Johnson v. Mason Lodge No. 33

• Decision Date: 13 June 1899
• Citation: 106 Ky. 838,51 S.W. 620
• Parties: JOHNSON v. MASON LODGE NO. 33. [1]
• Court: Kentucky Court of Appeals

51 S.W. 620

106 Ky. 838

JOHNSON v. MASON LODGE NO. 33. ^[1]

Court of Appeals of Kentucky.

June 13, 1899

Appeal from circuit court, Mason county.

"To be officially reported."

Action by Mason Lodge No. 83 against Milton Johnson on a promissory note. Judgment for plaintiff, and defendant appeals. Affirmed.

L. W Robertson, E. L. Worthington, and J. N. Keboe, for appellant.

L. W Galbraith, for appellee.

BURNAM J.

Appellee alleges that it is duly incorporated under the laws of this commonwealth, with power to contract and be contracted with that the appellant, Johnson, borrowed from them the sum of $750, for which he on the same day executed and delivered to them his promissory note, by which he agreed to pay them the sum loaned, with interest, on demand; that he paid thereon $52.50 August 17, 1897, and that demand had been made for the balance of the debt, and payment refused. Appellant, in his answer, admits the execution of the note sued on, and that it was for borrowed money, but seeks to evade the payment thereof on two grounds: First, he denies the corporate existence of appellee; and, second, he states that at the time the note sued on was executed, and for several years prior thereto, appellee had been engaged in the business of lending money and trafficking in property for profit in this state; that its residence is and had been in Mason county and that at the time of the execution of the note sued on and of the commencement of this suit appellee had not filed with the secretary of state a statement giving the location of its office, and the name of its agent upon whom process could be served, as required by section 194 of the constitution and section 571 of the Kentucky Statutes, and for this reason the obligation sued on was illegal and unenforceable. A general demurrer was sustained to this answer, and, appellant declining to amend, judgment was rendered in favor of appellee for the amount sued for, from which this appeal is prosecuted.

Section 194 of the constitution reads as follows: "All corporations formed under the laws of this state, or carrying on business in this state, shall, at all times, have one or more known places of business in this state, and an authorized agent or agents there, upon whom process may be executed, and the general assembly shall enact laws to carry into effect the provisions of this section." And the section of the statute relied on provides that: "All corporations except foreign insurance companies formed under the laws of this *** state, and carrying on any business in this state, shall at all times have one or more known places of business in this state, and an authorized agent or agents thereat, upon whom process can be served; and it shall not be lawful for any corporation to carry on any business in this state, until it shall have filed in the office of the secretary of state a statement, signed by its president or secretary, giving the location of its office or offices in this state, and the name or names of its agent or agents thereat upon whom process can be served; *** and if any corporation fails to comply with the requirements of this section, such corporation, and any agent or employé of such corporation, who shall transact, carry on or conduct any business in this state, for it, shall be severally guilty of a misdemeanor, and fined not less than one hundred nor more than one thousand dollars for each offense." It is claimed by appellee that as it is a purely charitable institution, without capital stock, or organized for pecuniary profit, it is not subject to any of the laws relating to corporations organized for the purposes of gain and rely to support this claim upon section 883 of the Kentucky Statutes, which reads as follows: "Corporations, associations, or societies organized under this act shall not be subject to any of the laws relating to corporations having a capital stock or organized for pecuniary profit, except that requiring an agent on whom process may be executed." It is evident that the legislature has made a marked difference in its requirements of charitable, educational, and religious corporations and those organized for private gain and having a fixed capital stock, and intended to exempt them from all the laws relating to corporations of the latter class, except that requiring an agent upon whom process may be executed. While the language of section 883 limits its exemptions to corporations organized under that act, we think it was intended to apply to all corporations of this character, whether they were organized previous to the passage of that law or subsequently thereto; and this opinion is confirmed by the provisions of section 882, which immediately precedes the one in question. But it seems to us that, giving a fair and reasonable construction to section 194 of the constitution, and the two provisions of the statute referred to, it was not intended to exempt any corporation organized under the laws of this state from the duty of filing in the office of the secretary of state a statement, signed by its president or secretary, giving the location of its office, and the name of its agent thereat upon whom process could be served. If we are wrong in this construction of the statute, it seems to us that there can be no doubt that the demurrer was properly sustained on the grounds that appellant, having contracted with appellee, and received from it $750, which he retains, is, in an action on the note executed for that money, estopped to deny the existence of appellee as a corporation, or its power to contract for failure to comply with the statute. Section 566 of the Kentucky Statutes provides: "No corporations organized under this chapter shall be permitted to set up or rely upon the want of legal organization as a defense to an action against it, nor shall any person, transacting business with such corporation, in suit for injury done to his property, be permitted to rely upon such illegal organization as a defense." And this provision of the statute only announces the common-law principle which has been repeatedly recognized by former adjudications of this court. In the case of Railroad...