John Hancock Mutual Life Insurance Co. v. Girard

• Decision Date: 22 July 1936
• Docket Number: 6316
• Citation: 57 Idaho 198,64 P.2d 254
• Parties: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Corporation, Respondent, v. Z. L. GIRARD et al., Defendants; BERTHA C. BRESSLER, Appellant
• Court: Idaho Supreme Court

64 P.2d 254

57 Idaho 198

JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Corporation, Respondent, v. Z. L. GIRARD et al., Defendants;

BERTHA C. BRESSLER, Appellant

No. 6316

Supreme Court of Idaho

July 22, 1936

On Rehearing Jan. 15, 1937.

APPEAL from the District Court of the Second Judicial District, for Latah County. Hon. Gillies D. Hodge, Judge.

Action to foreclose mortgage on real estate. Judgment for plaintiff. Defendant Bressler appeals. Reversed and remanded.

Reversed and remanded with direction. Costs awarded in favor of appellant.

A. H Oversmith for Appellant.

Foreign corporations cannot have greater rights and privileges in this state than corporations organized under the laws of the state of Idaho. Respondent has had such greater rights and privileges for fifteen years for the reason that it neither made out an annual statement or paid license fees in Idaho (Sec. 10, article 11, Idaho Const.; secs. 29-601 and 29-603 I. C. A.) The constitutional provision is self-acting. (Katz v. Herrick, 12 Idaho 1, 86 P. 873.)

The insurance company cannot hold title to real estate and comply with the laws of this state with reference thereto on account of being unable to record, in each county in which they hold real estate, a certified copy of its articles of incorporation. (Sec. 29-108, I. C. A.)

The phrase "doing business" has received construction by our court under another statute providing for service of summons upon a foreign corporation. (Compare third paragraph of sec. 5-507 with sec. 29-601, I. C. A.; Boise Flying Service v. General Motors Accept. Corp., 55 Idaho 5, 36 P.2d 813; Clemant et al. v. Coon et al., 161 Okla. 216, 18 P.2d 1059.)

The particular facts in any case are the determining factors in the court's decision upon the question of a foreign corporation doing business in the state of Idaho. (Katz v. Herrick, supra; Hoffstater v. Jewell, 33 Idaho 439, 196 P. 194; Donaldson v. Thousand Springs Co., 29 Idaho 735, 162 P. 334, 336; United States Building & Loan Assn. v. Lanzarotti, 47 Idaho 287, 274 P. 630.)

A foreign corporation is doing business within a state when it carries on some part of its business for which it is authorized by the state of incorporation. (Knapp v. Bullock Tractor Co., 242 F. 543; In re Welling's Estate, 192 Cal. 506, 221 P. 628; Green v. Kentenia Corp., 175 Ky. 661, 194 S.W. 820; Eatonton Cotton Mills v. Goodyear Tire & Rubber Co., 124 Misc. 211, 208 N.Y.S. 218; Paul et al. v. W. G. Patterson Cigar Co., 210 Ala. 532, 98 So. 787.)

The appointment by a foreign corporation of one or more agents to look after the business engaged in within a state constitutes doing business within that state. (Neyens v. Worthington, 150 Mich. 580, 114 N.W. 404, 18 L. R. A., N. S., 142; Hessig-Ellis Drug Co. v. Sly et al., 83 Kan. 60, 109 P. 770, Ann. Cas. 1912A, 551, and note following case.)

Tannahill, Durham & Hyatt, for Respondent.

Dean Driscoll for Respondent on Rehearing.

The transactions with respect to the note and mortgage in suit did not constitute doing business in Idaho in violation of the law with respect to foreign corporations.

The preliminary considerations are:

That the respondent was doing business in Idaho at the time the note and mortgage were taken, and in taking the same, is as essential a part of the defense as the fact that the respondent had not complied with the Idaho laws, but is not pleaded. (Bonham Nat. Bank v. Grimes Pass Placer Min. Co., 18 Idaho 629-635, 111 P. 1078.)

The questions of whether business is done within the borders of the state at all, and as to whether such business as is done is within the meaning of the foreign corporation statutes are to be distinguished. Both are involved here.

The note and mortgage in suit are not Idaho contracts and did not constitute doing business in the state at all, even though made by agent, for the loan was closed with the alleged agent outside the state.

A note and mortgage payable outside the state and accepted outside the state, even though secured by a mortgage on Idaho real estate, is not an Idaho contract and does not constitute doing business in Idaho. (Portland Cattle Loan Co. v. Hansen L. & F. Co., 43 Idaho 343-353, 251 P. 1051; Burlington Sav. Bank v. Grayson, 43 Idaho 654, 254 P. 215; W. T. Rawleigh Co. v. Van Duyn, 32 Idaho 767-772, 188 P. 945.)

