Chicago Mill & Lumber Co. v. Sims

• Decision Date: 14 April 1903
• Citation: 101 Mo. App. 569,74 S.W. 128
• Court: Missouri Court of Appeals
• Parties: CHICAGO MILL & LUMBER CO. v. SIMS.

74 S.W. 128

101 Mo. App. 569.

CHICAGO MILL & LUMBER CO. v. SIMS.

Court of Appeals at St. Louis, Missouri.

April 14, 1903.

CORPORATIONS — FOREIGN CORPORATIONS — RIGHT TO TRANSACT BUSINESS—STATUTORY PREREQUISITES — NONCOMPLIANCE — EFFECT —DOING BUSINESS—EVIDENCE—SUFFICIENCY —APPEAL—DEFENSES NOT INTERPOSED.

1. Evidence showing that plaintiff, a foreign corporation, bought timber and lumber within the state, and shipped it out, sufficiently showed that it was doing business in the state within the meaning of Rev. St. 1899, § 1024 et seq., prescribing the conditions on which a foreign corporation may transact business within the state.

2. Rev. St. 1899, § 1024 et seq., provides that foreign corporations shall have an office where they may be served with legal process, and be otherwise subject to the liabilities and duties imposed on similar domestic corporations; and further prescribes a fine and prosecution for the violation of the law, and imposes a disability to maintain any action of contract or tort. Held, that the statute does not render contracts made with noncomplying corporations void, but a foreign corporation which has entered into a contract without complying with the law, may, after compliance therewith, maintain an action on such contract.

3. A defense not interposed by the answer, which it was not incumbent on plaintiff to meet by proof, will be disregarded on appeal.

Appeal from Circuit Court, Pemiscot County; H. C. Riley, Judge.

Action by the Chicago Mill & Lumber Company against Thomas B. Sims. From a judgment for plaintiff, defendant appeals. Affirmed, and, on rehearing, cause certified to Supreme Court.

Roberts & Corbett and Brewer & Collins, for appellant. Faris & Oliver, for respondent.

Statement of Facts and Opinion.

GOODE, J.

Respondent is a foreign corporation organized under the laws of the state of Illinois. It instituted this action on a covenant contained in a deed executed by the appellant, Sims, November 29, 1898, which was intended to convey the growing timber on a tract of land in Pemiscot county, Mo., and allow respondent to cut and remove the timber within three years from its date. The covenant on which the action is founded reads as follows: "I warrant said timber and trees to be free and clear from any incumbrances done or suffered by me, or those under whom I claim, and I will warrant and defend the title to the said timber and trees to the said Chicago Mill and Lumber Company, or their assigns, against the lawful claims and demands of all persons whomsoever." A month after the execution of that deed, which was neither acknowledged nor recorded, the appellant made a quitclaim deed to E. A. M. and Joseph Webb, conveying the land on which the timber stood. The second deed did not except the timber which had been previously sold to appellant from its force and effect; so, after the Webbs had made the purchase, they put the deed to record, and began to cut the timber. This led to an injunction suit by the respondent to protect its rights acquired by the purchase from Sims, which suit is alleged in the petition to have resulted in a judgment that the title to the timber was in the Webbs. The petition in the present case states that the appellant, Sims, was duly notified to defend respondent's title to the trees according to his covenant. Two counts are contained in the petition, but we are only concerned with the first one, for the judgment on the second count was for the appellant. The only defense set up in the answer to the first count is that the respondent was a foreign corporation, resident in this state, and doing business therein at the time it took the deed from the appellant; but that it had not previously filed in the office of the Secretary of State a copy of its charter or certificate of incorporation, and had not made a sworn statement of the proportion of its capital stock represented by property located in Missouri, or paid its incorporation fees. In other words, that the respondent was a foreign corporation doing business in this state without having complied with the requirements of section 1024 et seq. of the Revised Statutes of 1899. It is stated in the respondent's brief that its business was manufacturing boxes, that all its factories were in the state of Illinois, and that the only business it conducted in this state was buying timber and other raw material to ship to Illinois to be made into boxes; but that statement is broader than the testimony in the record warrants. S. C. Humphreys, the Missouri agent of the respondent company, testified that it bought lumber from sawmill people in this state, and shipped it to Illinois, and at the end of the month it was in Cairo in boxes. There is no testimony as to where the respondent's factories were, whether it had any, whether it worked up the lumber it bought, or shipped it to Illinois and sold it. For about 10 months previous to the date of the deed in question it kept a resident agent in this state to make purchases of timber, who had an office at Caruthersville. The only business transaction the company is shown to have had prior to the date of the deed, except purchases of timber, was the acquisition of one other tract of land. The evidence shows that the plaintiff did not comply with the statutes in relation to foreign corporations until September 17, 1900, or about a month before this action was begun; also that a prior action to obtain the same relief was instituted June 16, 1900, and dismissed when the company's attorney found it had not as yet filed its certificate of incorporation with the Secretary of State. The only declaration of law asked was one by the appellant that under the pleadings and the proof the finding should be in his favor. The court refused that declaration, gave judgment for the respondent and this appeal was taken.

It will be seen from the statement that the respondent company had not complied with the law in relation to foreign corporations when Sims bound himself by the covenant on which this action is based, but had complied with it before the action was begun. The principal question, therefore, is, did that compliance entitle the respondent to maintain its action? This involves the further question of whether the deed was a void instrument from the first, because the respondent was in default in respect to its statutory duties. We might have a doubt as to whether the respondent company was transacting business in this state, within the meaning of the law, if the evidence warranted the statement contained in its brief that it was engaged in manufacturing in the state of Illinois, and only bought timber in Missouri to use in its factories. But, as we have said, there is no testimony that its Illinois business was of that character, as it is only shown to be an Illinois corporation which bought timber and lumber in Missouri and shipped it into Illinois. As the proof stands, we must hold it was engaged in business in the state of Missouri within the meaning of the law prescribing conditions on which foreign corporations may transact business in this state. That being true, the present action cannot be maintained if the deed from Sims to the company was void, but can be maintained if it was a valid instrument on which no action would lie in the state courts as long as the respondent remained in default. We have to inquire then whether the statutes relating to foreign corporations render contracts entered into by them before they have complied with the statutory requirements void, or merely suspend their right of action on such contracts. We would feel sure the statutes only affect the right to enforce the contract, instead of invalidating the contract itself, but for the fact that the opposite construction has been adopted heretofore by this court, and also by the Kansas City Court of Appeals. Williams v. Scullin, 59 Mo. App. 30; Blevins v. Fairley, 71 Mo. App. 259; Ehrhardt v. Robertson, 78 Mo. App. 404. In those cases it was decided that the statutes prevent foreign corporations which have failed to comply with their requirements from making agreements, and that all agreements attempted in such circumstances are void so far as the rights of the corporations are concerned. This conclusion was deduced from the proviso that, before a foreign corporation organized for pecuniary benefit shall be permitted to transact and continue business in this state, it shall observe the prescribed regulations. That language was thought to so effectually prohibit noncomplying companies from transacting any business whatever as to deprive all their agreements of validity, instead of simply denying the companies the remedies afforded by our courts for the redress of wrongs.

The question came up for decision in the case of Carson-Rand Co. v. Stern, 129 Mo. 381, 31 S. W. 772, 32 L. R. A. 420, and, as we understand the opinion, was determined the other way; but the Kansas City Court of Appeals, in Ehrhardt v. Robertson, supr...