Reed v. Todd

• Decision Date: 24 May 1910
• Parties: NANCY REED, Plaintiff and appellant, v. WILBERT A. TODD et al., Defendants and respondents.
• Court: South Dakota Supreme Court

25 S.D. 421, 127 N.W. 527 (1910)

NANCY REED, Plaintiff and appellant v WILBERT A. TODD et al.,

Defendants and respondents

South Dakota Supreme Court

Appeal from Circuit Court, Edmunds County, SD

Hon. Lyman T. Boucher, Judge

Reversed

Chas. H. Bartlet, Park Davis, William G. Clark

Attorneys for appellant.

Campbell & Taylor

Attorneys for respondents.

Opinion filed May 24, 1910

HANEY, J.

The paramount issue in this action is whether a corporation for profit organized under the laws of another state can acquire title to real property within this state without having complied with its laws relating to foreign corporations. It arises upon this state of facts: The land in controversy having been sold for taxes, a certificate of sale was issued to one Webb Vincent, who assigned the certificate to the Hawkeye Loan & Brokerage Company, a corporation organized under the laws of Iowa, for "the buying and selling of certificates of tax sale, purchasing, selling, holding and incumbering all classes and kinds of property, negotiating loans, purchasing, holding and selling securities, ... municipal orders, bonds, negotiable paper, mortgages and stock, and to do all things necessary to carry on a general brokerage business." Thereafter a tax deed was issued to the assignee of the certificate. Subsequently the Iowa corporation deeded the land to the plaintiff. Prior to the trial of this action, the corporation had taken no steps to comply with the laws of this state relating to foreign corporations. For that reason, the learned circuit court concluded no title was acquired by it and none passed to the plaintiff.

Plaintiff contends the Iowa corporation did acquire and transfer title notwithstanding its failure to comply with the laws of this state relating to the duties of foreign corporations. It may be stated as a general proposition that, as a state has the power entirely to exclude from its limits a corporation organized under the laws of another state, so it has the power, subject to constitutional limitations, of prescribing the terms upon which alone it may is permitted to do business within its limits, and of imposing any restraints which it may see fit. 19 Cyc. 1251. No feature of interstate commerce being involved, no doubt can exist as to the inherent power of this state to have wholly excluded the Iowa corporation, and the power to exclude necessarily includes the power to impose such conditions as the wisdom of the Legislature may dictate, unless that power is limited by some provision of the state Constitution. It declares: "No foreign corporation shall do any business in this state without having one or more known places of business and an authorized agent or agents in the same upon whom process may be served." Const. art. 17, § 6. Whatever other effects may have been intended, certainly this provision was not designed to prevent legislation imposing additional restraints. While in itself a limitation upon the rights of foreign corporations it is not a limitation upon the legislative power as to further regulation or entire exclusion. Therefore the effect of the Iowa corporation's noncompliance before attempting to acquire property within this state depends upon the construction to be given the statute in force when such attempt was made. The language of the statute as found in the Revised Civil Code, with the clauses added in 1895 italicized, and one immaterial clause in brackets which was then omitted, is as follows:

"No corporation created or organized under the laws of any other state or territory shall transact any business within this state, or acquire, hold and dispose of property, real, personal or mixed, within this state, or sue or maintain any action at law or otherwise, in any of the courts of this state, until such corporation shall have filed in the office of the Secretary of State a duly authenticated copy of its charter or articles of incorporation, or shall have complied with the provisions of this section. Provided, that the provisions of this section shall not apply to corporations and associations created for religious and charitable purposes only. Such charter or articles of incorporation shall be recorded in a book to be kept by the secretary of this state for that purpose. Such corporations shall appoint an agent, who shall reside at some accessible point in this state, [in the county where the principal business of said corporation shall be carried on,] duly authorized to accept service of process and upon whom such service of process may be had in any action in which said corporation may be a party and service upon such agent shall be taken and held as due and personal service upon such corporation. A duly authenticated copy of the appointment of said agent shall be filed and recorded in the office of the Secretary of State and register of deeds of the county where such agent resides, and a certified copy thereof by the Secretary of State or register of deeds shall be conclusive evidence of the appointment and authority of such agent. Provided, that no action shall be commenced or maintained in any of the courts of this state by such corporation on any contract, agreement or transaction made or entered into in this state, by such corporation, unless such corporation shall have fully complied with the provisions of this article. Provided, further, that it shall be unlawful for any person to act within this state as agent or officer of any foreign corporation unless such corporation shall have appointed an agent as hereinbefore provided, and every person so acting as such agent or officer of any such corporation shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined not less than ten nor more than one hundred dollars and imprisonment in the county jail not less than ten nor more than thirty days or both such fine and imprisonment at the discretion of the court. That justices of the peace shall have concurrent jurisdiction with the circuit courts to hear and determine any criminal actions arising under the provisions of this act."

