Hutterian Brethren of Wolf Creek v. Haas

Decision Date01 May 1953
Docket Number1437.,No. 1401,1401
PartiesHUTTERIAN BRETHREN OF WOLF CREEK AS A CHURCH OF STERLING ALBERTA, CANADA v. HAAS et al. HAAS et ux. v. HUTTERIAN BRETHREN OF WOLF CREEK AS A CHURCH OF STERLING, ALBERTA, CANADA.
CourtU.S. District Court — District of Montana

COPYRIGHT MATERIAL OMITTED

Howard C. Gee, Lewistown, Ralph J. Anderson, Helena, G. J. Jeffries, Roundup, for Hutterian Brethren of Wolf Creek as a Church of Sterling, Alberta, Canada.

H. Leonard DeKalb, Raymond E. Dockery, Weymouth D. Symmes, Lewistown, for Frank J. Haas and others.

PRAY, Chief Judge.

The court is considering both of the above cases together, since they involve the same parties, same contract and the same land holdings in Fergus County, Montana, and substantially the same facts and questions of law.

No. 1401 is an action for specific performance and to recover damages for alleged breach of contract to convey real property, now pending on motion for summary judgment and to dismiss the complaint.

No. 1437 is an action brought by plaintiffs to cancel the aforesaid contract between the parties, for an accounting of rents and profits and to restore the respective parties to status existing prior to execution of said contract. This case was begun in the State Court and removed by defendant to this court and also is pending on motion to dismiss the complaint, and for summary judgment.

After much time consumed in considering the pleadings, motion, affidavits and supporting and other related papers, and voluminous briefs, it would seem in order to state frankly at the outset that the court is of the opinion that the motion to dismiss in case No. 1401 should be granted, and that the court should of its own motion remand case No. 1437 to the State District Court in which it originated, and from which it was removed to this court.

It is practically conceded that the "Hutterian Brethren of Wolf Creek as a Church of Sterling, Alberta, Canada" is a corporation duly incorporated, organized and existing under and by virtue of the laws of the Province of Alberta, Canada, and that before entering into a contract for and commencing the business undertaken by such corporation in Fergus County, Montana, it was required to comply with certain provisions of Montana law before it could lawfully transact its corporate business in this State; its claim of exemptions as a religious organization is not sustained by the evidence presented here; its further claim that its incorporators and trustees were citizens of the United States is not material here, and would not be admissible in evidence, the presumption being that the incorporators and trustees were all citizens of the State or Country of incorporation, and no proof to the contrary would be admissible in either of these actions. See decision of Chief Justice Taney in Ohio & Mississippi R. Co. v. Wheeler, 1 Black 286, 66 U.S. 286-295, 296, 297, 298, 17 L.Ed. 130, and decisions therein cited.

It was held in Bank of Augusta v. Earle, 13 Pet. 519, 38 U.S. 519, 10 L.Ed. 274, that the artificial person or legal entity known to the common law as a corporation can have no legal existence out of the bounds of the sovereignty by which it is created; that it exists only in contemplation of law, and by force of law; that where that law ceases to operate, the corporation can have no existence. It must dwell in the place of its creation.

In Louisville, Cincinnati and Charleston R. Co. v. Letson, 2 How. 497, 43 U.S. 497, 11 L.Ed. 353, the court held that where a corporation is created by the laws of a State, the legal presumption is, that its members are citizens of the State in which alone the corporate body has a legal existence; and that a suit by or against a corporation, in its corporate name, must be presumed to be a suit by or against citizens of the State which created the corporate body; and that no averment or evidence to the contrary is admissible, for the purpose of withdrawing the suit from the jurisdiction of a court of the United States.

It appears that Frank J. Haas and Lola Haas, his wife, both citizens of the United States, parties of the first part, and Fred W. Woolsey, of Miles City, Montana, as party of the second part, on the 30th of June, 1947, entered into a certain written contract whereby the Haas's agreed to sell and said Woolsey agreed to buy certain lands and premises therein described situated in Fergus County, Montana, for the total consideration and price of $337,500. That on the 5th day of July, 1947, the said Woolsey sold, assigned and transferred the said contract to the "Hutterian Brethren of Wolf Creek as a Church of Sterling, Alberta, Canada", the Canadian corporation aforesaid; that it appears in evidence that, unbeknown to the grantors, the said Woolsey was acting as the agent of the corporation aforesaid in the negotiation and purchase of said property, and that persons mentioned as interested in the purchase of said lands had never talked to the owners about it, but had driven around the lands on the highways and looked them over; the subject of agency and indispensable parties will be considered later on.

