Royal Ins. Co. v. All States Theatres

• Decision Date: 19 February 1942
• Docket Number: 7 Div. 668.
• Citation: 6 So.2d 494,242 Ala. 417
• Parties: ROYAL INS. CO., Ltd., v. ALL STATES THEATRES, Inc.
• Court: Alabama Supreme Court

6 So.2d 494

242 Ala. 417

ROYAL INS. CO., Ltd., v. ALL STATES THEATRES, Inc.

7 Div. 668.

Supreme Court of Alabama

February 19, 1942

Rehearing Denied March 12, 1942.

Appeal from Circuit Court, Talladega County; R. B. Carr Judge.

By the complaint plaintiff claims of defendant three thousand dollars, the value of improvements and betterments made by plaintiff on a two-story brick building occupied by plaintiff as lessee, as a moving picture theatre, and situated in Union, South Carolina, "which the defendant on the 15th day of July, 1939, insured against loss or injury by fire and other perils in the policy of insurance mentioned, for a term of five years, which said improvements and betterments on said building were wholly destroyed by fire on the 11th day of November, 1939, of which the defendant has had notice."

Coleman Spain, Stewart & Davies, of Birmingham, for appellant.

C. W. Stringer, of Talladega, for appellee.

THOMAS Justice.

The complaint was not subject to demurrer. The use of the expression in the complaint "in the policy of insurance" imports that it was a written and not a verbal contract, and founded on a valuable consideration. Travelers' Ins. Co. v. Whitman, 202 Ala. 388, 80 So. 470; Prudential Casualty Co. v. Kerr, 202 Ala 259, 80 So. 97.

With commendable judgment, appellee's counsel observes of the two hundred assignments of error that they will be considered in the same order in which they have been discussed in brief of counsel for appellant. This court will, in like manner, attempt to consider the material questions to be decided as presented by the record, the assignments of error and argument of counsel.

It appears to be a primary question to be decided, whether the contract declared on, and by which plaintiff insured its property against loss by fire with defendant, was a valid contract or not. It is insisted that the failure of plaintiff to comply with the laws of the State of Alabama relative to a foreign corporation qualifying to do business in the state would render such insurance contract void by reason of noncompliance. It is insisted that the answer is found in whether or not such contract of insurance was the exercise of any function for which the corporation was created, and within the requirements of the Alabama statutes, conditioned upon the restrictions of foreign corporations "engaging in or transacting any business in this state" before a due qualification. Code 1923, §§ 7208, 3731, 7209-7220, Code 1940, T. 10, §§ 191, 192-196. The words of the statute "engaging in or transacting any business" do not differ from the constitutional phrase, "shall do any business in this state without having at least one known place of business and an authorized agent or agents therein, and without filing with the secretary of state a certified copy of its articles of incorporation or association." Constitution 1901, § 232; Beard v. Union & American Pub. Co., 71 Ala. 60; Ford Motor Co. v. Hall Auto Company, 226 Ala. 385, 388, 147 So. 603; May, Sheriff, et al., v. Strickland, 235 Ala. 482, 180 So. 93; Davis v. Jones, 236 Ala. 684, 184 So. 896; Bolton v. White Motor Co., 239 Ala. 168, 194 So. 510; Sullivan v. Sullivan Timber Co., 103 Ala. 371, 15 So. 941, 25 L.R.A. 543; General Motors Acceptance Corp. v. Home Loan & Finance Co., 218 Ala. 681, 120 So. 165; Ex parte Kemp et al., 232 Ala. 434, 168 So. 147.

The sustaining of demurrer to pleas 7, 8, 9, 10, 11, 12 and 23 is challenged by assignment of error and in argument as a primary question.

They relate to the sustaining of demurrer to appellant's pleas setting up facts to the effect that the plaintiff (appellee) was incorporated in the State of Michigan, took out the policy of insurance upon which this suit is brought in the State of Alabama, and at its place of business in Talladega on property situated in the State of South Carolina and on which it was then doing improvements for the conduct of its business there, and that at such time the plaintiff insured had not qualified as a corporation to do business in the State of Alabama, and that, therefore, the contract of insurance declared upon was void.

