Oliver Co. v. Louisville Realty Co.

• Citation: 156 Ky. 628,161 S.W. 570
• Parties: OLIVER CO. v. LOUISVILLE REALTY CO.
• Decision Date: 19 December 1913
• Court: Court of Appeals of Kentucky

161 S.W. 570

156 Ky. 628

OLIVER CO. v. LOUISVILLE REALTY CO.

Court of Appeals of Kentucky.

December 19, 1913

Appeal from Circuit Court, Jefferson County, Chancery Branch, First Division.

Action by the Oliver Company against the Louisville Realty Company. Judgment for defendant, and plaintiff appeals. Affirmed.

Hobson C.J., dissenting. Nunn, J., dissenting in part.

Helm Bruce and Bruce & Bullitt, all of Louisville, for appellant.

Trabue Doolan & Cox, of Louisville, for appellee.

CARROLL J.

The question for decision in this case is this: Is it a good defense, to an action brought in a state court by a foreign corporation to enforce the collection of the amount due on a contract entered into in the execution of its business here engaged in, that it has not complied with section 571 of the Kentucky Statutes reading: "All corporations except foreign insurance companies formed under the laws of this or any other state, and carrying on any business in this state shall at all times have one or more known places of business in this state, and an authorized agent or agents thereat, upon whom process can be served; and it shall not be lawful for any corporation to carry on any business in this state, until it shall have filed in the office of the Secretary of State a statement, signed by its president or secretary, giving the location of its office or offices in this state, and the name or names of its agent or agents thereat upon whom process can be served; and when any change is made in the location of its office or offices, or in its agent or agents, it shall at once file with the Secretary of State a statement of such change; and the former agent shall remain agent for the purpose of service until statement of appointment of the new agent is filed; and if any corporation fails to comply with the requirements of this section, such corporation, and any agent or employé of such corporation, who shall transact, carry on or conduct any business in this state, for it, shall be severally guilty of a misdemeanor, and fined not less than one hundred nor more than one thousand dollars for each offense"? The Oliver Company is a Tennessee corporation, and entered into a contract with the Louisville Realty Association to do certain work for it in the construction of a building by the latter company in the city of Louisville, Ky. The contract fixed the compensation that should be paid to the Oliver Company for the work it agreed to do, but during the progress of the work certain changes were made in the specifications, and as a result of differences arising between the parties to the contract as to the amount that should be paid, this suit was brought by the Oliver Company to recover from the realty company the sum it claimed was due it on the contract.

To this suit several defenses were made going to the merits of the claim asserted by the Oliver Company, but the issues arising on the merits of the controversy we do not find it necessary to discuss. The only question that we need concern ourselves with is the sufficiency of the defense relied on by the realty company that the Oliver Company could not maintain the action because it had failed to comply with the statute quoted. The lower court ruled that the failure of the Oliver Company to observe the requirements of this statute denied it the right to maintain the action, and dismissed its suit, and in the correctness of this decision we concur.

It will be observed that this statute expressly provides that it shall not be lawful for any corporation to carry on any business in this state until it shall have observed the requirements of the section, and further subjects to a penalty any corporation undertaking to transact, carry on, or conduct any business in this state without observing the section, although it does not in terms declare that any contract made by a corporation before complying with the statute shall be void or not enforceable. The fact, however, that the statute does not expressly declare that contracts made before complying with the section shall be void or not enforceable does not weaken the effect of the statute as a prohibition against the enforcement of contract made by a corporation in violation of the statute. In other words, the declaration of the statute that it shall not be lawful for any corporation to carry on any business in this state until it shall have observed the requirements of the statute, and the imposition of a penalty for engaging in business in violation of it, has the same effect and accomplishes the same end as if the statute had expressly declared the invalidity of contracts made without observing its conditions.

