Northwestern Hardware & Steel Co. v. Winnett

• Decision Date: 19 June 1923
• Docket Number: 5201.
• Citation: 216 P. 568,67 Mont. 545
• Parties: NORTHWESTERN HARDWARE & STEEL CO. v. WINNETT.
• Court: Montana Supreme Court

216 P. 568

67 Mont. 545

NORTHWESTERN HARDWARE & STEEL CO. v. WINNETT.

No. 5201.

Supreme Court of Montana

June 19, 1923

Appeal from District Court, Cascade County; J. B. Leslie, Judge.

Action by the Northwestern Hardware & Steel Company against W. J Winnett, doing business under the firm name and style of the Winnett Blacksmith Shop. Judgment for plaintiff, and defendant appeals. Affirmed.

Belden & Dekalb, of Lewistown, Homer E. Geis, of Winnett, and Merle C. Groene, of Lewistown, for appellant.

J. A McDonough, and Art. Jardine, both of Great Falls, for respondent.

STARK J.

The complaint in this action alleges that between the 1st day of August, 1919, and the 20th day of March, 1920, the plaintiff sold and delivered to the defendant goods, wares, and merchandise of the reasonable value of $446.65, for which the defendant agreed to pay the plaintiff, that he had not paid the same or any part thereof except the sum of $56.45, and that there is a balance due on said account of $390.11. There is no allegation in the complaint to the effect that the plaintiff is a corporation, nor is it alleged that the defendant was doing business under the style and firm name of Winnett Blacksmith Shop.

The defendant filed a general demurrer to the complaint, which was overruled, whereupon he answered denying that he at any time conducted any business under the name and style of Winnett Blacksmith Shop, or that the plaintiff had sold or delivered to him the goods, wares, and merchandise as alleged in the complaint.

The case was tried before a jury, and at the close of plaintiff's testimony defendant moved for a nonsuit which was denied, after which he introduced testimony on his part. The jury returned a verdict in favor of the plaintiff for the amount sued upon, whereupon judgment was entered, from which the defendant has appealed to this court.

The first contention of counsel for defendant is stated in their brief in these words: "The complaint is insufficient, inasmuch as it contains no allegation of corporate capacity of the plaintiff." This presents for specific answer the question: When a corporation brings an action at law, must it affirmatively allege in its complaint that it is a corporation and thus show its capacity to sue in order to state a cause of action?

An examination of the authorities will disclose some diversity of opinion, but a great majority of the decisions answer the question in the negative. In 7 R. C. L. 697, it is said:

"The prevailing view is that, in an action by a corporation in its corporate name, it is not necessary to allege in the declaration or complaint that the plaintiff is a corporation."

In 3 Thompson on Corporations, § 3197, the author says:

"The general and prevailing rule established by a large number of cases in a majority of the state courts, both at law and in equity, is that in actions of whatever nature by or against a corporation of any kind * * * the corporate existence need not be alleged nor is it necessary to plead the act of incorporation."

"The failure of the complaint to allege capacity to sue is not ground for demurrer under a statute allowing a demurrer only when it appears from the face of the complaint that the plaintiff has no legal capacity to sue; nor can a failure to allege such capacity render a complaint demurrable as not stating a cause of action." 21 R. C. L. 526.

In some of the earlier California cases (Oroville, etc., R. Co. v. Plumas County, 37 Cal. 360; Loup v. California Southern R. Co., 63 Cal. 97; People v. Central P. R. Co., 83 Cal. 395, 23 P. 303) there were expressions indicating a view contrary to that stated in the foregoing excerpts; but in Los Angeles Ry. Co. v. Davis, 146 Cal. 179, 79 P. 865, 106 Am. St. Rep. 20, the court in its opinion directs particular attention to these cases, expressly disapproves such expressions, and lays down the rule in these words:

"The point that plaintiff was not a corporation goes only to its capacity to maintain an action, and not to the sufficiency of the facts averred to constitute the alleged cause of action; and therefore it could be raised by demurrer to the complaint only under subdivision 2 of section 430 of the Code of Civil Procedure, which provides as a cause of demurrer 'that plaintiff has no legal capacity to sue'--and then only when said want of capacity 'appears on the face' of the complaint. If it does not so appear, the objection must be taken by answer pursuant to section 433."

