Martin v. Bankers' Trust Co.

• Decision Date: 25 March 1916
• Docket Number: Civil 1460
• Citation: 18 Ariz. 55,156 P. 87
• Parties: JOHN H. MARTIN, Trustee in Bankruptcy of the IMPERIAL COPPER COMPANY, a Corporation, Bankrupt, Appellant, v. BANKERS' TRUST COMPANY, a Corporation, Appellee
• Court: Arizona Supreme Court

156 P. 87

18 Ariz. 55

JOHN H. MARTIN, Trustee in Bankruptcy of the IMPERIAL COPPER COMPANY, a Corporation, Bankrupt, Appellant, v. BANKERS' TRUST COMPANY, a Corporation, Appellee

Civil No. 1460

Supreme Court of Arizona

March 25, 1916

APPEAL from a judgment of the Superior Court of the County of Pima. William F. Cooper, Judge. Affirmed.

Mr Francis M. Hartman and Mr. E. F. Jones, for Appellant.

Messrs Ellinwood & Ross and Mr. Clifton Mathews, for Appellee.

OPINION

FRANKLIN, J.

This is an action to foreclose a deed of trust covering the property of the Imperial Copper Company, an Arizona corporation, given to secure certain special contract mortgage bonds of the copper company together with interest, costs and expense, as provided in the mortgage, and also to foreclose the lien of a delivery in pledge of certain shares of stock of the Arizona Sourthern Railroad Company and the Southern Arizona Smelting Company owned by the copper company, which delivery in pledge was accompanied with a contemporaneous paper, to wit, an instrument of assignment qualifying and explaining the transfer and delivery of the stock, as collateral security for the payment of the bonds. The copper company is the defendant in the suit below, and the amount involved approximates $2,500,000.

The suit was commenced July 3, 1911, and in accordance with the allegations of plaintiff's bill (the plaintiff being the appellee here) and a confession thereof by defendant, a receiver was appointed, who took possession of all of the property described. The evidence is not in the record. From a judgment decreeing a foreclosure and sale, this appeal is prosecuted.

There are ten assignments of error, which are rather more technical than substantial in their nature. By this we mean that the errors alleged for a reversal of the judgment do not go to the merits of the case. Each assignment will be noticed in the progress of the opinion.

Objection is made to the jurisdiction of the court on account of bankruptcy proceedings. There is no suggestion in the record that the bankruptcy court thought there was any equity in the property for the benefit of the general creditors. The bankruptcy court is not seeking to enforce its power and authority, whatever it may be. The state court has never been asked to surrender the property, nor has the bankruptcy court indicated that it would be willing to take possession thereof. It is the appellant who is seeking to enforce an alleged jurisdiction of a court which that court has abstained from seeking to enforce. The court in bankruptcy did, however, recognize the jurisdiction of the superior court by making an order directing its trustee to make an application to intervene in the foreclosure proceeding, which the trustee did and was allowed to become a party in intervention by the superior court. The liens in suit were acquired many years before the proceedings in bankruptcy, and the foreclosure suit was pending when such proceedings were commenced. The liens sought to be foreclosed are nowhere in the acts of Congress relating to bankruptcy denounced, but, on the other hand, preserved and protected. In other words, they do not belong to those classes of liens expressly declared by the bankruptcy act to be dissolved by an adjudication within four months after they attached, nor to cases of fraud, or attempted preference; but come within the rule that the trustee in bankruptcy takes the property of the bankrupt subject to all such valid and existing liens as would be enforceable against it in the hands of the bankrupt itself. The jurisdiction of the state court to enforce the liens was not divested by the subsequent proceedings in bankruptcy. The case of The Tube City Mining & Milling Co. v. Otterson, 16 Ariz. 305, 146 P. 203, is not distinguished by appellant, nor is the reasoning therein criticized. We are satisfied that case is directly in point and should not be overruled. Indeed, the appellee fortifies it with an abundance of additional authority, there seeming to be no conflict of opinion on the question here presented. It is clear the superior court had jurisdiction.