Upon this point we may repeat what was said in the case of Fruin-Colnon Contracting Co. v. Chatterson, 146 Ky. 504, 143 S.W. 6, 40 L.R.A. (N. S.) 857, where this question was discussed: "The statute does not provide that contracts, entered into before it has been complied with, shall be void or nonenforceable, nor does it use any language in reference to the contract; but, when a statute makes it unlawful to do business under certain conditions, it seems to necessarily and logically follow that the doing of the business under the prohibited conditions is in itself unlawful. When the doing of the act is made unlawful, there is no reason why the statute should also declare that contracts made in violation of it should also be unlawful. When the law prohibits a thing, it is unlawful to do it, and the courts should not lend their aid to the enforcement of prohibited contracts. Courts are established to afford remedies to litigants who seek relief growing out of lawful transactions, and not to aid those who would invoke their assistance to enforce contracts made in violation of law. Their chief purpose is to secure the observance of laws enacted for the safety and protection of life and property and the general well-being of the people, and it would be a startling departure from this purpose if they should also give relief to parties who were seeking to enforce contracts made in violation of law. Such a course of procedure would be a perversion of justice, and convert the courts into instruments to aid lawbreakers in place of punishing them." The principle thus announced is supported by abundant authority, for it is a generally prevailing rule that a contract is void if prohibited by statute, though the statute only inflicts a penalty and does not in terms declare illegal contracts made in violation of it. Lindsey v. Rutherford, 17 B. Mon. 246; Vanmeter v. Spurrier, 94 Ky. 22, 21 S.W. 337, 14 Ky. Law Rep. 684; Harris v. Runnels, 12 How. 79, 13 L.Ed. 901; Wilson v. Spencer, 1 Rand. (Va.) 76, 10 Am.Dec. 491; Harrison v. Berkley, 1 Strob. Law (S. C.) 525, 47 Am.Dec. 578; Woods v. Armstrong, 54 Ala. 150, 25 Am.Rep. 671; Columbia Bank & Bridge Co. v. Haldeman, 7 Watts & S. (Pa.) 233, 42 Am.Dec. 229; Roby v. West, 4 N. H. 285, 17 Am.Dec. 423, and Levison v. Boas, 150 Cal. 185, 88 P. 825, 12 L.R.A. (N. S.) 575, 11 Ann.Cas. 661.

But passing this, a vigorous assault is made on the decision of the lower court denying to the Oliver Company the right to maintain the action it had instituted, and it is earnestly pressed on our attention that the statute should not be so construed as to prohibit a corporation that had failed to comply with the statute from bringing suit to enforce contracts made in the prosecution of its business in this state. The argument is made that persons who make otherwise valid contracts with foreign corporations should be estopped to deny the right of the corporation to enforce them. It is, of course, at once apparent that the effect of such a construction of this statute would be to destroy the life and vigor of the feature of it now under consideration. So construed, it would virtually have no meaning or effect at all. It would be to say, in substance, to a corporation: "It is true the statute expressly prohibits you from doing business in this state until you have complied with its simple provisions, but if it does not suit your convenience or your interest to do so, your failure will not prejudice any rights that you may have. If you choose to observe these requirements, well and good, but if you don't, you can yet carry on any business you please and make as many contracts as you wish, and the courts of the state are open to your pleas, and, notwithstanding your dereliction of duty and your violation of law, will afford you all the remedies that could be afforded if you had seen proper to observe the statute." If corporations may thus lightly treat the laws of this state, if they may ignore them at their pleasure and comply with them or not as suits their convenience, free from any of the civil disabilities imposed by the statute, the Legislature of the state might as well cease the enactment of laws intended to protect the people of the state in their dealings with corporations.

The statute, as may be readily seen, does not impose any harsh or unreasonable conditions. A literal compliance with its simple requirements is both easy and inexpensive, and no good reason can be assigned why a corporation undertaking to do business in the state should not be obliged to observe its provisions. It is a useful statute, and was intended as a police regulation for the protection of the people of the state, who have a right to know whether the party they are dealing with is an individual, or a corporation. It is a notorious fact that the country is full of corporations engaged in every imaginable line of business, with their agents going here and there and everywhere, and many of the people dealing with them do not know where the home of the corporation is, or, if they do know, would find it impracticable to seek relief by suits...