Marshall-Wells Co. v. Kramlich

• Decision Date: 29 May 1928
• Docket Number: 4799
• Citation: 46 Idaho 355,267 P. 611
• Parties: MARSHALL-WELLS COMPANY, a Corporation, Respondent, v. S.E. KRAMLICH, JOHN D. ISAAK and J. P. MEHLHAFF, Appellants
• Court: Idaho Supreme Court

267 P. 611

46 Idaho 355

MARSHALL-WELLS COMPANY, a Corporation, Respondent, v. S.E. KRAMLICH, JOHN D. ISAAK and J. P. MEHLHAFF, Appellants

No. 4799

Supreme Court of Idaho

May 29, 1928

CORPORATIONS - CORPORATION DE FACTO - ESTOPPEL TO DENY-SUFFICIENCY OF COMPLAINT-LIBERAL CONSTRUCTION AFTER JUDGMENT-APPLICATION FOR CONTINUANCE - ADMISSION OF SECONDARY EVIDENCE - FOREIGN CORPORATIONS - RIGHT TO SUE - ACTION ON GUARANTY-SECURITY NOT RESTRICTED.

1. Complaint setting out guaranty by defendants of the debts of the L. H. Co., Limited, setting up facts to show such company to be a corporation, and that defendants represented to plaintiff that the company was incorporated intending that plaintiff should rely thereon, which plaintiff did, and that defendants were estopped to deny that the company was a corporation, held to state but a single cause of action, namely, on the guaranty, and not to seek to recover for defendants' deceit, so that motion to strike one of the inconsistent causes of action was properly denied.

2. An association is not even a "corporation de facto" where it has not filed its articles of incorporation, as required by law, or attempted to do so.

3. Persons guaranteeing debts of body represented to be a corporation, and assuming and exercising corporate functions may be estopped to deny its incorporation, though it is not even a corporation de facto.

4. Where the person setting up estoppel was misled or deceived by the active actions, declarations and conduct of the other party, even though about a matter which the law requires to be of public record, the one to whom such conduct is imputed will be estopped from asserting the contrary to his previous declarations, actions and conduct.

5. Defect of complaint, in action by corporation on written guaranty, alleged to have been given to it, in not specifically alleging tat its name had been changed since the making of the contract, and that the contract was made with it under its former name, not being pointed out by demurrer or during the trial, was cured by the judgment, the facts having been proved.

6. The granting of continuance is largely in the discretion of the trial court.

7. That witness, for whose absence continuance is sought, agreed to testify is not the necessary showing of diligence to procure his attendance.

8. The questions of foundation for, and authenticity of, secondary evidence are for the trial court in the first instance.

9. Except in case of abuse of discretion, order admitting or rejecting secondary evidence will not be reversed.

10. Admission of secondary evidence, copies of letters, the matters contained therein having little probative value to the real dispute, but the letters being simply explanatory of the understanding the parties had of their transactions throughout the years that the account between them existed held not reversible error.

11. Mere change of name of corporation to which guaranty has been given is not such a change of obligee as to release the guarantors.

12. A noncomplying foreign corporation, even if doing business in the state, is not barred from suing in its courts on a guaranty of accounts arising wholly from interstate commerce transactions.

13. In case of absolute guaranty, the creditor is not obliged to first resort to any security received.

14. It is enough that the instructions, when considered as a whole as the jury are told that they should be, state all the applicable law.

15. The statute of limitations not having run, there was no error of which defendant could complain in not instructing thereon.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Clinton H. Hartson, Judge.

Action on written guaranty of debt of another. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

Martin & Martin, for Appellants.

The complaint does not state facts sufficient to constitute a cause of action. (C. S., sec. 4701; Harrill v. Davis, 168 F. 187, 22 L. R. A., N. S., 1153; In re Ballard, 279 F. 574, 22 A. L. R. 388, note 6; 1 Fletcher on Corporations, p. 608, sec. 298; 14 C. J., sec. 230, p. 222.)

Where plaintiff's complaint contains two causes of action which are conflicting and the defendants make a timely motion to require the plaintiff to elect upon which of said two causes of action it would go to trial and that the other be stricken, the denial of such motion by the court constitutes error for which a new trial will be granted. (Harshbarger v. Eby, 28 Idaho 753, Ann. Cas. 1917C, 753, 156 P. 619; Jones v. City of Caldwell, 20 Idaho 5, 116 P. 110, 48 L. R. A., N. S., 119; Murphy v. Russell & Co., 8 Idaho 133, 67 P. 421; 31 Cyc., p. 651, sec. E.)

Where defendants before the opening of the trial file a motion for a continuance upon the grounds of an absent witness, and the affidavits in regard to the witness' testimony show that the evidence to be secured is material to the defendants' defense and is not cumulative, and due diligence is shown under the circumstances, the denial of such motion by the court constitutes error for which a new trial will be granted. (Storer v. Heitfeld, 17 Idaho 113, 105 P. 55.)

