Ferguson Fruit & Land Co. v. Goodding

• Decision Date: 28 March 1927
• Docket Number: 4550
• Citation: 44 Idaho 76,258 P. 557
• Parties: FERGUSON FRUIT AND LAND COMPANY, a Corporation, Appellant, v. I. G. GOODDING and MAUDE E. GOODDING, Husband and Wife, Respondents
• Court: Idaho Supreme Court

258 P. 557

44 Idaho 76

FERGUSON FRUIT AND LAND COMPANY, a Corporation, Appellant, v. I. G. GOODDING and MAUDE E. GOODDING, Husband and Wife, Respondents

No. 4550

Supreme Court of Idaho

March 28, 1927

CORPORATIONS-EVIDENCE-ANNUAL LICENSE-PROOF OF FORFEITURE FOR FAILURE TO PAY-DEED EXECUTED AFTER FORFEITURE HELD NOT VOID-PURCHASE OF LAND AFTER FORFEITURE-ESTOPPEL-DELINQUENCY FOR FAILURE TO PAY TAX-EFFECT.

1. Under C. S., secs. 4782, 4784, 4785, 4786, 4787, 4788 and 4789, relative to annual fees of corporations and forfeiture for failure thereof, the forfeiture of a domestic corporation for failure to pay annual license tax can only be proven by introducing in evidence the original proclamation by the Governor, or certified copy thereof, and proof of its publication particularly where record fails to show publication of proclamation, even if judicial notice could be taken thereof under C. S., sec. 7933, subd. 3.

2. Deed executed by domestic corporation after forfeiture for failure to pay annual license fees required by C. S., sec. 4782, in name of corporation by persons attempting to act as such officers before rehabilitation of charter under sec. 4787 held not void in view of sec. 4790 constituting managers officer or directors trustees with full power to settle corporate affairs.

3. Purchasers of land from corporation after forfeiture of charter for failure to pay license tax required by C. S sec. 4782, having dealt with corporation in executing mortgage securing portion of purchase money, are estopped in action to foreclose it to deny that they dealt with corporation as such, or deny it was a corporation when mortgage was entered into.

ON PETITION FOR REHEARING.

4. A corporation does not by becoming delinquent for failure to pay annual license tax required by C. S., sec. 4782, die as does a natural person or a corporation whose term of existence has terminated, but is rather in a state of suspended animation, from which condition can be relieved by paying penalties as provided by sec. 4787.

APPEAL from the District Court of the Eleventh Judicial District for Twin Falls County. Hon. William A. Babcock, Judge.

Action to foreclose mortgage on real estate. Judgment for defendants. Reversed and remanded.

Reversed and remanded, with instructions. Costs awarded to appellant.

Stephens & North, for Appellant.

Forfeiture of charter of domestic corporation can be proven only by introduction of original proclamation of Governor or a certified copy thereof, and by proof of publication thereof in each of two newspapers of general circulation within the state. (C. S., secs. 4784, 4785; Kehrlein-Swinerton Const. Co. v. Rapken, 30 Cal.App. 11, 156 P. 972; 5 Thompson on Corporations, 2d ed., pp. 1327-1329; William-Wilson Co. v. Trainor, 27 Cal.App. 43, 148 P. 954; Alaska Salmon Co. v. Standard Box Co., 158 Cal. 567, 112 P. 454.)

A deed to property made by a corporation after it had forfeited its charter by reason of failure to pay its annual license tax is not void. (C. S., secs. 4781-4787, 4789; Moore v. Boise Land & Orchard Co., Ltd., 31 Idaho 390, 173 P. 117; Ohio Nat. Bank v. Central Const. Co., 17 App. D. C. 524.)

A person in possession of real estate under a deed made by a corporation while its charter is forfeited for nonpayment of annual license tax and who has given the corporation a mortgage to secure payment of part of the purchase price is estopped from denying validity of such mortgage. (Moore v. Boise Land & Orchard Co., Ltd., supra; Grangers' Business Assn. of California v. Clark, 67 Cal. 634, 8 P. 445; Fresno Canal & Irr. Co. v. Warner, 72 Cal. 379, 14 P. 37; Bank of Shasta v. Boyd, 99 Cal. 604, 34 P. 337; Raphael Weill & Co. v. Crittenden, 139 Cal. 488, 73 P. 238; Bashford-Burmister Co. v. Agua Fria Copper Co. (Ariz.), 35 P. 983; Kelleher v. Denver Music Co., 48 Colo. 212, 109 P. 860; Lynch v. Perryman, 29 Okla. 615, Ann. Cas. 1913A, 1065, 119 P. 229; California Fruit Exchange v. Buck, 163 Cal. 223, 124 P. 824; Grande Ronde Lumber Co. v. Cotton, 12 Colo. App. 375, 55 P. 610; Francis v. Western Screen Co., 22 Cal.App. 32, 133 P. 327; Cowell v. Colorado Springs Co., 100 U.S. 55, 25 L.Ed. 547; 11 Thompson on Corporations, 2d ed., p. 1940.)

Bothwell & Chapman, for Respondents.

