First Family Mortgage Corp. v. Durham

528 A.2d 1288, 108 N.J. 277, 1987 N.J. LEXIS 357

• Court: Supreme Court of New Jersey
• Decided: August 4, 1987
• Status: Published

Opinions

The opinion of the Court was delivered by

GARIBALDI, J.

The sole issue in this case is whether the Corporation Business Activities Reporting Act (the Reporting Act), N.J.S.A. 14A:13-14 to -23, violates the commerce clause, U.S. Const. art. I, ¶ 8, cl. 3, or the supremacy clause, U.S. Const. art. VI, 112.

Plaintiff, First Family Mortgage Corporation of Florida, a Florida Corporation whose principal place of business is in Illinois, violated the Reporting Act by failing to file a Notice of Business Activities Report (Activities Report) as required by N.J.S.A. 14A:13-15. Failure to file a timely Activities Report bars a foreign corporation from maintaining any action or proceeding in any state or federal court in New Jersey to enforce any cause of action accruing during an accounting period in which the corporation failed to file an Activities Report. N.J.S.A. 14A:13-20b. Pursuant to N.J.S.A. 14A:13-20b, the trial court dismissed plaintiffs mortgage foreclosure suit. The Appellate Division affirmed. 205 N.J.Super. 251 (1985). We granted plaintiffs motion for leave to appeal, 103 N.J. 507 (1986).

We now sustain the constitutionality of N.J.S.A. 14A:13-20 and hold that the State can require a foreign corporation to file an Activities Report and can withhold access to courts until the corporation complies. However, once a foreign corporation files an Activities Report and meets the requirements of N.J.S.A. 14A:13-20c(2), the commerce clause requires that the corporation be allowed to pursue any cause of action existing at the time of the filing (or accruing during that accounting period) regardless of when it arose.

I

Plaintiff invests in and services mortgages guaranteed by the Veteran’s Administration and Farmer’s Home Administration, and acts as a servicing custodian for Government National Mortgage Association (GNMA) loans. Plaintiff does not have a certificate of authority to do business in this state, does not file a New Jersey corporation business tax return or a New Jersey corporation income tax return, and has no officers, employees, or representatives in New Jersey. While plaintiff does not originate any loans in New Jersey, it does own loans secured by New Jersey real estate. Such loans provide plaintiff with more than $25,000 per year in interest income.

On July 24, 1980, plaintiff acquired fifty-four GNMA home mortgages secured by New Jersey real estate from Midstate Mortgage and Service Company, an Illinois corporation. Defendants, Mrs. and Mr. Linda A. Durham, were the mortgagors on one of these mortgages. On January 1, 1983, defendants defaulted on their monthly payment to plaintiff. Plaintiffs representatives communicated with defendants by mail and telephone in an attempt to collect on the delinquent account. When these efforts failed, plaintiff instituted a mortgage foreclosure action in the Chancery Division.

The trial court dismissed plaintiff’s action because plaintiff had failed to comply with the Reporting Act. The court based its ruling on Associates Consumer Discount Co. v. Bozzarello, 149 N.J.Super. 358 (App.Div.1977), which upheld the constitutionality of the Act. Nonetheless, the court opined that the Reporting Act, as applied to plaintiff, violated the commerce clause. This view was based upon the court’s interpretation of Allenberg Cotton Co., Inc. v. Pittman, 419 U.S. 20, 95 S.Ct. 260, 42 L.Ed.2d 195 (1974), and related Supreme Court decisions holding that a state cannot require a foreign corporation engaged solely in interstate commerce to obtain a license to do business within that state.

The Appellate Division affirmed, distinguishing this case from the licensing cases on the ground that the Reporting Act, unlike the typical licensing statute, “does not expose foreign corporations engaged solely in interstate commerce to lawsuits in this state. It merely requires that foreign corporations receiving substantial annual payments from New Jersey residents file information that will enable New Jersey to determine whether they are exempt from taxation.” 205 N.J.Super. at 255. The court also rejected plaintiff’s argument that the Reporting Act violates the supremacy clause by undermining the policy of the National Housing Act: “The slight inconvenience of filing the notice [Activities Report] will not destroy the market for GNMA mortgages on homes in New Jersey and in other states having a similar requirement.”¹ Id.

II

N.J.S.A. 14A:13-15 provides in pertinent part:

Every foreign corporation which during any calendar or fiscal accounting year ending after December 31, 1973, carried on any activity or owned or maintained any property in this State, unless specifically exempted under section 3 of this act, shall be required to file a notice of business activities report, as hereinafter provided.