Appellee's counsel insist that such contract of insurance was not void in that the taking out of the insurance in Talladega, Alabama, was the mere exercise of a corporate power and was not engaging in or transacting any business; that not every act done within the corporate power will constitute transacting "business" as meant by the Alabama Law.

It is further insisted by appellee that this court in Friedlander Bros., Inc., v. Deal et al., 218 Ala. 245, 118 So. 508, held that a foreign corporation organized and chartered to do a mercantile business and authorized to buy, lease or hold real estate suitable for the purpose of such corporation could lawfully lease for its intended and future use a storeroom in Alabama without complying with the Alabama incorporation laws indicated, and that the execution of such a lease before engaging in the business in question did not constitute the transacting of business within the meaning of such inhibitory statutes. It is insisted that this court there made a distinction between an initial, incidental and preliminary step necessary to the doing of business by a foreign corporation and the further required act of the doing or transacting of the business by such corporation in the state that was required by the laws indicated.

The instant pleas show that the property sought to be insured by plaintiff was in South Carolina, and was to be employed in the doing of its corporate business in said state, and not in the State of Alabama, where the principal place of business of the instant foreign corporation was located. That is to say, we have a Michigan Amusement Corporation taking a policy of insurance for the appellee corporation with its principal place of business at Talladega, in the State of Alabama, to insure its properties being prepared for use as an All States Theatre in the State of South Carolina. Said foreign corporation with its office in Talladega, Alabama, has not complied with the aforementioned requirements of law as to such foreign corporation before transacting said business in the State of Alabama. Thus the question presently for consideration is whether or not appellee was doing business in the State of Alabama in violation of law in the procuring of the contract of insurance in Alabama on its properties located in South Carolina.

Plea 23 shows that the making of the contract of insurance in Alabama was a part of the general corporate function of the plaintiff corporation. The charter sets out its purpose to that effect and gives the power not only to engage in the general amusement business, but gives other and sundry powers and to enter into and perform contracts with any person and to conduct its business anywhere. At the time of the fire it is insisted that plaintiff was engaged in the operation of its motion picture theatre business in Union, South Carolina, as a part of plaintiff's business, the subject of its procurement of its contract of insurance in Alabama and sued on in this state. That is to say, the application for the policy of insurance was taken in Alabama and at its place of business in Talladega and that the policy was delivered at such place. Under the authorities construing our Constitution and statutes, this made the insurance so procured, taken and delivered in Alabama, the doing of business in Alabama.

Plea 23 states as follows:

"Defendant further avers that plaintiff is a foreign corporation organized under the laws of the State of Michigan. A true and correct copy of the charter of plaintiff corporation is hereto attached and marked Exhibit 'A' and expressly made a part of this plea. Defendant further avers that plaintiff corporation has never complied with the statutes and laws of the State of Alabama and has never qualified to do business in the State of Alabama as a corporation, and has not, prior to the filing of this suit, filed with the Secretary of State of Alabama a certified copy of its articles of incorporation or association and has not filed with the State of Alabama an instrument in writing under the seal of the corporation and signed officially by the President and Secretary thereof, designating at least one known place of business in this State and an authorized agent or agents residing thereat, and had not, prior to the bringing of this suit procured from the State Tax Commission of the State of Alabama a permit to do business in the State of Alabama. Defendant further avers that the contract sued upon was made in Alabama by the plaintiff corporation and was delivered to plaintiff in Alabama. Defendant further avers that the plaintiff corporation at said time was otherwise engaged in the doing and transacting of a substantial part of its ordinary business in the State of Alabama. Defendant further avers that the principal or chief office of plaintiff corporation was located at Talladega, Alabama and at said place stockholders and Board of Directors meetings were held prior to the fire. At said place and prior to the fire the plaintiff corporation did sell stock in plaintiff corporation and did enter into a contract for the purchase of equipment and other articles which were afterwards used by it in the operation of its motion picture theatre in Union, South Carolina. Defendant further avers that prior to the fire the plaintiff corporation had one or more bank accounts in banks at Talladega, Alabama; that prior to the fire plaintiff corporation was engaged in the operation of a motion picture theatre in Union, South Carolina, and the principal offices of plaintiff corporation were located in Talladega, Ala. That numerous and sundry...