First Title & Securities Co. of Bloomington, Illinois v. United States Gypsum Co.

• Decision Date: 18 November 1930
• Docket Number: 40513
• Citation: 233 N.W. 137,211 Iowa 1019
• Parties: FIRST TITLE & SECURITIES COMPANY OF BLOOMINGTON, ILLINOIS, Appellant, v. UNITED STATES GYPSUM COMPANY, OF CHICAGO, ILLINOIS, Appellee
• Court: Iowa Supreme Court

233 N.W. 137

211 Iowa 1019

FIRST TITLE & SECURITIES COMPANY OF BLOOMINGTON, ILLINOIS, Appellant, v. UNITED STATES GYPSUM COMPANY, OF CHICAGO, ILLINOIS, Appellee

No. 40513

Supreme Court of Iowa, Des Moines

November 18, 1930

REHEARING DENIED FEBRUARY 12, 1931.

Appeal from Webster District Court.--H. E. FRY, Judge.

This is an action in equity, brought by the plaintiff, as the owner of certain described real estate, to enjoin the defendant from continuing a nuisance which it is alleged causes injury to plaintiff's premises.The defendant filed an answer pleading various defenses, and among them, that the plaintiff could not maintain the action because not duly organized according to the laws of the state of Illinois, which laws are pleaded in said answer.The plaintiff moved to strike the portion of said answer pleading said defense of a want of incorporation of the plaintiff.The motion was overruled whereupon the plaintiff elected not to plead further, and elected to stand upon its motion to strike.Thereupon, the court entered judgment dismissing the plaintiff's petition.The plaintiff appeals both from the ruling on said motion to strike and from the judgment of dismissal.

Reversed.

D. M. Kelleher and Thomas & Loth, for appellant.

Helsell, McCall & Dolliver and Scott, Bancroft, Martin & MacLeish, for appellee.

FAVILLE, J. MORLING, C. J., and EVANS, KINDIG, and GRIMM, JJ., concur.

OPINION

FAVILLE, J.

I.

A portion of appellee's argument is directed to the question of the jurisdiction of this court to entertain the appeal in this cause, upon the record made.Appellee contends that the appeal is, in effect, merely an appeal from a ruling on a motion to strike, and that such an intermediate order is not appealable.

There are two sufficient answers to this contention of the appellee's: (1) The question is not raised in this court by motion or written objections, as required by Section 12886, Code, 1927; and (2) it affirmatively appears that the appeal is from a final judgment dismissing the appellant's petition.

It appears from the record that the appellee, in one division of its answer, alleged that the appellant was never duly incorporated under the laws of the state of Illinois.The appellant moved to strike said portion of the appellee's answer.This motion was overruled, and the appellant elected to stand thereon, and suffered final judgment to be entered against it, dismissing its petition.The appeal appears to be both from the ruling on the motion to strike and from the final judgment.

The record brought the appellant within the rule recognized by us in Hansen v. Independent Sch. Dist., 193 Iowa 417, 186 N.W. 922;Devoe v. Dusey, 205 Iowa 1262, 217 N.W. 625;In re Estate of Delaney, 207 Iowa 451, 223 N.W. 486.

II.In this action the appellee, by its answer, seeks to plead, as a complete defense, the alleged failure of the appellant to comply with the provisions of the Illinois statute in taking the necessary steps to become incorporated under the laws of said state.There is no denial of the fact that the appellant attempted to become incorporated under the laws of Illinois; that a certificate or charter was duly issued to it by the proper authorities of said state; and that it has been and is functioning as a corporation.It holds the fee title to certain described real estate in Webster County, Iowa.The action is brought to enjoin the appellee from committing nuisance upon said real estate.

The particular ground of challenge to the legality of the incorporation of the appellant is the claim that certain powers which the Illinois statute does not permit a corporation to exercise were attempted to be assumed by the appellant corporation.More specifically, the point made is that, under the Illinois law, a corporation organized for one purpose--as, for example, a building corporation--cannot by its articles have certain other purposes,--as, for example, those of an agency or loan business.It is contended by appellee in its pleading that, under appellant's articles of incorporation, the appellant attempted to become incorporated for two separate purposes, and that, since this cannot be done legally under the Illinois statute, the appellant never had any legal existence as a corporation, and hence cannot maintain this action to abate the nuisance because of injury to its property.