It appears that for over five years since its occupation of the said lands in 1947 this foreign corporation has been conducting an agricultural and ranching business in the State of Montana without qualifying as required by law, until September 23rd, 1952, which was subsequent to commencement of the corporation action, No. 1401, and motion by Haas's to dismiss; and it further appears that no corporation license tax under state law has ever been paid, or that the corporation has ever filed the annual report required by Section 15-1704, R. C.M.1947. Counsel for the corporation claim that subsequent compliance was sufficient. There is found here the violation of a penal statute for over five years, Section 15-1705, R.C.M.1947, without compliance with its provisions.

There seems to be good authority to the effect that when a foreign corporation deliberately and wilfully violates a statute of this nature that a compliance with the act years later is not sufficient and of no avail to the corporate offender. Counsel construes the language of the statute in question so as to enable the foreign corporation to carry on without compliance for a time without limit if in the end when it becomes involved in litigation it then complies with the statute showing its right to do business in the State; that is practically the sense of counsel's construction, which, of course, would render the preceding language of the section of no effect.

Section 15-1703, R.C.M.1947, provides as follows:

"15-1703 (6653) Contracts void if made before compliance with act. If any foreign corporation shall attempt or commence to do business in this state without having first filed said statement, certificate, and consent, required by this act, or without complying with any or all of the laws of Montana relating to the payment of fees or licenses, no contract made by such corporation, or any agent or agents thereof, during said time, shall be enforceable by the corporation until the foregoing provisions have been complied with."
"Contracts void if made before compliance with act", and the statute goes on further to show what is meant by entering into contracts before compliance with the act. "If any foreign corporation shall attempt or commence to do business without having first filed said statement, certificate, and consent, required by this act, or without complying with any or all of the laws of Montana relating to the payment of fees or licenses, no contract made by such corporation, or any agent or agents thereof, during said time, shall be enforceable by the corporation until the foregoing provisions have been complied with."

What are the foregoing provisions to be complied with and when are they to be complied with — before "any foreign corporation shall attempt or commence to do business", "during said time" — which means during the time it was required to comply, and during such time such contracts will not be enforceable, until such foreign corporation does comply, and compliance must be made before any attempt to do business.

This seems to be a plain and sensible interpretation of the language of that section; to adopt counsel's view would result in emasculating the section and a flat contradiction of the evident intent and purpose of the act.

Section 93-401-15, Revised Codes of Montana, 1947, relating to construction of statutes, states as follows: "Construction of statutes and instruments — general rule. In the construction of a statute or instrument, the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all." It has been held that "in construing a statute, ordinarily, the words employed must be given their usual meaning, unless it is made apparent from the context of the subject that a different one was intended." Montana Beer Ass'n v. State Board of Equalization, 95 Mont. 30, 25 P.2d 128, 130.

But even if it should later be determined that this court is wrong in its construction of the statute, other evidence shows that the corporation is a violator of other sections of the State statutes, which would raise a very serious question as to its qualifications to begin or maintain any action in federal court. After making such contract, and after commencing and continuing business thereunder for a period of over five years and after commencing an action under that contract in this court, it thereafter finally files its statement or articles of incorporation. However under the authorities that the court deems applicable here, this act on the part of the corporation will not remove the bar of the statute.

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    • United States
    • Idaho Supreme Court
    • 18. Januar 1968
    ...278 P. 126, 67 A.L.R. 690 (1929); Glass v. Basin and Bay State Min. Co., 31 Mont. 21, 77 P. 302 (1904); Hutterian Brethren of Wolf Creek, etc. v. Haas, 116 F.Supp. 37 (D.C.Mont.1953); see also Hames v. City of Polson, 123 Mont. 469, 484, 215 P.2d 950, 958 (1950); Hancock v. Elkington, 67 Id......
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