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People v. Coe Manufacturing Co.

Decided: April 12, 1934.

PEOPLE OF THE STATE OF NEW YORK, RESPONDENT,
v.
COE MANUFACTURING COMPANY, APPELLANT



On appeal from the Supreme Court.

For the appellant, Paul Koch (John M. Dickinson, on the brief).

For the respondent, Bilder, Bilder & Kaufman (Samuel Kaufman and Daniel G. Kasen, of counsel), John J. Bennett, Jr., attorney-general of New York State, Henry Epstein, solicitor-general of New York State.

Lloyd

The opinion of the court was delivered by

LLOYD, J. The State of New York recovered a judgment in the Supreme Court of that state for a franchise tax imposed by its laws upon foreign corporations doing business within the state. On that judgment the present action was instituted.

The answer filed here by the defendant, a corporation of this state, was to the effect that the New York court was without jurisdiction; that the statute did not contemplate liability in personam; that the State of New York was without power to levy the assessment or tax on property outside of that state; that it was without right to enforce the tax as a personal liability, and that the action was to enforce the payment of a penalty -- an action that could not be maintained outside the State of New York. On motion the answer was stricken out and judgment entered for the plaintiff.

The defendant appeals and rests its prayer for reversal on the single proposition that the claim is based on penalties which cannot be prosecuted here. The respondent contends that the action is not to recover penalties within the rule contended for by the appellant, and also claims that regardless of the nature of the claim, under the full faith and credit clause of the federal constitution, the door is not open to the appellant to now raise the question.

It is undoubtedly true that penalties imposed by the penal laws of a state cannot be enforced in another jurisdiction. This fundamental rule was declared by the Supreme Court of the United States as early as the case of the Antelope, 10 Wheat. 64, when Chief Justice Marshall said, "the courts of no country execute the penal laws of another." It has been reiterated many times and copiously discussed in Huntington v. Attrill, 146 U.S. 657.

The statute upon which the New York action was based provided for the payment of a franchise tax imposed for the privilege of conducting business in the State of New York by a foreign corporation, the tax to be paid annually and to be computed on the basis of its entire net income. A procedure section provided that an action might be brought

at any time to recover the amount of the tax, penalties and interest.

To the action in New York the defendant appeared and the court of that state thereby obtained jurisdiction of its corporate person, and that it had jurisdiction of the subject-matter seems not to be, and indeed cannot be, questioned. When the court of that state with complete jurisdiction entered judgment on the claim its interpretation of the laws of the state conclusively established their object and meaning.

The full faith and credit clause of the federal constitution as invoked presents an interesting field for discussion. It has been the subject of numerous decisions in the Supreme Court of the United States to determine its scope and effect. In recent years its scope and binding force have perhaps been more generally recognized than was the case at another period of our national life. Wisconsin v. Pelican Insurance Co., 127 U.S. 265; Fauntleroy v. Lum, 210 Id. 230. Whether, when a case of this exact type shall be presented to the Supreme Court for adjudication, it shall be determined that, even as to penalties based upon purely penal statutes when ...


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