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Reynolds Offset Co. v. Summer

Decided: December 22, 1959.

REYNOLDS OFFSET CO. INC., A CORPORATION OF NEW YORK AUTHORIZED TO DO BUSINESS IN NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
ALEXANDER SUMMER AND EDITH SUMMER, A PARTNERSHIP T/A ALEXANDER SUMMER CO., AND JAMES E. HANSON AND ROBERT E. BLACKFORD, DEFENDANTS-APPELLANTS



Goldmann, Freund and Haneman. The opinion of the court was delivered by Haneman, J.A.D.

Haneman

[58 NJSuper Page 545] Plaintiff filed suit demanding judgment of $30,000, (1) against Alexander Summer and Edith Summer, a partnership t/a Alexander Summer Co. (Summer Co.), upon an alleged breach of a contract of guarantee of subletting, asserting that it had been executed by their agents, James E. Hanson (Hanson) and Robert E. Blackford (Blackford); and (2) against Hanson and Blackford upon the alternative grounds of (A) misrepresentation of their respective authorities as agents for Summer Co.; (B) fraud in asserting that they had authority to act as agents for Summer Co. in negotiating for and agreeing to the guarantee; and (C) breach of contract, asserting that they were personally liable on the guarantee.

Summer Co. denied the authority of Blackford and Hanson to execute any instrument of the nature of that upon which suit was brought and cross-claimed against them for any judgment which might be entered against Summer Co. Summer Co. as well counterclaimed for the $6,500 commission participation paid to Bernard Burlakoff (Burlakoff), plaintiff's president, upon the ground that he was fraudulently represented as a duly licensed broker who aided in bringing the parties together, and that the sums paid to him were represented as being for his sole benefit, all of which statements were allegedly false.

Hanson (1) denied signing the letter of guarantee; (2) denied making any representations to plaintiff as to his or Blackford's authority; (3) denied that the complaint stated a cause of action against him, since the actions against Summer Co. contain inconsistent statements of fact; (4) sought indemnification and exoneration from Summer Co., since the action grew out of acts done by him with authority from Summer Co.; and (5) denied the allegations of Summer Co.'s cross-claim against him. He sought contribution from Blackford in the event of a judgment against him.

Blackford (1) denied that the letter of guarantee constitutes a guarantee; (2) denied that there was any consideration for a guarantee, and (3) denied that plaintiff sustained any loss, since it used the entire 40,800 square feet for its own purposes. He as well denied the allegations of the cross-claims of Summer Co. and Hanson against him.

At the conclusion of plaintiff's case the Law Division granted Summer Co.'s motion for involuntary dismissal, basing its conclusion particularly upon MacLeod v. Ajax Distributing Co. , 22 N.J. Super. 121 (App. Div. 1952).

At the end of the entire case the jury rendered a verdict of no cause for action against Hanson and Blackford on the misrepresentation and fraud counts and a verdict for plaintiff against Hanson and Blackford on the individual contract count of $15,000 against each. The court, on motion,

dismissed the counterclaim of Summer Co. at the end of its case upon the ground that there was no evidence of fraud or misrepresentation.

Plaintiffs Hanson and Blackford moved to set aside and remold the verdict and to grant a new trial. The trial court denied the motions except insofar as they concerned damages, and directed a new trial of that issue upon the count which sought to hold Hanson and Blackford individually liable.

Plaintiff and each of the defendants appealed from some portion of the judgment and order granting a new trial. In the light of that which here follows, it will be necessary to consider, upon the appeal proper, only plaintiff's appeal from the involuntary dismissal of Summer Co. at the end of plaintiff's case; Summer Co.'s argument, advanced for the first time on this appeal, that the suit is barred by the statute of frauds, R.S. 25:1-5(b) and R.S. 25:1-5(c); and the appeal of Summer Co. from the dismissal of its counterclaim against plaintiff.

I.

Prior to argument, defendants moved for a dismissal of plaintiff's appeal and its complaint upon the ground, not raised below, that "this court and all others in the State of New Jersey have no jurisdiction to grant any relief to plaintiff on its complaint because it is a New York corporation that was not authorized to do business within the State of New Jersey prior to the making of the alleged contract upon which plaintiff's causes of action are based." We held this motion for final argument. It becomes necessary to treat thereof first.

Defendants rely upon R.S. 14:15-4, which reads:

"Until such corporation so transacting business in this state shall have obtained such certificate of the secretary of state, it shall not maintain any action in this state upon any contract made by it in this state."

and R.S. 14:15-5, which reads:

"When, by the laws of any other state or nation, any other or greater taxes, fines, penalties, licenses, fees or other obligations or requirements are imposed upon corporations of this state, doing business in such other state or nation, or upon their agents therein, than the laws of this state impose upon their corporations or agents doing business in this state, so long as such laws continue in force in such foreign state or nation, the same taxes, fines, penalties, licenses, fees, obligations and requirements of whatever kind shall be imposed upon all corporations of such other state or nation doing business within this state and upon their agents here, but nothing herein shall be held to repeal any duty, condition or requirement now imposed by law upon such corporations of other states or nations transacting business in this state."

and The General Corporation Law of New York, McKinney Consol. Laws, c. 23, ยง 218, which reads:

"A foreign corporation, other than a moneyed corporation, doing business in this state shall not maintain any action in this state upon any contract made by it in this state, unless before the making of such contract it shall have obtained a certificate of authority. This prohibition shall also apply to any successor in title of such foreign corporation and to any person claiming under such successor of such foreign corporation or under either of them."

