Booth v. Scott

• Decision Date: 16 September 1918
• Citation: 205 S.W. 633,276 Mo. 1
• Parties: IDA B. W. BOOTH, Appellant, v. S. W. SCOTT et al
• Court: Missouri Supreme Court

205 S.W. 633

276 Mo. 1

IDA B. W. BOOTH, Appellant, v. S. W. SCOTT et al

Supreme Court of Missouri, First Division

September 16, 1918

Appeal from Jackson Circuit Court. -- Hon. Kimbrough Stone, Judge.

Reversed and remanded (with directions).

J. W Porter, A. E. Crane, and Prince & Harris for appellant.

(1) The trial court erred in sustaining the demurrer of the defendants to the evidence of the plaintiff on the ground that the facts disclosed do not constitute a cause of action in favor of the plaintiff and against the defendants. (2) The plaintiff was entitled to recover the purchase price of the land, which the respondents attempted to sell to her, because the contract of purchase made with the plaintiff is void by reason of the fact that the Mexican Gulf Land & Development Company, Limited, was and is incapable of contracting in the State of Missouri. (a) The said company was incorporated by the respondents, all of whom were citizens and residents of Missouri, under the laws of Arizona, for the purpose of avoiding the laws of this State, which was a fraud upon the laws of both the States of Arizona and Missouri. Consequently the corporate existence of such a corporation will not be recognized by the State of Missouri. Sec. 3039, R. S. 1909. (b) All such corporations as that represented by the respondents are by said section of the statute positively prohibited from doing business in Missouri under any circumstances. And the respondents assuming to transact business in this State was a wilful violation of positive law and against public policy. All such business transactions were absolutely void for that reason. Ehrhardt v Robertson Bros., 78 Mo.App. 404; Tri-State Amusement Co. v. Amusement Co., 192 Mo. 404; Parke, Davis & Co. v. Mullett, 245 Mo. 168; Cleaton v. Emery, 49 Mo.App. 345; Davidson v. Hobson, 59 Mo.App. 130; Journal Co. v. Nelson, 133 Mo.App. 482; Hill v Beach, 12 N.J.Ch. 31; Hyatt v. Van Riper, 105 Mo.App. 664; Donnelly v. Missouri Trust Co., 144 S.W. 392; Lafferty v. Evans, 17 Okla. 255; Myatt v. Ponca City Land and Imp. Co., 14 Okla. 220; Empire Mills v. Alston Groc. Co., 15 S.W. 200; Rodman v. Munson, 13 Barb. (N. Y.) 188; Harris v. Larsen, 66 P. 782; Bank of Atchison County v Byers, 139 Mo. 627; Martin v. Fewell, 79 Mo. 401; Furniture & Carpet Co. v. Crawford, 127 Mo. 365; Rohan Bros. Boiler Mfg. Co. v. Richmond, 14 Mo.App. 595; Cement Co. v. Gas Co., 255 Mo. 1. (c) The Mexican Gulf Land & Development Company, Limited, was, prior to, at the time of, and long after making the contract in question with the plaintiff, doing business in Missouri within the meaning of Secs. 3039 and 3040, R. S. 1909. Frick v. Marshal, 86 Mo.App. 463; Tri-State Amusement Co. v. Amusement Co., 192 Mo. 404; Chicago Mill and Lumber Co. v. Sims, 101 Mo.App. 569; United States Machinery Co. v. Ramlose, 210 Mo. 631. (3) The second ground upon which the appellant is entitled to recover the purchase price of said land is that there is a total failure of consideration, for two reasons, viz. (a) The deed by which it was attempted to convey said land to this appellant is void for the same reasons that the original contract itself is void. For the validity of a contract, whatever its nature or object, as respects the capacity of the parties, is to be determined by the laws of the State where it was entered into. Bishop on Contracts, sec. 1383; Mutual Life Ins. Co. v. Simmons, 52 Mo.App. 357; 2 Parsons on Contracts, secs. 684, 685, 691; Roeder v. Robertson, 202 Mo. 537; United States Machinery Co. v. Ramlose, 132 S.W. 1133; Lafferty v. Evans, 17 Okla. 254-255; Tri-State Amusement Co. v. Amusement Co., 90 S.W. 1025. (b) Because said deed did not comply with the requirements of the laws of the State of Tamaulipas, Republic of Mexico, where the land was situated. Consequently it would not have conveyed the title of the land described therein even if the deed had been valid under the laws of the State of Missouri, where it was executed and delivered. For it is a well settled principle of law that the force and effect of a deed is to be determined by the law of the place where the land is situated. Richardson v. DeGiverville, 107 Mo. 422; Depas v. Mayo, 11 Mo. 314; Miller v. Dunn, 62 Mo. 216; 2 Parsons on Contracts (3 Ed.), sec. 470; Bishop on Contracts, sec. 1394. (4) It having been thus fully established that the said contract and deed are both void for three reasons; and that there is a total failure of consideration, it follows inevitably that the appellant has a right to recover the purchase price of said land for two reasons, to-wit: (a) Because the deed being void the title of said land did not pass from the said company to the appellant. And the title to the land not having passed, the money and note are still appellant's property, and, by reason of that fact, entitled to the possession thereof. United States Machinery Co. v. Ramlose, 132 S.W. 1133; Roeder v. Robertson, 202 Mo. 522; Sparks v. Jasper County, 112 S.W. 271. (b) Because, since, by reason of a void and worthless contract the respondents obtained possession of our money and note without giving us any consideration therefor, in all equity and good conscience, they ought to return the same to us. And out of this moral obligation the law implies a promise on the part of the respondents to return our property to us. And this implied promise on the part of the respondents, we can enforce. Union National Bank v. Lyons, 119 S.W. 549; Roeder v. Robertson, 202 Mo. 522. (5) If a corporation is materially defective in any essential particulars under the statute or common law, its members or stockholders are liable as partners for all of its debts and contracts. Walton v. Oliver, 49 Kan. 113; Beach, Private Corporations, sec. 1-6; Marshall v. Harris, 55 Iowa 182; Kaiser v. Savings Bank, 56 Iowa 104; Coleman v. Coleman, 78 Ind. 347; Smith v. Warden, 86 Mo. 382. (6) The trial court erred in finding and holding that the Mexican Gulf Land & Development Company, Limited, is such a de facto corporation as could be attacked only by the state which granted its charter. (a) The trial court erred in attempting to give a general application to a rule of law which can only be invoked in cases where the corporation in question attempted to do business only in the parent state. Tri-State Amusement Company v. Amusement Company, 90 S.W. 1024; Rowden v. Daniell, 132 S.W. 26-27; Ehrhardt v. Robertson Bros., 78 Mo.App. 404; Elliott v. Sullivan, 137 S.W. 290. (b) The contract and deed here in controversy, having been made by the respondents in violation of public policy and positive law, cannot become binding on this appellant by estoppel, and the appellant can take advantage thereof without waiting for action on the part of the State. Parke, Davis & Co. v. Mullett, 245 Mo. 169, 149 S.W. 461; Williams v. Scullin, 59 Mo.App. 30; Durkee v. People, 40 N.E. 626. (c) The finding and holding of the trial court that the appellant is estopped to call in question the capacity of said corporation to contract in Missouri, if approved by this court, would speedily nullify all the provisions of our statute relative to foreign corporations doing business in this State. Hardy v. Smith, 136 Mass. 332. (d) The trial court had no legal right to consider the defense of estoppel raised by the answers in passing on and determining a demurrer to the evidence of the appellant. 5 Am. & Eng. Ency. Law (1 Ed.), 563; Lee v. Virginia Co., 18 W.Va. 299; Morris v. Indianapolis Ry. Co., 10 Ill.App. 389; Brown v. Atchison Ry. Co., 31 Kan. 1; Bank of Atchison County v. Byers, 139 Mo. 627; Rohan Bros. v. Richmond, 14 Mo.App. 595; Indianapolis Ry. Co. v. McLin, 82 Ind. 435; Ruff v. Ruff, 85 Ind. 431; Morrison v. Berkey, 7 S. & R. (Pa.) 243; Young v. Black, 7 Cranch. (U.S.) 565.

