Land Development Corp. v. Cannaday, 7991

• Decision Date: 14 July 1953
• Docket Number: No. 7991,7991
• Citation: 258 P.2d 976,74 Idaho 233
• Parties: LAND DEVELOPMENT CORP. v. CANNADAY et al.
• Court: Idaho Supreme Court

Page 976

258 P.2d 976

74 Idaho 233

LAND DEVELOPMENT CORP. v. CANNADAY et al.

No. 7991.

Supreme Court of Idaho.

July 14, 1953.

Whitla & Knudson and Hawkins & Miller, Coeur d'Alene, for appellant.

J. H. Felton and Wm. Jones, Lewiston, McNaughton & Sanderson, Coeur d'Alene, for respondent.

On Petition for Rehearing.

THOMAS, Justice.

Appellant, hereinafter designated as the plaintiff, The Land Development Corporation, a corporation of the State of Washington, instituted an action for the foreclosure of a real estate and a chattel mortgage on real property and chattels in Idaho.

The complaint alleged that plaintiff is a Washington corporation, duly organized, formed and existing under the laws of the State of Washington, and alleged the execution and delivery of a note and mortgages, in the State of Washington, by defendant, Dowd Roy Cannaday, to plaintiff; it also alleged demand for, and the refusal of, payment. The note was pleaded in haec verba and discloses on its face that it was made and payable in Tekoa, Whitman County, Washington; a copy of each mortgage was attached to the complaint and by reference made a part thereof and likewise show on their face that they were executed in Whitman County, Washington.

Respondent, Dowd Roy Cannaday, filed an answer denying each and every allegation of the complaint and set forth affirmatively that plaintiff was a Washington corporation and was not authorized to do business in Idaho, and that it was engaged in doing business in the State of Idaho and that the note and mortgages were void under Sec. 30-505, I.C.

The respondents, W. R. More and Betty G. More, his wife, filed an answer and cross-complaint alleging a prior mortgage upon the property and sought judgment foreclosing their mortgage.

Plaintiff introduced evidence in support of its complaint showing that it was a corporation duly organized and existing under and by virtue of the laws of the State of Washington, which respondent admitted in his answer to be true. Plaintiff further adduced evidence which disclosed that on December 3, 1948, in Tekoa, Whitman County, Washington, in the law office of John Denoo, the then president of said corporation, Dowd Roy Cannaday, the respondent, borrowed from the corporation the sum of $15,500 and at that time and place executed and delivered to the corporation his promissory note in such sum, payable one year from date at Tekoa, Washington; plaintiff also introduced testimony that at that time and place Dowd Roy Cannaday made, executed and delivered a real estate mortgage covering certain real property situated in the State of Idaho, together with a chattel mortgage covering certain personal property, likewise situated in Idaho, to secure the payment of said note, and that the entire transaction was initiated, conducted and concluded in the office of said John Denoo, in Tekoa, Washington, and that demand for payment had been made and payment refused.

Immediately following, by agreement of counsel and before any cross-examination, respondent More introduced evidence in support of his cross-complaint and rested.

Following the cross-examination of plaintiff's witnesses plaintiff rested, whereupon respondent Cannaday moved the court to enter a judgment of nonsuit on the grounds that the plaintiff had not proved that it is an Idaho corporation or that it had the right to do business in Idaho on December 3, 1948, and that it had also failed to prove it was not doing business in Idaho on that date. The court denied the motion at that time.

Respondent Cannaday then called the witness Denoo for cross-examination under the statute and after a few preliminary questions were asked the examination was concluded; the court then granted Cannaday's motion for nonsuit on the ground that the evidence disclosed the plaintiff corporation was doing business in the State of Idaho but failed to show said plaintiff was qualified to do business in this state.

A judgment of nonsuit was entered decreeing that the complaint of plaintiff be dismissed and that the note and mortgages executed by Dowd Roy Cannaday were void and of no force and effect, and that no action upon such instruments could be maintained in the State of Idaho. The court also entered judgment for W. R. More and Betty G. More, foreclosing their mortgage as a first and prior lien upon the real property, and further decreed that the title of Cannaday in and to the lands and premises was quieted against all claims and demands as to any of the parties to the action excepting More and his wife, forever barring and enjoining the plaintiff or any other parties except More and his wife from claiming any interest, right, title or estate in and to the lands and premises or any part thereof adverse to the title quieted.

