Hogan v. City of St. Louis
| Decision Date | 20 June 1903 |
| Parties | HOGAN, Appellant, v. CITY OF ST. LOUIS et al |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. D. D. Fisher Judge.
Affirmed.
Grover & Grover for appellant.
(1) The petition in this case shows that plaintiff sues as a "citizen and property-owner and taxpayer for himself and on behalf of all others similarly interested," thus evidencing the purpose of preventing a multiplicity of suits and presenting a proper case for equitable interposition, for the right to intervene for the purpose of preventing a multiplicity of suits is a distinct head of equity jurisdiction. Ewing v. Board of Education, 72 Mo 441; State v. Saline County, 51 Mo. 350; Matthis v. Cameron, 62 Mo. 506; 1 Story, Eq. Jur., 70; Mitford, Eq. Pl. (Jeremy), 144, 145; 2 High, Inj. (3 Ed.), sec. 1142; Cooley, Tax. (2 Ed.), 769; Damschroeder v. Thias, 51 Mo. 105; Wagner v. Meety, 69 Mo. 151; Hooper v. Ely, 46 Mo. 505; Steiner v. Franklin County, 48 Mo. 167; Ranney v. Bader, 67 Mo. 479; Newmeyer v. Railroad, 52 Mo. 81; Ruby v. Shane, 54 Mo. 207; Dennison v. Kansas City, 95 Mo. 429; Lilly v. Tobbein, 103 Mo. 488; Black v. Ross, 37 Mo.App. 257; Black v. Cornell, 30 Mo.App. 646. (2) The pretended contract entered into between the city of St. Louis and the Kern company is illegal and void, for that at the time when its bid was submitted to the Board of Public Improvements, and at the time the Board of Public Improvements made an award in its favor, and at the time when the alleged contract and the bond to secure the performance thereof were executed and delivered, and at the time when the alleged contract was confirmed and the alleged bond approved by the City Council, the Kern company was an alleged corporation under the laws of New Jersey, and had not obtained a license to "do business" in Missouri. A foreign corporation doing business in another State is exercising a franchise which depends solely upon the comity of that State, and the corporation enters therein, transacts business and exercises such a franchise only upon the terms prescribed by the laws of that State, in short, it may be prohibited altogether, and in like manner the terms and conditions under which it may enter and lawfully transact business may be definitely fixed. Any failure to comply with the terms and conditions necessary to secure the exercise of the privilege or franchise makes void any contract attempted to be made. At home the corporation has only such powers as are expressly granted or which flow therefrom by necessary implication -- abroad it has only what the foreign State chooses to grant and solely upon the terms and conditions prescribed. State ex inf. v. Trust Co., 144 Mo. 586; Daggs v. Ins. Co., 136 Mo. 382; Lamb v. Lamb, 13 Nat. Bank Reg. 17; Oil Co. v. Wemple, 44 F. 24; People v. Wemple, 134 N.Y. 64; Com. v. Oil Co., 101 Pa. St. 119; Farrier v. New Eng. Mort. Co., 88 Ala. 275; Mullen v. Amer. Co., 88 Ala. 288; Christian v. Am. Co., 89 Ala. 198; Ginn v. New Eng. Co., 92 Ala. 135; Ins. Co. v. Wright, 55 Va. 526; Bank v. Page, 6 Ore. 431. A foreign corporation coming into the State to do business must not only qualify, but keep itself qualified. Ins. Co. v. Story, 41 Mich. 402. It is a general rule of comity that a contract, illegal under the law of the place where made, will be held illegal and void everywhere. Story, Confl. Laws, sec. 243; Hyde v. Goodenow, 3 N.Y. 266; Ford v. Buckeye Ins. Co., 6 Bush (Ky.) 133; In re Comstock, 3 Sawyer 218. Nor is there any right of recovery upon the bond given to secure such a contract. Thorne v. Ins. Co., 80 Pa. St. 15; Ins. Co. v. Bales, 92 Pa. St. 352; Daniels v. Barney, 22 Ind. 207; Barneys v. Daniels, 32 Ind. 19; Cassady v. Ins. Co., 72 Ind. 95; Am. Co. v. Railroad, 37 F. 242; In re Comstock, supra.
Chas. W. Bates and Wm. F. Woerner for respondents.
