Cockburn v. Kinsley

• Decision Date: 14 October 1913
• Citation: 25 Colo.App. 89,135 P. 1112
• Parties: COCKBURN et al. v. KINSLEY.
• Court: Colorado Court of Appeals

135 P. 1112

25 Colo.App. 89

COCKBURN et al. v. KINSLEY.

Court of Appeals of Colorado

October 14, 1913

Appeal from District Court, El Paso County; John W. Sheafor, Judge.

Action by Samuel H. Kinsley against George A. Cockburn and another. From a judgment for plaintiff, defendants appeal. Reversed with directions to dismiss the suit.

Jos. P. Trickett, of Kansas City, Mo., W.M Swift, of Colorado Springs, George H. Thorne, of Denver, and Laurence T. Gray, for appellants.

H.K Wing and J.A. Carruthers, both of Colorado Springs, for appellee.

MORGAN J.

Plaintiff had judgment in the El Paso district court in January, 1909, on his complaint filed in April, 1908, on a promissory note. Defendants appealed.

The complaint set forth a copy of the note as follows: "$1500.00. Colorado Springs, Colo., Sept. 28, 1907. Thirty days after date, we promise to pay to the order of M.F. Schutt fifteen hundred dollars, at 216 Security Bank Building, Minneapolis, Minn. With interest at 8 per cent. per annum from Sept. 28 until paid. Value received. The Bavicanora Mines Company, By Geo. A. Cockburn, Secy. By Geo. E. Maxwell, Prest." The action is against Cockburn and Gray, two of the board of directors of the company that made the note. The complaint states that the company was incorporated and existing under and by virtue of the laws of Arizona territory; that it had been doing business within this state for about one year prior to the date of the note; that it had not on that date or prior thereto, or at all, filed with the Secretary of State a copy of its charter of incorporation, or a certificate, and that the payee bad assigned the note to the plaintiff before the commencement of the action. A demurrer for insufficiency and for defect of parties was overruled. The answer denies that the company was "doing business" in Colorado, and denies that the note was made and delivered therein. It may be seen from these pleadings that the plaintiff's right to recover against the defendants personally depends upon the effect of a failure on the part of the company to comply with the statutes that require the filing by foreign corporations of their articles of incorporation with the Secretary of State.

The appellants contend that the general demurrer should have been sustained because the complaint on alleging certain facts, on information and belief, states "that the plaintiff is informed and verily believes," but fails to follow up such statement with the words, "and upon such information and belief alleges." Our Code provides how such allegations should be made, and the plaintiff failed to comply with it, but this case should not be reversed for this reason alone, as the technical defect did not destroy the general sufficiency of the complaint and the defendant thereafter answered and the case was tried regardless of this defect.

The appellant also contends that the court erred in permitting the plaintiff to amend his complaint by inserting the words, "and for about one year prior thereto," immediately preceding the words, "doing business within the state of Colorado." It was proper to allow this amendment, and it did not prejudice the rights of the defendants to such an extent that the case should be reversed on account thereof, as the defendants answered and proceeded to trial on the issues.

The appellant discusses the other assignments of error under three propositions, which will be disposed of in the following order: (1) That the action on the note with reference to the defendants' personal liability, or otherwise, is governed by the laws of Minnesota, where the note was made payable. (2) The statute of 1877 (Gen.Laws 1877, §§ 191-322), by virtue of which the plaintiff seeks to hold the defendants liable personally, was repealed by implication by the general corporation law of 1901 (Laws 1901, p. 116). (3) That the company was not "doing business" in this state within the meaning of the statute.

As to the first proposition, it is concluded that the law of this state is applicable, and governs the liability of these defendants personally, under the statute involved, if the company "was doing business" in this state within the meaning of the statute.

Certain facts should be kept in mind; the note was specifically made payable in Minnesota; it was made and dated in Colorado; suit was brought in Colorado against two directors living in Colorado. During the consideration of this point we shall concede that the company was "doing business" in Colorado, and had failed to file its articles of incorporation as required by statute. (The facts that the company is an Arizona company, that the mines are located in Mexico, and that the directors held meetings in Colorado Springs are only necessary in the consideration of the third proposition.)

