Burroughs v. Southern Colonization Co.

• Decision Date: 26 November 1930
• Docket Number: No. 13110.,13110.
• Citation: 96 Ind.App. 93,173 N.E. 716
• Parties: BURROUGHS v. SOUTHERN COLONIZATION CO.
• Court: Indiana Appellate Court

96 Ind.App. 93

173 N.E. 716

BURROUGHS

v.SOUTHERN COLONIZATION CO.

No. 13110.

Appellate Court of Indiana, in Banc.

Nov. 26, 1930.

Appeal from Starke Circuit Court; W. C. Pentecost, Judge.

Action by the Southern Colonization Company against Nelson T. Burroughs, in which defendant filed a counterclaim. From a judgment for plaintiff, defendant appeals.

Reversed, with instructions to grant new trial.

Superseding opinions in 163 N. E. 517 and 165 N. E. 763.

L. Darrow, of La Porte, for appellant.

O. W. Nichols, of Knox, for appellee.

NICHOLS, C. J.

This is an action growing out of an exchange of 4,480 acres of land in LaPorte and Starke counties, Indiana, owned by appellant, for 61,000 acres of land in Osceola and DeSota counties, Fla., owned by appellee, consummated in the year 1916.

The second amended complaint, on which the case was tried, was filed on November 11, 1925, and, in substance, is as follows: Appellee is a corporation, duly organized, chartered, and existing under the laws of the state of Florida.

On or about December 28, 1916, appellant made and delivered to appellee two certain deeds of conveyance, conveying or purporting to convey to appellee certain real estate situate in LaPorte and Starke counties, Ind.

Appellant acquired such legal or record title as he had to said real estate from the Tuesburg Land Company. At the time of the execution of said deeds, there was pending, in the La Porte circuit court, a certain suit wherein the state of Indiana was plaintiff and the Tuesburg Land Company and others were defendants, in which suit the state claimed to be the owner of, and prayed that its title be quieted to, 2,060.4 acres of the said 4,480 acres of real estate, which lands so claimed were known as meander lands along the Kankakee river.

Both appellee and appellant knew of the pendency of said suit and the fact that it involved the title to 2,060.4 acres of said lands. Because of the defect in the title to said 2,060.4 acres of said 4,400 acres of land, appellee refused to accept deeds to any of said lands from appellant or pay the consideration therefor. Thereupon and in consideration of the premises and of the full payment by appellee of the consideration for said 4,400 acres of land and the acceptance of said deeds, appellee and appellant entered into a contract in writing on about December 28, 1916, at the city and state of New York, whereby appellant agreed that, if the said suit of the State v. Tuesburg Land Company et al. should be decided against the defendants therein, appellant should furnish a valid title to said lands, or, in case of failure to furnish such title within six months from the date of the decision in said case, thereupon to refund to appellee the purchase price at $60 per acre for the acreage which might be recovered by the state in said suit and which appellant had attempted to convey to appellee. A copy of this contract is made a part of the complaint.

Said cause of the State v. Tuesburg Land Co. et al. was transferred on change of venue to the St. Joseph circuit court, and on February 21, 1919, a final judgment was rendered in said cause by said court whereby it adjudged, ordered, and decreed that the state was the owner in fee simple of said 2,060.4 acres of lands, and quieted the title thereto in the state.

The state by said judgment recovered 2,060.4 acres of land which appellant had theretofore attempted to convey to appellee as aforesaid.

More than six months has expired since the decision in said case, and appellant has wholly failed to furnish appellant a valid title to said lands or any part thereof, and has wholly failed and still fails to refund to appellee the purchase price of $60 per acre for the 2,060.4 acres so decreed to be owned by the state.

There has been unnecessary and unreasonable delay on the part of appellant in complying with the provisions of said contract, and there is now due and owing to appellee from appellant, and wholly unpaid upon said contract, $143,624, with interest thereon from August 21, 1919, at 6 per cent. per annum, for which appellee demands judgment.

