Rogers v. Mountain States Royalties, Inc.

• Decision Date: 26 May 1947
• Docket Number: 15883.
• Citation: 116 Colo. 455,182 P.2d 142
• Parties: ROGERS et al. v. MOUNTAIN STATES ROYALTIES, Inc.
• Court: Colorado Supreme Court

182 P.2d 142

116 Colo. 455

ROGERS et al. v. MOUNTAIN STATES ROYALTIES, Inc.

No. 15883.

Supreme Court of Colorado, in Department.

May 26, 1947

Error to District Court, City and County of Denver; Joseph J Walsh, Judge.

Action by Harley R. Rogers and others against Mountain States Royalties, Inc., and others, wherein the named defendant appeared specially for purpose of filing its motion to set aside and quash the service of the summons. To review a judgment granting the motion to quash, the plaintiffs bring error.

Affirmed.

W David McClain and Edwin A. Williams, both of Denver, for plaintiffs in error.

Simon & Lee and M. O. Shivers, Jr., all of Englewood, for defendant in error.

JACKSON Justice.

This case involves the one question of whether defendant, a Wyoming corporation, is doing business within the state of Colorado so as to subject it to service of process issued out of the courts of this state. Plaintiffs brought suit in tort against Arthur M. Teakell, individually, Mountain States Royalties, Inc., a Wyoming corporation, of which Teakell is president and holder of the majority of the shares, and the Continental Oil Company, a Delaware corporation, a lessee of oil producing property in Wyoming paying royalties to Mountain States Royalties, Inc. Plaintiffs allege that they are minority stockholders of Mountain States Royalties, Inc. and that Teakell is a majority stockholder--having become such by reason of his false representations made to plaintiffs, resulting in an unfair transaction between them and Teakell at the time of the formation of the corporation.

Plaintiffs sought judgment against Teakell and Mountain States Royalties, Inc. in the amount of $15,000, for body judgment against Teakell, an injunction against the Continental Oil Company restraining it from making any further payment of royalty moneys to the other two defendants, and that the royalty moneys be paid to a receiver to be appointed by the court or, in the alternative, that such payments be enjoined and restrained until a final hearing of the cause.

Mountain States Royalties, Inc., appearing specially for that purpose, filed its motion to set aside and quash the service of summons on the following grounds: that it is a Wyoming corporation; has never been engaged in doing business within the state of Colorado; that plaintiffs did not, as required by Rule 3(a), R.C.P. Colo., file their complaint within ten days after the alleged service of summons upon defendant corporation, and that one of the plaintiffs has pending in the district court of the seventh judicial district, county of Natrona, state of Wyoming, a similar action. This last allegation was supported by the evidence. After the taking of testimony and argument, the trial court granted the motion to quash. Plaintiffs here seek a reversal of this ruling.

The evidence showed that service of summons was made upon Mrs. H. Margaret McGinnis at her residence in Denver. She testified that she was the vice president of Mountain States Royalties, Inc.; identified a copy of the articles of incorporation showing that the company was a Wyoming corporation; testified that all of its business operations were carried on in Wyoming; and that all of its income was derived from property located in that state. The articles show that at the time of the incorporation the directors were described as residents of Wyoming. The testimony of Mrs. McGinnis further disclosed that most of the directors' meetings had been held in Colorado for the convenience of the directors who are now living in Denver or Littleton, although at least one directors' meeting had been held in Wyoming; that no stockholders' meeting, however, had ever been held in Colorado, and that no business transactions had been had with third parties in the state of Colorado--the directors' meetings pertaining simply to the internal affairs of the corporation. One directors' meeting included the authorizing of the payment of a dividend, at which it was directed that some of the dividend checks be issued by one of the officers in Colorado and the remaining checks to be issued by an officer in Wyoming.

The testimony of Teakell, president of the company, was to the same effect. Commenting upon the fact that the minutes of a meeting held June 29, 1943, at which these dividends were authorized, contained a reference to a meeting held in the company's office in Littleton, Colorado, he stated that the company owned no office in Colorado- [182 P.2d 144] --the meeting having been held in his home.

From this evidence the court found that the corporation was not engaged in carrying on or transacting its ordinary business in Colorado.

The following Colorado cases have been discussed or cited in the briefs:

Colorado Iron Works v. Sierra Grande Mining Co., 15 Colo. 499, 25 P. 325, 22 Am.St.Rep. 433, in which we held that a domestic corporation could sue a foreign corporation in the courts of this state on an indebtedness created by virtue of a contract between the two companies.

Plattner Implement Co. v. Bradley, Alderson & Co., 40 Colo. 95, 90 P. 86, where we decided that a domestic corporation could recover against a foreign corporation on an indebtedness incurred by the latter within in Colorado, where the domestic corporation was doing business.

Cockburn v. Kinsley, 25 Colo.App. 89, 135 P. 1112, also is discussed by counsel. In that case, the treasurer of an Arizona corporation, which was operating a mine located in the Republic of Mexico, of his own motion had caused letterheads to be printed designating a certain office in Colorado Springs, Colorado, as the main office of the company. The corporation owned no property in Colorado and except for the execution of one promissory note evidencing the loan of money, had never transacted any business in Colorado. In an action upon this note against the officers of the corporation, under the provisions of sections 916, 919, R.S. '08, '35 C.S.A. c. 41, §§ 109, 113, our Court of Appeals held that the corporation had not been doing business within the meaning of the statute. Judge Morgan, speaking for the court in that case [25 Colo.App. 89, 135 P. 1116], said: 'The authorities seem to agree that the purpose of a statute such as ours,...