A. Booth & Co. v. Weigand

• Decision Date: 31 December 1904
• Docket Number: 1578
• Citation: A. Booth & Co. v. Weigand, 28 Utah 372, 79 P. 570 (Utah 1904)
• Court: Utah Supreme Court
• Parties: A. BOOTH AND COMPANY, a Corporation, Respondent, v. G. M. WEIGAND, Appellant

79 P. 570

28 Utah 372

A. BOOTH AND COMPANY, a Corporation, Respondent, v. G. M. WEIGAND, Appellant

No. 1578

Supreme Court of Utah

December 31, 1904

Appeal from the Third District Court, Salt Lake County.--Hon. T. D Lewis, Judge.

The plaintiff, a foreign corporation, brought this action to recover the value of certain goods sold and delivered to the defendant.From a judgment in favor of the plaintiffthe defendant appealed.

REVERSED.

S. P Armstrong, Esq., for appellant.

Can a foreign corporation without complying with the laws of Utah maintain an action in its courts on contracts entered into within the State, while it was engaged in a general business in disregard of its laws?This court has answered this question in the negative."It will be conceded in the outset that, if the contract upon which the plaintiff's action was brought was made in violation of a law of the State, it cannot be enforced by any court in the State.So far as appears, plaintiff had no place of business, with an authorized agent upon whom process could be served within the State, and had not filed a certified copy of its articles of incorporation with the secretary of state.The contract and notes upon which suit was brought were made in Kansas City Kansas, where plaintiff conducted its business, and the notes were made payable there.The plaintiff had never done nor contemplated doing any business in this State, except in bringing this action to enforce the contract and rights sued upon.Under these circumstances, was the bringing of this action to enforce the contract and obtain the rights thereunder forbidden by the constitution and laws of this State, which provide that "no corporation shall do business in this State." etc."In our opinion, the constitution, when reasonably construed, was intended to prohibit corporations from transacting their ordinary corporate business within the State without first complying with its terms,"etc. Barse Co. v. Range Co.16 Utah 64-65.

This decision considers the law as it stood January 20, 1896.At that time the only statutory disadvantage, from non-compliance, was that the foreign corporation should not have the benefit of the statute of limitations.Com. Laws 1888, sec. 2293.

But the Constitution provides that, "no corporations organized outside of this State shall be allowed to transact business within the State on conditions more favorable than those prescribed by law to similar corporations organized under the laws of this State."Art. XII. sec. 6.And "No corporation shall do business in this State, without having one or more places of business, with an authorized agent or agents, upon whom process may be served; nor without first filing a certified copy of its articles of incorporation with the Secretary of State."Art. XII, sec. 9.

This court treated the provisions of the constitution as self executing, and hence says that "It will be conceded" that a contract made in violation of these provisions will not be enforced.That is, a contract made in Utah by a foreign corporation doing business therein without complying with its laws, will not be enforced.Barse Co. v. Range Co.,16 Utah 64, After the case of Barse Co. v. Range Co., was begun an act was approved to take effect April 4, 1896, among other things providing that "All corporations, not organized under the laws of this State, before doing business within the State, shall file, etc.,... and shall also before doing business within the State, by resolution, etc., accept the provisions of the Constitution of this State, and also designate some person, etc....Any such corporation failing to comply with the provisions of this section, shall not be entitled to the benefits of the laws of the State relating to corporations."Laws 1896, page 308, sec. 2293.

Among the "benefits" conferred upon corporations are the rights to contract and to sue."The corporation in its name shall have power to make all contracts necessary and proper to effect its purposes and conduct its authorized business, to sue and be sued, etc."Laws 1903, p. 78;Rev. Stat., sec. 322;Com. Laws 1888, sec. 2272.

In the revision of the statutes, 1898, the following clause was added to the Act of April 4, 1896, above quoted: "And any person acting as agent of a foreign corporation which shall neglect, etc., shall be deemed guilty of a misdemeanor, and shall be personally liable on any contracts made in this State by him for and in behalf of such corporation during the time that it shall remain so in default; provided, etc."Rev. Stat., sec. 352.

This court considered these statutory provisions, and says: They"expressly embody these provisions of the Constitution, and prohibit foreign corporations from doing business in this State, unless they have complied with these requirements of the law; and any corporation failing to so comply with the provisions of the law is not entitled to the benefits of the law of this State relating to corporations.""The appellant corporation did not comply with the laws of this State, and has no power to engage in its business of mining, or to acquire any water rights under the laws of this State."Having failed to comply with its laws, "the defendant corporation, therefore, is not entitled to the benefit of the laws of this State, with reference to corporations."Railroad v. Power Co.,23 Utah 38-39.

Power of the State to restrict foreign corporations.

