Chicago Title & Trust Co. v. Hagler Special School District No. 27

• Citation: 12 S.W.2d 881,178 Ark. 443
• Decision Date: 26 November 1928
• Docket Number: 3
• Parties: CHICAGO TITLE & TRUST COMPANY v. HAGLER SPECIAL SCHOOL DISTRICT NO. 27
• Court: Arkansas Supreme Court

12 S.W.2d 881

CHICAGO TITLE & TRUST COMPANY v. HAGLER SPECIAL SCHOOL DISTRICT NO. 27

178 Ark. 443

No. 3

Supreme Court of Arkansas

November 26, 1928

Appeal from Arkansas Chancery Court, Southern District; H. R. Lucas Chancellor; reversed.

STATEMENT BY THE COURT.

Appellants brought this suit in equity against appellees to obtain judgment for the amount of certain school bonds, and to foreclose the mortgage on the property of the school district to secure the same. The suit was defended on the ground that the contract for the issuance of the bonds was illegal and void.

The material facts may be stated in brief form as follows:

The Legislature of 1915 created Hagler Special School District No. 27, in Arkansas County, and authorized its directors to borrow money and to mortgage its property for repayment of same. Acts of Arkansas, 1915, p. 1292. Pursuant to the power conferred by this act, the directors of Hagler Special School District No. 27 issued bonds in the aggregate amount of $ 10,000, and gave a mortgage on all the property of the school district. The bonds recited that they were given for the purpose of raising funds to erect and equip a necessary school building for said school district. The bonds also provide the following:

"It is hereby certified and recited that all acts, conditions and things required by the Constitution and laws of the State of Arkansas to exist, happen and be performed precedent to and in the issuance of this bond, have existed, happened, and been performed in regular and due time, form and manner, as required by law, and that the amount of this bond, together with all other indebtedness of said school district, does not exceed any constitutional or statutory limitation."

Appellants who are nonresidents of the State, purchased these bonds, and are now bona fide holders of the same. The Chicago Title & Trust Company of Chicago, Illinois, a foreign corporation, was named as trustee in the mortgage; but this corporation does not own the bonds or have any beneficial interest therein. Default was made in the payment of said bonds and the interest thereon.

The Legislature of 1917, by special act, created Special School District No. 69 in Arkansas County, and in doing so took a material part of the territory then embraced within Hagler Special School District No. 27. Acts of 1917, p. 53. The act recites that no notice of the intention to apply for the introduction and passage of act No. 314 of the Acts of the General Assembly of 1915, creating Hagler Special School District No. 27, was ever given, as required by the Constitution.

The Legislature of 1919, by special act, created Special School District No. 71 of Arkansas County, and also took away from Hagler Special School District No. 27 a material part of its territory in forming the new district, which was called Brewer Special School District. Special Acts of 1919, p. 903. This act also recites that no notice to apply for the introduction and passage of the act of 1915, creating Hagler Special School District No. 27, was given as required by the Constitution.

The Chicago Title & Trust Company has never complied with our statute authorizing foreign corporations to do business in the State. Other facts will be stated or referred to in the opinion.

The chancellor found that the Chicago Title & Trust Company trustee in the bonds, was not authorized to do business in the State of Arkansas, and that the contract for the bonds was illegal and void. Therefore it was decreed that the complaint of appellants should be dismissed for want of equity. The case is here on appeal.

Decree reversed, and cause remanded.

Carmichael & Hendricks, for appellant.

Peyton D. Moncrief, A. G. Meehan, John W. Moncrief, and R. D. Rasco, for appellee.

OPINION

HART, C. J., (after stating the facts).

After the transcript was filed in this court, counsel for appellants ascertained that the deposition of E. F. Horning, one of the bondholders, had been lost. The decree recites that the case was heard upon the pleadings and depositions of certain witnesses, specifically named, and among them is the name of E. F. Horning. Counsel for appellants applied to the chancery court from which this appeal was taken to supply the lost deposition. The chancery court granted their request, and, upon proper proof, the lost deposition was supplied and made a part of the record, and so certified by the clerk of the chancery court, under the direction of the chancellor.

It is earnestly insisted by counsel for appellees that no such power existed in the chancery court. We cannot agree with counsel in this contention. Section 8342 of Crawford & Moses' Digest provides that, whenever any of the public records, including all records, papers and proceedings of every description, of record or on file in any court, or clerk's or recorder's office, or other public office of a county, shall be lost, or burned, or otherwise destroyed, the same may be reinstated and restored in the manner hereinafter provided. This court has held that, independent of statute, a court of general jurisdiction possesses the inherent power to substitute or restore its lost or destroyed records, and such power is not taken away by a statute unless a clear intention to do so appears in the body of the statute itself. Fort Smith Automobile & Supply Co. v. Nedry, 100 Ark. 485, 140 S.W. 711. So it will be seen from the language of the statute that it is merely declaratory of the common law.

The rule and the necessity for it were clearly stated by Mr. Justice Mitchell of the Supreme Court of Minnesota, in Red River & Lake of the Woods Railroad Company v. Sture, 32 Minn. 95, 20 N.W. 229, as follows:

"Independently of statute, and by virtue of its inherent powers, unaffected by lapse of time, every court has the right to replace its records when lost or destroyed by accident, negligence, or wantonness. If it had not this power, the rule that the record imports absolute verity, and is exclusively admissible evidence of matters properly incorporated in it, would work much mischief. The power which enables a court to supply an entire record after judgment extends to supplying any pleadings or papers in civil cases prior to judgment."

Under our practice, depositions, when filed, or oral evidence ordered to be reduced to writing and filed as depositions, become a part of the record in a chancery court. Fletcher v. Simpson, 144 Ark. 436, 222 S.W. 710; Harmon v. Harmon, 152 Ark. 129, 237 S.W. 1096; McGraw v. Berry, 152 Ark. 452, 238 S.W. 618; C. A. Rees & Co. v. Pace, 156 Ark. 473, 246 S.W. 491; Rose v. Rose, 9 Ark. 507; Lemay v. Johnson, 35 Ark. 225; and Casteel v. Casteel, 38 Ark. 477.

Of course, the court should proceed cautiously in the matter of restoring lost records, especially lost depositions; but this was done in the case at bar.

The chancellor held that the contract of the school district for the sale of the bonds was invalid, because the trustee named in the bonds and in the mortgage given to secure the same was a foreign corporation, which had not complied with our statute authorizing foreign corporations to do business in this State. We do not agree with this construction placed upon our statute prescribing upon what conditions foreign corporations may do business in this State. The language of the statute shows that it was intended to prevent a foreign corporation from doing business in this State, for which it was organized in another State, until it had procured the required certificate to do business in this State. In Kephart v. People, 28 Colo. 73, 62 P. 946 the Supreme Court of Colorado had under consideration a statute of that State which provided, among other things, that, if a foreign corporation fails to pay a prescribed fee to the Secretary of State, it shall not exercise any corporate powers or do any business in the State until the fee shall be paid; and it was held that the statute did not prevent an action by the foreign corporation to collect State warrants bought at its place of business in the State where such corporation was created. In Bamberger v. Schoolfield, 160 U.S. 149, 16 S.Ct. 225, 40 L.Ed. 374, it was held that a corporation of one State does not carry on business in another State by discounting a note sent it from the other...