If the contract is not an Idaho contract, it makes no difference how much or what other business is then or thereafter done in the state by the corporation. (Bettilyon Home Builders Co. v. Philbrick, 31 Idaho 724-728, 175 P. 958; Marshall-Wells Co. v. Kramlich, 46 Idaho 355-375, 267 P. 611.)

Assuming that the respondent's note and mortgage violate the requirements of the Constitution and statutes of the state as to foreign corporations doing business therein, still the mortgage is neither void nor voidable as a conveyance of real estate under section 29-505, I. C. A., for

The definition of "conveyance" contained in section 54-813, I. C. A., cited as the authority for the court's opinion, is limited by its own terms to the recording of transfers. (Fargo v. Bennett, 35 Idaho 359-362, 206 P. 692; Booker v. Castillo, 154 Cal. 672, 98 P. 1067, 1069.)

A mortgage in Idaho is a mere lien, and transfers no title. (Secs. 9-101, 9-104, 44-106, 44-109, 44-801, 44-804, 44-811, I. C. A.; Hannah v. Vensel, 19 Idaho 796, 116 P. 115; Woodmansee Estate v. Covington, 39 Idaho 749, 230 P. 41.)

A mortgage is not a conveyance at all. (Secs. 9-104, 44-801, 44-802, 44-806, I. C. A.; Booker v. Castillo, supra; In re Crooks' Estate, 125 Cal. 459, 58 P. 89; State v. Rhodes, 77 Kan. 202, 93 P. 610, 611.)

AILSHIE, J. Givens, C. J., and Morgan, C. J., and Holden, J., concurring. Budge, J., expresses no opinion. Budge, J., dissents.

OPINION

AILSHIE, J.

On May 9, 1923, Z. L., Nellie E., Frank T. and Adeline Girard executed their promissory note secured by a real estate mortgage on lands in Latah county for the sum of $ 16,000, in favor of the Farm Mortgage Security Company, which, for convenience, will hereinafter be referred to as the Security Company. On June 20th following the note and mortgage were assigned to the respondent, John Hancock Mutual Life Insurance Company, which will hereinafter be referred to as the Insurance Company. In October, 1927, Christopher Broeneke and wife purchased the mortgaged premises from the Girards and thereupon executed a promissory note for $ 5,000 secured by a second mortgage on the premises in favor of the appellant, Bertha Bressler.

On April 27, 1928, Broeneke and wife entered into a written agreement with the Insurance Company for an extension to October 1, 1935, of the Girard note and mortgage, and by the terms of the agreement, personally assumed and promised to pay the note and mortgage on or before October 1, 1935. At the same time they executed eight coupon notes covering interest that would accrue up to the final maturity of the note. Default was made in the payment of the principal and interest on this extended note and mortgage and the coupons, and the Insurance Company instituted this suit in foreclosure on February 17, 1934.

Appellant, Bertha C. Bressler, answered and filed a cross-complaint. By her answer she alleged that the Insurance Company was a foreign corporation existing under the laws of the state of Massachusetts and that it was, and had been, doing business in the state of Idaho without complying with the Constitution and laws of the state in reference to foreign corporations qualifying to do business in this state. She specifically alleged that the Insurance Company had failed to comply with the provisions of sec. 10 of art. 11 of the Constitution, and secs. 29-501 and 29-502, I. C. A. Appellant also set out a note and mortgage of $ 5,000 executed in her favor by the Broenekes on October 7, 1927, which was past due, and prayed that she have a decree of foreclosure and that her mortgage lien be decreed prior and superior to the mortgage set up by the Insurance Company.

The case was submitted to the court on a stipulation of facts and no oral testimony was introduced. The court found against the defendants and entered a decree of foreclosure in favor of the Insurance Company. This appeal is from the judgment.

Since no oral testimony was introduced in the lower court, it becomes our duty to examine the evidence and determine the facts therefrom without reference to the findings made by the trial court. (Roby v. Roby, 10 Idaho 139, 77 P. 213; Stoneburner v. Stoneburner, 11 Idaho 603, 83 P. 938; Cannon v. Seyboldt, 55 Idaho 796, 48 P.2d 406.)

It is agreed that the case reduces itself to one question, namely: Was the respondent doing business in the state within the constitutional and statutory provisions?

This case is a difficult one, due largely to the indefiniteness of some of the provisions of the stipulation and the uncertainty attending some of the recitals which it contains. For that reason we shall copy herein what we deem to be essential parts of the stipulation.

It seems that prior to the execution of the notes and mortgages here involved the Insurance Company and the Security Company entered into an agreement in writing which recited that the Insurance Company proposed to purchase mortgages of the Security Company or accept applications for such mortgages as it might finally approve. The Security Company was a Washington corporation which qualified to do business in Idaho and complied with the Constitution and statute with respect thereto and paid its license and other fees. The Security Company agreed to secure loans on good and marketable titles and to forward them to the Insurance Company for its acceptance or rejection. The Security Company further agreed to take care of all taxes,...