Nelms v. Edinburgh-American Land Mortg. Co.

• Decision Date: 08 April 1891
• Citation: 9 So. 141,92 Ala. 157
• Parties: NELMS v. EDINBURGH-AMERICAN LAND MORTG. CO.
• Court: Alabama Supreme Court

9 So. 141

92 Ala. 157

NELMS v. EDINBURGH-AMERICAN LAND MORTG. CO.

Supreme Court of Alabama

April 8, 1891

Appeal from chancery court, Perry county; W. H. TAYLOE, Chancellor.

J. C Richardson, for appellant.

COLEMAN J.

The bill was filed by appellee, a foreign corporation, to foreclose a mortgage given to secure a loan of money. Appellant demurred to the bill, and the grounds of demurrer are (1) that the bill fails to sufficiently aver facts to show that the "agent designated" had authority to exercise or perform any of the corporate functions or powers of the corporation; and (2) for that the bill fails to show that the corporation, by its charter, was authorized to engage in the business of loaning money, and securing the same by taking mortgages on the lands in Alabama. There are several assignments of grounds for demurrer, intended to raise, in different ways, the same principle. Appellant's contention is that, under the influence of the principle declared in Christian v. Mortgage Co., 89 Ala. 198 7 South. Rep. 427, a foreign corporation is required to aver in the pleadings every fact essential to show it had the power and right to make the contract sought to be enforced and to maintain the bill. A corporation has been declared to be a mere legal entity, without bodily existence or actual residence. The act of February 13, 1879, now section 2642 of the Code of 1886, declared the residence of corporations to be in any county where they do business, at least for the purposes of suit. Home Protection v. Richards, 74 Ala. 470. In creating domestic corporations, the state through the legislature, had full authority to subject it to such restrictions and liabilities, within constitutional bounds, as the public interest required. Foreign corporations are essentially non-residents. Suits against non-residents are sometimes attended with inconvenience, difficulties, and expense, and judgments rendered are not always absolute. Service by publication only, may be sufficient to authorize judgment and condemnation, when the proceedings are in rem and for all purposes within the jurisdiction of the state; but such judgments rendered in cases where the court did not have jurisdiction of the person are not conclusive as personal judgments beyond the jurisdiction of the state. Corporations are not citizens, within the meaning of the constitution of the United States, which accorded to them the privileges and immunities of citizens in the several states; and it is accepted law that the several states have the power and authority to prescribe the terms, places, and conditions upon which foreign corporations may do business within their respective limits, and to provide for the security of their own citizens in transactions with foreign corporations. Paul v. Virginia, 8 Wall. 168. Article 14, § 4, of the constitution, which declares that "no foreign corporation shall do any business in this state without having at least one known place of business and an authorized agent or agents therein," was intended to require foreign corporations to have a "legal and local existence" in the state, which should be "officially exhibited" and acknowledged as such, by having a "known place of business and an authorized agent or agents therein." The provision of the constitution was not intended to require of the foreign corporation that no business should be transacted with it, except only at the one known place of business, and through such authorized agent therein; for, after providing that it should have one known place of business and an agent therein, the same section further provides "that such corporation may be sued in any county where it does business, by service of process upon an agent anywhere in this state." Service of process is not limited to the agent "therein" designated, at the known place of business, but may be upon an agent anywhere in the state; neither did the law intend to require that every "company or corporation not organized under the laws of Alabama" should have a branch enterprise of its business at the "one known designated place.'

As to what is "a known place of business," within the meaning of the constitution, is not raised by the demurrer, and will not be considered, further than to refer to the case of Mortgage Security Co. v. Ingram, ante, 140, delivered at the same time with this opinion, where this question has been considered and adjudicated. When the known place of business is designated, the corporation has a "legal and local existence" in the state, and, for the purposes of suits, is placed upon the same footing as domestic corporations. The act of the legislature of February, 1886-87, p. 102, requires every foreign corporation "to officially designate one known place of business, and an authorized agent or agents thereat, to be filed in the office of the secretary of state at Montgomery." Until this act became a law, there was no legally declared rule by which the "known place of business" and "authorized agent" could be ascertained. When the statute has been complied with by the foreign corporation in this respect, both place and agent may be known, and any person wishing to sue in any county in the state may know where to have process and service personally executed upon the foreign corporation, and a judgment recovered upon such service will be as valid for all purposes as if against a resident citizen or domestic corporation. An "agent," within the meaning of the constitution, is not one who has authority to bind the corporation by contract generally. The general rule that he who deals with an agent does so at his peril continues in force and applies, and the parties having business transactions with the foreign corporation through an agent, are bound to know the extent of the agent's authority. If such agent, by virtue of his appointment under the statute, can bind the corporation at all, then his authority is general and absolute for all purposes. There is no limitation upon his power in the constitution and statute. We hold, therefore, that the provision of the constitution, requiring foreign corporations to have a known place of business and an authorized agent, has no scope or purpose, other than to provide for the bringing of suits and recovery of judgments, as if they were resident or domestic corporations.

The agent appointed in compliance, to comply with the constitutional and statutory provisions, may not be authorized by the corporation to do any act or to transact any business, to promote or carry on the business of the company, and yet be an agent, within the meaning of the law. This view of the law is fully borne out by the act of the legislature, (Acts 1886-87, p. 103, § 3,) which enacts "that it shall not be lawful for any person to act as agent,...