Quartette Music Co. v. Haygood

• Decision Date: 15 February 1915
• Docket Number: 16703
• Court: Mississippi Supreme Court
• Parties: QUARTETTE MUSIC CO. v. HAYGOOD

67 So. 211

108 Miss. 755

QUARTETTE MUSIC CO. v. HAYGOOD

No. 16703

Supreme Court of Mississippi

February 15, 1915

APPEAL from the circuit court of Lee county. HON. CLAUDE CLAYTON Judge.

Suit by the Quartette Music Company against J. L. Haygood and another. From a judgment overruling a demurrer to the plea of defendants, plaintiff appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

George H. Hill, for appellant.

The court erred in overruling the demurrer. It should have been sustained; the plea filed by appellees presenting no defense to this action. The plea sets out that J. L. Haygood was appellant's agent; that appellant was engaged in selling to the public, sheet music and music in book form; that said Haygood acting as such agent sold said music and gave the note on which suit is brought with G. W. Long as security. While section 935 of Code of 1906, provided that foreign corporations failing to file a copy of their charter are subject to a fine, yet there is no provision in said section that foreign corporations failing to file a copy of their charters shall be denied the right to bring and maintain an action to recover on their contracts.

I submit that the weight of authority holds that they can maintain an action. Cases holding to the contrary are generally based upon a statute denying foreign corporations the right to maintain an action. I do not think this court has passed upon the precise case at bar; but in Watts Mercantile Co. v. Buchanan, 92 Miss. 544, our court approves the New York Case which held that, "that kind of plunder which holds onto the property, but pleads the doctrine of ultra vires against the obligation to pay for it has no recognition or support in the laws of this state."

Can it be said that an agent of a foreign corporation failing to file a copy of its charter, can embezzle the funds coming into his hands as such agent and then be permitted to set up the defense that has been interposed in this case? I think not. See Decell v. Oil Mill, etc., 83 Miss. 346; Howe v. Jelly, 68 Miss. 323; Gilliam v Brown, 43 Miss. 641; 19 Cyc. 1306, and cases there cited.

In 19 Cyc. 1306, we find the following language: "It has been held even by courts which deny the right of foreign corporations to maintain an action on the bond of an agent where it has been doing business in violation of law, that its failure to comply with the law is no defense in an action by it against the agent to recover money or property received by him to its use, on the ground that the agent is estopped to dispute the title of his principal to the money which he has received for him."

It surely will not be held that it is against the public policy of the state for Haygood to execute his note, with Long as security, for money which he admits came into his hands by virtue of his employment. In Decell v. Oil Mill, heretofore cited, our court holds with reference to the failure to pay privilege tax, that: "The law making void the contracts of those in reference to their business carried on in disregard of the privilege tax act, does not shield Mr. Decell. It has no reference to dealers inter sese and their agents in the conduct of their business. It does not authorize or condone embezzlement, nor prevent partners or stockholders from requiring honest settlements among themselves or from their agents." I desire to call attention to the fact that at the time this case was decided, that we had a statute making void the contracts of all persons, firms and corporations failing to pay the required privilege tax and denying them access to our courts. Even if appellee's plea is sufficient (which I deny), they are estopped to plead the failure of the Quartet Music Company to file a copy of their charter.

If it had been the intention of the legislature to deny foreign corporations the right to maintain an action on its contracts, it would have so expressed itself as has a number of the legislatures of the different states. There can be no reason or justice in denying appellant to recover from its agent on the note sued on.

C. P. Long and J. W. P. Boggan, for appellees.

Section 935, Code of 1906, requiring foreign corporations to file in the office of the secretary of state of Mississippi, a copy of their charter, is not a revenue statute, but is penal. Its object is not to raise money, but for the protection of the people of the state of Mississippi against fakes, frauds and blue sky corporations. The penalty imposed for a failure to obey it, is a fine just like any other offense, and the corporation failing to obey its mandate, is guilty of a crime, and while this section does not render void and unenforceable any contract made by a foreign corporation not having complied with its terms and carrying on business in Mississippi in violation thereof, we have only to drop back a page or two, to section 914, of the same Code, and we find the following language:

"But such foreign corporations shall not do or commit any act in this state, contrary to the laws or policy thereof, and shall not be allowed to recover on any contract made in violation of the law or public policy;" so that while counsel for appellant is correct in saying that section 935 does not render void a contract, or refuse the enforcement thereof, in express terms, still section 914 does not say so, and the language could not be clearer or plainer or more easily understood.