The law is quite plain that where the contract is made in one state and performance is to be in another, the law of the place of performance governs with reference to all questions concerning the performance, whether the suit be brought in that place or not (section 398, Wharton on Conflict of Laws), and that the law of the place where the suit is brought governs in all questions concerning the remedy (Id. §§ 427k, 428a), and that the law of the place where the contract is made governs all questions concerning the validity of the note and the capacity of the makers thereof (Id. § 427k et seq.; Wolf v. Burke, 18 Colo. 264, 268, 32 P. 427, 19 L.R.A. 792.

Wharton on Conflict of Laws, § 393, says: "Hence it is that when we come to determine the seat of an obligation, from which seat its legal relations are inferred, we find ourselves in a labyrinth of speculations, from which we can only emerge by following the landmarks of arbitrary, juridical rules. It follows, from the nature of the case, that these rules, applied as they are by so many courts, in so many distinct legal atmospheres, to so many varying states of fact, and without any imperative principle to appeal to, should often conflict." In section 401 he says: "A contract, so far as concerns its formal making, is to be determined by the place where it is solemnized, unless the lex situs of property disposed of otherwise required; so far as concerns its interpretation, by the law of the place where its terms are settled, unless the parties had the usages of another place in view; so far as concerns the remedy, by the law of the place of the suit; and so far as concerns its performance, by the law of the place of performance. The rule, it is true, is sometimes differently expressed. Thus, in the Supreme Court of the United States, in 1875, it was said, in Scudder v. Union Nat. Bank, 91 U.S. 406, 23 L.Ed. 245, by Mr. Justice Hunt, that: 'Matters bearing upon the execution, the interpretation, and the validity of a contract are determined by the law of the place where the contract is made. Matters connected with its performance are regulated by the law prevailing at the place of performance. Matters respecting the remedy, such as the bringing of suits, admissibility of evidence, statutes of limitations, depend upon the law of the place where the suit is brought.' To this statement, however, it may be objected that in cases where the place of making the contract conflicts with the law of the place of performance, the validity of the contract, so far as concerns Its performance, depends upon the law, not of the former but of the latter place. It has hence been frequently held that a contract illegal by the law of the place of performance is illegal everywhere. On the other hand, an action may be maintained on a debt good where it is payable, though invalid by the local laws of the place where the contract is made. But the conflict of opinion in this respect is rather nominal than real." See, also, section 402.

In section 427h he says: "The capacity of the parties to contract is one of those matters that relates to the preliminary question, whether, in a legal sense, any contract has been brought into existence; and *** its governing law should be determined by a fixed rule not dependent upon the intention of the parties. *** When the party whose capacity is in question is an artificial person, like a corporation its capacity is necessarily determined, or at least limited, by the law of its creation, though its capacity may be still further restricted, or at least incumbered with conditions, by a statute of another state or country in which it attempts to contract. So, when the question relates to the capacity or authority to contract of a person who acts in s representative capacity, as an agent, or executor, or administrator, the law of the state or country in which such relation was created necessarily enters as a factor. This is a mere result of the principle stated ante, section 427f, that any matter relating to the preliminary question whether a contract has been made, is governed by the law of its situs, whether that situs be at the place where the contract is attempted to be made or elsewhere. *** As between the law of the place where the contract is made and that of the place where it is performable, the weight of authority favors the former. In other words, this matter comes within the first rule of the Scudder Case, which, for this purpose, may be treated as an absolute rule, not dependent upon the intentions of the parties. A distinction is to be observed, however, between the capacity of a party to make a contract and his or her capacity to do the act essential to its performance. It seems clear that, while the former question is governed by the law of the place where the contract is made, the latter ought to be governed by the law of the place of performance, so that, even assuming that a party was capable of making a contract by...