Activities or property maintenance in this State which require corporations to file this report are:

********

e. receiving payments from persons residing in this State, or businesses located in this State, aggregating in excess of $25,000 regardless of any other connections with this State;

********

Every foreign corporation subject to the Reporting Act must file an Activities Report with the Director of the Division of Taxation of the State of New Jersey, on or before the fifteenth day of the fourth month after the close of the corporation’s calendar or fiscal accounting year. N.J.S.A. 14A:13-18a. Pursuant to N.J.S.A. 14A:13-16b, a foreign corporation is not required to file, if it has received either a certificate of authority to do business in this state or has filed a timely tax return under the Corporation Business Tax Act, N.J.S.A. 54:10A-1 to -40, or the Corporation Income Tax Act, N.J.S.A. 54:10E-1 to -24 (the Second Tier Income Tax).²

N.J.S.A. 14A:13-20a and b set forth sanctions for a foreign corporation’s failure to file an Activities Report:

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.

However, a court may excuse a corporation’s failure to file an Activities Report

where the court finds the corporation has sustained the burden of establishing that

(1) the failure to file a timely report was done in ignorance of the requirement to file, such ignorance was reasonable in all circumstances;

(2) all taxes, interest and civil penalties due the State for all periods have been paid, or provided for by adequate security or bond approved by the director, before the suit may proceed. [N.J.S.A. 14A:13-20c.]

The Reporting Act was recommended in the Report of the New Jersey Tax Policy Committee, Vol. V, at 32-34 (Report) submitted to Governor William T. Cahill on February 23, 1972. The Report recommended that New Jersey do as many other states had done, “by adding to their corporate franchise taxes, or by substituting for them, an income tax levied, not on the privilege, or the doing of business in the State, but on income derived from sources within the State.” Id. at 20. It explained that “equity demands business carrying on activities in the State and exploiting the New Jersey market make some contribution to the costs of maintaining governmental operations and the services provided by the State____” Id. at 22. The Report recommended the enactment of a “second tier” income tax to impose a tax on foreign corporations neither qualified nor doing business within the state in the traditional franchise tax sense (who do not maintain an office or employ or own property or capital in the state), but who, nevertheless, derive income from sources in the state and have an adequate due process nexus with New Jersey to give the state jurisdiction to tax.³ The Tax Policy Committee recognized that for the Second Tier Income Tax to be effective, the state had to be able to locate those foreign corporations that would be subject to the new proposed tax:

[I]t is important, in order to safeguard the State’s revenues and reduce unfair taxfree competition with businesses that pay taxes to this State, that the Legislature adopt a more effective technique for discovering foreign corporations that may be taxable, but that are now paying no taxes, and would otherwise escape the broadened jurisdiction of the proposed second tier tax. To seek to accomplish that objective, we propose that a statutory provision be adopted requiring certain non-qualified foreign corporations to file with the Division of Taxation a Notice of Business Activities. [Report, supra, at 33],

Moreover, the Report specifically stated the reason for N.J.S.A. 14A:13-15e:

It would also appear desirable, in order to establish a simple, objective quantitative test for the filing of the Notice to require any foreign corporation that receives payments from persons residing in the State, or business located in the State, aggregating a minimum dollar amount to be designated by the statute, to file the Notice, regardless of any other connections with the State. [Report, supra, at 34],

The Legislature adopted the Tax Policy Committee’s recommendations and enacted the Reporting Act, in conjunction with the Corporation Income Tax Act (the Income Tax), making both Acts effective on June 7, 1973. As part of the Reporting Act, the Legislature adopted N.J.S.A. 14A:13-15e, viewing the receipt of at least $25,000 per year “as at least a preliminary indication that a foreign corporation derived income from sources within New Jérsey and was subject to the corporation income tax.” Avco Fin. Servs. Consumer Discount Co. One, Inc. v. Director, Div. of Taxation, 100 N.J. 27, 32 (1985).⁴

Ill

The commerce clause of the United States Constitution, although phrased as an affirmative grant of power to Congress to regulate foreign and interstate commerce, is “a self-executing limitation on the power of the States to enact laws imposing substantial burdens on such commerce.” South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87, 104 S.Ct. 2237, 2240, 81 L.Ed.2d 71, 76 (1984). This limitation, however, is not absolute. States “retain authority under their general police powers to regulate matters of ‘legitimate local concern,’ even though interstate commerce may be affected.” Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 36, 100 S.Ct. 2009, 2015, 64 L.Ed.2d 702, 711 (1980).