Robert O. McLin, Bruce Barnett, James T. Montgomery and Warner, Dean, McLeod & Langworthy for respondents.

(1) There was no fraudulent incorporation. The contract was not void so far as plaintiff's rights were concerned, and the defendants are not seeking to enforce any part thereof. The Mexican Gulf Land & Development Company, Ltd., would not be permitted to avoid any part of its contract or its deed by reason of any default of its own, and the plaintiff could have enforced the contract against the corporation, and has a valid deed to the five hundred acres of land in Mexico. Coal, etc. Co. v. Lead Co., 157 Mo.App. 720; Note Company v. Cement Company, 155 Mo.App. 351; Young v Gaus, 134 Mo.App. 170; Manufacturing Company v. Construction Co., 124 Mo.App. 363. (2) The contract involved in this was fully executed, and the statute does not affect an executed contract. Manufacturing Company v. Construction Company, 124 Mo.App. 364; Cranor Co. Ltd. v. Miller, 147 Ala. 268; Mobile Electric Light Co. v. Rust, 117 Ala. 690; Dufenbaugh v. Vaughn, 116 Ala. 154; Trust Co. v. Mfg. Co., 222 F. 694; Russel v. Jones, 101 Ala. 263. (3) The statute is unconstitutional and void. Sec. 3039, R. S. 1909, was Sec. 1025, R. S. 1899, which did not contain the clause about incorporators being held as partners. The Act of 1903, added the clause about the partnership liability. This act contained more than one subject, and did not contain any reference to the partnership liability in the enacting clause, or title, and violates Sec. 28, Art. 4, of the Constitution which provides that no bill shall contain more than one subject, which shall be clearly expressed in its title. Woodward Hardware Company v. Fisher, 190 S.W. 576. See also: Williams v. Railroad, 233 Mo. 666. (4) The trial court did not hold anything about appellant being estopped. This question was raised by the answers, but the fault here found with the findings of the trial court does not exist. (5) There is absolutely no evidence that this...