Higgins v. Hampshire Prods., Inc.

• Decision Date: 05 January 1948
• Docket Number: No. 48.,48.
• Parties: HIGGINS et al. v. HAMPSHIRE PRODUCTS, Inc., et al.
• Court: Michigan Supreme Court

319 Mich. 674

30 N.W.2d 390

HIGGINS et al.

v.HAMPSHIRE PRODUCTS, Inc., et al.

No. 48.

Supreme Court of Michigan.

January 5, 1948.

Appeal from Circuit Court, Washtenaw County; James R. Breakey, Jr. judge.

Action by Russell C. Higgins and others, copartners doing business as the Conso lidated Aircraft Products Company against Hampshire Products, Inc., and against the Ann Arbor Bank and others, garnishee defendants. From an order dismissing the declaration for claimed lack of jurisdiction, the plaintiffs appeal.

Reversed.

SHARPE and BUSHNELL, JJ., dissenting.

Before the Entire Bench.

Freud & Toppin, of Detroit (Henry J. Freud, of Detroit, of counsel), for Russell C. Higgins, E.W. Higgins and J.F. Higgins, plaintiffs-appellants.

Roscoe O. Bonistell and Charles C. Menefee, both of Ann Arbor, for appellees.

BUTZEL, J.

This suit was properly brought in Washtenaw county. The village of Milan is situated partly in Monroe county and partly in Washtenaw county. Defendants claim that it is common knowledge at least in Milan, Michigan, that the street address of defendant Hampshire Products, Inc., as well as the location of its office, is in Monroe county, and that it is inconceivable that plaintiffs after doing business with defendants for many months did not have this knowledge. ¹ Our attention has not been called to any law or custom by which a county line can be determined by a careful observer in the absence of a sign designating it, and there is no claim that there was such a sign. The only safe and proper thing for an investigator to do is to go to the county records. That is exactly what the plaintiffs did. The articles of association of defendant, its certificate of registered agent and its annual reports regularly filed up to an including the year 1946 stated that its place of doing business and offices are in Washtenaw county. It is not claimed that Monroe county is even mentioned. The articles of association were never amended or filed in Monroe County. A short time prior to the commencement of this suit, plaintiffs had brought another suit in Washtenaw county against Hampshire Products, Inc., to recover on what plaintiffs claim was an entirely different cause of action, and in that suit defendant did not assert that the venue was improper. The testimony showing that Hampshire Products, Inc., was locatedin Monroe county is not strong. The court relied on the fact that the compnay paid personal property taxes in Milan township, which is in Monroe county. The record makes it uncertain whether it did this more than once. The deputy sheriff who served the declaration stated that the did not know whether the company's building was in Washtenaw county or not, but that the line goes through Milan and the building is located very close to the line. Plaintiffs, however, made no showing to refute the claim that the defendant's property was not situtated in Washtenaw county except to offer the records and files of the county clerk of Washtenaw county and to show the additional fact that no certificate was filed in Monroe county. The judge on this tenuous testimony on the part of defendant Hampshire Products, Inc., found under the circumstances that Hampshire Products, Inc., was located in Monroe County.

Numerous decisions hold that the purpose of the requirement that the articles of incorporation and annual report be made a public record is to provide a means of furnishing information to those who deal with corporations and that those so dealing have a right to rely upon the fairness and honesty of statements made therein. Silberman v. Munroe, 104 Mich. 352, 62 N.W. 555;Bank of Saginaw v. Peirson, 112 Mich. 410, 70 N.W. 901;Dime Savings Bank v. Fletcher, 158 Mich. 162, 122 N.W. 540, 35 L.R.A.,N.A., 858; Continental & Commercial National Bank v. Emery, 178 Mich. 612, 146 N.W. 303;Ver Wys v. Vander Mey, 206 Mich. 499, 173 N.W. 504. Although these cases refer to the right to rely upon statements regarding the financial condition of a corporation, the same reasoning should apply with respect to other statements contained in the records.

The purpose of the requirement that the location and postoffice address of the corporation be specified in the articles and the annual reports is, among o thers, to fix the location or residence of the corporation under venue statutes. Fletcher, Cyc. Corp., § 140. In section 4046 of the same work, the rule is again stated: “Such requirements are written into the statutes in order to secure sevice of process, determine venue, for purposes of general jurisdiction and taxation * * *.”

