Central Coal & Coke Co. v. Optimo Lead & Zinc Co.

• Decision Date: 20 July 1911
• Citation: Central Coal & Coke Co. v. Optimo Lead & Zinc Co., 139 S.W. 525, 157 Mo. App. 720 (Mo. App. 1911)
• Parties: CENTRAL COAL & COKE COMPANY et al., Appellants, v. OPTIMO LEAD & ZINC COMPANY et al., Respondents
• Court: Missouri Court of Appeals

139 S.W. 525

157 Mo.App. 720

CENTRAL COAL & COKE COMPANY et al., Appellants, v. OPTIMO LEAD & ZINC COMPANY et al., Respondents

Court of Appeals of Missouri, Springfield

July 20, 1911

Appeal from Jasper Circuit Court.--Hon. David E. Blair, Judge.

Judgment affirmed.

E. F Cameron and McReynolds & Halliburton for appellants.

(1) The deed of trust executed and delivered by the Optimo Lead & Zinc Company, an Arizona corporation which has not complied with the laws of this State, is a contract. Contracts made by foreign corporations doing business in this state which have not complied with the laws of this state are void. Tri-State Amusement Co. v. Amusement Co., 192 Mo 423; Roeder v. Robertson, 202 Mo. 536; Erhardt v. Robertson, 78 Mo.App. 404; Mill & Lumber Co. v Sims, 197 Mo.App. 512; Zinc & Lead Co. v. Mining Co., 221 Mo. 7; Machinery Co. v. Ramlose, 210 Mo. 631; Bank v. Leeper, 121 Mo.App. 688; State ex rel. v. Pond & Co., 135 Mo.App. 81; Text Book Co. v. Gillispie, 229 Mo. 397. (2) A contract that is absolutely void has no effect whatever. In fact, it is a mere nullity. Skape v. Lecony, 1 N. J. L. 11; Cummings v. Powell, 8 Tex. 80; Lumber Co. v. McIntyre, 75 N.W. 964, 100 Wis. 258; King v. King, 59 N.E. 111; Callis v. Day, 38 Wis. 643; Breckenridge Heirs v. Ormsby, 26 Ky. 228, 19 Amer. Dec. 71; Alexander v. Nelson, 42 Ala. 402; Hoen v. Lewis (N. Y.), 2 Ed. Ch. 289; Bank v. Wheelock, 40 N.E. 636; Pearsol v. Chapin, 48 Pa. 15.

Norman A. Cox and Hugh Dabbs for respondents.

(1) Appellant's contention entirely misconstrues the meaning of our statutes governing foreign corporations. The uniform rule is that such statutes shall be strictly construed and not extended or enlarged by judicial construction so as to embrace penalties or persons not plainly within their terms. State v. Koock, 202 Mo. 223; Crone v. Tel. Co., 131 Mo.App. 320; Connell v. Tel. Co., 108 Mo. 459; Rixke v. Tel. Co., 96 Mo.App. 410. (2) The statutes were enacted for the purpose of protecting citizens of the state and creditors--such as respondents--against foreign corporations, and the universal rule is to so construe such statutes as not to make contracts void as against the parties for whose benefit the law was enacted. Page on Contracts, sec. 332; Ins. Co. v. Ellis, 32 Ohio 388; Ins. Co. v. McMillan, 24 Ohio St. 67; Thompson on Corporations, sec. 6712; 19 Cyc. 1301; Marshall v. Ins. Co., 78 Hun (N. Y.) 83, 29 N.Y.S. 334; Young v. Gaus, 134 Mo.App. 171; Mfg. Co. v. Const. Co., 124 Mo.App. 364; United Shoe Co. v. Ramlose, 132 S.W. 1133. (3) The law presumes that a foreign corporation doing business in this state has complied with the law, and the citizen, for whose benefit the statute was enacted and who does not come within its penalties, has a right under the law to presume that such corporation has complied with the law. Pennypacker v. Ins. Co., 8 L. R. A. 242; Ins. Co. v. McMillan, 24 Ohio St. 67; Lasher v. Simpson, 123 A. 552; Silver Co. v. Rust, 51 P. 526. Neither the corporation nor creditors under a subsequent debt and judgment lien can attack respondent's mortgage and contract, and in no event without tendering to respondents the money loaned by them in good faith. Mfg. Co v. Const. Co., 124 Mo.App. 366; Thompson on Corporations, sec. 7955; Rollins v. McAntire, 87 Mo. 496; Downing v. Ringer, 7 Mo. 585; Mason v. Pitt, 21 Mo. 391; Roller v. Robinson, 202 Mo. 533; Shoe Co. v. Ramlose, 132 S.W. 1133; Barnett v. Timberlick, 57 Mo. 501.

OPINION

COX, J.

