Finseth v. Scherer

• Decision Date: 23 November 1917
• Docket Number: No. 20563.,20563.
• Citation: 165 N.W. 124,138 Minn. 355
• Parties: FINSETH v. SCHERER.
• Court: Minnesota Supreme Court

138 Minn. 355

165 N.W. 124

FINSETH

v.SCHERER.

No. 20563.

Supreme Court of Minnesota.

Nov. 23, 1917.

Appeal from Municipal Court of Minneapolis; Charles L. Smith, Judge.

Action by C. H. Finseth against J. C. Scherer, Jr. From a judgment for plaintiff, and an order denying new trial, defendant appeals. Affirmed.

Syllabus by the Court

Negotiable paper, executed as part of a transaction with a foreign corporation doing business in this state in violation of the laws relating to foreign corporations, may be enforced by a bona fide purchaser thereof.

It was not error for the trial court to allow an amendment of the complaint at the trial; nor to permit the cashier of a bank having personal knowledge of the fact to testify that a depositor had checked out the entire amount to his credit; nor to exclude exhibits offered solely for the purpose of contradicting a witness upon an immaterial point. Brady, Robertson & Bonner, of Minneapolis, for appellant.

Lancaster, Simpson & Purdy and James E. Dorsey, all of Minneapolis, for respondent.

TAYLOR, C.

The municipal court of the city of Minneapolis directed a verdict for plaintiff in a suit upon a promissory note, and defendant appealed from an order denying a new trial.

Section 6206, G. S. 1913, provides that:

‘Every foreign corporation for pecuniary profit, before it shall be authorized or permitted to transact any business in this state * * * or to acquire, hold, or dispose of property within this state, or to sue or maintain any action at law or otherwise in any of the courts in this state,’ shall comply with certain prescribed conditions.

And section 6208, G. S. 1913, further provides that:

‘Every such foreign corporation * * * which shall neglect or fail to comply with the foregoing conditions shall be subject to a fine of one thousand dollars to be recovered before any court of competent jurisdiction; * * * and no corporation which shall fail to comply with the foregoing provisions shall maintain any suit or action, either legal or equitable, in any of the courts of this state, upon any demand, whether arising out of contract or tort.’

The statute excepts from its operation certain classes of corporations not here important.

The Co-operative Wheat Ranch Company is a West Virginia corporation which was doing business in this state without having complied with the conditions prescribed by the statute, and which employed the A. C. Bohrnstedt Company, a Minnesota corporation, to make sales of its capital stock. The Bohrnstedt Company sold some of the capital stock of the Wheat Ranch Company to defendant, and received the note in controversy for a part of the purchase price of the stock. The note contained nothing upon its face to show that it was connected in any way with any transaction of the Wheat Ranch Company. It was made payable to the Bohrnstedt Company, was sold and indorsed by that company to the State Bank of Lafayette before maturity, and was transferred by the bank to plaintiff, its cashier, after maturity. Although plaintiff took the note after maturity, he stands in the shoes of the bank who took it in the usual course of business for value before maturity, and the principal question presented is whether a bona fide purchaser is entitled to enforce it against the maker. Defendant admits the execution and delivery of the note, but contends that it was given in violation of the above statute, and is void for that reason in the hands of whomsoever it may come.

The note was fair on its face and was executed and put in circulation by defendant. In respect to negotiable paper this court has said:

‘A party who puts his paper in circulation invites the public to receive it of any one having it in his possession with apparent title, and he is estopped to urge an actual defect in the paper, when, through his own act, it ostensibly has none.’ First National Bank v. Compo-Board Mfg. Co., 61 Minn. 274, 63 N. W. 731.

See, also, Drew v. Wheelihan, 75 Minn. 68, 77 N. W. 558;Askegaard v. Dalen, 93 Minn. 354, 101 N. W. 503;First National Bank v. Busch, 102 Minn. 365, 113 N. W. 898.

It is well settled that a bona fide holder of negotiable paper executed as part of a transaction prohibited by statute is within the protection of the above rule, and may enforce such paper, except in those cases in which the statute has expressly or by necessary implication declared it void. The statute in question does not expressly declare such paper void, and according to the great weight of authority cannot be construed as declaring it void by implication. McMann v. Walker, 31 Colo. 261, 72 Pac. 1055;Union Trust Co. v. Preston National Bank, 136 Mich. 460, 99 N. W. 399,112 Am. St. Rep. 370,4 Ann. Cas. 347;Commercial National Bank v. Jordan, 71 Fla. 566,71 South. 760; Citizens' National Bank v. Buckheit, 14 Ala. App....