Sections 430 and 433 of the California Code referred to are the same as sections 9131 and 9135, Revised Codes of 1921. The rule announced in the last-mentioned case was subsequently followed and approved by the California court in Redding Gold & Copper Mining Co. v. National Surety Co., 18 Cal.App. 488, 123 P. 544.

The case of Ph nix Bank of New York v. Donnell, 40 N.Y. 410, was decided under statutory provisions similar to ours above referred to. The complaint, so far as the designation of the plaintiff was concerned, was identical with that in this case; there was no allegation relative to its being a corporation or possessing any legal capacity to sue. Its sufficiency was challenged by a demurrer on the grounds (1) that it did not show that the plaintiff was a corporation and entitled to sue; and (2) that it failed to state facts sufficient to constitute a cause of action. It was held that the demurrer could not be sustained on the first ground because it did not affirmatively appear upon the face of the complaint that the plaintiff had not the legal capacity to sue; or on the second ground because it had no applicability to the capacity of the plaintiff to sue, but only applied when the facts stated as a cause of action failed to show one.

We have referred to the above cases from California and New York to illustrate the rule because of the fact that their Code provisions are the same as ours, and that ours were derived from them.

The same rule is announced in varying forms in each of the following cases: Cone Export & Com. Co. v. Poole, 41 S.C. 70, 19 S.E. 203, 24 L. R. A. 289; Jantzen v. Emanuel Baptist Church, 27 Okl. 473, 112 P. 1127, Ann. Cas. 1912C, 59; Exchange National Bank v. Capps, 32 Neb. 242, 49 N.W. 223, 29 Am. St. Rep. 433; Bennington Iron Co. v. Rutherford, 18 N. J. Law, 105, 35 Am. Dec. 528; Stanly v. Richmond & Danville R. R. Co., 89 N.C. 331; Smith v. Weed Sewing Machine Co., 26 Ohio St. 562; Zion Church v. St. Peter's Church, 5 Watts & S. (Pa.) 215; Saunders v. Nursery Co., 6 Utah, 431, 24 P. 532; Bank v. Knowlton, 12 Wis. 624, 78 Am. Dec. 769; Leader Printing Co. v. Lowry, 9 Okl. 89, 59 P. 242; Brady v. National Supply Co., 64 Ohio St. 267, 60 N.E. 218, 83 Am. St. Rep. 753. A great number of cases supporting the rule will also be found in the notes under the sections of R. C. L. and Thompson on Corporations above quoted. See, also, Knight v. LeBeau, 19 Mont. 223, 47 P. 952; Herbst Importing Co. v. Hogan, 16 Mont. 384, 41 P. 135; and O'Donnell v. City of Butte, 44 Mont. 97, 119 P. 281.

Among the cases which hold to the contrary is Miller v. Pine Mining Co., 3 Idaho, 493, 31 P. 803, 35 Am. St. Rep. 289, decided in 1892. In the later Idaho case of Fegtly v. Mining Co., 18 Idaho, 536, 111 P. 129, that court, referring to its former decision, said: "It must be conceded that the weight of authority is against the rule announced in Miller v. Pine Mining Co.''

The reason running through these cases to justify the rule deduced is that, although corporations are artificial persons, yet under the statutes by which they are created they have the same capacity to sue and be sued as natural persons, that when a natural person sues or is sued it is sufficient to designate him by name, and that it is neither necessary to aver that he is a person, or that he has legal capacity to sue, since such capacity is presumed to exist until the contrary is shown, and that the same presumption attaches to a corporation.

The case is analogous to one wherein a person or partnership doing business under a fictitious name is precluded from maintaining an action until he or it has filed and published a statement disclosing the true name of such person or persons. Until this is done, the statute says they cannot maintain any action upon any account, transaction, or contract had in the partnership name, i. e., until they have complied with the statute, they...