St. Louis, A. & T. Ry. Co. v. Fire Ass'n.

• Decision Date: 16 March 1895
• Citation: 30 S.W. 350
• Parties: ST. LOUIS, A. & T. RY. CO. v. FIRE ASS'N OF PHILADELPHIA et al.
• Court: Arkansas Supreme Court

30 S.W. 350

ST. LOUIS, A. & T. RY. CO. v. FIRE ASS'N OF PHILADELPHIA et al.

Supreme Court of Arkansas.

March 16, 1895.

Appeal from circuit court, Columbia county; Charles W. Smith, Judge.

Action by the Fire Association of Philadelphia and the Southwestern Commercial Company against the St. Louis, Arkansas & Texas Railway Company. From a judgment for plaintiffs, defendant appeals. Affirmed.

Gaughan & Sifford and Sam H. West, for appellant. B. F. Askew and Scott & Jones, for appellees.

BATTLE, J.

This action was instituted by the Fire Association of Philadelphia and the Southwestern Commercial Company against the St. Louis, Arkansas & Texas Railway Company for the recovery of damages incurred through the loss of cotton burned by fire on the 1st day of April, 1887, at Magnolia, Ark. The Fire Association of Philadelphia was a corporation organized and existing under the laws of Pennsylvania, and was engaged in insuring property against fire; and the Southwestern Commercial Company was a corporation of the state of Missouri, and was engaged in buying and selling cotton. The cotton burned was purchased in this state by the Southwestern Commercial Company, belonged to it, and was insured by the Fire Association against fire by a policy issued to its owner. After the fire on the 16th of May, 1887, the Fire Association paid to the Commercial Company the sum of $1,478.86 on account of the loss sustained by the burning of the cotton, and the latter transferred to the former corporation its claim against the defendant for damages. Plaintiffs alleged that the fire was caused by the negligence of the defendant.

The defendant answered. The issues joined were tried by a jury. The plaintiffs recovered a judgment. The defendant appealed. The judgment was reversed by this court, and the cause was remanded for a new trial. St. Louis, A. & T. Ry. Co. v. Fire Ass'n, 55 Ark. 163, 18 S. W. 43.

Upon the return of the case to the circuit court the defendant filed another answer as a substitute for the first, and therein alleged, among other things, as follows:

"First. That the contract of insurance set out in the complaint between the plaintiffs herein was made within the state of Arkansas, and is void, because at the time of the making of said contract of insurance the plaintiff the Southwestern Commercial Company, a corporation, as alleged in the complaint, organized and transacting business under the laws of the state of Missouri, had no legal existence in this state; having never complied with section 11, art. 12, of the constitution, and an act of April 4, 1887, so as to authorize it to do any business whatever.

"Second. That the assignment and transfer of the right of said Southwestern Commercial Company to said Fire Association were made in this state, and the pretended subrogation of the latter thereto are void, because it says neither of said plaintiffs were authorized to transact corporate business in the state of Arkansas; neither having complied with the act approved April 4th, 1887, whereby alone they could be so authorized, and neither having done so at any time prior to the institution of this suit.

* * * * * * * *

"Tenth. That this court has not jurisdiction to hear and determine this cause, but that on the contrary a court of equity alone is competent to hear and determine this cause," — and asked that it "may be transferred to the equity docket."

The plaintiffs demurred to the paragraphs of the answer which are numbered "First" and "Second," in so far as they set up the act of April 4, 1887, as a defense, and the demurrer was sustained by the court. The motion to transfer to the equity docket was disregarded, and the issues were tried by a jury. A verdict was returned in favor of the Fire Association. Judgment was rendered accordingly, and the defendant again appealed.

In order to decide the question raised by the demurrer to the answer of the appellant, it is necessary to consider the act of April 4, 1887. That act declares that, "before any foreign corporation shall begin to carry on business in this state, it shall," by a "certificate under the hand of the president and seal of such company, filed in the office of the secretary of state, designate an agent, who shall be a citizen of this state," upon whom process may be served, and state therein its principal place of business in this state, and provides that, if any such corporation shall fail to file such certificate, all its contracts with citizens of this state shall be void as to it, and shall not be enforced in its favor by the courts. The sole object of the act, as shown by these provisions, is the protection of the citizen. The contracts affected by it are made with him, and, if entered into in violation of the statute, are void as to the corporation, and no one else. Contracts between foreign corporations and persons who are not citizens are under no circumstances declared void as to any one. The act prescribes the conditions upon which foreign corporations can do business, and declares and limits the penalty of noncompliance. Having done so, the penal consequences cannot be extended beyond the boundaries so defined. Bank v. Matthews, 98 U. S. 621; Insurance Co. v. McMillen, 24 Ohio St. 67.

Appellees were foreign corporations. The contract of insurance made by them was prior in time to the enactment of the act of April 4, 1887, was not made with citizens of this state, and was a valid contract. Being valid, how could the right to maintain this action be affected by the failure, if any, of the Commercial Company to comply with the condition on which foreign corporations are allowed to do business in this state? The cotton burned was its property, and was in its possession when it was destroyed or injured. No one had a right to forcibly take it from the company, or willfully or carelessly damage or destroy it, with impunity, because it might have been acquired in the transaction of business by a corporation without first conforming to the laws of this state. W. U. Tel. Co. v. Union Pac. Ry. Co., 1 McCrary, 562, 3 Fed. 423; Tenant v. Elliott, 1 Bos. & P. 3; Clements v. Yturria, 81 N. Y. 285; Pfeuffer v. Maltby, 54 Tex. 454; 1 Whart. Cont. § 352. Should any one do so, it...