Long Beach Canning Co. v. Clark

• Decision Date: 11 January 1926
• Docket Number: 25083
• Court: Mississippi Supreme Court
• Parties: LONG BEACH CANNING CO. v. CLARK et al. [*]

106 So. 646

141 Miss. 177

LONG BEACH CANNING CO. v. CLARK et al. ^[*]

No. 25083

Supreme Court of Mississippi

January 11, 1926

Division B

(Division B.).

1 CORPORATIONS. Foreign corporation not required to file copy of charter to sell property in state; sale by foreign corporation of specific property in state held not "doing business" therein within meaning of statute requiring filing of charter.

Section 935, Code of 1906 (Hemingway's Code, section 4111) requiring foreign corporations doing business in Mississippi to file a copy of their charter of incorporation in the office of the secretary of state, does not prevent a foreign corporation which owns property in Mississippi from selling such property without filing a copy of its charter of incorporation. The mere sale of specific property is not doing business in the state within the meaning of said section. Harleston v. West Louisiana Bank, 129 Miss. 111, 91 So. 423, cited.

2. CORPORATIONS. That foreign corporation did business in state without filing charter held not to prevent it from selling property in state to liquidate its affairs; statute prohibiting foreign corporation from transacting business in state unless copy of charter is filed held only to deny right to enforce rights growing out of business transacted contrary to statute.

The fact that a foreign corporation did business in the state without filing its charter as required by section 935, Code of 1906 (Hemingway's Code, section 4111), does not prevent it, on discontinuing the doing of business in the state, from selling its property for the purpose of liquidating its affairs. The statute does not forfeit property used in business for a violation of the statute, but denies access to its courts to enforce rights growing out of the doing of business in violation of the statute.

HON. D M. GRAHAM, Judge.

APPEAL from circuit court of Harrison county, HON. D. M. GRAHAM, Judge.

Action by the Long Beach Canning Company against W. O. Clark and others. From a judgment dismissing the cause, plaintiff appeals. Reversed and remanded.

Reversed and remanded.

William Estopinal, for appellant.

It will be observed that the transaction herein involved did not arise from the regular order of transacting business by this appellant, that this appellant had discontinued doing business altogether for a considerable period of time prior to the date of its attempt to sell and dispose of its assets. This transaction did not arise, as between these parties, from doing a business on the part of the appellant but it arose solely and entirely from the fact that the appellant had already gone out of business, was not attempting to sell any of its products that had been manufacured by it in the course of its business but arose entirely out of the liquidation and the closing out of the business of the appellant.

The statutes requiring a foreign corporation to file its charter with the secretary of state state that it is done in the interest of public, policy and of good morals and unless an act of a foreign corporation violates the principle of this statute by any act performed by it, then such act does not violate, the statute and the foreign corporation should not be punished as provided for in the said statute for such act. It cannot by the longest stretch of imagination be construed as a violation of the public policy of this state nor as against, good morals, for these appellants to have offered for sale their assets in the manner and for the purpose of getting out of business. That being true, the appellees should be required to carry out their part of the agreement and to pay the balance of the purchase price on the assets of the said appellants.

What constitutes doing business in a state has been construed by many courts of many states and of the United States many times, but in our entire research of the authorities we have been unable to find any case directly in point. The cases nearest in point, however, are: Bartling Tire Co. v. Coxe, 288 F. 314 (Ala.) ; Smith & Fay v. Montgomery, Ward & Co., 96 So. 231. In Alpena Portland Cement Co. v. Jenkins & Reynolds Co., 91 N.E. 480, it was held that a single transaction within the state by a foreign corporation does not constitute doing business within the meaning of the Foreign Corporation Act, and that doing business or transacting business by a foreign corporation does not include acts nor constitute any part of its ordinary business. See, also, Plew v. Board, 113 N.E. 603; Ichenhauser Co. v. Landrums, Assignee, 153 Ky. 316, 155 S.W. 738; George v. Oscar Smith & Sons Co., 250 F. 41 (Miss.); Broadway Bond St. & Co. v. Fidelity Printing Co., 170 S.W. 394; German-American Bank v. Schmidt, 208 S.W. 878 (Mo.); Hurst Automatic Switch & Signal Co. v. Trust Co., 216 S.W. 954.

In the lastnamed case it was held that the statutes relating to foreign corporations in the state of Missouri do not purport to deny existence in Missouri to a foreign corporation for all lawful purposes, but only denies it the privilege of prosecuting the business for which it is incorporated without compliance within the laws of the state requiring qualification. It was held that such a corporation, without having qualified, may acquire a title to real estate and sue for an alleged wrong in connection therewith without first taking out a license. This case is very much in point with the case at bar since the Missouri statute prescribing the method for foreign corporations to qualify in that state is practically identical with our Mississippi statute in that regard, and since in that case the matter involved, affected the rights held by the foreign corporation in property owned by it in the state of Missouri. See, also, Lane v. Equitable Trust Co. of New York, 262 F. 918; Parker v. Ware, 230 S.W. 75; Shields v. Chapman, 240 S.W. 505; Toledo Railway & Light Co. v. Hill, 244 U.S. 49, 37 S.Ct. 591.

When the appellant sold out his property, had been out of business for some time, was getting ready to sell all he had in the state and discontinue business altogether, that transaction is not within the meaning or intent of our statute as it is not a transaction arising out of the carrying on of the business for which the corporation was created. We submit, therefore, that the court clearly erred in sustaining the demurrer and dismissing the cause of action.

J. L. Taylor, for appellees.

Under section 4111, Hemingway's Code, a foreign corporation is required to file a copy of its charter, and pay a fee therefor, in order to have a place of business in the state.

The plaintiff was not engaged in interstate commerce in the matter out of which the suit grew, but was conducting its business in the state and cannot enforce its suit in the courts of this state. Quartet Music Co. v. Haygood, 108 Miss. 755, 67 So. 211. The above case seems to be absolutely decisive of the case at bar, and we submit that the trial court rendered the correct judgment and the case should be affirmed.

OPINION

ETHRIDGE, J.

The Long Beach Canning Company, a corporation organized under the laws of the state of Louisiana, with a factory and place of business located in the city of Gulfport, Miss., brought suit against the appellees, alleging: That plaintiff being the owner of a certain canning factory, boats, equipment, etc located in the city of Gulfport, Miss., did sell said plant and equipment at public auction in the city of Gulfport on February 29, 1924. That the sale was conducted by licensed auctioneers and was advertised for three weeks prior to said sale, and that it was stipulated in the advertisement that ten per cent of the purchase price should be deposited with the auctioneers immediately after the sale for the purpose of binding the purchase, and that the remainder of said purchase price would be paid upon the consummation of the sale and the delivery of a deed of conveyance for the property from the sellers to the buyers. That at the sale sundry bids were made, and the property was sold to the defendants, the appellees, at and for the sum of eight thousand six hundred and fifty dollars. That the defendants and each of them stated that W. O. Clark was acting for and on behalf of each of the defendants, and that during the sale the said three defendants consulted with each other and agreed among themselves as to the price that they were bidding, and, while the actual bidding was being done by the said W. O. Clark, he was in fact acting for himself and the other defendants, and that they became joint purchasers of the assets of the Long Beach Canning Company. That immediately after the defendants were declared to be the purchasers of the said assets, and in compliance with the terms of the sale the defendants deposited with the auctioneers a sum of money equal to two-thirds of ten per cent., stating at the time that it was for the benefit of the defendants. That immediately after the said sale the secretary and treasurer of said Long Beach Canning Company met the defendants at the office of the company for...