Many cases are cite. We find these among others to be directly in point. Stat e ex rel. Juvenile Shoe Corp. v. Miller, 217 Mo.App. 16, 272 S.W. 1066;Alabam a Clay Products Co. v. City of Birmingham, 226 Ala. 631, 148 So. 328;State ex rel. Northwestern Land & Col. Co. v. District Court, 191 Iowa 144,182 N.W. 21 1. In a fairly recent case, Hawk & Buck Co. v. Cassidy, 164 S.W.2d 245, 246, t he Texas Court of Civil Appeals said: “Like many other jurisdictions, Texas has by statute required corporations to designate the place or places where they will do business. * * *

Such statutes are, no doubt, for the obvious purpose of avoiding disputes as to the company's ‘place of business' or ‘domicile’ and to determine venue,” et ce tera.

It is the usual practice of attorneys in selecting a court of competent jurisdiction for the bringing of a suit to check the records on file in the county clerk's office. Plaintiffs followed this practice in this case and the public records revealed that defendant resided in Washtenaw county. Are we to say that plaintiffs had no right to rely upon these records, which are composed of documents which we assume have been properly executed and verified by defendant? By asserting that it is not a resident of Washtenaw county, defendant seeks to set up its violation of the statute by failing to file true annual reports as a shield from an otherwise proper suit.

We feel that the basic question involved in this appeal is the following: Does the designation of Washtenaw county in the articles make defendant a “resident” of Washtenaw county, at least for purposes of venue, under 3 Comp.Laws 1929, § 13997, § 1, par. 2, Stat.Ann. § 27.641, even though, in fact, its principal and only office is in Monroe county? This question must be answered in the affirmative if we are to give effect to the legislative intent behind the statutes regulating articles of association, annual reports, et cetera, of corporations.

We must acknowledge that the authorities are in conflict upon this question. T he text-writers have the following to say:

Fletcher, Cyc.Cor. (Perm.Ed.), § 4035: “Domestic corporations * * * are * * * deemed to have, equally with natural persons, a residence at some place in the state, and that place is generally regarded as being the one at which the principal office or principal place of business is located, or where its books are kept and its corporate business is transacted. * * * Thus, it has been held that a domestic corporation has its residence for purposes of venue in the county designated in its certificate of incorporation as that in which its principal place of business was to be located, notwithstanding the fact that it actually has places of business in one or more other counties, although it has been held that statements in its certificate or charter as to the location of its principal place of business are not at all conclusive.”

And in section 4046, the same author says: “The courts are not agreed upon the question as to whether the statement in the articles of incorporation regarding the location of the principal office or place of business is or is not conclusive. According to the weight of authority such statement is not conclusive.”

In 18 C.J.S. 585, Corporations, § 176, the following language appears: “By some authorities, the charter, articles, or certificate is regarded as conclusive as to domincile or residence, although the company may in fact transact some or even the greater part of its business elsewhere; but according to other authority, at least as to the state and persons not parties to the designation of the principal place of business, residence or domicle is not conclusively determined by the charter, articles, or certificate, but is a question of fact.”

We have made a very thorough, though not exhaustive, examination of the cases cited in support of these rules. We find that in the cases which were in point on the issue herein involved the courts have been uniform in holding, in effect, that a corporation can be sued in transitory actions in the county designated in its certificate to be the location of its principal office, i.e., that a corporation is a resident of such county for purposes of venue. From them the rule can be deduced that although the designation in the certificate of incorporation is not absolutely “conclusive” so as to bind all persons, it is nevertheless conclusive as to the corporation where a question of venue is involved.

In Hawk & Buck Co. v. Cassidy, supra, a case which on its facts is practically indentical with the instant case, the court said: “We feel compelled to follow the rule * * * that a corporation may be sued in the county where its domicile is designated by its charter, and this regardless of whether it does business or maintains an office in such county. In this decision, however, we do not wish to be understood as holding that the provisions of the charter fix the venue exclusively in Dallas County. The principal office of the corporation is admittedly in Tarrant County and thus venue against it might also be there under (the statute). The conclusiveness of the recitations in the charter must necessarily be construed against the corporation and not in its favor so as to permit it it remove a suit from the county of its actual residence to one designated in its charter.”

An accurate statement of the rule in...