Kendrick & Roberts, Inc. v. Warren Bros. Co.

• Decision Date: 10 February 1909
• Parties: KENDRICK & ROBERTS, Inc., v. WARREN BROS. CO.
• Court: Maryland Court of Appeals

72 A. 461

110 Md. 47

KENDRICK & ROBERTS, Inc., v. WARREN BROS. CO.

Court of Appeals of Maryland

February 10, 1909

Appeal from Superior Court of Baltimore City; Thos. Ireland Elliott Judge.

Assumpsit by Warren Bros. Company against Kendrick & Roberts Incorporated. Judgment for plaintiff, and defendant appeals. Affirmed.

Argued before BOYD, C.J., and BRISCOE, PEARCE, SCHMUCKER, BURKE, and WORTHINGTON, JJ.

Charles F. Harley, for appellant.

Thomas G. Hayes, for appellee.

BRISCOE J.

On the 2d of November, 1904, the appellee, a West Virginia corporation, sued out a nonresident attachment against the appellant, a Pennsylvania corporation. The attachment was laid in the hands of the trustees of the Johns Hopkins Hospital, and sufficient funds were attached to cover the appellee's claim. Subsequently the appellant gave bond and the attachment was dissolved. The declaration in the short-note case is in assumpsit and contains the six money counts. The verdict and judgment, after trial in the short-note case, was in favor of the plaintiff, and the defendant has appealed.

At the trial of the case, the appellant reserved seven bills of exception. Five of these relate to the rulings of the court upon the admissibility of testimony, one to the action of the court in permitting an amendment to the plaintiff's voucher filed in the case, and the seventh to the refusal of the court to grant the appellant's prayers. The principal questions in the case arise upon the rulings of the court on the pleadings, and we find it more convenient to consider them here.

The amended declaration, it will be seen, contains six counts, and to this the defendant pleaded five pleas. The fourth and fifth pleas are those chiefly relied upon by the defendant corporation as a bar to the action, and they are as follows: "Fourth Plea. And for a fourth plea the defendant says that the plaintiff is a foreign corporation, and at the time of the institution of this suit in this court the said foreign corporation had not filed in the office of the Secretary of the State of Maryland, accompanied by a deposit fee of $25, a duly certified copy of the charter, certificate, or act of incorporation under which it claimed the power to transact business as a corporation, together with a sworn statement from the president or other chief executive officer of such corporation, under its official seal, setting forth the amount of its capital stock authorized by law, and the amount actually issued, the amount of its assets and liabilities, the character of the business to be transacted in this state, designating the place or places of its principal office or offices, and the name or names of its agent or agents to reside in this state, with the place or places of their residence, upon whom legal process issued out of any court of this state may, at any time, be served in any action, at the suit of the state of Maryland or of any county or incorporated city or town of this state, or of any citizen or citizens of this state, or of any corporation organized under the laws of this state.

"Fifth Plea. That on or about the 13th day of September, 1905, the defendant was by the District Court of the United States for the Eastern District of Pennsylvania, at a session thereof held at the city of Philadelphia, in the said district, on the day and year aforesaid, regularly declared and decreed and adjudicated a bankrupt according to the true intent and meaning of the laws of the United States. And the defendant says that the said supposed indebtedness alleged in the declaration, if any such ever did accrue, accrued before the defendant so became a bankrupt as aforesaid, and was provable under said bankruptcy against the said defendant, and that the said plaintiff was duly and legally notified of said proceedings in bankruptcy, and the said alleged claim was duly scheduled by this defendant in its list of debts in said proceedings, and that on or about the 14th day of February, 1906, at the city of Philadelphia, in said district, the said defendant was by the order and decree of the said District Court of the United States for the Eastern District of Pennsylvania duly discharged of and from all debts owing by it and provable under said bankruptcy, among which debts was the one named and counted upon in the plaintiff's said declaration, all of which by the files and records of said District Court, true and attested copies of which are here ready in court to be shown, will more fully appear; and the said District Court, at the time and place last aforesaid, further ordered that the said defendant be allowed its certificate of discharge as aforesaid, which said certificate was duly issued to the said defendant, and it brings the same into court here, duly executed and certified, by all of which the said supposed indebtedness in the said declaration alleged, if any such there be, became and was and now is wholly discharged, and this the defendant is ready to verify."