The forfeiture of appellant's charter was sufficiently proven. (Kaiser Fruit & Land Co. v. Curry, 155 Cal. 638, 103 P. 341; Alaska Salmon Co. v. Standard Box Co., 158 Cal. 567, 112 P. 454; William-Wilson Co. v. Trainor, 27 Cal.App. 43, 148 P. 954; Kehrlein-Swinerton Const. Co. v. Rapken, 30 Cal.App. 11, 156 P. 972; Rossi v. Caire, 186 Cal. 544, 199 P. 1042; California Nat. Supply Co. v. Flack, 183 Cal. 124, 190 P. 634; Van Landringham v. United Tuna Packers, 189 Cal. 353, 208 P. 973; C. S., secs. 4782, 4784, 4785, 4786, 4788, 7933; Williams v. Sherman, 35 Idaho 169, 21 A. L. R. 353, 205 P. 259; 36 Idaho 494, 212 P. 971; State v. Eagleson, 32 Idaho 280, 181 P. 935; In re Segregation of School District, 34 Idaho 222, 200 P. 138; Meservy v. Gulliford, 14 Idaho 133, 181 P. 935; Bruce v. Frame, 39 Idaho 29, 225 P. 1024.)

A deed to property made by a corporation after the forfeiture of its corporate charter through nonpayment of the annual license fee is void. (Rowe v. Stevens, 25 Idaho 237, at 254, 137 P. 159; Holter v. Hauser, 33 Idaho 406, 195 P. 628; Sharp v. Eagle Lake Lbr. Co., 60 Cal.App. 386, 212 P. 933; Slayden v. O'Dea, 182 Cal. 500, 189 P. 1066; Brandon v. Umpqua Lbr. Co., 166 Cal. 322, 136 P. 62; Newhall v. Western Zinc Min. Co., 164 Cal. 380, 128 P. 1040; Crossman v. Vivienda Water Co., 150 Cal. 575, 89 P. 335; C. S., secs. 4790-4792.)

Respondents were not estopped to deny validity of mortgage. (C. S., sec. 4789; School Dist. No. 8 v. Twin Falls etc. Co., 30 Idaho 400, 164 P. 1174; Deer Creek Highway Dist. v. Doumecq Highway Dist., 37 Idaho 601, 218 P. 371).

VARIAN, Commissioner, BRINCK, Commissioner. Brinck, Johnson, CC., Wm. E. Lee, C. J., Budge, Taylor, T. Bailey Lee, JJ., Varian, C., and Givens, JJ., concurring. GIVENS, J., Dissenting.

OPINION

VARIAN, Commissioner.--

This is an action to foreclose a mortgage on certain real estate situate in Twin Falls county. Appellant, a domestic corporation, sold the land covered by the mortgage to respondents who gave their notes, secured by the mortgage, for part of the purchase price. The first note, and interest for one year, was paid. Eight months after respondents failed to pay the second note and the interest due for that year, appellant elected to consider the whole amount due and commenced foreclosure.

The answer denies that appellant is a corporation "duly or regularly organized" under the laws of Idaho; that the notes sued on were executed, or delivered, or were for a valuable consideration; admits the execution of the notes and mortgage. That appellant is the legal owner or holder of the notes or mortgage, or that the mortgage was delivered, is denied.

The court found that appellant's charter had been forfeited; that the notes and mortgage, though executed by respondents, had not been delivered; that appellant is not now the legal owner of the notes and mortgage; that the interest has been paid up to November 8, 1920; that defendants have not paid the note due November 8, 1921, nor any interest; that appellants could not legally exercise the option to declare the mortgage and notes due and payable; that respondents had made certain payments set forth in their answer, and other payments, the last being for $ 82.40 on December 1, 1921; that appellant's charter was duly forfeited on December 2, 1918; that it had no charter to do business when the notes and mortgage were executed, and the same are absolutely void; that respondents went into possession and remained in possession thereof during the years 1920, 1921, 1922 and 1923; that respondents have rescinded and tendered possession of such title as they may have received to appellant. The court found certain sums due respondents under the contract and deed, decreed rescission and that respondents' have an equitable lien on the land for the difference between the sum due it and the reasonable rental value of the land during the time they were in possession.

Appellant makes seventeen assignments of error which respondents contend are insufficient to raise the questions urged. The brief groups the assignments under three heads, which seem to be sufficiently stated to raise the questions sought to be reviewed (McKinlay v. Javan Mines Co., 42 Idaho 770, 248 P. 473), which will be considered in their order.

It is first contended that the forfeiture of a domestic corporation for failure to pay the annual license tax can only be proven by introducing in evidence the original proclamation by the Governor, or certified copy thereof, and proof of its publication in two newspapers having general circulation within the state. At the trial, over objection of appellants respondents were permitted to introduce, with leave to substitute certified copies thereof, appellant's articles of incorporation, certified copy by the Secretary of State of the list of corporations whose charters forfeited on December 2, 1918, and a certified copy of the certificate of the Secretary of State showing restoration of appellant to its corporate rights on December 28, 1920, being documents in the office of the county recorder of Twin Falls county. Respondents then offered "the original files in the office of the Governor of the State of Idaho, being the original proclamation" made December 2, 1918, and asked permission to substitute certified copy thereof. The offer was admitted over objection. The Secretary of State, under date of March 13, 1926, certified to a copy of the proclamation. Neither the original proclamation, nor a certified...