Peter & Burghard Stone Co. v. Carper

• Decision Date: 03 July 1930
• Docket Number: No. 13541.,13541.
• Citation: 96 Ind.App. 554,172 N.E. 319
• Court: Indiana Appellate Court
• Parties: PETER & BURGHARD STONE CO. v. CARPER.

96 Ind.App. 554

172 N.E. 319

PETER & BURGHARD STONE CO.

v.CARPER.

No. 13541.

Appellate Court of Indiana, in Banc.

July 3, 1930.

Appeal from Probate Court, Marion County; M. E. Bash, Judge.

Action by the Peter & Burghard Stone Company against Alice Carper, executrix of the estate of William M. Carper. From a judgment abating the action, plaintiff appeals

Reversed with directions.

For dissenting opinion, see 172 N.E. 775.

Fenton, Steers, Beasley & Klee, of Indianapolis, for appellant.

Walker & Hollett, of Indianapolis, for appellee.

McMAHAN, J.

Henry W. Klausman had a contract for the construction of a bank building at Marion. William M. Carper was one of the sureties on his bond which was conditioned for the faithful performance of the contract, including the payment for all material and labor charges incurred in the construction of such building. Appellant, under a written contract with Klausman, furnished the material and the necessary labor to construct and erect the marble work in suck building at a cost of more than $9,000. There is a balance of $6,807.96 due appellant, which Klausman failed to pay. Appellant brought suit against Klausman and after his death recovered judgmentin the Howard circuit court against his estate for the full amount of its claim, but because of the insolvency of Klausman's estate, nothing was or could be collected thereon. Appellant then filed its claim against the estate of William M. Carper, to which claim Alice Carper as executrix filed a plea in abatement, alleging that at the time when appellant entered into said contract and at the time when it furnished the material and performed the work in connection with such contract it was a foreign corporation and had not, at such time, complied with the corporation laws of this state, and that by reason of such failure, appellant could not maintain an action in this state upon said claim. A demurrer to this plea was overruled, and appellant refusing to plead over, a judgment abating the action was rendered; hence this appeal.

[1] The question presented by this appeal is: Can a foreign corporation, which has made a contract and transacted business thereunder in this state by furnishing material and labor for the construction of a building before compliance with the statute relative to foreign corporations, upon subsequent compliance with such statute maintain an action in a court of this state to recover for such material and labor?

The right of appellant to do business in this state and to maintain actions growing out of such business, in the courts of this state, requires a compliance with, and is regulated by, chapter 176, Acts 1907, p. 286, sections 4909-4914, Burns' Ann. St. 1926. The first section of this act provides that:

“Before any foreign corporation for profit shall be permitted or allowed to transact business or exercise any of its corporate powers in the State of Indiana, other than insurance companies, building and loan companies and surety companies, they [it] shall be required to comply with the provisions of this act and shall be subject to all the regulations prescribed herein, as well as all other regulations, limitations and restrictions applying to corporations of like character organized under the laws of this state.”

Section 2 provides that such corporations must make application to the secretary of state, stating, among other things, where its principal office in this state will be located and the name and address of some agent or attorney in fact upon whom service of process can be had in all suits commenced in this state. Sections 3 and 4 relate to the form of the application and the certificate of authority. Section 5 provides that after such corporation has been admitted to do business in the state, it shall constantly keep on file with the secretary of state an affidavit of the president and secretary showing the location of its principal business office in this state and the name of some person who may be found at such office for the purpose of accepting service in all suits against the corporation, and that as often as the corporation shall change its location or its agent for receiving service, a new affidavit shall be filed to take the place of the one previously filed. Section 5 1/2 requires that all corporations admitted to do business in the state shall make a report to the secretary of state 30 days after January 1 of each year showing, among other things, the proportion of its property and assets in this state, and when such report shows an increase of $5,000 or more in this state an additional fee shall be paid on such increase. Section 7, relates to the amount of fees to be paid. Section 9 (section 4918, Burns' Ann. St. 1926), is as follows:

