Lasher v. Stimson

• Citation: 145 Pa. 30,23 A. 552
• Decision Date: 08 February 1892
• Docket Number: 176
• Parties: GEO. F. LASHER v. H. D. STIMSON
• Court: United States State Supreme Court of Pennsylvania

23 A. 552

145 Pa. 30

GEO. F. LASHER v. H. D. STIMSON

No. 176

Supreme Court of Pennsylvania

February 8, 1892

Argued January 23, 1891

APPEAL BY PLAINTIFF FROM THE COURT OF COMMON PLEAS NO. 2 OF PHILADELPHIA COUNTY.

No. 176 July Term 1890, Sup. Ct.; court below, No. 816 December Term 1888, C.P. No. 2.

On January 11, 1889, George F. Lasher brought assumpsit against H. D. Stimson. Issue.

At the trial, on May 13, 1890, the jury returned a special verdict as follows:

"The plaintiff, upon the order of the defendant, who professed to be acting on behalf of the Sudsena Manufacturing Co. furnished in accordance with said order certain goods and did certain work between February 10, 1888, and June 12th of the same year. The value of the goods and work was $299.55. The goods and work were charged on the plaintiff's books to the Sudsena Manufacturing Company. The plaintiff was paid on account of his bill $100, and was, on August 10th, given two notes signed "Sudsena Manufacturing Co., H. D. Stimson Treasurer," one for $100, and one for $99.55, both of which notes are overdue and unpaid.

"The Sudsena Manufacturing Co. was a corporation, not of this commonwealth, but organized under the laws of New Jersey, and had not complied with the provisions of the act of assembly of April 22, 1874, but was nevertheless carrying on the business of the manufacture and sale of soap or washing compound within the state of Pennsylvania.

"The bill-heads of the said company, which were printed by the plaintiff on the defendant's order as for the Sudsena Manufacturing Co., were as follows: 'H. D. Stimson President; Jas. Longwell, Secretary; Philadelphia, 188 . Bought of Sudsena Manufacturing Co., 939 and 941 Front street. Terms, ;' and the letter-heads, also printed by the plaintiff on defendant's order: 'H. D. Stimson President; Jas. Longwell, Secretary. Office of Sudsena Manufacturing Co., manufacturers of Sudsena Washing Compound, Stimson's Cotton Softener, Stimson's Satine Size, 939 and 941 North Front street, Philadelphia, 188 .'

"The said headings, and the notes and checks outstanding, the words 'Sudsena Manufacturing Co., H. D. Stimson, Treasurer,' were the only notice had by the plaintiff of the character of the Sudsena Manufacturing Co., and he was not informed that the said company was a corporation of the state of New Jersey, or that it was a corporation at all.

"Subject to the opinion of the court whether on the facts above found the plaintiff is entitled to recover, the jury finds a verdict for the plaintiff and assesses the damages at $222.49."

A motion for judgment for the defendant, non obstante veredicto, having been argued, the court, on June 12, 1890, entered judgment for the defendant, on the special verdict. Thereupon, the plaintiff took this appeal, specifying that the court erred in not entering judgment for the plaintiff for the amount found by the jury, and in entering judgment for the defendant.

Judgment reversed; and judgment is now entered on the verdict in favor of the plaintiff and against the defendant for $222.49, with interest thereon from June 12, 1890.

Mr. Henry Budd, for the appellant:

1. A corporation is limited as to its existence of right, and its power to transact business, to the territorial limits of the sovereignty creating it. This arises from the very nature of sovereignty, which alone can create an artificial person, and is duly limited by its own territorial boundaries: Bank of Augusta v. Earle, 13 Pet. 519; Ohio etc. R. Co. v. Wheeler, 1 Black 286; Tioga R. Co. v. Railroad Co., 20 Wall. 137; Chicago etc. R. Co. v. Whitton, 13 Wall. 270; Home Ins. Co. v. Morse, 20 Wall. 445. This being the case, when a corporation exercises power in the transaction of business outside the territorial limits of the sovereignty creating it, such exercise is a matter of comity only: Paul v. Virginia, 8 Wall. 168; Lafayette Ins. Co. v. French, 18 How. 407. And the state which permits a foreign corporation to exercise power, or carry on business within its borders, may make its permission conditional, and say upon what terms it will recognize the existence of the corporation within its boundaries: Lafayette Ins. Co. v. French, 18 How. 407; Paul v. Virginia, 8 Wall. 168; Ducat v. Chicago, 10 Wall. 410; Balt. etc. R. Co. v. Koontz, 104 U.S. 5.