Code Section 10984 is as follows:

"Foreign corporations may sue in the courts of this state in their corporate name."

Code Section 8401 is as follows:

"No person or persons acting as a corporation shall be permitted to set up the want of a legal organization as a defense to an action against them as a corporation, nor shall any person sued on a contract made with such an acting corporation, or sued for an injury to its property, or a wrong done to its interests, be permitted to set up a want of such legal organization in his defense."

The appellant, as a plaintiff, is suing only for an injury to its property, and, under the terms of this statute, in such a casethe party sued is not "permitted to set up a want of such legal organization in his defense."

Appellee, contends, however, that this statute is not applicable, because of its claim that the statute applies only to domestic corporations, and has no application to a foreign corporation, such as the appellant.

This statute originally came into our legislation in the Code of 1851, as Section 704, which was a part of a chapter pertaining to "corporations for pecuniary profit."The wording of the statute in said Code was significantly different from the present statute, in that, by its very terms, it referred to "a corporation under the provisions of this chapter," which expressly limited the application of the statute to domestic corporations.

The statute passed into the Revision of 1860 as Section 1181, and, as in the Code of 1851, said section was a part of the chapter on "corporations for pecuniary profit," and by its express terms, referred to "a corporation under the provisions of this chapter. "

The statute was continued in the Code of 1873 as Section 1089, in the identical language of the Revision of 1860, making it applicable to corporations organized under the chapter of the Code referring to "corporations for pecuniary profit."

In the enactment of the Code of 1897, however, a significant change was made.The statute, when carried into said Code, became Section 1636; and, while the section is in the chapter on corporations for pecuniary profit, the clause limiting its application to corporations organized under said chapter was entirely eliminated.This section was carried from the Code of 1897 literally into the Code of 1924, and is now Section 8401 of the Code of 1927, supra.We think that significance is to be attached to the fact that, in the adoption of the Code of 1897, and in the present Code, although the section appears in the general chapter referring to corporations for pecuniary profit, it is not limited to corporations organized under that chapter, as was the case under previous statutes.The legislature evidently had a reason for eliminating the clause limiting the application of the statute to corporations organized in this state under the chapter on corporations for pecuniary profit.In view of the statute permitting foreign corporations to sue in this state, it is reasonable at least to assume that it was the intention of the legislature to so change the section as to make it applicable to foreign corporations, as well as domestic corporations.

The precise question involved in this action does not appear to have been previously before us, but we have discussed this section upon at least two occasions.In Quinn v. Shields;62 Iowa 129, 17 N.W. 437, we quoted the statute, and said:

"The purpose of the section is to provide that the enforcement of rights against corporations, and the enforcement by a corporation of contracts made with it, and the recovery of claims for 'a wrong done to its interest,' cannot be defeated on the ground that the corporation was not legally organized.* * * This construction of the statute in question is demanded by justice and the interest of the public.Corporations defectively or illegally organized may acquire great property interests in personal and real estate and chose in action.Their business is conducted and property managed in the same manner as though they were legally organized, and the interest and rights of all parties dealing with them are involved.If, in an action to enforce any right held by a corporation, it were declared to have no legal existence, great confusion and losses would result, not only to its members, but to persons having dealings with it."

See, alsoState Security Bank v. Hoskins, 130 Iowa 339, 106 N.W. 764.

It is true that in both of these caseswe were dealing with domestic corporations, and not with foreign corporations; but the cases indicate the reasons for the rule announced in the statute, and inasmuch as, by express legislative enactment, foreign corporations are permitted to sue in this state, the same reason and logic should apply to them as to domestic corporations, under this statute.

In this connection it is to be remembered that the appellant is not attempting to transact business in the ...