Alabama Western R. Co. v. Talley-Bates Const. Co.

• Decision Date: 30 June 1909
• Citation: 50 So. 341,162 Ala. 396
• Parties: ALABAMA WESTERN R. CO. v. TALLEY-BATES CONST. CO.
• Court: Alabama Supreme Court

50 So. 341

162 Ala. 396

ALABAMA WESTERN R. CO. v. TALLEY-BATES CONST. CO.

Supreme Court of Alabama

June 30, 1909

On Rehearing.

Appeal from Circuit Court, Franklin County; C. P. Almon, Judge.

Action by the Talley-Bates Construction Company against the Alabama Western Railroad Company. From a judgment sustaining a demurrer to defendant's pleas, it appeals. Reversed and remanded.

Percy &amp Benners, J. M. Dickinson, and Blewett Lee, for appellant.

C. H Trimble, Almon & Andrews, and Samuel D. Weakley, for appellee.

SAYRE J.

All other counts of the complaint having been eliminated by various rulings of the court below and the action of the plaintiff, who is appellee here, this case went to the jury upon the tenth count alone. One defense, much relied upon was that the plaintiff, being a foreign corporation, had not, at and before the time of its alleged partial performance of the contract between the parties out of which the suit arose, complied with that statute of the state which requires, under penalty, that every corporation not organized under the laws of this state, shall, before engaging in or transacting any business in this state, file an instrument in writing in the office of the Secretary of State, designating at least one known place of business in this state and an authorized agent or agents residing thereat. Code 1907, § 3642. In section 3644 it is provided that it is unlawful for any foreign corporation to engage in or transact any business in this state before filing the written instrument provided for in section 3642. These statutes were passed in aid of well-known constitutional provisions to the same effect. Const. 1875, art. 14, § 4; Const. 1901, § 232. Some propositions in connection with these constitutional and statutory provisions have been settled by the decisions of this court. They constitute a police regulation for the protection of the property interests of the citizens of the state, as much so "as the law forbidding vagrancy among its inhabitants." Am. Union Tel. Co. v. West. Union Tel. Co., 67 Ala. 26, 42 Am. Rep. 90. The doing of a single act of business, if it be in the exercise of a corporate function, is prohibited. The policy of the Constitution and statute is to protect our citizens against the fraud and imposition of insolvent and unreliable corporations, and to place them in an attitude to be reached by legal process from our courts in favor of citizens having cause of complaint. Foreign corporations may not sue until they put themselves in a position to be sued in domestic courts. Farrior v. New England Mtg. Co., 88 Ala. 275, 7 So. 200. The conditions are fixed, inflexible, and unalterable. Sullivan v. Timber Co., 103 Ala. 371, 15 So. 941, 25 L. R. A. 543. A contract to pay for an act or service promised to be done or performed in violation of this statute is illegal, and, as long as it is executory, the courts will not lend their aid to its enforcement. Dudley v. Collier, 87 Ala. 431, 6 So. 304, 13 Am. St. Rep. 55.

Evidently with this statute and these decisions in mind, the pleader in framing the tenth count set himself to the statement of a cause of action which would be beyond the reach of a demurrer asserting their unfavorable application to his case. Under a caption which discloses that the plaintiff is a corporation, without more, it is averred that the parties entered into a contract in the city of Chicago, state of Illinois, by which plaintiff undertook and agreed to build a railroad in the state of Alabama for a compensation to be paid by the defendant; the amount depending upon the quality of earth and rock moved. The allegation then is that in the execution of the contract the plaintiff sublet the work to sundry independent contractors, agreeing to pay them for their work. These contracts of subletting were entered into at Memphis, Tenn., and there, as the count alleges, became effective and binding between the parties thereto. Then follows an allegation, to epitomize it, to the effect that the subcontractors had performed a large part of the work, and had continued to perform it until the defendant refused to pay installments as agreed, whereupon the plaintiff ceased work under the contract. The count seeks to recover a balance due upon the work done, and is a count upon the contract. Nowhere does it appear that the plaintiff was a foreign corporation, and therefore the demurrer, which took the point that the plaintiff had engaged in the work of building the railroad in contravention of the Constitution and laws hereinabove set out, was properly overruled.

The defendant interposed the same defense in the shape of a plea designated as "NN." This plea averred that the plaintiff was a corporation chartered under the laws of the state of Tennessee for the purpose, among other things, of building railroads for other persons or corporations; that it entered into the contract counted on; that in the execution of it the plaintiff did business in the state of Alabama; and that prior to so doing it had not filed an instrument in writing in the office of the Secretary of State of Alabama designating a known place of business in this state and an authorized agent or agents residing thereat. The demurrer to this plea went upon the theory, mainly, that the fact that the work in Alabama had been done by independent subcontractors relieved the plaintiff of the charge of having offended against those provisions of the Constitution and law to which reference has been made. As it appears to us, this is much, if not altogether, the same thing as to say that the plaintiff may maintain its suit upon the contract by which it undertook to build the railroad, at the same time maintaining, in order to obviate the defense interposed, that it did not do the building. The appellee will not, of course, concede that its contention is fairly capable of statement in this shape; but we believe a consideration of its true inwardness will show it to be in effect, if not in form, nothing more. The cases of Beard v. Publishing Co., 71 Ala. 60, Sullivan v. Timber Co., 103 Ala. 371, 15 So. 941, 25 L. R. A. 543, International Cotton Seed Co. v. Wheelock, 124 Ala. 367, 27 So. 517, State v. Anniston Rolling Mills, 125 Ala. 121, 27 So. 921, and Abraham v. Southern Ry., 149 Ala. 547, 42 So. 837, except for the general test laid down, which was that there must be a doing of some of the works, or an exercise of some of the functions for which the corporation was created, contribute nothing to the solution of the question here raised. Those cases merely held that the doing of the certain several particular acts there shown did not measure up to the test--did not constitute the performance of the functions for which the corporations were chartered.

In the case under consideration the plea avers that the cause of action declared on arose out of a contract for the building of a railroad in Alabama, and that the plaintiff corporation was organized in the state of Tennessee for the purpose of building railroads for other persons and corporations. The averments of count and plea taken together, plaintiff's avenue of escape from the conclusion that it violated the statute is to be found in its asserted proposition that the building of the railroad was the act of the subcontractors only, and not the act of plaintiff, within purview of statute and Constitution. Accordingly the demurrer took the point that the plea was bad, because it did not deny the averment that the work had been done by independent subcontractors and now the argument is that the subcontractors were not the agents of the plaintiff, for the reason only that they were contractors and were independent. It might well be considered that the plaintiff closed the door upon this contention when it entered into the contract; for the contract, which is set out in extenso in the count, stipulated that "the contractor shall not be relieved under any circumstances from the immediate charge and responsibility of the work, and no part thereof shall be transferred or sublet to any person or persons, except by the written consent of the railroad company. In case such consent is given, it shall not relieve the contractor from any of the obligations of this contract, and any transferee or subcontractor shall be considered as the agent of the contractor, and as between the parties hereto the contractor shall be and remain liable as if no such transfer or subletting had been made." We make no point here that the contract was not assignable with the subsequently given verbal or implied consent of the defendant. The averment of the...