The plaintiff and appellee is a foreign corporation, but has not complied with the statutes of Arizona relating to foreign corporations "which shall carry on any business, enterprise or occupation in this state." It is contended, therefore, that it was disqualified to act as trustee in connection with the mortgage sought to be foreclosed, and cannot, therefore, maintain this action. Ordinarily an intervenor must take the suit as he finds it, and is not in a position to interpose dilatory pleas or plead exceptions going to dismissal of the suit. Kenner's Syndicate v. Holliday, 19 La. 154; Cahn v. Ford, 42 La.Ann. 965, 8 So. 477; Charleston etc. Ry. Co. v. Pope, 122 Ga. 577, 50 S.E. 374; Seaboard Air Line Ry. v. Knickerbocker Trust Co., 125 Ga. 463, 54 S.E. 138; Booth v. State, 131 Ga. 750, 63 S.E. 502. But, waiving the question whether the present intervener is in a different situation and has such power by reason of being a trustee in bankruptcy, and also, if he has such power, whether the question has properly been raised, there is no merit in the contention. There must of necessity be a great diversity and conflict of opinion on this subject, owing to the marked differences in the statutory provisions of the several states.

The court below made the following findings of fact, to wit:

"Plaintiff has not at any time complied with any of the statutes of Arizona applicable to foreign corporations desiring to transact business therein, either by filing, recording or publishing its articles of incorporation, or by the appointment of any resident statutory agent upon whom process might be served.

"Except by filing and prosecuting this action, plaintiff herein has transacted no business within the territory or state of Arizona. The trust deed herein foreclosed was accepted, executed and acknowledged by plaintiff in the city of New York, and thereafter recorded by defendant in Arizona, said trust deed having been executed and acknowledged by defendant within the territory of Arizona. At or before the filing of this action, plaintiff had not accepted any other trusts in relation to property situated in Arizona. Except in connection with the prosecution of this action, it has never had an agent or representative in Arizona, nor has it maintained any office or place of business therein. The certificates of stock described in the supplemental agreement were delivered to and received by plaintiff at its office and place of business in the city of New York, state of New York, in which city and state defendant also maintains an office.

"All acts performed by plaintiff in connection with the mortgage herein sought to be foreclosed were performed at the city of New York. After the filing of this action and at its said office in New York, plaintiff accepted appointment as trustee under three other trust deeds or mortgages of real estate situate in Arizona, in two of which it continues to act as such trustee. It has not transacted any business or done any act in reference to any of said trusts within the state of Arizona."

The Revised Statutes of Arizona of 1901 provide:

"909. (sec. 149.) Any company incorporated under the laws of any other state, territory or foreign country which shall carry on any business, enterprise or occupation in this territory shall, before entering upon, doing or transacting such business, enterprise or occupation in this territory, file a certified and duly authenticated copy of its articles of incorporation or charter and the appointment of an agent as hereinafter specified with the secretary of the territory and the county recorder in each county in this territory in which such business, enterprise or occupation is to be carried on, and shall publish at least six times in some newspaper published in each of the counties in this territory in which such business, enterprise or occupation is to be carried on, a copy of its articles of incorporation, and upon the expiration thereof, file an affidavit in the office of the secretary of the territory stating that such publication has been made according to law. This section, however, shall not apply to insurance corporations."

"911. (Sec. 151.) No corporation such as is mentioned in section 149 of this title shall transact any business whatsoever in this territory until and unless it shall have first filed its articles of incorporation and appointment of an agent as required in the two preceding sections, and every act done by it prior to the filing thereof shall be utterly void."

All of the acts of every foreign corporation, whether it carry on a business in Arizona or elsewhere, are not denounced by the law, but "no corporation such as is mentioned in section 149 of this title shall transact any business whatsoever in this territory (state)" until it has done certain things enumerated in the statute. And not every act done by any foreign corporation prior to doing the things required by the law of Arizona is void, but every act done by a foreign corporation such as is mentioned in paragraph 909, supra, which shall transact any business whatsoever in this territory (state) is the wording of the law. The corporations referred to are plainly restricted to "any company incorporated under the laws of any other state, territory or foreign country which shall carry on any business, enterprise or occupation in this territory (state)."

In order to invoke the provisions of said paragraph 911, it is clear that it must first be shown that the corporation sought to be disqualified is one carrying on a business, enterprise or occupation in this state. In the face of the finding of the court that ...