“Every foreign corporation amenable to the provisions of this act, which shall neglect or fail to comply with any of the provisions of the same, as herein provided, shall be subject to a penalty of not less than one thousand ($1,000) dollars nor exceeding ten thousand ($10,000) dollars to be recovered before any court of competent jurisdiction, and it is hereby made the duty of the secretary of state, as he may be advised or may ascertain that any corporation is doing business in contravention of this act, to report such fact to the attorney-general, and it shall be the attorney-general's duty and the duty of the prosecuting attorney of the proper county to bring such action at law as shall be necessary for the recovery of the penalties imposed hereby, and in addition to such penalty, if after this act shall take effect any foreign corporation shall fail to comply herewith, no suit may be maintained either at law or in equity upon any claim, legal or equitable whether arising out of contract or tort, in any court in this state.”

The verified claim which stands as the complaint alleges that appellant had complied with the law of this state and was authorized to transact business in this state. Appellant calls attention to the fact that the plea does not allege that appellant had not complied with the statute prior to the commencement of this action, and insists that a contract of a foreign corporation made by it before compliance with the statute, if not immoral or against public policy, or prohibited by law, is not void, and may be enforced by such corporation in the courts of this state upon subsequent compliance with the statute.

U. S. Construction Co. v. Hamilton Nat. Bank (1920) 73 Ind. App. 149, 126 N. E. 866, 868, is relied upon by appellee to sustain the action of the court in overruling the demurrer to the plea in abatement in the instant case. Appellant, however, insists that that case is in conflict not only with the decisions of the Supreme Court of this state, but that it is also in conflict with the weight of authority as announced by the majority of courts of last resort of other states and should be overruled. In that case the action was commencedby a foreign corporation, which had not, either before or after the execution of the contract sued on, complied with the statute authorizing it to do business in this state, and which was subject to all the penalties prescribed in section 4918, supra, including the prohibition against maintaining an action in the courts of the state. The question as to whether the plaintiff, in that case, could have maintained an action upon complying with the statute subsequent to the execution of the contract was neither presented nor decided.

The court, after quoting section 4085, Burns' Ann. St. 1914, which is section 4909, Burns' Ann. St. 1926, said: “The provisions of the act to be complied with follow in subsequent sections with which appellant had not complied, among which is one making a failure to comply therewith a misdemeanor. This renders the contract made in violation thereof, void.” The inference to be drawn from this statement is that a contract made by a noncomplying foreign corporation is void because the statute makes the act of such corporation in transacting business in this state a crime. This is the first case in Indiana so holding. Sandage v. Studabaker, etc., Co. (1895) 142 Ind. 148, 41 N. E. 380, 34 L. R. A. 363, 51 Am. St. Rep. 165, and United Lead Co. v. J. W. Reedy, etc., Co. (1906) 222 Ill. 199, 78 N. E. 567, 6 Ann. Cas. 637, are cited in support of the holding of the court.

The contract in the Sandage Case grew out of the sale of a patent right. The particular contract there involved was prohibited by law. Its execution was by express words of the statute (section 12227, Burns' Ann. St. 1926) made a misdemeanor, and under the statute was invalid as between the parties and those having notice. It was not void. Section 6054, Rev. St. 1881, section 12225, Burns' Ann. St. 1926.

The Illinois case does not appear to be a well-considered case. It is not in line with the weight of authority, and is based on Cincinnati, etc., Assurance Co. v. Rosenthal (1870) 55 Ill. 85, 8 Am. Rep. 626, which was an action by a noncomplying foreign insurance company to recover on a premium note. The Illinois insurance statute was directed against the insurance business and the doing of certain things which was declared to be unlawful. A corporation violating the statute was subject to no penalty. The only method the state had of enforcing the statute was to hold contracts made in violation of its provisions were void.

The Supreme Court of Utah, in A. Booth & Co. v. Weigand (1906) 30 Utah, 135, 83 P. 734, 736, 10 L. R. A. (N. S.) 693, in discussing the Rosenthal Case, said: “The statute provided that it should not be lawful for any agent of a foreign insurance company ‘to directly or indirectly take risks, or to do or transact any business of insurance in this state’ without first procuring a certificate, etc. Without complying with the statute the agent insured a citizen of Illinois, who gave his promissory note in payment of premiums. In an action on the note by the company it was held...