194 N.E. 58 | NY | 1934
The plaintiff is the holder of "accumulative installment certificates" issued by the defendant, a foreign corporation. By each of these instruments the defendant certified that, in consideration of the payment of specified sums at fixed times for ten years, it would, at the expiration of that period, pay a stated amount to the recorded owner. This action is brought to recover moneys received by the defendant in accordance with the terms of the certificates.
Upon sufficient evidence, the courts below have found: "That the defendant was an investment company in this State; that within the meaning, definition and purview of the Banking Law of the State of New York it was engaged here in the business of an investment company at the times it sold within this State to the plaintiff and her assignors the certificates that are here in issue; that the defendant did not comply with the New York State Banking Law with regard to investment companies so doing business within this State." Judgment for the plaintiff followed upon a conclusion of law that the transactions in suit were illegal and void. It has not been held that any act of the defendant wasultra vires. The plaintiff alleges no breach or repudiation by the defendant of any obligation; no failure of consideration. The fact is that the plaintiff and her assignors had defaulted and had abandoned their respective contract rights before they were advised of any infirmity in the undertakings of the defendant.
Accordingly this appeal presents the question whether the failure of the defendant to conform to the Banking *133
Law of this State is without more a sufficient basis to sustain the plaintiff's recovery. The issue is one of original statutory construction. Everything turns on the meaning of the words of a particular enactment. (American Law Institute, Restatement of the Law of Contracts, § 580; Pollock on Principles of Contract [9th ed.], p. 357; 3 Williston on Contracts, § 1771; Mahar v.Harrington Park Villa Sites,
Foreign investment companies were first subjected to the supervision of our banking authority by chapter 506 of the Laws of 1890. That statute was repealed and its provisions, in substance, made part of the Banking Law in 1892 (L. 1892, ch. 689, § 215; §§ 200-205.) The language now to be interpreted is found in articles 1, 2 and 7 (now 12-A) of the Banking Law (Cons. Laws, ch. 2), as enacted by chapter 369 of the Laws of 1914. These articles made, inter alia, the following provisions:
"The term, `investment company,' * * * means any corporation other than an insurance corporation formed under the laws of this state or of any other state, and doing business in this state for the purpose of selling, offering for sale, or negotiating to individuals other than bankers bonds or notes secured by deed of trust or mortgages on real property or choses in action, owned, issued, negotiated or guaranteed by it, or for the purpose of receiving any money or property, either from its own members or from other persons, and entering into any contract, engagement or undertaking with them for the withdrawal of such money or property at any time with any increase thereof, or for the payment to them or to any person of any sum of money at any time, either fixed or uncertain" (§ 2).
"No foreign corporation shall transact in this state the business defined in this chapter as the business of an investment company or any part thereof, unless such corporation shall have *134
"1. Been authorized by its charter to carry on such business and shall have complied with the laws of the state or country under which it is incorporated;
"2. Made the deposit with the superintendent of banks required by section three hundred and six (now § 521) of this article;
"3. Designated the superintendent of banks, by an instrument in writing duly executed, its true and lawful attorney upon whom all process in any action or proceeding by any resident of the state against it may be served with the same effect as if it were a domestic corporation and had been lawfully served with process within the state;
"4. Received a license duly issued to it by the superintendent as provided in section twenty-seven of this chapter" (§ 304, now § 519).
The deposit directed to be made with the Superintendent of Banks was designed "as security for the depositors with and creditors of such corporation in this state" (§ 306, now § 521). The corporation was to be licensed so as to enable the Superintendent to "satisfy himself whether the applicant may safely be permitted to do business in this state" (§ 27).
It was provided by section 302 (now § 517): "No person shall act in this state as the representative of any foreign corporation in transacting the business described in this chapter as the business of an investment company unless such corporation shall have complied with the provisions of this article relating to such corporations."
The foregoing provisions conditionally restrained in this State every activity in the nature of the business of an investment company by a foreign corporation. The plaintiff, therefore, is bound to maintain that default of the defendant in observing the conditions so prescribed for the prosecution of its business in this State rendered all such business subject to being denounced as void, at the mere election of those with whom the business was *135 done. In our opinion so sweeping a resolution of the lawmaking power is not to be implied from the context and structure of the statute.
The general purpose of this legislation was the regulation of all investment companies, domestic and foreign. The safeguarding of persons in the situation of the plaintiff was, of course, an object consistent with supervision of foreign corporations like the defendant. "The nature or terms of a statute or rule of law will also sometimes indicate that it was intended for the protection of one class of individuals against another, and where this is the case a party belonging to the class whose protection was intended may recover what he has paid." (3 Williston on Contracts, § 1789; Kneeland v. Emerton,
In short, the statutory restrictions invoked by the plaintiff, we hold, gave neither the right nor the remedy asserted. "It is true there are cases in which the letter of the statute is not deemed controlling, but the cases *136
are few and exceptional, and only arise when there are cogent reasons for believing that the letter does not fully and accurately disclose the intent. No mere omission, no mere failure to provide for contingencies, which it may seem wise to have specifically provided for, justify any judicial addition to the language of the statute." (United States v. Goldenberg,
Prior to any transaction here involved, the defendant duly sought authority to do business in this State conformably to our Banking Law. The application was withdrawn upon the informal advice of the then Superintendent of Banks that the defendant need comply only with our General Corporation Law (Cons. Laws, ch. 23). It is not suggested that this procedure has significance except as showing that the defendant did not purposefully ignore the conditions imposed upon it by the law of this State. That is to say, the question of the effect of willful disobedience of legislative mandate is not now before us. Rejection of the construction which the plaintiff would have us put upon the applicable statute decides this case. That construction, we have held, is one which the words of the statute will not bear.
The judgment should be reversed and the complaint dismissed, with costs in all courts.
POUND, Ch. J., CRANE, LEHMAN, O'BRIEN, HUBBS and CROUCH, JJ., concur.
Judgment reversed, etc. *137