In general, a “[s]tate regulation affecting commerce will be upheld if (a) the regulation is rationally related to a legitimate state end, and (b) the regulatory burden imposed on interstate commerce, and any discrimination against it, are outweighed by the state interest in enforcing the regulation.” L. Tribe, American Constitutional Law § 6-5 at 326 (1978). As stated by the Court in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174, 178 (1970):

Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Huron Cement Co. v. Detroit, 362 U.S. 440, 443 [80 S.Ct. 813, 816, 4 L.Ed.2d 852 (1960)\]. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities, [citation omitted]

Notwithstanding this general rule, a statute will be held per se invalid if its sole purpose is economic protectionism: “where simple economic protectionism is effected by state legislation, a virtual per se rule of invalidity has been erected.” Philadelphia v. New Jersey, 437 U.S. 617, 624, 98 S.Ct. 2531, 2535, 57 L.Ed.2d 475, 481 (1978). The purpose of the Reporting Act is to achieve a substantial and legitimate state interest, not to encourage simple economic protectionism of local businesses at the expense of interstate commerce. The history of the Act conclusively establishes that it was enacted to

enable the Division of Taxation to obtain pertinent data from any foreign corporation which carries on an activity or runs or maintains property in this State but which has not obtained a certificate of authority to do business in New Jersey, to the end that a proper determination may be made as to whether such corporation is subject to any State tax. [Avco Fin. Servs. Consumer Discount Co. One, Inc. v. Director, Div. of Taxation, supra, 100 N.J. at 33 (quoting Associates Consumer Discount Co. v. Bozzarello, supra, 149 N.J.Super. at 362).] ⁵

Plaintiff contends that the Supreme Court has created a second exception to the balancing rule in a series of decisions that invalidated state statutes that imposed licensing requirements on foreign corporations engaged solely in interstate commerce.⁶ Plaintiff argues that the Reporting Act is an unconstitutional “forced licensure” statute despite the clear evidence that the goal of the Reporting Act is merely to provide information that will help the state collect the Corporate Income Tax.

It is true that the Supreme Court has held that forced licensure statutes violate the Commerce Clause. See Allenberg Cotton Co. v. Pittman, supra, 419 U.S. 20, 95 S.Ct. 260, 42 L.Ed.2d 195 (statute withheld access to courts from foreign corporations doing business within the state without certificates of authority); Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 291, 293, 42 S.Ct. 106, 108, 109, 66 L.Ed. 239, 244, 245 (1921) (a state cannot by statute “impose burdensome conditions” on interstate commerce; a “corporation of one state may go into another, without obtaining the leave or license of the latter, for all the legitimate purposes of such commerce”); Sioux Remedy Co. v. Cope, 235 U.S. 197, 35 S.Ct. 57, 59 L.Ed. 193 (1914) (statute withheld access to courts from foreign corporations doing business in the state until it filed its Articles of Incorporation with the state and appointed a resident upon whom service of process could be served); International Textbook Co. v. Pigg, 217 U.S. 91, 30 S.Ct. 481, 54 L.Ed. 678 (1910) (state could not require foreign corporation to file a “complete detailed statement of the condition of such corporation” including information about its officers, directors, managers, assets, liabilities, and capital stock).

Nonetheless, a close analysis of those forced licensure cases discloses that in each of the cases the Court found that the qualification statute imposed unreasonable conditions on the foreign corporation’s right to sue in a state court. As we stated in Materials Research Corp. v. Metron, Inc., 64 N.J. 74, 79 (1973):

the law has long been settled that a state may not impose a qualification statute which unduly burdens interstate commerce, Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239 (1921); see, e.g., International Text-book Co. v. Pigg, 217 U.S. 91, 30 S.Ct. 481, 54 L.Ed. 678 (1910); Sioux Remedy Co. v. Cope, 235 U.S. 197, 35 S.Ct. 57, 59 L.Ed. 193 (1914). [(emphasis added.)]

An analysis of the Reporting Act shows how it differs from licensing statutes and discloses that it does not unduly burden interstate commerce. First, the Reporting Act does not require every foreign corporation doing business in New Jersey to file an Activities Report. Instead, the reporting requirement is carefully limited to those corporations that satisfy any of the conditions cited in N.J.S.A. 14A:13-15, and are therefore likely to owe a tax.

