Wood Selick v. . Ball , 190 N.Y. 217 ( 1907 )

This action was brought by the plaintiff, a foreign corporation, to recover the price of goods sold and delivered to the defendant. On the trial the plaintiff gave proof of the sale and delivery of the goods and the amount due, and rested. The defendant moved for a nonsuit on the ground that the plaintiff was not entitled to recover since the complaint did not state upon its face that the plaintiff had procured from the secretary of state the certificate entitling it to do business in this state, as required by section 15 of the General Corporation Law. The motion was granted, as the learned court stated, on the ground that the complaint did not state a cause of action, since the material allegation that the certificate had been obtained was absent and that the prohibition against foreign corporations maintaining actions in the courts of this state contained in that section was operative upon the face of the complaint. The judgment was affirmed at the Appellate Division and the plaintiff has appealed to this court.

It is obvious that the decision of the learned county judge and the exception taken thereto at the trial present no question except one of pleading. The question then is, whether a complaint in an action by a foreign corporation, which does not state affirmatively that the plaintiff has procured the required certificate from the secretary of state, is subject to demurrer as not containing a cause of action. All that the plaintiff was obliged to state in the complaint, according to the provisions of the Code, was a plain and concise statement of the facts constituting his cause of action, and he did state the facts in regard to the sale and delivery of the goods and the non-payment. The facts in regard to the plaintiff's right to do business in this state were not of the substance of the cause of action.

During a period of at least eighty years the right of a foreign corporation to sue in the courts of this state has been authorized and regulated by statute. (2 R.S. 457, §§ 1, 2.) These statutes have been incorporated into the present Code which regulates procedure in civil actions. (Code Civ. Pro. §§ 1779, 1780.) Whether foreign corporations could, prior to the enactment of these statutes, maintain actions in the courts of this state at common law, under the doctrine of comity, it is not necessary now to inquire. I will only remark in passing that for nearly a century there existed a mass of statutory law regulating procedure in actions by or against foreign corporations. (L. 1840, ch. 354; L. 1842, ch. 197.) It cannot be doubted that, under the general provisions of the Code, which were in force for such a long period in some form, that this action was well brought and that the complaint was entirely sufficient, but in recent years there have been restrictions imposed upon the right to bring actions in the courts of this state by foreign corporations, and section 15 of the General Corporation Law is the restriction which was invoked successfully to defeat the plaintiff in this case. It will be noticed that that section does not purport to be an amendment to the Code, but a subsequent and independent statute in respect to the right to bring the action. That section does not contain any general prohibition against the right of action, but is limited in its operation to one particular class of actions, namely, actions upon contracts made in this state. It is very clear that, notwithstanding that restriction, the plaintiff in this case can maintain all other actions. It can sue for injuries to property, real or personal. It can bring ejectment or trespass or suits for damages arising upon negligence. It can sue for libel or slander, and, in short, can maintain every action that a domestic corporation can maintain except the single cause of action on a contract made within this state. It can still sue upon contracts made in some other state.

So that we have to deal now with two statutes: One contained in the sections of the Code above referred to; the other and subsequent enactment is section 15 of the Corporation Law. The former statute, beyond all doubt, enabled the plaintiff to bring and maintain this action upon the complaint as it appears in the record. The latter statute, containing the restriction, has the effect of modifying the general provisions of the Code; but the question is, upon which of the parties was the burden of pleading this statute. That is the only question involved in this appeal, and it seems to me that it has been settled by the adjudications in this court, which will now be referred to.

