National Fertilizer Co. v. Fall River Five Cents Sav. Bank

• Citation: 82 N.E. 671,196 Mass. 458
• Parties: NATIONAL FERTILIZER CO. v. FALL RIVER FIVE CENTS SAVINGS BANK et al.
• Decision Date: 26 November 1907
• Court: United States State Supreme Judicial Court of Massachusetts

196 Mass. 458

82 N.E. 671

NATIONAL FERTILIZER CO. v. FALL RIVER FIVE CENTS SAVINGS BANK et al.

Supreme Judicial Court of Massachusetts, Hampshire.

November 26, 1907

COUNSEL

John B. O'Donnell and John C. Hammond, for plaintiff.

Jackson Slade & Burden and Irwin & Hardy, for defendants.

OPINION

RUGG J.

The plaintiff is a foreign corporation. Prior to the filing of the bill of complaint in this case, which was July 30, 1906 it had several places of business in this commonwealth. The defendant pleaded in abatement that the plaintiff was a foreign corporation within the meaning of St. 1903, p. 443 c. 437, § 56; that it had a usual place of business in this state, and had not complied with sections 58 and 60 (pages 443, 444) of said chapter. On the 12th day of October, 1906, the plaintiff corporation did all acts required by the laws of this commonwealth of foreign corporations as prerequisites to the transaction of business, but had prior to that day taken no steps to comply with our laws in these respects. The single question presented is whether on this plea judgment must be entered for defendant. The laws regulating the doing of business by foreign commercial corporations in this state have contained the provision that failure to comply with their terms should not affect the validity of contracts made by or with such corporations. St. 1884, p. 359, c. 330, § 3; St. 1895, p. 166, c. 157; St. 1900, p. 209, c. 280; Rev. Laws c. 126,§ 6; St. 1903, p. 444, c. 437, § 60. Under these statutes it has been held that contracts made before compliance with them by the corporation were valid, and actions upon such contracts could be maintained in our courts, the statutes being treated as merely directory. Rogers Co. v. Simmons, 155 Mass. 259, 29 N.E. 580; Kelley v. Rice-Blake Lumber Co., 167 Mass. 28, 44 N.E. 1090; Enterprise Brewing Co. v. Grime, 173 Mass. 252, 53 N.E. 855. See, also, Chase's Patent Elevator Co. v. Boston Towboat Co., 152 Mass. 428, 28 N.E. 300, 9 L. R. A. 339. In section 60 of the statute last cited (St. 1903, p. 444, c. 437) for the first time appear the words, 'No action shall be maintained or recovery had in any of the courts of this commonwealth by any such foreign corporation so long as it fails to comply with the requirements of said sections,' that is, those respecting the appointment of an agent and the filing of certain papers with the commissioner of corporations. It is to be noted that this language of prohibition does not attempt to indicate all the steps in a litigation, nor does it undertake to describe by a general phrase the course of an action in the courts from beginning to end. It does refer to two steps only, namely, the maintenance and the recovery. It must be assumed that both these words were intended to be given effect, and they must be construed, if reasonably possible, with reference to the shade of meaning, which each expresses. While it would be possible under certain circumstances to construe the phrase 'maintenance of an action' as including all steps from the making of the writ to the recovery of final judgment, and while there are many authorities giving the word this meaning in certain connections, nevertheless in this statute the legislature used 'maintenance' in contradistinction to 'recovery.' This being so, it would not be carrying into effect the legislative intent to give it a broader meaning and include within its scope the institution of an action. Using the words in their ordinary significance 'maintain' carries a different meaning from 'institute' or 'begin,' and implies that an action must be begun before it can be maintained. To give the words this construction harmonizes with the general intent of the statute, which is not to prohibit the doing of business by foreign corporations or avoid their contracts made before complying with the laws, but merely to suspend the privileges of our courts during the period of non-compliance. It is a temporary disability, to remove which lies within the power of the corporation at any time. It follows from its preservation of the validity of contracts of foreign corporations, notwithstanding their noncompliance with the law, that the purpose of the statute is not to hamper the doing of business within the range of their corporate powers, nor to put into the hands of those, with whom they may contract in reliance upon the contractual protection given by the statute, a weapon of substantial defense, which might in conceivable cases amount to immunity from liability; but its aim is rather to bring foreign corporations under the supervision and regulation of state officials, and to give to the public the same information respecting their financial standing, their character and management, which is required of domestic corporations and also to render them amenable to ordinary legal process. Hunnewell v. Duxbury, 154 Mass. 286, 28 N.E. 267, 13 L. R. A. 733; Steel v. Webster, 188 Mass. 478, 74 N.E. 686; Heard v. Pictorial Press, 182 Mass. 530, 65 N.E. 901. The ample penalties against the officers and the corporation for failure to comply with our laws (St. 1903, pp. 444, 447, 448, c. 437, §§ 60, 68, 70) and the power in equity to absolutely restrain such delinquent corporation from exercising any of its franchises or doing any business (St. 1906, p. 346, c 372), when read in connection with the provision that the contracts it makes shall not be invalid, evince a legislative intent to directly punish offenses for violation of the statute, and not to impose upon the court any duty of wresting words from their ordinary sense in order to impose indirectly an additional penalty. The sovereignty is thus authorized to enforce the statute by appropriate proceedings, the corporation and its officers may each be punished, and the benefit of the courts is suspended. The statute does not say that an action shall not be begun, nor that the courts shall not receive or entertain it nor prohibit its maintenance forever but only until the corporation has complied with the law. The statute constitutes an inhibition upon remedies, which may be avoided at any time. Proper allowance of terms upon a plea in abatement will protect the real rights of the parties without adding the harsh penalty of entering final judgment upon a matter which does not go to the merits of the case.

It was intimated in Friedenwald Co. v. Warren, 194 Mass. ----, 81 N.E. 207, that noncompliance with the statute could only be taken advantage of by a plea in abatement. This is almost tantamount to saying that such noncompliance is a mere temporary incapacity, capable of removal at any stage of the proceedings.

While the question now before us was expressly left undecided in Friedenwald Co. v. Warren, 194 Mass. ----, 81 N.E 207, it was there said that the words we are now construing imply 'a temporary disability merely, like that of alien enemy at common law or any other personal disability.' But the result of that case is conclusive against the claim of the defendant. If the effect of the statute is to...