To the fourth plea the plaintiff replied by way of replication: "That on January 10, 1905, the plaintiff fully complied with all the requirements of the law of the state of Maryland relating to foreign corporations and known as Acts 1898, p. 811, c. 270, and which requirements of said act are set out in the averments of said fourth plea. And the plaintiff hereby tenders itself ready to bring into court and show the court the certificate of the Secretary of State of the state of Maryland, duly executed and attested, which shows said compliance by the plaintiff with said Acts 1898, p. 811, c. 270, on said date." And for a replication to the fifth plea the plaintiff says: "That the adjudication of the defendant a bankrupt and its discharge in bankruptcy by order or decree of the United States District Court for the District of Pennsylvania does not release or discharge the security on the bond filed in this case by the defendant to dissolve the attachment which had been previously issued and levied by the plaintiff on the moneys and credits of the defendant, which bond had been executed and filed in said case more than four months before the filing in said District Court of the defendant's petition to be adjudged a bankrupt. That the judgment sought to be obtained in this case against the defendant is solely and exclusively to bind the security in said bond filed to dissolve the attachment issued and levied on the moneys and credits of the defendant as aforesaid, and if a judgment is had in this case against the defendant, the court will be asked by the plaintiff by its order to restrain the plaintiff from ever issuing an execution on said judgment against the defendant."

To the plaintiff's replications to these pleas, the defendant demurred, and, upon the overruling of the demurrer, filed a rejoinder to the fourth plea, to the effect that the plaintiff had not complied with the requirements of the statute at the time of the institution of this suit. A demurrer to this rejoinder to the replication to the fourth plea was sustained, and a judgment was entered in favor of the plaintiff thereon, and, the defendant failing to rejoin to the fifth replication, a judgment was also entered for the plaintiff on the demurrer to this replication.

The questions raised by the fourth plea involve a construction of sections 139 and 140 of article 23 of the Code of Public General Laws of 1904. By section 139, it is provided: "Any person or any officer of such corporation who shall presume to act as agent or employé of any such foreign corporation, or to open or continue an office for the transaction of the business of any such foreign corporation, before the provisions of section 137 have been fully complied with, and before said corporation shall have procured the aforesaid certificate from the Secretary of State, shall forfeit and pay to the state of Maryland the sum of one hundred dollars for each and every day he may act as such agent or employé, or may occupy such office for the transaction of such business, and it shall be the duty of the state's attorney for the city or county in which such business is transacted, or is proposed to be transacted, to prosecute for and recover such penalty." Section 140 provides: "No such foreign corporation shall be permitted to maintain any action, either at law or equity, in the courts of this state, until the provisions of section 137, shall have been complied with."

It is quite clear, we think, the Legislature did not intend that a violation of the statute should operate to destroy or avoid contracts made by foreign corporations before they complied with the law, but imposed a penalty by way of fine upon its agents or officers who transacted business before they complied therewith. In Walker v. Baldwin, 103 Md 356, 63 A. 362, this court adopted the rule stated in 1 Wharton on Contracts, § 364, where it is said: "When statutory conditions are imposed on the conduct of the business, agreements made without observing these conditions, if no stigma of wrong is attached to the specific transaction, and if it appears that the condition was imposed for merely administrative purposes, viz., the convenient collection of the revenue, it will not be held invalid." Banks v. McCosker, 82 Md. 518, 34 A. 539, 51 Am. St. Rep. 478; Coates v. Locust Point Co., 102 Md. 291, 62 A. 625. The Supreme Court of the United States, in Fritts v. Palmer, 132 U.S. 289, 10 S.Ct. 93, 33 L.Ed. 317, in dealing with a somewhat similar statute, held: "The fair implication is that, in the judgment of the Legislature, the penalty was ample to effect the object of the statute prescribing the terms upon which foreign corporations might do business in the state. If the Legislature had intended to...