2. It results from this, that where a condition of doing business has been ordained by a state and has not been complied with by a foreign corporation, such corporation is, as to such state, without power to do business, and is non-existent: In re Comstock, 3 Sawy. 219; Semple v. Bank of Brit. Columb., 5 Sawy. 88. The act of April 22, 1874, P.L. 108, in the most positive terms forbids any foreign corporation to do any business whatever within the state, until it has complied with the act. And it will not do to argue that because the third section of the act imposes a penalty upon agents or employees of the corporation for transacting business for it, therefore the act is to be confined in effect to the imposition of the penalty: AEtna Ins. Co. v. Harvey, 11 Wis. 395. And so held in our own state: Mitchell v. Smith, 4 Dall. 269. The state can enforce a penalty against the agent, because he is within her reach. She cannot punish the corporation itself, because, until it has complied with the law, she does not recognize its existence within the commonwealth, and it is not within her jurisdiction; but she can prevent it from carrying on business, by simply declining to recognize actions nominally brought on the part of the corporation.

3. It follows, also, that as the Sudsena company had not complied with the statute, it was as to this state non-existent, and the defendant, in this case, although assuming to contract as an agent, was an agent who had no principal, or was exercising an authority which he assumed he had, but in reality had not. Wherefore, the plaintiff, having dealt with him and furnished goods to him on his order, can recover from him personally; and this, irrespective of whether the defendant made any specific fraudulent representation as to his authority or not. In either case, he was not legally an authorized agent, and, not being an agent, and having made purchases, he is liable for the purchase money: Smout v. Ilbery, 10 M. & W. 1; Randall v. Trimen, 18 C.B. 786; West London Bank v. Kitson, L.R. 12 Q.B. 157; McConn v. Lady, 10 W.N. 493; Kroeger v. Pitcairn, 101 Pa. 311. It is to be remembered that this is not an attempt to hold a stockholder for a corporate debt. The person sought to be charged is the actual contractor.

Mr. J. Martin Rommel (with him Mr. James M. West), for the appellee:

1. The object of the legislature in enacting statutes such as the act of April 22, 1874, is only "to protect parties dealing with these companies from imposition, and to secure convenient means of obtaining jurisdiction in the local courts:" Morawetz on Corp., § 748. Such being the case, and the legislature having imposed a penalty on all persons violating the said act, it must be construed strictly with this end in view; for, where it has been intended that neglect to comply with statutory requirements shall be followed by personal responsibility, it has been so said in express terms: Act of June 2, 1874, P.L. 271, as to partnerships limited; act of July 18, 1863, P.L. [1864] 1102, as to trading companies; act of March 21, 1836, P.L. 143, as to limited partnerships.

2. It is not denied that in making the contract with the plaintiff the defendant did an act which was unlawful and contrary to the provisions of the act of 1874, "but it does not follow that the unlawfulness of the act was meant by the legislature to avoid a contract made in contravention of it:" Harris v. Runnels 12 How. 79; Wood v. Caldwell, 54 Ind. 270; Clark v. Middleton, 18 Mo. 229. And the failure to file the certificate as required by the act, does not affect the capacity of the corporation to sue and be sued, and the plaintiff in the present case might have proceeded against the Sudsena company: Holmes Co. v. Barnard, (C.P.), 15 W.N. 110; Hagerman v. Empire Slate Co., 97 Pa. 536; Thorne v. Insurance Co., 80 Pa. 28. The plaintiff has therefore suffered no possible injury or loss, by reason of the non-registry of the Sudsena company.

3. Further; the plaintiff had dealt with the company as a corporation, and it does not now lie in his power, in the absence of fraud, to deny its existence: Wood's Fields on Corp., § 349; Dutchess Mfg. v. Davis, 14 Johns 244. The state alone can take advantage of a corporation's want of capacity: Cochran v. Arnold, 58 Pa. 399; Goundie v. Water Co., 7 Pa. 233; Morawetz on Corp., § 748. And it cannot be pretended by the plaintiff that he did not...