Portland Cattle Loan Co. v. Hansen Livestock & Feeding Co.

• Decision Date: 11 December 1926
• Citation: 251 P. 1051,43 Idaho 343
• Court: Idaho Supreme Court
• Parties: PORTLAND CATTLE LOAN COMPANY, a Corporation, Respondent, v. HANSEN LIVESTOCK & FEEDING COMPANY, a Corporation, et al., Defendants, and CHARLES ZIEMER and ACTON LIND, Trustees in Bankruptcy of HANSEN LIVESTOCK & FEEDING COMPANY, an Involuntary Bankrupt, Appellants

251 P. 1051

43 Idaho 343

PORTLAND CATTLE LOAN COMPANY, a Corporation, Respondent, v. HANSEN LIVESTOCK & FEEDING COMPANY, a Corporation, et al., Defendants, and CHARLES ZIEMER and ACTON LIND, Trustees in Bankruptcy of HANSEN LIVESTOCK & FEEDING COMPANY, an Involuntary Bankrupt, Appellants

Supreme Court of Idaho

December 11, 1926

CORPORATIONS-CORPORATE NOTE AND MORTGAGE-EXTENSION OF TIME-CONSIDERATION-RATIFICATION-MORTGAGE YEAR BEFORE BANKRUPTCY NOT A GENERAL ASSIGNMENT OF CORPORATE PROPERTY-TRANSACTION OF FOREIGN CORPORATION HELD NOT "DOING BUSINESS WITHIN STATE."

1. One alleging that corporate note and mortgage were void because of lack of resolution authorizing president and secretary to execute them has burden of overcoming presumption that officers did not exceed their authority arising on notes and mortgage being placed in evidence with proof of signature by proper officers.

2. Where corporation received money represented by notes, it is immaterial whether mortgage was given to secure loan made at time of its execution or to secure pre-existing indebtedness.

3. Where private corporation received and retained benefits of unauthorized or illegal transaction on part of its board of directors, such conduct amounts to ratification.

4. Extension of time by creditor within which to pay old obligation is as much a consideration and as much an extension of credit as granting a new loan.

5. Corporation has right to ratify acts of its officers although improperly done, and such ratification relates back to original act, and makes it valid from beginning.

6. Execution of mortgage by corporate officers on small portion of corporate property approximately year before bankruptcy did not constitute general assignment of corporate property.

7. Foreign corporation, securing note from Utah corporation secured by mortgage on real estate situated in Idaho, whole transaction being consummated at home office of foreign corporation, was not "doing business within state" of Utah so as to require compliance with Comp. Laws Utah 1917, secs. 945, 947.

8. Mere taking of application for loans by agent of foreign corporation, and forwarding same to home office, there to be ap- proved or disapproved, does not constitute "doing business within state" so as to come within statutes regulating foreign corporations.

9. Where there is conflict in evidence, findings or judgment of trial court will not be disturbed.

APPEAL from the District Court of the Fifth Judicial District, for Caribou County. Hon. O. R. Baum, Judge.

Action to foreclose mortgage on real property. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs awarded to respondent.

A. W Hart and Whitcomb, Cowen & Clark, for Appellants.

The notes and mortgage were not the authorized acts of Hansen Livestock and Feeding Co. (Cupit v. Park City Bank, 20 Utah 292, 58 P. 839; 3 Fletcher, Corporations, secs. 1751 1854; Lochwitz v. Pine Tree M. & M. Co., 37 Utah 349, 108 P. 1128; Alta Silver Mining Co. v. Alta Placer Mining Co., 78 Cal. 629, 21 P. 373; Luse v. Isthmus Transit & R. Co., 6 Ore. 125, 25 Am. Rep. 506; Stokes v. New Jersey Pottery Co., 46 N.J.L. 237.)

The burden of proving authority of the signers to bind the corporation on these notes and mortgage is on the plaintiff, defendant corporation having denied their execution and their validity. (Brown v. Tourtelotte, 24 Colo. 204, 50 P. 195.)