Moreover, the burden imposed on a foreign corporation by the Reporting Act is minimal. Unlike a licensing statute, the Reporting Act does not require a foreign corporation to obtain permission from the state prior to doing business here. The Act does not force foreign corporations to secure a certificate of authority to do business or any other license in New Jersey. Moreover, licensing statutes generally require corporations to submit to in-state service of process. L. Tribe, supra, § 6-13 at 342; see, e.g., N.J.S.A. 14A:13-4(1)(d). In order to secure a certificate of authority to do business in New Jersey, a foreign corporation must maintain a registered agent within the state to accept service of process, file with the Secretary of State an annual report and a copy of its corporate charter, and submit to the Corporation Business Tax, which imposes a higher rate of tax than the second tier income tax. N.J.S.A. 14A:13-4(1); N.J.S.A. 54:10A-2. Such requirements are strong disincentives for many corporations from doing interstate business in this state, especially if the amount of their business would be minimal.

The information required by the Activities Report is easily accessible to the corporation. The Report form merely asks a corporation to provide identification information (name, address, place of incorporation, etc.), and then asks whether the corporation satisfies any of the conditions listed in N.J.S.A. 14A:13-15. The form also asks the corporation whether it has any liability under the Second Tier Tax Act.

Furthermore, compliance with the Reporting Act does not subject a foreign corporation to any tax liability or result in any other consequences. Rather, the notice requirement is merely an information gathering tool that permits the Division of Taxation to initiate an investigation to determine whether the foreign corporation having commercial contacts with the state may be liable for the constitutionally valid New Jersey Second Tier Income Tax.⁷ Without the benefit of the information contained in the Activities Report, the Director would find it almost impossible to determine which foreign corporations are doing business in New Jersey and which are liable under the Second Tier Income Tax Act. The Director would be greatly dependent on voluntary compliance with the Tax Act. This would deprive the state of revenue, be unfair to those corporations that comply voluntarily, and give an unfair advantage to those corporations that avoid the tax. Therefore, we hold that it is constitutional for New Jersey to require foreign corporations that satisfy the conditions in N.J.S.A. 14A:13-15 to file an Activities Report.

IV

This holding, however, does not end our inquiry because the Reporting Act also imposes an important sanction for noncompliance. Failure to file an Activities Report prevents a corporation from using New Jersey courts to pursue any cause of action arising “at any time prior to the end of the last accounting period for which the corporation failed to file a required timely report.” N.J.S.A. 14A:13-20b. It is this harsh penalty that we find constitutionally infirm.

It is without question that N.J.S.A. 14A:13-20b is rationally related to the State’s interest in maintaining compliance with the Reporting Act. The prospect of being unable to enforce an important contract will encourage corporations to file the Activities Report. The provision will also aid in detecting those corporations that have violated the Act because defendants will have a strong incentive to raise the Reporting Act as a defense.

The concurring and dissenting opinion of Wilentz, C.J., would have us uphold N.J.S.A. 14A:13-20b on these grounds, without further analysis. It disapproves of balancing tests in no uncertain terms: “ ‘[Sjuch an inquiry is ill suited to the judicial function and should be undertaken rarely if at all.’ ” Post at 307 (quoting CTS Corp. v. Dynamics Corp., ___ U.S. ___, ___, 107 S.Ct. 1637, 1652, 95 L.Ed.2d 67, 89 (1987) (Scalia, J., concurring)). While the opinion does purport to apply a balancing test, its emphasis upon the interests of the state, to the exclusion of any discussion of the burdens placed on interstate commerce, ensures that the vast majority of, if not all, non-protectionist restraints on interstate commerce will receive judicial approval. We find such an approach inconsistent with the spirit of the commerce clause and governing case law.

Applying a balancing test, we find that the state’s interest in maintaining compliance with the Reporting Act is insufficient to justify the burden placed on interstate commerce by N.J.S.A. 14A:13-20b. Without the right to enforce contracts made in interstate commerce, the right to engage in such commerce is severely restricted. This stiff sanction applies without regard to whether the corporation is actually liable for any tax. Moreover, the penalty (the value of the lost cause of action) may be completely disproportionate to any tax that might be due. In addition, the statute gives a windfall to defendants that they can exploit for their own economic advantage.⁸