The State can put any restriction or condition on a foreign corporation doing business within its territory, except that it must not interefere with Federal corporations, or with corporations in so far as they are engaged in interstate commerce, the sale of patented articles or business for the United States.Mining Co. v. Pennsylvania,125 U.S. 181, 190;Paul v. Virginia,8 Wall. 168, 181;Cooper v. Ferguson,113 U.S. 727;St. Clair v. Cox, 106 U.S. 356;Ry. v. Gebhard, 109 U.S. 537;Ry. v. Koontz, 104 U.S. 11.

Plaintiff was doing a general mercantile business at its storeroom in Salt Lake City from which the goods were sold and delivered and hence the case does not come within any of the exceptions.Hynes v. Briggs,41 F. 470;Robbins v. Taxing Dist.,120 U.S. 489, 500;Brown v. Houston, 114 U.S. 622, 635.

A corporation having failed to comply with the laws of Utah cannot sue in its courts.Where the foreign corporation conducts a local business, it comes within the prohibition of the local laws, and it cannot sue until it complies therewith.Crefeld Mills v. Goddard,69 F. 141, 149;Barse Co. v. Range Co.,16 Utah 65;Smith v. Alberta Co.,74 P. 1073(Idaho);Carey-Lombard v. Thomas, 22 S.W. 745, (Tenn.)

The contracts sued upon are void.This action is based on contracts made in violation of the Utah Constitution and Statutes."Whenever a contract is prohibited, whether expressly or by implication, it is illegal, and cannot be enforced.Of this there is no doubt."The propositions that seem fairly deducible from the foregoing authorities are the following: First.That where a contract is prohibited by statute, it is immaterial to inquire whether the statute was passed for revenue purposes only, or for any other object.It is enough that parliament has prohibited it, and it is therefore void."Benj. Sales(3d Ed.), secs. 694, 702;(7 Ed.), secs. 530, 538;2 Add. Cont. 1147 (8 Ed.);2 ChittyCont. 1003 (11th Am. Ed.), (7th Ed.), 694-7; Smith, Cont., (5 Ed.), 241;Miller v. Ammon,125 U.S. 426-7;Stevenson v. Ewing,9 S.W. 230(Tenn.);Woods v. Armstrong, 25 Am. R. 671, 674.

Where the payment of a tax is a condition to the right to carry on a business, "in such case the business carried on without a license will be illegal, and no recovery can be had upon contracts made in the course of it."Cooley, Taxation (2 Ed.), 572;Bish., Contracts, sec. 547;Sellers v. Phillips,37 Ill.App. 74.

The courts have applied this general principle of law, familiar alike in England and America, to contracts made by foreign corporations doing business without complying with the law of the state into which they have come.These decisions have established the rule that, unless there is something in the statute from which the lawmakers may be presumed to limit its scope to some other consequences, its contracts will be void and unenforcible by the noncomplying corporation.Cooper v. Ferguson,113 U.S. 727;Utley v. Clark-Gardner,4 Colo. 369, 372;Cin. Mut. Co. v. Rosenthall,55 Ill. 85, 90, 93;Thomas v. Ins. Co.,21 Am. Rep. 89, 92, 80 Pa. 15;Electric Co. v. Perry(R. I.),75 F. 898-9;Carey-Lombard Co. v. Thomas,92 Tenn. 596;Williams v. Mining Co., (Cal.),96 F. 454, 463; Re Comstock, 3 Sawyer 227 (Ore.);McCanna v. Trust Co.,76 F. 421;Pennington v. Townsend, 7 Wend. (N.Y.), 279-80;Barber v. Boehm,21 Nebr. 450;DeGroot v. Van Dusen20 Wend. 393;Dobsen v. Hope,7 Kans. 165;Williams v. Cheny,3 Gray 222;Ins. Co. v. Chamberlain,16 Gray 165;Gilchrist v. Ry., (Mont.),47 F. 593;Flosheim v. Lester,46 Am. St. 161, 60 Ark. 120;Dundee v. Nixon,10 So. 311, 95 Ala. 318;B. & L. Ass'n v. Cannon, (Tenn.)41 S.W. 1054;Hachney v. Leary,12 Ore. 45;Semple v. Bank, 5 Sawyer 91-2-3;Nelms v. Mtg. Co.,92 Ala. 159;Farrier v. Mtg. Co.,88 Ala. 277, 279;Christian v. Mtg. Co.,89 Ala. 198, 200;Ins. Co. v. Wright, 55 Vt. 531.

W. R. Hutchinson, Esq., for respondent.

The right of the respondent to maintain its action against the appellant is authorized by the Constitution of the State of Utah.SeeArticle 12, section 4-6.The appellant refers in his brief to section 351 of the Utah Code, andsec. 9, article 12, Constitution of Utah and claims that foreign corporations are prohibited from making contracts in this state, and from enforcing their contracts so made in the courts of this State.

The...