From both the judgment of nonsuit and the judgment of foreclosure in favor of More and his wife, this appeal was taken.

Respondent moved this court to dismiss the appeal on the ground no undertaking on appeal was filed in accordance with Sec. 13-203, I.C., providing that appellant will pay all costs and damages which may be awarded against it on the appeal or on a dismissal thereof.

The bond, in pertinent part, provides as follows:

'Whereas, * * * plaintiff * * * has commenced or is about to appeal * * * from * * * those judgments and orders * * * now, therefore, in accordance with the provisions of 13-203, Idaho Code, the General Casualty Company of America do undertake in the sum of Three Hundred ($300.00) Dollars to pay all costs which may be awarded against the plaintiff * * * on an appeal, said amount, however, not to exceed the sum of Three Hundred ($300.00) Dollars.'

It will be noted that the undertaking provides for costs but does not expressly also include damages as provided in Sec. 13-203, I.C.

Sec. 12-613, I.C., dealing with the general form of an undertaking, provides as follows:

'Whenever a party to an action or proceeding desires to give an undertaking provided to be given by law, it shall be sufficient if the sureties sign an undertaking indicating that they are thereby bound to the obligations of the statute requiring the undertaking to be given. Such undertaking may be in form as follows:

(Title of court. Title of cause.)

'Whereas, the _____ desires to give an undertaking for (state what) _____, now, therefore, we the undersigned sureties, do hereby obligate ourselves jointly and severally, to (name who) _____ under said statutory obligations in the sum of _____ dollars.

'The sureties so signing such undertaking are bound to the full statutory obligations of the statute requiring the undertaking.'

The bond here challenged discloses that it was given pursuant to Sec. 13-203, I.C., and that the surety is bound to the extent of the statutory obligations. In reading sections 13-203, I.C., and 12-613, I.C., together, the obligation is supplied and the surety cannot avoid payment thereof to the parties adverse to plaintiff in the event damages and costs are awarded against it, either on appeal or on a dismissal, hence, the motion to dismiss is denied. Bothwell v. Keefer, 52 Idaho 737, 20 P.2d 199; Muncey v. Security Ins. Co., 42 Idaho 782, 247 P. 785; Bain v. Olsen, 36 Idaho 130, 209 P. 721.

Respondent urges that plaintiff failed to introduce the Articles of Incorporation although they were marked and, hence, there is no showing as to the powers, if any, possessed by the plaintiff corporation and that there is no presumption of law that it had the right to loan money, the right to take mortgages or the right to sue to recover therefor. Such contention is without merit.

There is a presumption that the contract of a corporation is within its corporate powers and the burden of proving a contract ultra vires is on the party making that assertion and, furthermore, it must be specially pleaded. Wallace Bank & Trust Co. v. First Nat. Bank, 40 Idaho 712, 237 P. 284, 50 A.L.R. 316; Meholin v. Carlson, 17 Idaho 742, 107 P. 755; 19 C.J.S., Corporations, § 1119, page 693; 13 Am.Jur., sec. 756, p. 786.

The motion for nonsuit admits the truth of plaintiff's evidence and every reasonable inference of fact that can be legitimately drawn therefrom and evidence must be interpreted most strongly against the defendant. Bogovich v. Capitol Silver-Lead Mining Co., 71 Idaho 1, 224 P.2d 1078; Quinn v. Hartford Accident & Indemnity Co., 71 Idaho 449, 232 P.2d 965.

The crucial and decisive question presented on this appeal is whether the plaintiff, a foreign corporation which did not comply with the Constitution and statutes of this state, relating to foreign corporations doing business in Idaho, was doing business herein within the meaning of Art. 11, Sec. 10, Idaho Constitution, and Secs. 30-501 & 502, I.C. These provisions regulating foreign corporations do not apply unless the corporation is doing business...