Appellant's demurrer to this complaint was overruled, after which appellant filed answer in eleven paragraphs, the first being a general denial, and the other ten affirmative answers. Appellee's demurrer as to each of these affirmative answers was sustained as to the second, third, fifth, and ninth paragraphs, and overruled as to the fourth and four and a half paragraphs; and the court sustained appellee's motion to strike out the eighth and tenth paragraphs. The sixth paragraph was a plea of payment, and the seventh failure of consideration. Appellant filed a counterclaim to the second amended complaint by which he asks for damages by reason of the breach of contract in failing to complete and in tearing up the railroad then under construction, in the sum of $300,000. Appellee's motion to strike out the counterclaim and its demurrer thereto were each overruled. The issues were closed by replies to the affirmative paragraphs of answer to which demurrers had been overruled, and by an answer in denial to the counterclaim. There was a trial by jury which resulted in two general verdicts, one for appellee against appellant in the sum of $151,334, and one for appellant against appellee in the sum of $75,000. The jury also returned its answers to interrogatories submitted to it to the effect that the written contract entered into by appellee and Howard Cole & Co., on August 1, 1916, was executed by said company for and on behalf of appellant, and that the exchange of the lands here involved was made pursuant to said contract. Appellant filed its motion for a venire de novo, which was overruled. Appellant's motion for a new trial was also overruled, and judgment was thereupon rendered in favor of appellee for $151,334, and interest and costs, and judgment on the answers to interrogatories notwithstanding the general verdict that appellant take nothing by his counterclaim. From this judgment this appeal is prosecuted. The errors and cross-errors assigned and presented, germane to the substantial questions involved, are hereinafter considered.

[1] We do not discuss the alleged error in overruling appellant's demurrer to the complaint, as the substantial question there presented is more fully presented, and is discussed in considering the alleged error in sustaining appellee's demurrer to the second paragraph of answer. Appellant forcefully contends that the court, after overruling appellee's demurrer to the second paragraph of answer to the second amended complaint, erred in setting aside its ruling and in sustaining such demurrer. As we understand this question, there is merit in appellant's contention. This paragraph alleges that appellee was a foreign corporation, and had not qualified, and could not qualify in Indiana, on account of its having been put in the hands of a receiver in the states of Minnesota, Florida, and Indiana, and that such receiverships were still pending, and that its charter authorized it to own stocks and bonds of railroad companies, which would not be permissible under the laws of this state, and that the contract sued upon was made in Indiana, in reference to Indiana lands, and by the failure of appellee to qualify before doing business in the state, and entering into such contract, the same was ultra vires and void. It is expressly averred that appellee is and was a corporation organized by virtue of the laws of the state of Florida, and was such corporation at the times involved, and that it had a capitalization of $1,500,000, and its purposes and objects were that of buying, selling, mortgaging, leasing, and otherwise acquiring and disposing of lands, and the doing of a general real estate and rent collecting business, and buying and selling timber and owning shares of securities in other corporations, including railroad corporations, and in cultivating, farming, developing, irrigating, and treating lands for agricultural purposes in any form or manner. That such corporation entered into an agreement in the state of Indiana prior to July 1, 1916, to purchase the lands described in the complaint, in LaPorte and Starke counties, Ind., and did, pursuant to said agreement, take possession of said lands and occupy the same by its servants, agents, or tenants on or about September 20, 1916, and appellant did convey to appellee such lands by a good and sufficient warranty deed, pursuant to the agreement so entered into, and appellee, prior to the delivery of said deed of conveyance, took possession of and dominion over said lands in Indiana, and by its agents and officers, before said deeds were executed and delivered, and did use said lands for the purposes for which they were purchased, to wit, renting, making hay, and farming the same, in Indiana, and that the contract herein sued upon grew out of and was a part of the same transaction in the purchase and sale of such lands, that was made and entered into in Indiana by and between appellee and appellant on or about December 28, 1916. It is clearly averred in such paragraph of answer that appellee was a foreign corporation, and that it had not qualified and could not qualify so as to transact business in the state as required by the statute, and that, at the time of the execution of the contract in suit, it was transacting in this state the kind of business for which it was organized.

Section 4909, Burns' 1926 (Acts 1907, p. 286, c. 176, § 1) provides that: Before any foreign corporation for profit shall be permitted or allowed to transact business or exercise any of its corporate powers in the State of Indiana *** they [it] shall be required to comply with the provisions of this act and shall be subject to all the regulations prescribed herein.”

There has been much discussion and difference of opinion in this court whether, under the above section and subsequent sections, as well as other...