It was held in the case of Rowell v. Janvrin (151 N.Y. 60) that where a general statute authorized the plaintiff to bring an action, and a subsequent statute restricted that right conditionally in a particular case, that the pleader, that is, the plaintiff, might state his case upon the general statute and leave it to his opponent to plead the subsequent statute which restricted the right of action by way of defense. That decision was unanimous and this question of pleading was fully discussed. That is this case. We have an earlier statute, under which the complaint in this action is undoubtedly good. We have a subsequent statute restricting, in particular cases, the right of action; and hence, the restriction is no part of the plaintiff'sprima facie case but is matter of defense. This case was followed in Parmele Co. v. Haas (171 N.Y. 579), where the same question was involved in regard to another statute containing a similar prohibition against the right of a foreign corporation to maintain actions in the courts of this state. The same rule of pleading was followed and approved in Shepard v.Fulton (171 N.Y. 193, 194) and in People v. Stedeker (175 N.Y. 66, 67), where it was distinctly held that where there is a restriction or exception against a right of action in a subsequent statute it is a matter of defense to be shown by the defendant. These cases have been followed in numerous decisions in the Supreme Court. (N.Y. Arch. Terra Cotta Co. v.Williams, 102 App. Div. 1; Emmerich Co. v. Sloane, 108 App. Div. 330, and many other cases to be found in the reports.) InFuller Co. v. Schrenk (58 App. Div. 222) it was held that the prohibition against actions in the courts of this state brought by foreign corporations was matter of defense and no part of the plaintiff's case. That case was unanimously affirmed in this court without opinion (171 N.Y. 671), but it was held in Welsbach Co. v. Norwich Gas El.Co. (96 App. Div. 52) that unless a foreign corporation stated affirmatively in its complaint that it had first obtained from the secretary of state the certificate under section 15 of the Corporation Law the complaint was bad on demurrer, and this case was affirmed in this court without opinion (180 N.Y. 533); but that case came here upon certified questions and the answer was, in effect, that it appeared on the face of the complaint that the plaintiff did not have legal capacity to sue, and that facts were not stated sufficient to constitute a cause of action, so that it will be seen that we are now confronted with two decisions made without opinion that are hopelessly conflicting with each other. It is utterly impossible to reconcile them. Either one or the other is wrong, and we must follow one or the other, but cannot follow both. It is obvious, from what has already been said, that the earlier decision was the correct one, and no doubt, if an opinion had been written, the later decision would not have been made.

The question now is, which of these conflicting decisions on the same question we should follow. I do not think that there is any principle of law or rule of practice that requires us to follow an erroneous decision simply because it is the last one. I am in favor of following the decision that appears to be correct. There are many reasons for following an older decision, even though erroneous, which do not apply to another and later decision. Under the old decision rights and interests may have grown up that it would be unwise and unjust to disturb, even though the later decision would seem to be the more correct; but certainly these reasons can have no application to a later decision, which appears to be wrong, made by inadvertence or mistake. In this case it is apparent that the current of authority on the question of pleading was fully announced in the earlier decision, while the later one was a departure from all decisions preceding it so far as the question that we are now concerned with was involved. When we have to deal with two conflicting decisions in this court, one of which is right and the other wrong, I am in favor of correcting the last error, instead of ignoring a prior decision which is obviously correct. Moreover, it is important to observe that theWelsbach case does not control the case at bar, since the two cases are materially different in the facts and in the questions of law raised. The Welsbach case decided by an answer to a certified question that the plaintiff had not legal capacity to sue and that the incapacity appeared upon the face of the complaint. Now such a question can be raised only by demurrer to the complaint (Code Civ. Pro. §§ 488, 498); and it was so raised in that case. In the present case there was no demurrer at all, but the defendant answered without referring in any manner to the subsequent restrictive statute forbidding actions in certain cases by foreign corporations in the courts of this state; so that it is perfectly clear that the legal capacity of the plaintiff to sue is not in this case at all, but was in the other case. As it was held in that case that the incapacity to sue appeared upon the face of the complaint, that necessarily decided the case and it was not necessary to decide anything else. The answer to the question whether the complaint contained a cause of action was mere surplusage and not binding in the present case. When the plaintiff in that case was put out of court on the ground that it was incapable of bringing an action it was not then of the slightest consequence whether the complaint was good or bad. It could not even be amended on the application of a party who had no capacity to sue at all. As there was a demurrer in that case and no demurrer in this it is obvious that there is a very substantial distinction between the two cases. In theWelsbach case the question of incapacity to sue was raised; in this case it is not; and so the decision in the Welsbach case cannot control the decision in this case. It is unsafe and unsatisfactory in many cases to apply the restriction in the General Corporation Law to statements or want of statements upon the face of the complaint. This is illustrated by a recent decision in this court. (Penn Collieries Co. v. McKeever,183 N.Y. 98.)

The judgment should be reversed and a new trial granted, with costs to abide the event.

CULLEN, Ch. J., GRAY, WERNER, WILLARD BARTLETT and CHASE, JJ., concur with VANN, J.; O'BRIEN, J., reads dissenting opinion.

Judgment affirmed.