However, the unconstitutionality of the enforcement provision as written does not require us to invalidate the entire Reporting Act or leave the Reporting Act without any enforcement provision. Where part of a statute is unconstitutional, “a court has the power to engage in ‘judicial surgery’ and through appropriate construction restore the statute to health.” Town Tobacconist v. Kimmelman, 94 N.J. 85, 104 (1983) (citing New Jersey Chamber of Commerce v. New Jersey Election Law Enforcement Comm’n, 82 N.J. 57, 75 (1980)); Borough of Collingswood v. Ringgold, 66 N.J. 350, 357 (1975), app. dism., 426 U.S. 901, 96 S.Ct. 2220, 48 L.Ed.2d 826 (1976); State v. DeSantis, 65 N.J. 462, 472-73 (1974)). The relevant issue in each case is whether the Legislature would want the statute to survive. New Jersey Chamber of Commerce v. New Jersey Election Law Enforcement Comm’n, supra, 82 N.J. at 75. This inquiry does not turn “simply upon whether the statute, if adjusted to the constitutional demand, will cover more or less than its terms purport to cover ... [T]he sounder course is to consider what is involved and to decide from the sense of the situation whether the Legislature would want the statute to succumb.” Id. (quoting Schmoll v. Creecy, 54 N.J. 194, 202 (1969)).

We believe that the state’s interest in enforcing the Reporting Act is adequately served by a provision that prohibits a corporation from using state courts until such time as the corporation files an Activities Report and the provisions of N.J.S.A. 14A:13-20c(2) are met.⁹ This allows the corporation to enforce all its contracts and will force the corporation to provide the information the state needs to determine the corporation’s tax liability. Admittedly, this enforcement provision is not as effective as N.J.S.A. 14A:13-20b because it will force compliance with the Reporting Act only after a corporation decides to bring a lawsuit in New Jersey courts. Nonetheless, we are convinced that due to the importance of the Reporting Act in enforcing the Tax Act, the Legislature would prefer this modified enforcement provision over the absence of an enforcement provision.¹⁰ The conclusion that the Legislature would not view N.J.S.A. 14A:13-20b as an indispensible part of the Reporting Act is supported by the severability clause contained in N.J.S.A. 14A:13-23.

Accordingly, we conclude that to preserve the constitutionality of N.J.S.A. 14A:13-20b, the statute shall be interpreted to mean that a foreign corporation can pursue a cause of action in this state after filing an Activities Report and meeting the conditions of N.J.S.A. 14A:13-20c(2), regardless of whether the Report was filed in the same accounting period in which the cause of action arose. As one commentator has explained with respect to sanctions for violations of qualification statutes, this approach is not as effective as a permanent retroactive bar to the courts but is “preferred because it provides effective enforcement and yet is fair to the corporation.” Note, Corporate Qualification Statutes, 63 Colum.L.Rev. 117, 130 (1963).¹¹ If the Legislature wishes to increase the deterrent effect of the Act, it may wish to amend the Act to also provide reasonable monetary penalties. See id. (“The need for deterrence can be met by a companion provision imposing monetary penalties.”)

Y

Defendants also assert that the Reporting Act violates the supremacy clause because it frustrates the goals of the National Housing Act, 12 U.S.C.A. §§ 1701 to 1750g. Defendants argue that the burden of filing an Activities Report and the application of 14A:13-20 to disable a mortgagee from foreclosing on a mortgage in default will discourage lenders from making mortgage loans in New Jersey.

A state statute violates the supremacy clause

(1) where “Congress has either explicitly or implicitly declared that the states are prohibited from regulating” in this area, Ray v. Atlantic Richfield Co., 435 U.S. 151, 157, 98 S.Ct. 988, 994, 55 L.Ed.2d 179 (1978) or (2) where a state statute “actually conflicts with a valid federal statute.” Id: at 158, 98 S.Ct. at 994. [McGlynn v. N.J. Public Broadcast Auth., 88 N.J. 112, 137 (1981).]

Since defendants have not alleged that Congress has prohibited the states from regulating in this area, we must consider only whether the Reporting Act “actually conflicts with a valid federal statute.”

The test for determining whether actual conflict exists is “whether, under the circumstances of [a] particular case, [the state’s] law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941), quoted in Jones v. Rath Packing Co., 430 U.S. 519, 526, 97 S.Ct. 1305, 1310, 51 L.Ed.2d 604 (1977). [McGlynn v. N.J. Public Broadcast Auth., supra, 88 N.J. at 137.]