Individuals cannot constitute themselves a corporation de facto by statements that they are a corporation. In this state there can be no corporation de facto until the persons attempting to form a corporation have at least filed articles of incorporation in the office of the county recorder of the county where the business is located. (C. S., sec. 4701; Fletcher on Corporations, p. 608, sec. 298; 14 C. J., sec. 230, p. 222, bottom 2d col.; Harrill v. Davis, supra; Ogden Packing & Provision Co. v. Wyatt, 59 Utah 481, 22 A. L. R. 359, 204 P. 978; Rice v. Sanger Bros., 27 Ariz. 15, 229 P. 397; In re Ballard, supra.)

Where it appears that the representations which it is claimed constitute an estoppel were made about a matter which the law requires to be made of record in the office of the recorder of the county where the persons are doing business, then such record would constitute an available means of knowledge to the persons to whom the representations were made and would prevent an estoppel. (Cahoon v. Seger, 31 Idaho 101, 168 P. 441; Bryan v. Ramirez, 8 Cal. 461; Flege v. Garvey, 47 Cal. 371; Tonge v. Item Pub. Co., 244 Pa. 417, 91 A. 229.)

All the facts necessary to constitute an estoppel must be strictly pleaded and proven. (Seat v. Quarles, 31 Idaho 212, 169 P. 1167; Hess v. Hess, 41 Idaho 359, 239 P. 956; Leland v. Isenbeck, 1 Idaho 469; Neitzel v. Lawrence, 40 Idaho 26, 231 P. 423.)

The refusing of testimony properly offered which is material to defendants' defense and might have changed the result had it been received by the court is error for which a new trial will be granted. (4 C. J., p. 1003, sec. 2986, note 61; Hirshfield v. Dana, 193 Cal. 142, 223 P. 451; Albertini v. Linden, 43 Mont. 126, 115 P. 31; Forrest v. Portland Ry. etc. Co., 64 Ore. 240, 129 P. 1048.)

The giving of an instruction, though correctly stating the law, which is not applicable to any issue in the case is misleading to the jury and error. (Gwin v. Gwin, 5 Idaho 271, 48 P. 295; Smith v. Graham, 30 Idaho 132, 164 P. 354; Henry v. Jones, 1 Idaho 48; Lloyd v. Anderson, 39 Idaho 314, 227 P. 32; 14 R. C. L., p. 786, sec. 51, p. 782, sec. 49, p. 773, sec. 42; Slaughter v. Fowler, 44 Cal. 195; Portneuf-Marsh Valley Irr. Co. v. Portneuf Irr. Co., 19 Idaho 483, 114 P. 19; Shellenberger v. Nourse, 20 Idaho 323, 118 P. 508.)

Where the instructions given by the court are conflicting and tend to mislead or confuse the jury a new trial should be granted. (Smith v. City of Rexburg, 24 Idaho 176, Ann. Cas. 1915B, 276; Portneuf-Marsh etc. Co. v. Portneuf Irr. Co., supra; 14 R. C. L. 775, sec. 44; 20 R. C. L. 267, sec. 51.)

The refusal of the court to give an instruction requested by defendants and which correctly states the law and is applicable to an issue in the case is error for which a new trial will be granted. (4 C. J., p. 1049, sec. 3032 (b), notes 85, 86; Lloyd v. Anderson, supra; James v. Speer, 69 Mont. 100, 220 P. 535; Armstrong v. Larsen, 55 Utah 347, 186 P. 97.)

Where one of the defenses tendered by a defendant is that the plaintiff's cause of action is barred by the statutes of limitation and such action could be barred under any view of the evidence, it is error for the court to refuse to give an instruction upon statutes of limitation. (Smith v. Washburn-Wilson Seed Co., 40 Idaho 191, 232 P. 574.)

Paul Pizey and Delana & Delana, for Respondent.

Where directors and officers of a pretended corporation represent that they are a corporation to third parties, and such third parties deal with such persons in reliance upon such representations, such directors and officers are estopped to deny the falsity of the representations, or deny corporate existence. (Marshall on Corporations, p. 138; note, 33 Am. St. 184; Corey v. Morrill, 61 Vt. 598, 17 A. 840; Hanson v. Martin, 192 Wis. 40, 211 N.W. 790; Torras v. Raburn, 108 Ga. 345, 33 S.E. 989; Attorney General v. Simonton, 78 N.C. 57; Beal v. Bass, 86 Me. 325, 29 A. 1088; Tama Water Power Co. v. Hopkins, 79 Iowa 653, 44 N.W. 797; Pattison v. Gulf Bag Co., 116 La. 963, 41 So. 224; Gardiner v. Minneapolis, 73 Minn. 517, 76 N.W. 282; Allen v. Rhodes, 230 F. 321, 144 C. C. A. 463; Dows v. Naper, 91 Ill. 44; Thompson v. Reno Savings Bank, 19 Nev. 103, 3 Am. St. 797, 7 P. 68.)

Such rule of estoppel operates against stockholders and members who make such representations. (Note, 33 Am. St. 184; Corey v. Morrill, supra; Whitney v. Wyman, 101 U.S. 392 25 L.Ed. 1050; In re Western Bank & Trust Co., 163 F. 713; Tulane Improvement Co. v. Chapman & Co., 129 La. 562, 56 So. 509; Casey v. Galli, 94 U.S. 673, 24...