S T Bank
v.
Spectrum Cabinet Sales, Inc.

Appellate Division of the Supreme Court of New York, Second DepartmentFeb 2, 1998
247 A.D.2d 373 (N.Y. App. Div. 1998)
247 A.D.2d 373668 N.Y.S.2d 641

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  • shipping a "large amount of product" into New York was insufficient to establish that a foreign corporation was "doing business" within the meaning of § 1312(a)

    Summary of this case from Hongtai Trading Inc. v. Mingsheng Yan

February 2, 1998

Appeal from the Supreme Court, Nassau County (O'Connell, J.).


Ordered that the order is reversed, on the law, with costs, the defendant's motion is denied, and the complaint is reinstated.

The defendant successfully moved at the Supreme Court to dismiss the complaint on the ground, inter alia, that the plaintiff's assignor, International Kitchens, Ltd. (hereinafter International), a Pennsylvania corporation, lacked the capacity to sue ( see, CPLR 3211 [a] [3]) pursuant to Business Corporation Law § 1312 Bus. Corp. (a), since it was doing business in this State without authority. Business Corporation Law § 1312 Bus. Corp. (a) "constitutes a bar to the maintenance of an action by a foreign corporation found to be `doing business' in New York without the required authorization to do business there" ( Great White Whale Adv. v. First Festival Prods., 81 A.D.2d 704, 706; Interline Furniture v. Hodor Indus. Corp., 140 A.D.2d 307). However, the party relying upon this statutory barrier bears the burden of proving ( see, Great White Whale Adv. v. First Festival Prods., supra) that the corporation's business activities in New York "were not just casual or occasional," but "so systematic and regular as to manifest continuity of activity in the jurisdiction'" ( Peter Matthews, Ltd. v. Robert Mabey, Inc.) 117 A.D.2d 943, 944; Construction Specialties v. Hartford Ins. Co., 97 A.D.2d 808; see also, International Fuel Iron Corp. v. Donner Steel Co., 242 N.Y. 224).

Contrary to the defendant's contention, its motion papers did not establish, prima facie, that International was doing business in New York at the the that the parties entered into the contract being sued upon ( see, International Fuel Iron Corp. v. Donner Steel Co., 242 N.Y.2d 224, 229-231, supra). Although International shipped a large amount of its product into New York, it neither maintained an office, a telephone, or a sales representative in New York. Nor did it do any advertising in New York. Under these circumstances, "there is no showing that plaintiff conducted continuous activities in [New York] essential to its corporate business" ( Von Arx AG. v. Breitenstein, 52 A.D.2d 1049, 1050, affd 41 N.Y.2d 958). The purpose of Business Corporation Law § 1312 (a) is "to regulate foreign corporation which are `doing business' within the State [and] not * * * to enable the avoidance of contractual obligations" ( Von Arx AG. v. Breitenstein Co., 41 N.Y.2d supra, at 960). Accordingly, "the presumption that the plaintiff does business, not in New York but in its State of incorporation has not heen overcome" ( Construction Specialties v. Hartford Ins. Co., supra, at 808). Therefore, the Supreme Court erred in granting the defendant's motion to"dismiss the complaint.

Mangano, P.J., Joy, altman and Luciano, JJ., concur.