(1) The execution of the contract in controversy did not constitute the doing of business within the meaning of the statutes respecting foreign corporations, and was not prohibited by them. (a) It was an isolated act of a corporation not located in Missouri at all, and therefore was not the doing of business within the meaning of said statutes. Woolen Mills v. Edwards, 84 Mo.App. 450; Blevins v. Fairley, 71 Mo.App. 262; Steam Heating Company v. Gas Company, 60 Mo.App. 155; Cooper Mfg. Co. v. Ferguson, 113 U.S. 734; 6 Thompson on Corp., sec. 7936; note 24 L. R. A. 295-297. (b) The contract was merely a preliminary step taken with a view to subsequently engaging in business. (c) Where the contract entered into, or the act done, is merely incidental to the corporate purposes, and does not constitute part of the regular course of the business of the corporation, it does not come within the provisions of the foreign corporation statutes. Coal and Mining Co. v. Ladd, 160 Mo. 442. (2) The foreign corporation statutes were enacted to protect the citizens of this State. To support appellant's contention that the contract in controversy is void, is to work great injustice to citizens and municipalities -- agencies of the State itself. If such a preliminary contract as the one in controversy is void, then no foreign corporation can ever successfully compete for municipal work, and the cities of the State will hereafter be deprived of any outside bidding and competition. Rand Co. v. Stern, 129 Mo. 381. (3) The contract attacked by the petition, even though executed contrary to the provisions of the statute, is valid, at least as against everyone but the State. Edison General Electric Co. v. Canadian, etc., Co. (Wash.), 24 L. R. A. 315. (a) An objection to the validity of said contract can only be raised by the State in a direct proceeding. St. George Church v. Branch, 120 Mo. 243; Church v. Tobbein, 82 Mo. 418; St. Louis v. Shields, 62 Mo. 247; Ins. Co. v. Smith, 117 Mo. 289; Hall v. Bank, 145 Mo. 425; 2 Morawetz on Corp. (2 Ed.), sec. 665. (b) Such defect can not be taken advantage of collaterally by a private person. Fritz v. Palmer, 132 U.S. 293. (c) A foreign corporation may even render itself subject to a penalty, and yet its contracts will be valid and enforcible against it. Ins. Co. v. Railroad, 149 Mo. 178. (d) The remedies and penalties for failure of a foreign corporation to comply with the statutory requirements respecting the doing of business in this State are pointed out by the statutes, and these remedies and penalties are the only consequence of non-compliance with the statutes. Said statutes do not declare, either expressly or by implication that a contract made by such corporation without compliance with said statutes shall be void. R. S. 1899, secs. 1024-1026 and secs. 1315-1318; Ins. Co. v. Railroad, supra; Ins. Co. v. Walsh, 18 Mo. 238. (e) The contract in controversy does not provide for nor contemplate the violation of any law, and the consideration is not tainted with any illegality. (f) At all events, the contract is enforcible against the foreign corporation, which can not plead its own failure to comply with the law to defeat its own contract, and this fact defeats the objection thereto of a citizen and taxpayer. (4) Although the foreign corporation has not complied with the statutory provision, still its capacity to make the contract in controversy can not be questioned by the plaintiff. Bank v. Gorten, 34 Mo. 119; Lead Co. v. Grote, 80 Mo.App. 265; Smith v. Shelley, 12 Wall. 361; Telephone Co. v. Telephone Co. (Ky.), 72 S.W. 4.
Plaintiff, as a resident taxpayer of defendant city, brings this suit in equity to enjoin the city, its officers and their co-defendant, the Kern Incandescent Gas Light Company (hereinafter called the Kern Company) from carrying out what the petition calls a pretended contract alleged to have been made by the city with the Kern Company for lighting the streets.
According to the petition, on January 11, 1900, the Board of Public Improvements, acting under authority of city ordinance 19892, approved December 7, 1899, advertised for bids for a contract to light a large part of the city. In answer to the advertisement the Kern Company submitted a bid which was accepted by the board. Whereupon a contract was entered into between the city and the Kern Company, whereby the latter became obligated, for certain consideration, to furnish the light specified, and to secure the faithful performance of its contract the Kern Company, as the contract required, executed its bond with security payable to the city in the penalty of two hundred thousand dollars.
The contract and bond are exhibited with the petition, the details of which it is unnecessary to set out in this statement.
The petition alleges that the Kern Company is a corporation organized under the laws of New Jersey with a nominal capital stock of $ 12,000, whereof, however, only $ 1,000 had been subscribed and $ 500 paid; that at the time this pretended contract was entered into and this bond given to secure its faithful performance this foreign corporation had not complied with the statute requirements of this State prerequisite to its admission into the State with authority to do business here, that is, had not complied with the requirements of sections 1025, 1026, 1315, 1316, 1317 and 1318, Revised Statutes 1899, but that after the contract and bond had been executed the corporation, preparatory to entering upon its performance, did file its statement and receive from the Secretary of State a license as required by section 1025. For its failure to comply with the terms of the statute before executing the contract the plaintiff in his petition draws the conclusion that the alleged contract and bond are void and upon that ground he seeks to have their performance or enforcement enjoined. The...
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