133 N.Y.S. 25 | N.Y. App. Div. | 1911
Lead Opinion
This action was brought to recover a penalty under section 33 of the Stock Corporation Law (Consol. Laws, chap. 59; Laws of 1909, chap. 61). It is there provided that “Every foreign stock corporation having an office for the transaction of business in this State, except moneyed and railroad corporations, shall keep therein a book to be known as a stock book, containing tlie names, alphabetically arranged,, of all persons who are stockholders of the corporation * * *. Such stock book shall be open daily, during business hours, for the inspection of its stockholders and judgment creditors, and any officer of the State authorized by law to investigate'the affairs of any such .corporation. * * *. For any-refusal to allow such book to be inspected, such corporation and the officer or agent so refusing shall each forfeit the sum of two hundred, and fifty dollars to be recovered by the person to whom such refusal was made.” I do not agree with Mr. Justice'Miller that this section is to-be read in connection with other sections of the General Corporation Law, the Stock Corporation Law and the Tax Law which require a corporation doing business in this State to obtain a certificate authorizing it to- do such business, and to pay a tax for the privilege of doing such business, or which provide for the taxation .of the property of a foreign corporation invested in this State, and which also regulate said business. There is nó question of taxation; no question of the regulation
Nor do I think that this construction of the law could affect its validity under the Constitution of the United States. The statute, as before stated, does not attempt to regulate the business of the corporation or restrict it in any way in transacting
I think, therefore, the determination of the. Appellate Term should be affirmed.
Laughlin and Clarke, JJ., concurred; Miller and Scott, JJ., dissented.
Dissenting Opinion
This is an action to recover the penalty prescribed by section 33 of the Stock Corporation Law (Consol. Laws, chap. 59;
The State of Pennsylvania conferred upon the defendant its corporate franchise, i. e., the privilege of doing business as a corporation. The defendant exercises that franchise by conducting the business for which it was granted in that State. It employs incidental means in this State to obtain orders for its products, and, of course, strictly, that constitutes doing business. One of the means thus employed is an office,- and so, literally, the defendant has an office for the transaction of business; but the question is, whether it has “an office for the transaction of business in this State ” within the intent and purpose of the statute.
Said section 33 is not to be construed apart from its context, nor is the statute of which it is a part to be construed without reference to other statutes on the subject. The particular ones which I have in mind are the G-eneral Corporation Law, relating to corporations generally, the Stock Corporation Law, relating specifically to stock corporations, and article 9 of the Tax Law, relating to corporation taxes. A careful analysis of those statutes discloses a consistent scheme for authorizing the ■ doing of business in this State by corporations, doméstic or foreign, and for the supervision, regulation and taxation of
It is settled .that the defendant is not “ doing business in this State ” within the meaning of section 15 of the General Corporation Law (Cummer L. Co. v. Associated Mfrs.’ Ins. Co., 67 App. Div. 151; affd., 173 N. Y. 633; Harvard Co. v. Wicht, 99 App. Div. 507; Burrowes Co. v. Caplin, 127 id. 317; Page & Co. v. Sherwood, 146 id. 618; Penn Collieries Co. v. McKeever, 183 N. Y. 98), or within the meaning of the Tax' Law. (People ex rel. Parker Mills v. Commissioners of Taxes, 23 N. Y. 242; People ex rel. Sherwin Co. v. Barker, 5 App. Div. 246; affd., 149 N. Y. 623; People ex rel. Tower Co. v. Wells, 98 App. Div. 82; affd., 182 N. Y. 553.) The conclusion necessarily follows that the defendant is not transacting business in this State within the meaning of said section 33.
We might stop the discussion.at this point, but there .is a further, and to my mind controlling, reason for holding that the statute was not intended to apply to a case like this, and it may serve a useful purpose to state that reason. I have said that the general purpose of the entire body of statutory law on the subject of corporations was to provide for their organization, or, in the case of foreign corporations, for their authorization to do business, for their effective supervision and regulation and for their taxation. Authorization, regulation and taxation are the objects, the “ doing ” or the “ transaction ” of .business, the exercise of corporate franchises within the State, is the subject, of all the provisions. Even if said section 33 be construed as an independent enactment, the expressed purpose of the requirement of keeping a stock book is that it may be inspected by stockholders and judgment creditors and by “ any officer of the State authorized by law to investigate the affairs of any such corporationIt was first enacted in its present form by chapter 384 of the Laws of 1897, which amended
A corporation is not a citizen within the meaning of article 4, section 2, or the Fourteenth Amendment, of the Federal' Constitution. (Paul v. Virginia, 8 Wall. 168; Hooper v. California, 155 U. S. 648; Waters-Pierce Oil Co. v. Texas, 177
The defendant gets no privilege from and is not in any just sense exercising, its corporate franchise within this State.
It gets the privilege or franchise of transacting business as a corporation from the State of- Pennsylvania, and it exercises the corporate franchise thus conferred in that State. The only privilege exercised by it in the State of New York is the privilege of. doing an interstate business which it gets from the Congress-of the United States, whether from action or non-action of that body is immaterial, for its jurisdiction is exclusive. The State of New York has no power to prohibit, regulate or burden the exercise of that privilege.
■ As I have endeavored to show, the provision in question is a part of a statute and of a general scheme of laws which purport directly to regulate the doing of business within the State by corporations, or corporations doing business within the State. It is immaterial which expression is used, as both amount to one and the same thing, and it seems to me that it is not permissible to extract from the statute a single section and to construe it without regard to the purview of the entirq act, even
I have considered the expressions used in' said statutes; “ doing business ” and “ exercising its corporate franchises,” as synonymous, and it seems plain that they are so used. I am aware that it has been said .that the so-called “ franchise tax ” on corporations (domestic and foreign) is in respect to the latter “imposed solely upon business,” not on a corporate franchise (People v. Equitable Trust Co., 96 N. Y. 387), and that “ a corporation can have no legal existence out of the boundaries of the sovereignty by which it is created.’’ (Bank of Augusta v. Earle, 13 Pet. 519, 588.) Any discussion in this connection of the nature of the artificial entity called a “ corporation ” would be purely academic. Many cases bearing on the subject may be found in the' note to the case last above cited, published in the Lawyers’ Edition of ■ the Supreme Court reports. A critical. analysis of them will disclose that the apparent conflict are almost wholly in the terminology employed. Many corporations do no business in the States of their creation and in fact are never intended to do any. Upon their organization they acquire the haré privilegé or franchise o.f being corporate entities When such a corporate entity by its agents goes into another State and seeks to do business, it finds that it has no existence V there, that it is only recognized by comity, and that it can only do business or exercise its corporate franchises by permission. It is quite immaterial whether that permission be termed a “privilege” or a “franchise,” though it seems to me that the ( privilege to do business within its jurisdiction, extended by one J
The determination of the Appellate Term should be reversed and the judgment of the Municipal Court affirmed, with costs.
Scott, J., concurred.
Determination affirmed, with costs.