There was no ratification by the Hansen Livestock & Feeding Co. of the unauthorized acts of its officers in signing these notes and mortgage, either express or implied. (4 Fletcher, Corporations, sec. 2186, and cases cited.)

There was no estoppel in pais or in law. Estoppel must be alleged to be relied upon and plaintiff has not pleaded estoppel. ( Leland v. Isenbeck, 1 Idaho 469; Bigelow on Estoppel, 6th ed., p. 603.)

The plaintiff corporation, at the time these notes and mortgage were given and taken, was a foreign corporation unlawfully doing business in Utah within the meaning of the Utah statute. (First Nat. Bank of Price v. Parker, 57 Utah 290, 194 P. 661; In re Conecuh Pine Lbr. & Mfg. Co., 180 F. 249; United States Sav. & Loan Co. v. Miller (Tenn.), 47 S.W. 17; Commonwealth v. Chattanooga Implement & Mfg. Co., 126 Ky. 636, 104 S.W. 389; Connecticut Mut. Life Ins. Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569; Diamond Glue Co. v. United States Glue Co., 187 U.S. 611, 23 S.Ct. 206, 47 L.Ed. 328; Peck-Williamson Heating etc. Co. v. McKnight, 140 Tenn. 563, 205 S.W. 419; Michigan Trust Co. v. Bronson, 192 Cal. 506, 221 P. 628; Chattanooga Nat. Bldg. & Loan Assn. v. Denson, 189 U.S. 408, 23 S.Ct. 630, 47 L.Ed. 870; British-American Mtg. Co. v. Jones, 77 S.C. 443, 58 S.E. 417; People's Building, Loan & Sav. Assn. v. Markley, 21 Ind.App. 128, 60 N.E. 1013; Republic Acceptance Corp. v. Bennett, 220 Mich. 249, 189 N.W. 901; Donaldson v. Thousand Springs Power Co., 29 Idaho 735, 162 P. 334.)

The contract sued upon is therefore void. (First Nat. Bank of Price v. Parker, supra; Chattanooga B. & L. Co. v. Denson, supra; In re Conecuh Pine Lbr. & Mfg. Co., supra.)

The act of the plaintiff's president in going to Utah for the purpose of having the notes and mortgage completed and signed in Utah was an act in furtherance of and in connection with its business, so that even if taken alone it would be in contravention of the Utah statute. (Note, Ann. Cas. 1912A, p. 556; John Deere Plow Co. v. Wyland, 69 Kan. 255, 76 P. 863; International Text Book Co. v. Mueller, 149 Ill.App. 509; Welling's Estate, 192 Cal. 506, 221 P. 628; Van Schuyver Co. v. Breedman, 5 Alaska, 260; Miellmier v. Toledo Scale Co., 128 Ark. 211, 193 S.W. 497; National Merc. Co. v. Watson Corporation Commr. (Or.), 215 F. 929; Dungan Hood & Co., Inc., v. C. F. Bally, Ltd., 271 F. 517.)

The acceptance out of the state did not change the character of the transaction. (American Case Register Co. v. Griswold, 206 N.Y. 723, 100 N.E. 1124.)

Merrill & Merrill, for Respondent.

A written contract, complete on its face, which recites that it is a corporate contract and which has the seal of the corporation attached, is prima facie evidence that such contract is the act of the corporation. (Quackenboss v. Globe & Rutgers Fire Ins. Co., 177 N.Y. 71, 69 N.E. 223; Mills v. Boyle Mining Co., 132 Cal. 95, 64 P. 122; Underhill v. Santa Barbara Land, Bldg. & Imp. Co., 93 Cal. 300, 28 P. 1049; Burnett v. Lyford, 93 Cal. 114, 28 P. 855; Schallard v. Eel River Steam Nav. Co., 70 Cal. 144, 11 P. 590; Westchester Mtg. Co. v. McIntire, 171 A.D. 518, 157 N.Y.S. 725.)