We will now notice the cases cited by counsel for appellant, as authority for his contention that the demurrer should have been sustained: Watts Mercantile Co. v. Buchanan, 92 Miss. 544; in this case, the plaintiff or holder of the note, was absolutely free from any illegal conduct and the defendant corporation was seeking to avoid the payment of a note given by it, and at the same time, keep the proceeds or property derived by it, by virtue of the giving of said note, on the ground that it, the defendant itself, had violated the law in making the contract, and this the court held, and very properly held, could not be done. Otherwise, a robber could be turned loose on a community, and when sued for what he had gotten, or suit was brought to recover possession thereof, he would only have to set up his own illegal act in order to defeat recovery.

Decell v. Oil Mills, etc., 83 Miss. 350, is the next case cited by appellant. This case arose under the revenue statutes, and it is a well-established and adjudicated fact, that under these statutes, the question of the protection of the public or public policy is not involved; the only purpose being to raise revenue and that the same rules of construction that apply in such cases, do not apply in cases arising under the statutes or on contracts made in violation of statues, which are penal, and which have nothing to do with the question of raising revenue.

The cases of Howe v. Jolly, 68 Miss. 323, and Gilliam v. Brown, 43 Miss. 641, were both expressly overruled in the case of Woodson v. Hopkins, in the opinion delivered by Chief Justice WHITFIELD, in 85 Miss., which is a very interesting and instructive case along this line. In fact, as stated by Judge WHITFIELD in that case, the case of Gilliam v. Brown, was overruled in 71 Miss. , in the case of McWilliams v. Phillips, and by the same judge who rendered the opinion in the case of Gilliam v. Brown.

In the case of Woodson v. Hopkins, as expressly stated by the judge rendering the opinion, the transactions which had been jointly carried on between Woodson & Hopkins with the public, in which Woodson was acting as agent for Hopkins, were not expressly prohibited by any statute, but were such robbing, thieving contracts and so unconscionable, that they were against the public policy of the state of Mississippi; therefore neither the agent nor the principal would be allowed to go into any court, either of equity or law jurisdiction, and complain one against the other, for the courts would leave them just where they found them.

In the case of McWilliams v. Phillips, in 51 Miss. 196, there was no moral wrong committed by either of the parties in the transaction, out of which the suit grew, McWilliams being the treasurer of the county, and contrary to the statute, having credited Phillips with the price of a whiskey license, when the law said the same could be sold only for cash, and although the price agreed upon was secured by trust deed from Phillips to McWilliams, when McWilliams tried to enforce this trust deed, he was kicked out of court and Phillips was allowed to retain his license and to do nothing, and still it was set up that it was a violation of the law on the part of McWilliams, and a violation of the public policy of the state of Mississippi, on the part of McWilliams in selling a license on credit instead of for cash.

The only other authority cited by counsel for appellant, is 19 Cyc. 1306. The quotation used by him is a part of subdivision B. on said page. If he had carried out the citation, he would have added the following: "Under some statutes however, the rule is otherwise."

So that I take it, that the various decrees by the various courts of the country, are based upon the statutes, and also upon the question of whether the public policy of the state is involved, and are also in line to some extent, with previous decisions of the court on similar questions. In our court there is almost from the foundation of the state government, a line of decisions, denying access to the courts by one, who in the conduct of his business, in the making of the contract sued on, has violated the penal statutes, or the public policy of the state, commencing with the case of Wooten v. Miller, 7 S. & M. 385, in which case one Miller, who was a citizen of the state of North...