Defendant, Optimo Lead and Zinc Company, is a corporation organized under the laws of Arizona and has been for some time engaged in mining in Jasper county, Missouri, but has not complied with the provisions of our law in relation to foreign corporations doing business in this state. The plaintiffs are judgment creditors of this corporation, having obtained judgments against it in the circuit court of Jasper county, February 25, 1910. On June 9, 1909, the corporation borrowed eight thousand dollars from R. C. Boyd, and to secure the same executed a deed of trust upon its mining property with H. B. Boyd as trustee. At the time the loan was made and the deed of trust executed, the Boyds had no knowledge that the corporation had not complied with our law. Default having been made in the payment of the debt secured by this deed of trust, the trustee, on February 14, 1910, advertised the property for sale as provided by the deed of trust; whereupon the plaintiffs instituted this suit in equity for the purpose of having the deed of trust declared void and cancelled and the property covered by it subjected to the payment of their judgments. The trial court found for defendants and dismissed plaintiffs' bill and plaintiffs have appealed.

The main facts are undisputed, and plaintiffs rests their case chiefly upon the proposition that since the Optimo Company is a foreign corporation and had not complied with our laws, the deed of trust executed by it is void and defendants, Boyds, can secure no rights under it even though they dealt with the corporation in ignorance of the fact that it had not complied with our law.

The statute, sections 3037 and 3039, Revised Statutes 1909, among other things, require a corporation from another state to file with the Secretary of State a copy of its charter and to maintain an office in this state where process may be served upon it. Among other provisions is the following, which is part of section 3037:

"And no corporation incorporated under the laws of any other state, territory or country, doing business in this state, shall be permitted to mortgage, pledge or otherwise encumber its real or personal property situated in this state to the injury or exclusion of any citizen or corporation of this state who is a creditor of such foreign corporation." Section 3040 provides for a penalty by fine against a foreign corporation which shall do business in this state without having first complied with the provisions of the other sections.

Nearly all the states in the Union have statutes similar to ours and an examination of the decisions construing them will disclose an irreconcilable conflict upon the question as to whether a contract entered into by a foreign corporation without having first complied with the laws of the state where the contract is made is void or only voidable at the election of the other party. [See 19 Cyc., 1289, b. note 73; Tri-State Amusement Co. v. Amusement Co., 192 Mo. 404 at 404-419, 90 S.W. 1020.] The Supreme Court of this state has uniformly held the contract void. [Amusement Case, supra; Mill & Lumber Co. v. Sims, 197 Mo. 507, 95 S.W. 344; Roeder v. Robertson, 202 Mo. 522, 100 S.W. 1086; United Shoe Machinery Co. v. Ramlose, 210 Mo. 631, 109 S.W. 567; Zinc & Lead Co. v. The Mining Co., 221 Mo. 7, 120 S.W. 31.]

The above cases, however, as well as cases in other jurisdictions in which the contract has been held void are cases in which the corporation, or some one claiming under it, was asserting the validity of the contract and the other party to the contract was repudiating it. No court so far as we can learn has ever held the contract of a foreign corporation void for failure to domesticate and at the same time permitted the corporation, or its privy, to profit thereby as against a citizen of the state who had dealt with the corporation in ignorance of its default. As applied to the corporation or its privy the contract is void. But to hold it void when to do so would result in injury to an innocent party and profit to a wrongdoer is contrary to all principles of right and justice, and would be a perversion of the law.

Aside from the question of revenue the purpose of this statute imposing certain conditions upon foreign corporations in return for the privilege of doing business in the state is to protect the citizens of the state. [19 Cyc. 1302; Union Mutual Insurance Co. v. McMillen, 24 Ohio St. 67; Swan v. Watertown Fire Insurance Co., 96 Pa. 37; Lasher v. Stimson (Pa.), 23 A. 552; Corbett v. Physicians' Casualty Assn. (Wis.), 115 N.W. 365; Sparks v. National Masonic Acc. Assn. (Ia.), 69 N.W. 678.]

The citizen needs no protection until it shall become necessary for him to enforce, or resist some obligation, contractual or otherwise, between himself and the corporation. If then his contracts with the corporation, made in ignorance of the fact that the corporation had not complied with the law of the state, which he may seek to enforce are to be held void under all circumstances until the corporation shall comply with the law the statute affords him no protection until it has been complied with by the corporation, and his right to the fruits of his contract is made dependent upon the acts of the other party and the innocent party is put at the mercy of the wrongdoer. To this proposition we cannot give our approval.

Our courts have uniformly held that in proceedings in court involving the status of a foreign corporation it will be presumed in the absence of a contrary showing that the corporation has complied with our law. [United Shoe Machinery Co. v. Ramlose, 210 Mo. 631, 109 S.W 567; Tribble v. Halbert, 143 Mo.App. 524, 127 S.W. 618.] Upon the same principle, a party dealing with a foreign corporation in the absence of knowledge to the contrary should be permitted to presume that the corporation has complied with the law. No court should stultify itself by indulging a presumption of compliance with the law in its own dealings with a foreign corporation and then deny the same privilege to a citizen. If a court in the trial of a case where the parties meet as antagonists and where the burden may be upon the corporation to make out its case, will presume compliance with the law, why should not the citizen be permitted to indulge the same...