The purpose of the National Housing Act is “to establish secondary market facilities for home mortgages,” 12 U.S.C.A. § 1716, and “to promote private activity in the building of low and moderate income housing through the use of federal credit,” United States v. Winthrop Towers, 542 F.Supp. 1042, 1044 (N.D.Ill.1982). We see nothing in the Reporting Act, as modified in Section III of our opinion, that frustrates these goals. We do not think that compliance with the Reporting Act is so burdensome that lenders will shun the New Jersey mortgage market. Accordingly, we hold that the Reporting Act does not violate the supremacy clause.

As modified, we affirm the judgment of the Appellate Division.

1 The Appellate Division found there was an insufficient factual record to sustain the Chancery Division’s conclusion that plaintiff was not engaged in intrastate business activities. 205 N.J.Super. at 256. We agree.

2 N.J.S.A. 14A:13-16 provides:

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 for such accounting period. [ (footnotes omitted) ]

3 The Corporation Income Tax is a tax on a corporation’s "entire net income," measured in the first instance by the corporation’s federal taxable income. N.J.S.A. 54:10E-4i. This income is apportioned to New Jersey by application of a three part formula based upon receipts, property, and payroll within and outside the state. N.J.S.A. 54:10E-6.

4 It is undisputed that plaintiff satisfies all the conditions that would bar it from maintaining this action under the Reporting Act and fullfills none of the Act's exceptions. Accordingly, unless the Reporting Act is deemed unconstitutional, plaintiff is barred from maintaining its foreclosure suit.

5 As we recognized in American Bank & Trust Co. of Pennsylvania v. Lott, 99 N.J. 32, 39 (1985):

This exception for timely filing a relevant corporate tax return underscores the basic purpose of the Reporting Act, which is to provide the Division of Taxation with information to determine the tax liability of foreign corporations. Associates Consumer Discount Co. v. Bozzarello, 149 N.J.Super. 358, 362 (App.Div.1977). Consistent with that purpose, the notice of business activities report form is issued by the Division of Taxation and is filed with that Division.

6 Plaintiff relies on our decision in Coons v. American Honda Motor Co., 94 N.J. 307 (1983), cert. denied, 469 U.S. 1123, 105 S.Ct. 808, 83 L.Ed.2d 800 (1985). In that case, we held that the statute that tolls the running of statute of limitations in actions against foreign corporations that are not "represented" in the state was a forced licensure statute. Hence, we found it unconstitutionally burdened interstate commerce by requiring a foreign corporation engaged exclusively in interstate commerce to obtain a certificate to do business in New Jersey in order to gain the benefit of the statute of limitations.

7 The constitutionality of the tax was upheld in Avco Financial Services Consumer v. Director, supra, 100 N.J. 27.

8 The concurring and dissenting opinion of Wilentz, C.J., finds this reason for invalidating N.J.S.A. 14A:13-20b unpersuasive because “[i]n numerous contexts, the law permits private litigants to come away with a ‘windfall’ if doing so is the only or the most effective way of assuring that an important public interest is served.” Post at 304. The opinion points to “[s]tatutes and common-law rules permitting plaintiffs to collect treble or punitive damages against malefactors____” Post at 304-305. We do not believe that the policy of awarding treble or punitive damages to certain innocent plaintiffs in order to encourage them to bring wrongdoers to court justifies allowing malefactors to escape liability for their wrongdoing because of the fortuity that their victims failed to comply with the Reporting Act.

9 N.J.S.A. 14A:13-20c(2) provides:

all taxes, interest and civil penalties due the State for all periods have been paid, or provided for by adequate security or bond approved by the director, before the suit may proceed.

10 The concurring and dissenting opinion of Wilentz, C.J., asserts that we have "effectively eliminated any sanction for noncompliance" with the Reporting Act. Post at 304. It suggests that as a result of our decision foreign corporations will comply only where the cost of compliance (paying taxes) does not exceed the value of the lost cause of action. Post at 303-304. "This will mean that only those foreign corporations which happen to have a need to use the New Jersey courts (or which have an uncharacteristic commitment to the rule of law) will end up supplying the Activities Report requested by the statute. It is hardly fair that compliance with the Act should turn on such a fortuity.” Post at 304.

We find this argument unpersuasive because the effectiveness of the Reporting Act even as written depends upon this type of fortuity. Even under the concurring and dissenting opinion, a corporation will comply with the Reporting Act only if it concludes that the probable value of the causes of action it is likely to have in New Jersey courts exceeds the taxes that the corporation is likely to owe.

11 Of course, any foreign corporation that meets the exceptions set forth in NJ.S.A. 14A:13-20c(1) and (2) likewise may maintain a suit in New Jersey.