Rev. Civ. Code, §§ 883, 884, 885; Comp. Laws. §§ 3190, 3191, 3192; Laws 1895, C. 47.

Concerning the statute, prior, to its amendment, this court expressed the following views in an action involving the validity of a general assignment for the benefit of creditors, executed in this state, by a noncomplying Minnesota corporation:

"The acts of a foreign corporation, which has not complied with the requirements of the Constitution and laws of the state in relation to such corporation transacting business, owning and disposing of property, and, in case of insolvency, making an assignment of its property for the benefit of creditors, are not void and unenforceable, but such a foreign corporation may in a direct proceeding instituted by the state be prevented from exercising its franchise within the state until its has fully complied with the Constitution and laws. Article 17, § 6, of the Constitution, and sections 3190, 3192, Comp. Laws, were not designed or intended as a prohibition upon foreign corporations to make lawful contracts in this state to the extent to declare such contracts void, but were merely intended to furnish the means by which citizens could procure personal judgments against them, and bring them and their property within the reach of the process and jurisdiction of our courts; thus protecting them from fraud and imposition, and affording adequate and speedy relief against either."

Wright v. Lee, 2 S.D. 596, 51 N.W. 706. These conclusions were adhered to on rehearing with this further statement:

"The question of the right of a duly organized foreign corporation to do business in this state without having complied with the statutes of this state as to filing an authenticated copy of it articles of incorporation, etc. ... cannot be raised or determined collaterally."

Wright v. Lee, 4 S.D. 237, 55 N.W. 931. The decision on rehearing was rendered in October, 1893. In February, 1895, on an appeal from an order overruling a motion to discharge an attachment, it was held on the authority of Wright v. Lee, supra, that a foreign corporation might maintain an action in its own name without complying with the statute. Pech Mfg. Co. v. Groves, 6 S.D. 504, 62 N.W. 109. The Legislature being then in session re-enacted the statute with the amendments as indicated, the amendatory act taking effect March 14, 1895, Laws 1895, C. 47.

Though there may be room for discussion as to all the objects sought by these amendments, no doubt exists with respect to the right of a foreign corporation for profit to sue in the courts of this state. Manifestly it was intended thereby that no such corporation shall maintain any action in any of the courts of this state until it shall have complied with the requirements of the statute, and that no such corporation shall maintain any action in any of the courts of this state on any. contract, agreement, or transaction entered into in this state by such corporation without having complied therewith. The plain and unambiguous language employed is susceptible of no other interpretation. In all cases arising since its amendment the statute has been given that interpretation, and in all such cases not affected by the interstate commerce clause of the federal Constitution it has been given that effect. Bradley, Metcalf & Co. v. Armstrong, 9 S.D. 267, 68 N.W. 733; Acme Mercantile Agency v. Rochford, 10 S.D. 203, 72 N.W. 466, 66 Am.St.Rep. 714; Thompson & Juve v. Scroyer, 20 S.D. 72, 104 N.W. 854; American Copying Co. v. Eureka Bazaar, 20 S.D. 526, 108 N.W. 15. Wright v. Lee, supra, involved the effect. of the statute upon the acts of a noncomplying foreign corporation, while all the cases decided since the statute was changed have involved its effect upon the right of the corporation to maintain an action in its own name, a distinction which cannot be ignored...