First Nat. Bank of Price v. Parker

• Decision Date: 20 December 1920
• Docket Number: 3536
• Citation: 57 Utah 290,194 P. 661
• Court: Utah Supreme Court
• Parties: FIRST NAT. BANK of PRICE v. PARKER et al

194 P. 661

57 Utah 290

FIRST NAT. BANK of PRICE v. PARKER et al

No. 3536

Supreme Court of Utah

December 20, 1920

Appeal from District Court, Third District, Salt Lake County; W. H Bramel, Judge.

Action by the First National Bank of Price against H. C. Parker and another. From a judgment of dismissal, plaintiff appeals.

AFFIRMED.

C. S Price and W. Q. Van Cott, both of Salt Lake City, for appellant.

Howat Marshall, McMillan & Crow, of Salt Lake City, for respondents.

GIDEON, J. CORFMAN, C. J., and FRICK, WEBER, and THURMAN, JJ., concur.

OPINION

GIDEON, J.

Respondent Parker executed the notes in question in this suit payable to self, indorsed them in blank, and delivered them to his codefendant, the Utah National Underwriters' Corporation, in renewal of other notes held by said corporation, which were payable direct to the corporation. The consideration for the notes was stock of that corporation. The stock, however, was never delivered to Parker, although issued.

The Utah National Underwriters' Corporation, hereinafter designated corporation, was organized under the laws of the state of Arizona. The corporation at no time complied with the requirements of the statutes of Utah authorizing it to do business within this state. The corporation, before maturity, for a valuable consideration and by indorsement, transferred the notes to plaintiff bank. It may be assumed in determining the questions before this court that the bank was a holder in due course. It is conceded that the corporation was doing business in this state at the time of the execution of the original notes, as well as at the time of the execution of the notes upon which suit is brought and at the time of delivery of the same to appellant bank. At least the appellant bank has presented the matter to this court on that theory.

At the close of the testimony both plaintiff bank and defendant Parker moved the court for a directed verdict. One of the grounds of plaintiff's motion was that the evidence was without conflict that the plaintiff was a purchaser of the promissory notes in question before maturity for value and without notice of any defenses, or asserted defenses, or any infirmity in the promissory notes in question. There were other grounds stated. It is, however, unnecessary to refer to them here. The principal ground upon which Parker based his motion was that it conclusively appeared that at the time of the execution of the original notes and at the time of the execution of the renewal notes, also at the time of the sale to plaintiff bank, the corporation was a foreign corporation, and had never complied with the provisions of the statutes of this state authorizing it to do business within this state. The court granted defendant Parker's motion upon the ground specified, and a judgment of dismissal was entered. From that judgment this appeal is prosecuted.

From the foregoing it will be seen that the decisive question on this appeal is whether a holder of negotiable paper, received in due course from a foreign corporation doing business within this state, which corporation has failed to comply with the requirements of our statute necessary to be complied with to authorize it to do business within the state, can enforce payment of such negotiable paper. To be authorized to do business within this state, a corporation organized under the laws of another state is required to file with the county clerk of the county in which the principal office of the corporation in this state is situated a copy of its articles of incorporation, by-laws, and amendments, certified to by the secretary of state of the state under the laws of which the corporation is organized, together with an acceptance of the provisions of the Constitution of this state, and to designate an agent upon whom service may be made. Within 10 days after filing such articles, etc., with the clerk certified copies thereof must be filed with the secretary of state of Utah. Comp. Laws Utah 1917, § 945. None of these requirements had been complied with by the corporation at the dates in question.

Comp. Laws Utah 1917, § 947, so far as material here, reads as follows:

" Any such corporation failing to comply with the provisions of the section 945 shall not be entitled to the benefits of the laws of this state relating to corporations, and shall not sue, prosecute, or maintain any action, suit, counterclaim, cross-complaint, or proceeding in any of the courts of this state, or any claim, interest, or demand arising, or growing out of, or founded on any contract, agreement, or transaction made or entered into in this state by such corporation or by its assignor, or by any person from, through, or under whom it derives its interest or title or any part thereof; and shall not take, acquire, or hold title, possession, or ownership of property, real, personal, or mixed, within this state; and every contract, agreement, and transaction whatsoever made or entered into by or on behalf of any such corporation within this state, or to be executed or performed within this state, shall be wholly void on behalf of such corporation and its assignees and every person deriving any interest or title therefrom, but shall be valid and enforceable against such corporation, assignee, or person."

Defendant Parker contends, and that was the view taken by the lower court, that that statute is decisive of the rights of the parties, that it being an undisputed fact that the corporation was organized under the laws of Arizona, and that it had not complied with the provisions of section 945, supra, and was doing business within this state, it was therefore incapable of acquiring either title to or ownership in the notes in question. He further contends that the notes were wholly void, not only in the hands of the corporation itself, but in the hands of its assignee or any one deriving any interest or title therein or thereto from said corporation.

It is argued on behalf of appellant that whatever defense the maker, Parker, might have had against the corporation cannot be invoked by him to defeat the payment of these notes in the hands of an innocent holder in due course. The argument is predicated upon certain sections of our Negotiable Instruments Law, to wit, Comp. Laws Utah 1917, §§ 4091, 4094.

Section 4091 reads as follows:

" A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon."

Section 4094 reads:

"The maker of a negotiable instrument by making it engages that he will pay it according to its tenor; and admits the existence of the payee and his then capacity to indorse."

It may be conceded that the notes in question, after indorsement by the maker, were payable to bearer, and that the title and right to the same could be transferred by delivery. It is, upon that theory, contended by appellant that the indorsement at the time of delivery to the plaintiff by the corporation was not essential or necessary for the transfer of the notes to appellant bank, and that by delivery only plaintiff acquired an enforceable obligation against the maker, relieved from any defense that the maker might have had against the corporation. In answer to that, it may be said, as is said by respondent, that whatever might have been the effect of the delivery without indorsement the fact remains that the notes were delivered and transferred by indorsement by the corporation. Independent of that consideration, however, if the plaintiff had any title or right to these notes, that title or right was acquired from this noncomplying corporation. Conceding that the indorsement was unnecessary to transfer title, it must be, it seems to us, indisputable that the title which the plaintiff has was received by the indorsement, or by the delivery, from the corporation. If the statute is to be given the effect that its language seems to imply, and as contended for by respondent, the method or medium of transfer is wholly immaterial. It is, in our judgment, an illogical argument to claim title, as the plaintiff does in this case, by indorsement, and at the same time contend that if the title had been acquired by delivery without indorsement a better or higher right would have been acquired. If plaintiff can enforce payment of these notes it must be upon the theory that it is a holder in due course, and that the defendant is deprived of any defense by reason of the provisions of the Negotiable Instruments Law, supra.

In our judgment the language of our statute with references to noncomplying foreign corporations is susceptible of but one construction. Its meaning is not doubtful. Courts uniformly hold that in the application of such statutes there is but one thing to do, namely, enforce the statute as it is.

" Whenever the statute has expressly declared that the contract is unenforceable, that, of course, is the end of the controversy. Such a statute is self-construing, and the court has no other duty than to give it effect." Booth & Co. v. Weigand, 30 Utah p. 140, 83 P. 736 (10 L. R. A. [N. S.] 693); Miles v. Wells, 22 Utah 55, 61 P. 534; Swarts v. Siegel, 117 F. 13, 54 C. C. A. 399.

See, also, 8 Cyc. 733.

The appellant has cited in support of its contention decisions from the courts of last resort of several states, but reliance is had particularly upon the construction of what is claimed to be similar statutes by the Supreme...