Dalton, Dalton, Little, Inc. v. Mirandi

In Dalton, Dalton, Little, Inc. v. Mirandi., 412 F.Supp. 1001 (D.C. N.J. 1976), the District Court considered whether a contract entered into between a foreign general business corporation and a New Jersey resident was enforceable and whether a general business corporation can engage in the rendering of another type of professional services (architecture). In Dalton, the plaintiff was a general business corporation which was organized under the laws of the State of Maryland. Id. at 1002. The plaintiff entered into a contract with the defendant for the provision of architectural services. Ibid. The District Court noted that in 1969 the New Jersey Legislature passed the Professional Service Corporation Act. Id. at 1003. The court stated that as a result of the passage of the Act: Professionals otherwise forbidden by local law to practice in the corporate form are authorized to incorporate, but only subject to explicit restrictions and requirements designed to assure that the achievement of federal tax equity would not open the way to erosion of the protected relationship between the professional and the lay client, or reduce the level of individual professional responsibility, or provide an escape from disciplinary controls. All of these facets have been designed for the protection of the lay client since time immemorial. Every provision of the professional corporation law . . . firmly displays the purpose of retaining full control over the professional relationship despite the authority to practice in the corporate form. Id. at 1003-04. The court further opined that the purpose of the Professional Service Corporation Act was to "protect those with whom professionals deal, and not to allow the professional responsibility to be degraded by allowing use of the corporate form. . . ." Id. at 1006. After noting that the Professional Service Corporation Act did not allow a foreign corporation to incorporate in New Jersey as a professional service corporation, the court held that the contract entered into between the plaintiff and the defendant was illegal and, therefore, unenforceable. Id. at 1006-07. The court also noted that "domestic business corporations cannot practice architecture in New Jersey; only domestic professional corporations may do so. . . ." Id. at 1007 (citing N.J.S.A. 14A:17-1 to -18).