Ratification relates back to the original act and makes it valid from the beginning. (Steffens v. Nelson, 94 Minn. 365, 102 N.W. 871.)

The act of the Hansen company was ratified by meetings of the directors and by retaining the benefits of the loan and by acquiescence in the mortgage. (Ashley Wire Co. v. Illinois Steel Corp., 164 Ill. 149, 56 Am. St. 187, 45 N.E. 410; Commercial Trust Co. v. Idaho Brick Co., 25 Idaho 755, 139 P. 1004; Pettengill v. Blackman, 30 Idaho 241, 164 P. 358.)

Where there is a substantial conflict in the evidence this court will not set aside the findings of the trial court. ( Miller v. Blunck, 24 Idaho 234, 133 P. 383; Hayton v. Clemans, 30 Idaho 25, 165 P. 994; Fritcher v. Kelley, 34 Idaho 471, 201 P. 1037; First Nat. Bank v. Cruikshank, 38 Idaho 789, 225 P. 142.)

The business of loaning money to residents of Utah whether upon collateral in the state or otherwise, is not "doing business" in Utah unless the loans are made in Utah. (9 Fletcher, Cyc. Corporations, sec. 5929, p. 9987; 2 Ann. Cas. 210, note; Neal v. New Orleans etc. Assn., 100 Tenn. 607, 46 S.W. 755; Eastern Bldg. & Loan Assn. v. Bedford, 88 F. 7; Bedford v. Eastern Bldg. & L. Assn., 181 U.S. 227, 21 S.Ct. 597, 45 L.Ed. 834; People's Bldg. & Loan Assn. v. Berlin, 201 Pa. 1, 88 Am. St. 764, 50 A. 308; Covey Cotton Oil Co. v. Bank of Ft. Gaines, 15 Ala. App. 529, 74 So. 87; Foore v. Simon Piano Co., 18 Idaho 167, 108 P. 1038; Bonham Nat. Bank v. Grimes, 18 Idaho 629, 111 P. 1078; Largilliere Co. v. McConkie, 36 Idaho 229, 210 P. 207; Toledo Computing Scales Co. v. Young, 16 Idaho 187, 101 P. 257; Pembleton v. Illinois Commercial Men's Assn., 289 Ill. 99, 124 N.E. 355; Hoyt v. Ogden-Portland Cement Co., 185 F. 889.)

A single transaction does not constitute "doing business" in Utah. (Ann. Cas. 1913E, 1154, note; Geo. R. Barse LiveStock Co. v. Range Valley Cattle Co., 16 Utah 59, 50 P. 630; Booth & Co. v. Weigand, 30 Utah 135, 83 P. 734, 10 L. R. A., N. S., 693.)

Where parties of different states contract with reference to property in a third state, there can be no "doing business" in the second state. (Hart v. Livermore Foundry & Mach. Co., 72 Miss. 809, 17 So. 769.)

BUDGE, J. Wm. E. Lee, C. J., and Givens, Taylor and T. Bailey Lee, JJ., concur.

OPINION

BUDGE, J.

On May 29, 1919, the Hansen Livestock & Feeding Company, a Utah corporation, executed a mortgage upon real property situated in Caribou county, Idaho, and delivered the mortgage to respondent, Portland Cattle Loan Company. The mortgage was given for the purpose of securing an indebtedness of $ 315,000, evidenced by thirty-one promissory notes, dated May 29, 1919, at Ogden, Utah and made payable to respondent at North Portland, Oregon. This action was subsequently instituted by respondent, in Caribou county, for the purpose of foreclosing the mortgage. Before the commencement of the action the Hansen Company had been adjudicated a bankrupt and become a defunct corporation by reason of failure to pay the Utah corporation license fee, and the trustees in bankruptcy were made defendants, as were the directors of the defunct corporation as trustees, together with the Mutual Livestock Corporation, which claimed...