National Mercantile Co. v. Mattson

• Decision Date: 02 September 1914
• Docket Number: 2642
• Citation: 45 Utah 155,143 P. 223
• Court: Utah Supreme Court
• Parties: NATIONAL MERCANTILE CO., Limited, v. MATTSON, Secretary of State

143 P. 223

45 Utah 155

NATIONAL MERCANTILE CO., Limited, v. MATTSON, Secretary of State

No. 2642

Supreme Court of Utah

September 2, 1914

Appeal from District Court, Third District; Hon. Geo. G. Armstrong Judge.

Mandamus by the National Mercantile Company, Limited, against David Mattson, Secretary of the State of Utah.

Judgment for defendant. Plaintiff appeals.

AFFIRMED.

D. O Willey for appellant.

A. R Barnes, Attorney General, E. V. Higgins and G. A. Iverson for respondent.

FRICK, J. McCARTY, C. J., and STRAUP, J., concur.

OPINION

FRICK, J.

The National Mercantile Company, Limited, a corporation, organized under the laws of the province of British Columbia, with its principal office and place of business in the City of Vancouver, in the province aforesaid, hereinafter styled appellant, made application to the District Court of Salt Lake County for a writ of mandate requiring David Mattson, Secretary of the State of Utah, hereinafter called respondent, to issue to appellant a certificate in the usual form, authorizing it to carry on business within the State of Utah. Appellant, after alleging the foregoing facts respecting its organization and place of business, in substance alleged that it had made application to the respondent, as Secretary of the State of Utah, for a certificate in the usual form authorizing it to do business in this state; that it had complied with the provisions of our Constitution in tendering to respondent a proper resolution duly passed by its governing body, whereby it adopted the provisions of the Constitution of this state relating to foreign corporations; that it had also tendered to him and offered to file a copy of its articles of association and by-laws, in which articles of association the objects and purposes for which it was created, and the business it is authorized to conduct and carry on, are duly set forth, and that respondent had refused and still refuses to issue to appellant a certificate authorizing it to do business in this state.

The objects and purposes which appellant is authorized to carry on are contained in 24 separate and distinct subdivisions of its charter lettered from "a" to "x" inclusive. In subdivision "a," after setting forth a number of specific things, this general clause is added:

"And generally to engage in any business or transaction which may seem to the company, directly or indirectly, conducive to the interests or conveniences of the company's members or ticket holders, or their friends, or any section thereof."

Subdivisions "t," "u," "v," "w," and "x" are as follows:

"(t) To make and enter into any form of contract with members of the company and others providing for payments to be made to the company and from time to time or for certain specified times by such member, members or persons and in such amounts as may be agreed upon and in consideration therefor, to give to such member, members or persons, certain rights to loan, or other rights and privileges, with such provisions as to repayments of loans, interest, security, rights of redemption, repurchase and cancellation, and such other terms, conditions and provisions as may be agreed upon.

"(u) To carry on a general loan, mortgage and investment business with the members of the company and others in all its branches.

"(v) To advance or lend the capital or other moneys of the company for the time being on the security of freehold, leaseholds, bills of exchange, promissory notes, bonds, agreements, goods, chattels or other property, real and personal, and in particular under the terms of the loan and investment contracts of the company.

"(w) Out of the moneys derived from the sale of investment contract or other moneys, to create special reserve or loan funds for the purpose of making loans and settling with contract holders, or for any other purpose of the company.

"(x) To sell or dispose of loan or investment contracts of various classes and descriptions, providing for sharing of profits or otherwise."

The shares of the capital stock of the company, or "the share capital of the company," as it is stated in the articles presented for filing, is $ 10,000, divided into 100 shares of $ 100 each. Of the foregoing shares there were subscribed as follows: By George Edward Stillings, promoter, 25 shares; by Roy Arthur Campbell, bookkeeper, 1 share; by John R. Vernon, 1 share; by Chester Frank Campbell, 1 share; by Edith Gertrude Stillings, 1 share. It is provided in the by-laws that every member is entitled to a certificate for each share registered in his name, and each share is entitled to one vote.

