Missouri Pac. R. Co. v. W. S. Fox & Sons, Inc., 5--5711

• Decision Date: 25 October 1971
• Docket Number: No. 5--5711,5--5711
• Citation: 472 S.W.2d 726,251 Ark. 247
• Parties: MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. W. S. FOX & SONS, INC., Appellee.
• Court: Arkansas Supreme Court

Page 726

472 S.W.2d 726

251 Ark. 247

MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. W. S. FOX & SONS, INC., Appellee.

No. 5--5711.

Supreme Court of Arkansas.

Oct. 25, 1971.

Rehearing Denied Dec. 6, 1971.

William J. Smith and George Pike, Jr., Little Rock, for appellant.

Coleman, Gantt, Ramsay & Cox, Pine Bluff, for appellee.

JONES, Justice.

The Missouri Pacific Railroad Company filed suit against W. S. Fox & Sons, Inc., in the Pulaski County Circuit Court alleging that Missouri Pacific is a corporation organized and existing under the laws of Missouri; that it is authorized to do business in the State of Arkansas and is doing business in Pulaski County, Arkansas; that on November 24, 1970, some of its railroad cars were destroyed by fire as a result of the negligence of W. S. Fox & Sons, Inc., in Sheridan (Grant County), Arkansas. The complaint also alleged a contractual 'hold harmless agreement' between Missouri Pacific and Fox & Sons, and alleged damage in the amount of $13,000 for which judgment was prayed. Fox & Sons appeared specially and filed a motion to quash service of process upon it in Grant County for the reason that the venue of the action was improperly laid in Pulaski County. The motion to quash was granted by the trial court and the complaint was dismissed without prejudice.

On appeal to this court Missouri Pacific presents the question of law for our determination clearly stated in the point it relies on, as follows:

'A foreign corporation has its residence under Ark.Stats. § 27--611 in the county in which its principal office and place of business in Arkansas is located, just as does a domestic corporation.'

Ark.Stat.Ann. § 27--611 (Repl.1962) provides as follows:

'Any action for damages to personal property by wrongful or negligent act may be brought either in the county where the accident occurred which caused the damage or in the county of the residence of the person who was the owner of the property at the time the cause of action arose.'

The question then, is whether Missouri Pacific can maintain its suit in Pulaski County where its main Arkansas office and principal place of business is located, or must it file its suit in Grant County where the 'accident occurred which caused the damage.' Missouri Pacific seems to recognize that in order to maintain its suit in Pulaski County it must not only be a 'person' within the meaning of the statute, but that it must also have its 'residence' in Pulaski County within the meaning of the statute.

It is true, as argued by Missouri Pacific, that in East Texas Motor Freight Lines, Inc. v. Wood, Judge, 218 Ark. 211, 235 S.W.2d 882, we did hold that within the meaning of the statute 'the word 'person' includes a corporation as well as a natural person.' We also recognized in Texas Motor Freight that a corporation may have a 'residence' within the meaning of the statute. In the Texas Motor Freight case, Arkansas Motor Freight Lines, Inc., a domestic corporation, filed suit in Sebastian County, Arkansas, against East Texas Motor Freight Lines, Inc., a Texas corporation, alleging damages to personal property belonging to Arkansas Motor Freight when one of its trucks was involved in a collision with an East Texas truck in Hot Spring County, Arkansas. The matter reached this court through a petition for prohibition to Sebastian County Circuit Court, Wood, Judge.

As to the 'residence' requirement under the statute, the effect of our decision in the East Texas case was to recognize the domestic corporation as a resident of Sebastian County in Arkansas. The distinguishing features in that case, however, are set out in the first sentence of the stated facts in the opinion as follows:

'The Arkansas Motor Freight Lines, Inc., is an Arkansas corporation with its articles of incorporation filed in the Fort Smith District of Sebastian County, Arkansas, where its principal office and place of business are located.' (Emphasis supplied.)

The full significance of the above language becomes apparent when we examine the constitutional authority and the statutes thereunder for the forming of business corporations in Arkansas. Article 12, § 6, of the Arkansas Constitution provides for the formation of corporations and is as follows:

'Corporations may be formed under general laws, which laws may, from time to time, be altered or repealed. The General Assembly shall have the power to alter, revoke or annul any charter of incorporation now existing and revocable at the adoption of this Constitution, or any that may hereafter be created, whenever, in their opinion, it may be injurious to the citizens of this State, in such manner, however, that no injustice shall be done to the corporators.'

Ark.Stat.Ann. §§ 64--501, 64--502 (Repl.1966) provide as follows:

'One or more natural persons of the age of twenty-one (21) years or more, may act as incorporator(s) of a corporation by executing and filing in accordance with Section 15 (§ 64--117) of this act, articles of incorporation for such corporation.

The articles of incorporation, which shall be duly signed by all of the incorporators, shall set forth:

J. The address (including street and number, if any) of its initial registered office, and the name of its initial registered agent at such address. * * *'

The formation of domestic business corporations is not only authorized under the Business Corporation Act of 1965 (§§ 64--101 to 64--1002), but their corporate structure is closely controlled and regulated. Subsequent sections of the Act, §§ 64--907 and 64--908 even provide for the involuntary dissolution and liquidation of the assets and business of domestic corporations. We conclude, therefore, that a domestic corporation does not acquire its residence in a particular county of this state by simply maintaining an office and its principal place of business there; it acquires a county of residence by setting forth in its articles of incorporation 'the address (including street and number, if any) of its initial registered office, and the name of its initial registered agent at such address,' § 64--502, subd. J, supra.

The State of Arkansas has no such authority and control over foreign corporations as it does over domestic corporations. It only has authority to permit foreign corporations to do business in Arkansas and to regulate the manner in which their business is conducted. In other words, foreign corporations may only become guests of this state under Art. 12, § 11, of the constitution, which provides as follows:

'Foreign corporations may be authorized to do business in this State under such limitations and restrictions as may be prescribed by law. Provided, that no such corporation shall do any business in this State except while it maintains therein one or more known places of business and an authorized agent or agents in the same upon whom process may be served; and, as to contracts made or business done in this State, they shall be subject to the same regulations, limitations and liabilities as like corporations of this State, and shall exercise no other or greater powers, privileges or franchises than may be exercised by like corporations of this State, nor shall they have power to condemn or appropriate private property.'

Foreign corporations are permitted to do business in this state by complying with the provisions of Ark.Stat.Ann. § 64--1201 (Repl.1966) which is as follows:

'Every company or corporation incorporated under the laws of any other State, territory, or country, including foreign railroad and foreign fire and life insurance companies, now or hereafter doing business in this State, shall file in the office of the Secretary of State of this State a copy of its charter or articles of incorporation or association, or a copy of its certificate of incorporation, duly authenticated and certified by the proper authority, together with a statement of its assets and liabilities and the amount of its capital employed in this State, and shall also designate its general office or place of business in this State, and shall name an agent upon whom process may be served. Provided, before authority is granted to any foreign corporation to do business in this State, it must file with the Secretary of State a resolution adopted by its Board of Directors, consenting that service of process upon any agent of such company in this State, or upon the Secretary of State of this State, in any action brought or pending in this State, shall be a valid service upon said Company; and if process is served upon the Secretary of State it shall be his duty to at once send it by mail, addressed to the Company at its principal office.'

So the question before us boils down to whether there is any difference in the 'residence' of a foreign corporation as distinguished from a domestic corporation within the meaning of § 27--611, and we are of the opinion that there is. Missouri Pacific, in the case at bar, argues that a foreign corporation has its residence, under § 27--611, in the county in which its principal office and place of business in Arkansas is located,...