It is a well established principle that our appellate courts will not consider questions not properly presented to the trial court when an opportunity for such presentation was available, unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest. Krieger v. Jersey City , 27 N.J. 535 (1958); Howard v. Mayor and Bd. of Finance of City of Paterson , 6 N.J. 373 (1951); Morin v. Becker , 6 N.J. 457 (1951); State ex rel. Wm. Eckelmann, Inc., v. Jones , 4 N.J. 207 (1950), rehearing denied 4 N.J. 374 (1950).

We will, however, consider this issue in spite of defendants' failure to raise the same before the trial court, in the light of the nature thereof.

In order to ascertain whether New York imposes "any other or greater * * * penalties * * * or other

obligations or requirements" upon foreign corporations doing business in that state without first obtaining a certificate of authorization than New Jersey imposes upon a foreign corporation similarly circumstanced, it becomes necessary to consider the statutes of the respective states and the judicial construction accorded thereto.

R.S. 14:15-4 has been construed by our courts to permit a foreign corporation which has obtained a certificate authorizing it to do business in this State, to bring suit on a contract even though such contract was made before the issuance of the certificate. Day v. Stokes , 97 N.J. Eq. 378 (E. & A. 1925).

In Delaware & H. Canal Co. v. Mahlenbrock , 63 N.J.L. 281 (E. & A. 1899), the court held that a single transaction entered into within this State by a foreign corporation not authorized to do business in this State does not amount to doing business so as to disenable the corporation to sue in the New Jersey courts.

The above-cited New York statute interdicts the bringing of a suit by a foreign corporation doing business in the State of New York upon a contract unless a certificate authorizing it to do business was obtained prior to the execution of the contract.

In International Fuel & Iron Corporation v. Donner Steel Co. , 242 N.Y. 224, 151 N.E. 214, 215, 216 (Ct. App. 1926), the court had before it the then statute, which read:

"* * * No such foreign corporation doing business in this state shall maintain any action in this state upon any contract made by it in this state, unless prior to the making of such contract it shall have procured such certificate."

The court there held:

"To come within this section, the foreign corporation must do more than make a single contract, engage in an isolated piece of business, or an occasional undertaking; it must maintain and carry on business with some continuity of act and purpose.

And, finally, I would like to call attention to an interpretation of this section of the Stock Corporation Law, which I think has either been overlooked by the courts below or else not sufficiently emphasized. Taken literally, no corporation doing business in this state shall maintain any action upon any contract unless it procured the certificate prior to the making of the contract. This may be read so as to eliminate altogether the importance of the time when the corporation was doing business in the state; that is, if a contract be made before the certificate be obtained, but the corporation do no other business within the state until after the procuring of the certificate, this section, taken literally, would prevent any action on such a contract. Here would be the case of a corporation doing business in the state, and a contract made before procuring the certificate. But such is not the law. The corporation must be doing business in the state at the time of making the contract, or before procuring the certificate. This section does not apply to a corporation which is not doing business, as these words are interpreted, prior to its procuring the certificate." (Emphasis supplied.)

International, supra , is the landmark case on this subject and has been consistently and continuously followed by the courts of New York to date, and as recently as Nicolich v. Muniz Ferreira & CIA , 149 N.Y.S. 2 d 662 (Sup. Ct. 1956).

As far as the proofs disclose, the lease and guarantee were the first piece of business transacted by plaintiff in this State. It was an isolated transaction. No business had been done in New Jersey prior thereto. It follows that were plaintiff a New Jersey corporation seeking relief on a contract executed in New York under the identical facts here present, it would not be barred from maintaining such action in New York. Since New York does not impose any other or greater penalty upon a New Jersey corporation, under the facts here present, doing business in New York without first having obtained a certificate of authorization, than New Jersey would impose under similar circumstances upon a New York corporation, plaintiff is not barred from maintaining the action sub judice.

The motion is denied.

II.

The facts adduced at the trial are as follows: Early in 1953, plaintiff, a corporation organized under the laws of

the State of New York, had offices in New York City. Being desirous of securing some 20,000 to 25,000 feet of industrial space for its plant, it advertised for the same, with the result that it was contacted by a Mr. Breidenbach, a salesman for defendant Summer Co. Summer Co. was not a corporation, as its title would imply, but rather a partnership composed of Alexander Summer and Edith Summer. It was extensively engaged in real estate transactions both as principal and agent. Various phases of the business were assigned to designated departments of the partnership, i.e. , house, insurance, mortgage, commercial land and investment, and industrial. In addition, it had corporate associates or affiliates which contributed to and aided in the accomplishment of the general objectives of the partnership. One of these was Alexander Summer Industrial Service Company (Industrial Service Company), ...


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