The respondent, through the Attorney General of the State, appeared and filed a general demurrer to the application. Upon a hearing the District Court sustained the demurrer and entered judgment dismissing the application, from which this appeal is prosecuted.

The respondent contends that, under the certified copy of the charter tendered for filing, the appellant is not entitled to a certificate authorizing it to do business in this state, unless and until it complies with section 1 of chapter 129, Laws Utah 1911, 253, which provides:

"No building and loan association heretofore or hereafter organized under the laws of any other state, or territory or foreign country, for the purpose of engaging in the building and loan business shall be allowed to do business or sell their stock or certificates in the State of Utah without first having deposited with the State Treasurer or responsible trust companies within or without the state designated by him, the sum of fifty thousand dollars ($ 50,000), either in cash or bonds of the United States or bonds of any county or municipal corporation of the State of Utah, or in first mortgage upon real estate located within this state, as a guarantee fund for the protection and indemnity of the residents of the State of Utah, with whom such association shall do business; the fund so deposited to be paid by the custodian thereof to the residents of Utah when proof of claim of final judgment has been filed with the custodian of such fund against such foreign association."

It is further contended by respondent that, before appellant is entitled to the certificate, it must also comply with the provisions of Comp. Laws 1907, section 397, by filing the statement therein required. That section reads as follows:

"It shall be unlawful for any building and loan association not organized under the laws of this state, to transact business herein unless the company shall have obtained a certificate of authority from the Secretary of State, and shall have filed with the Secretary of State a certified copy of its articles of incorporation or charter and by-laws; together with a statement subscribed and sworn to by the manager or by an officer of the company, showing: (1) The amount of authorized capital, and the par value of each share; (2) the number of shares sold during the year; (3) the number of shares cancelled and withdrawn during the preceding year; (4) a statement of receipts and disbursements during the preceding year; (5) salaries paid each of its officers; (6) a statement of its assets and liabilities at the end of the year, and the nature thereof in general terms; (7) any other fact which the Secretary of State may require. Upon receipt of such statement, the Secretary of State, if he believes that the association is properly managed, that its financial condition is satisfactory, and that its business is conducted upon a safe and reliable plan, shall issue a certificate of authority to such corporation."

It is further provided in chapter 129, supra, section 7, as follows:

"The name 'foreign building and loan associations,' as used in this act, shall include all foreign corporations, societies or organizations or associations doing a saving and loan or investment business on the building society plan, whether mutual or otherwise, and whether issuing certificates of stock which nature at a fixed time in advance or not."

Counsel for appellant vigorously contends, however, that the provisions set forth above do not apply to appellant, for the reason that in its charter it is not authorized to transact what is usually denominated a building and loan business. In support of his contention, he has cited some cases in which the courts have undertaken to define what constitutes a building and loan business. It is, however, not necessary for us to refer to the cases, since our statute (chapter 129, section 7, supra) provides us with a definition, and hence the only question is whether appellant in its charter is authorized to transact the business there defined. Whether a corporation is authorized to transact and carry on a particular business must be determined from an inspection of the statutes under which it is created and the powers conferred upon it by its charter.

Corporations have and may exercise only such powers as are expressly or by necessary implication granted, and such as are necessary to effectuate those powers which are granted as aforesaid. 10 Cyc. 1096; Gitzhoffen v. Hospital Ass'n, 32 Utah 46; 88 P. 691; 8 L. R. A. (N. S.) 161.

No doubt (in determining whether a corporation is transcending its charter powers or not) both the statute and the charter should be given a fair and reasonably liberal construction. We think the respondent is entitled to place a liberal construction upon the charter in question in determining whether the business that may be transacted under it comes within any of the provisions of our statute.

Applying such a construction to the charter proposed to be filed, the question to be answered is: Is the respondent justified in refusing appellant a certificate of authority to carry on the...