Peter & Burghard Stone Co. v. Carper

• Decision Date: 08 September 1930
• Docket Number: No. 13541.,13541.
• Citation: 96 Ind.App. 554,172 N.E. 775
• Court: Indiana Appellate Court
• Parties: PETER & BURGHARD STONE CO. v. CARPER.

96 Ind.App. 554

172 N.E. 775

PETER & BURGHARD STONE CO.

v.CARPER.

No. 13541.

Appellate Court of Indiana, in Banc.

Sept. 8, 1930.

Dissenting opinion.

*775For majority opinion, see 172 N. E. 319.

NICHOLS, J.

I challenge the decision of the majority of this court as being contrary to the interests of *776the state, and of its citizens, as a misinterpretation of the plain words of the statute, as reaching a result that can only be reached by judicial legislation, and as against, not only the better reasoning, but the great weight of authority. It is proper that we should have before us the circumstances and conditions which confront us. Since the decisions in the cases of United States Construction Co. v. Hamilton Nat. Bank, 73 Ind. App. 149, 126 N. E. 866;Burroughs v. Southern Colonization Co. (Ind. App.) 163 N. E. 517; and State ex rel. v. Traylor (Ind. App.) 162 N. E. 64, the secretary of state has issued and published a bulletin on the subject of “Transacting Business in Indiana by Foreign Corporations,” based as to the requirements of such corporations upon these authorities. As a result thereof, such corporations, evidently not choosing to risk having their contract declared void, have complied with the law of the state, as required by the statute, until now there are about 1,000 corporations so qualified. If these cases are overruled and such corporations understand that in harmony with the majority opinion herein, they can transact business in the state without complying with the statute, until they need to do so to use our courts for litigation, thereby saving the fees which they would otherwise pay to the state, and thereby avoiding the appointment in the state of an agent upon whom summons can be served in the event that they for any reason should become liable to a citizen of the state, either because of breach of contract or in tort, it can hardly be questioned that the great number of these foreign corporations that have so qualified will cease to comply with the statute. If the law is as declared by the majority opinion, then a foreign corporation can enjoy privileges and benefits that a domestic corporation cannot have, simply by violating our statute. It can, until it may have occasion to use our courts, do business free of charge, and, if it shall become liable to a citizen, it can withdraw from the state, and the citizen is without remedy.

In the event of such course, which will surely follow, the state will lose the fees which such noncomplying corporations would pay for their right to transact business in the state lawfully, and the citizens of the state must suffer should there be a liability against such corporations, because citizens will be unable to bring actions for any such liability accruing to them, for the reason that there will be no person in the state upon whom process can be served.

Let us first, without resorting to any list of authorities, as precedents for the conclusion which I reach, examine the sections of the statute here involved, determine the meaning of their plain words, and then, when we have reached a conclusion by sound reasoning as to the meaning of such sections, as intended by the Legislature, see whether we cannot find authorities to sustain such conclusion. The first section, quoted in the majority opinion, is section 1, c. 176, of the Acts of 1907, p. 286, section 4909, Burns' 1926, which 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 *** 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.” The language of the section is plain and unequivocal. Such corporations, until they have complied with the requirements of the statute, cannot transact business or exercise any of their corporate power in Indiana. It necessarily follows that any business transacted by such a corporation and any contracts that are entered into by it before its compliance, as aforesaid, are unlawful. The statute, by its plain words, absolutely prohibits a foreign corporation from transacting any business until qualified.

Now let us examine section 9 of the same act, being section 4918, supra. This section provides a penalty of not less than $1,000 and not exceeding $10,000 for a violation of the provisions of the act, and then provides, in addition to such penalty: “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.” This section does not say that any suit shall not be maintained until there is a compliance with the statute, and it cannot be made so to read, except by judicial legislation. The statute clearly forbids the transaction of any business until there is a compliance, makes such business unlawful, forbids any suit on any contract entered into, and prescribes a penalty for violation of the statute. What more could it do?

Having reached this conclusion, and I cannot conceive how any one can contend that it is not in harmony with sound reasoning and the plain words of the statute, I am now ready to fortify myself in the conclusion which I have reached through what I believe to be sound reasoning, by the authorities which I will hereinafter discuss.

Of course, if the authorities cited in the majority opinion are erroneous in their construction of the statutes involved, and if such construction is harmful to the state and its citizens, there certainly can be no reason to follow such authorities in the face of reason and justice. There can be no reason for perpetuating an erroneous construction of a statute based upon an erroneous precedent. The rule *777should be, first, the determination, by sound reasoning, of the right principle, and then, for the purpose of fortifying such determination, to find authorities to sustain it, and not first the authorities which perchance may be erroneous, and then to determine the principle, right or wrong, based thereon.

The first authority cited in the majority opinion, which we need to discuss, is Walter A. Wood Co. v. Caldwell, 54 Ind. 272, 23 Am. Rep. 641, from which the majority opinion quotes extensively, the court construing the act of 1852, 1 Rev. St. 1876, p. 373, c. 85, concerning foreign corporations, sections 1, 2, 3, 5, 6, and 7 of which provided for certain things which agents of such corporations were required to do before entering upon the performance of the duties of their agency in this state, and section 4 of which act provided that such foreign corporations should not enforce, in any courts of this state, any contracts made by their agents or persons assuming to act as their agents, before a compliance by such agents, or persons acting as such, with the provisions of sections 1 and 2 of the act. The court first set out the Insurance Act of 1865, 1 Rev. St. 1876, p. 594, c. 156, section 1 of which first provided that it should not be lawful for any agent or agents of any insurance company incorporated by any other state than the state of Indiana, directly or indirectly, to take risks or transact any other business of insurance in this state, without first producing a certificate of authority from the auditor of state. There were other requirements and prohibitions in this section to the same effect. Section 7 of the act provided penalties for the violation of the act. The court, after stating that the statute contained no section or clause thereof, declaring what the effect of noncompliance with its provisions should be upon contracts made before compliance, then held that contracts made in violation of the statute were void, citing Hoffman v. Banks, 41 Ind. 1;Union Central Life Ins. Co. v. Thomas, 46 Ind. 44;Farmers,' etc., Ins. Co. v. Harrah, 47 Ind. 236. To the same effect is Cassaday v. American Ins. Co., 72 Ind. 95.

The Hoffman Case held that, where a premium note was given for a policy in a foreign corporation, which had not compiled with the law, and no certificate had been issued to the agent receiving the note, the note was void. The other two authorities are to a similar effect. If the contracts involved in these cases were void because there had been no compliance with a statute which said that it shall not be lawful to transact business without first complying, and those authorities are not overruled, then why are contracts under the act under consideration, which provides that foreign corporations shall not transact business or exercise any of their corporate powers before compliance with the act, not void? The court then proceeded to a discussion of the act of 1852, cited above, section 4 of which, set out above, distinguished it from the insurance act of 1865 construed in such case, as appears above, in that said section 4 declared what the effect of noncompliance with the 1852 act would be, which was that the contract could not be enforced before (until) there was a compliance with sections 1 and 2. These two acts, 1852, 1865, were later repealed, and we have, in lieu of the 1852 act, the one here to be construed. I submit that the Insurance Act of 1865 was, in effect, so far as here involved, like chapter 176 of the Act of 1907, here under discussion, and, if contracts made in violation of the Insurance Act of 1865, which had no section or clause declaring the effect of noncompliance with its provisions, were held void, then contracts made in violation of chapter 176, here under consideration, section 1 of which affirmatively declared that, before any foreign corporation for profit shall be permitted or allowed to transact...