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Okin v. A.D. Gosman Inc.

Decided: July 27, 1961.

HAROLD S. OKIN, TRUSTEE, PLAINTIFF,
v.
A.D. GOSMAN, INC., DEFENDANT



Labrecque, J.s.c.

Labrecque

The above matter comes before me on the defendant's motion for summary judgment of dismissal.

Plaintiff Harold S. Okin sues as trustee in bankruptcy of Phil Stillpass Sales Corporation, a body corporate of the State of New York, for damages arising out of the improper performance of a contract for processing certain materials belonging to the bankrupt.

Prior to the filing of the petition in bankruptcy on July 20, 1959, the bankrupt had been in the business of jobbing, converting and selling plastics and plastic products. It was not, however, authorized to do business in the State of New Jersey. Briefly, plaintiff contends that certain raw material was delivered by it to the defendants for processing and that the work was performed improperly, with the result that its material was damaged and it sustained a loss of profits on the work.

The defendant set up the separate defense that the bankrupt corporation, not having been authorized to transact business in the State of New Jersey, was precluded from bringing a suit on any contract made in the State, and that by reason thereof the trustee in bankruptcy suffers from a like disability.

R.S. 14:15-3 provides that every foreign corporation with certain exceptions, shall file in the office of the Secretary of State a copy of its charter and a statement prescribed by the statute, and that upon such filing the Secretary of State shall issue a certificate authorizing such corporation to transact business in this State.

R.S. 14:15-4 provides that:

"Until such corporation so transacting [the] 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."

It is conceded that the contract was made in this State.

Upon this state of facts the rule is well settled that the plaintiff corporation itself could not have maintained an action against the defendants for the cause of action here stated. Neither the bankrupt nor the trustee obtained authority to do business subsequent to the contract in question and prior to the bringing of this action, so it becomes unnecessary to determine whether such action would have permitted the bringing of the present suit, in view of R.S. 14:15-5 and the provisions of section 218 of the General Corporation Law of New York. The question to be determined is whether the plaintiff Okin, as trustee in bankruptcy, is barred from access to the New Jersey court by reason of the statute in question.

It is to be noted that the statute is punitive in nature. It does not invalidate the contracts of nonconforming corporations, but merely bars them from access to our courts in respect to contracts made without complying with the licensing requirements. The legislative interdiction in the statute is not against the legitimacy of the contract made by the foreign corporation, but is against the maintenance of an action upon the contract by the corporation. The contract itself remains valid.

The diligence of counsel has failed to disclose any case in point in this State. Even in ...


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