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American Bank and Trust Co. v. Lott

Decided: March 14, 1984.

AMERICAN BANK AND TRUST COMPANY OF PENNSYLVANIA, PLAINTIFF-RESPONDENT,
v.
FRANK W. LOTT, JR. AND CAROLE A. LOTT, FIRST NATIONAL BANK AND TRUST COMPANY OF BEVERLY, DEFENDANTS-APPELLANTS, AMERICAN BANK AND TRUST COMPANY OF PENNSYLVANIA, PLAINTIFF-RESPONDENT, V. FRANK W. LOTT, JR. AND CAROLE A. LOTT, DEFENDANTS-APPELLANTS



On appeal from Superior Court of New Jersey, Chancery Division, Burlington County.

Michels, King and Dreier. The opinion of the court was delivered by: Dreier, J.A.D.

Dreier

Defendants Lott appeal from a Chancery Division order denying their motion to dismiss plaintiff's complaint for failure to comply with the Corporation Business Activities Reporting Act, N.J.S.A. 14A:13-14 et seq. The issues raised in this case require a reexamination of the principles established by this court in Bank Leumi Trust Co. of N.Y. v. Schneider, 188 N.J. Super. 423 (App.Div.1982), and the interplay among the certificate of authority sections of the General Corporation Act, N.J.S.A. 14A:13-1 et seq., the Corporation Business Activities Reporting Act, N.J.S.A. 14A:13-14 et seq., and the foreign banks provisions of the Banking Act of 1948, N.J.S.A. 17:9A-315 et seq. We hold that where a foreign bank has obtained a Certificate of Authority from the Commissioner of Banking under the Banking Act, even when it performs acts outside the scope of that certificate but within the exempt transactions provisions of the act (N.J.S.A. 17:9A-331), it is relieved from filing a notice of Business Activities Report under N.J.S.A. 14A:13-16(a).

Defendants Lott were indebted to plaintiff as guarantors of an indebtedness incurred in Pennsylvania on behalf of their Pennsylvania corporations. The businesses later were moved with plaintiff's knowledge to New Jersey, experienced financial difficulties and are the subject of a separate bankruptcy action. Plaintiff has pursued the Lotts by way of a mortgage foreclosure proceeding involving real estate mortgages which secure their individual guarantees. Defendants have raised the bar of N.J.S.A. 14A:13-20(a) and (b) in this proceeding. The statute reads as follows:

a. No foreign corporation carrying on any activity or owning or maintaining any property in this State which has not obtained a certificate of authority to do business in this State and disclaims liability for the corporation business tax and the corporation income tax shall maintain any action or proceeding in any State or Federal court in New Jersey, until such corporation shall have filed a timely notice of business activities report.

b. The failure of a foreign corporation to file a timely report shall prevent the use of the courts in this State for all contracts executed and all causes of action that arose at any time prior to the end of the last accounting period for which the corporation failed to file a required timely report.

Judge Alexander Wood in the Chancery Division rejected this claim stating:

In the present case, the plaintiff bank has obtained a Certificate of Authority to transact business pursuant to the New Jersey Statutes 17:9A-316 . . . [H]aving secured a Certificate of Authority to do business as required by Title 17, the bank is exempt from any of the requirements of Title 14A; . . . [T]he bank is not barred from maintaining this action this date . . .

We agree and affirm. The exemption section from Corporation Business Activities Reporting Act, N.J.S.A. 14A:13-16, reads as follows:

A foreign corporation shall not be required to file a notice of business activities report if

a. by the end of an accounting period for which it was otherwise required to file a notice of business activities report under this act, it had received a certificate of authority to do business in this State; or

b. a timely return has been filed under the Corporation Business Tax Act or the Corporation Income Tax Act ...


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