws of 1896, chap. 908, § 181) which supersedes, if it does not actually repeal, the act of 1895.

It follows that the only act which applies in this case is that of 1892, because the proof offered was not for the purpose of showing a failure to pay the license tax under the acts of 1895 and 1896, but was directed merely to showing that the defendant had not obtained from the Secretary of State a certificate entitling it to do business in this State. As our construction of the act of 1892 is that it would not prevent a recovery by a foreign corporation upon a counterclaim growing out of the same transaction upon which the plaintiff sued, it follows that there was no error in excluding the proof offered.

The second error alleged by the plaintiff is, that evidence of offers to sell the machine was improperly admitted as proof of its value. The objection, however, which is the basis of the exception was that the question itself of whether the defendant had made "any effort to sell the machine" was immaterial. Had the answer been "yes" or "no," the effect would have been to show the good faith of the defendant, and there was no inquiry as to what if any offers were received. Although it is true that the witness did not properly respond to the question and in his answer stated that certain parties said the machine "wouldn't run true and they didn't want it," no objection was made to this answer nor was there any request to strike it out, and this exception, therefore, is not good.

Another alleged error upon which the plaintiff relies is presented by the exception to the charge relating to the measure of damages; and there are two reasons why the exception cannot be sustained. The first is that the court, after charging the jury that if the defendant had shown that there was a warranty which was broken and that the machine was worthless the money paid on account might be recovered (which was the rule of damages to which the plaintiff objected), subsequently, upon plaintiff's request, charged that the "correct rule" was "the difference between the value of that machine if it were perfect when delivered and its present value;" thus curing any error in the charge previously made. The second reason is, that although the rule formulated and charged at the plaintiff's request is the correct one, yet in the present instance, upon the facts appearing, the rule which had been charged by the court and that which was subsequently charged as requested by the plaintiff are identical, since the defendant's evidence tended to show that the machine was worthless, and the court had said that the jury before applying the rule first stated should so find. If the machine were worthless, then, its present value being nothing, the difference would be the sum which the defendant had paid.

The plaintiff insists, however, that there is nothing to show that the machine was worthless; and we thus come to the final contention that the verdict was contrary to the evidence. In this connection, it is asserted that the defendant gave no proof that the machine had no actual value, the testimony of its officers merely being that the machine had no value in the factory. We think, however, that the evidence is sufficient to give rise to the inference that the machine was of no value whatever, for it is testified that it was built for a special purpose upon order and that it was faulty and useless to any one for that purpose, that it could not be repaired, and that even as old junk it was lined with porcelain bricks which would have to be removed, so that it was "absolutely worthless."

Our conclusion, therefore, upon the whole case, is that the judgment appealed from must be affirmed, with costs.


Judgment affirmed, with costs.