State, to use of Hart-Parr Co. v. Robb-Lawrence Co.

• Decision Date: 02 January 1906
• Court: North Dakota Supreme Court

106 N.W. 406

15 N.D. 55

STATE OF NORTH DAKOTA TO AND FOR THE USE OF HART-PARR COMPANY, A CORPORATION, v. ROBB-LAWRENCE COMPANY, A CORPORATION, AND NORTHERN TRUST COMPANY, A CORPORATION

Supreme Court of North Dakota

January 2, 1906

Appeal from District Court, Cass county; Pollock, J.

Action by the state, for the use of the Hart-Parr Co., against the Robb-Lawrence Company and the Northern Trust Company. Judgment for defendants and plaintiff appeals.

Reversed.

Judgment reversed, and a new trial granted.

Benton & Lovell, for appellant.

A complaint failing to allege compliance with the statutes of this state as to foreign corporations, is not demurrable. Acme Merc. Agency v. Rochford, 72 N.W. 466; American, etc., v. Smith, 73 Mo. 368; Knapp v Nat., etc., 30 F. 607; Cassady v. American etc., 72 Ind. 95; Sprague v. Cutler & Savidge Lbr Co., 106 Ind. 242, 6 N.E. 335; Nelson v. Edinburgh, etc., 92 Ala. 157.

"Doing business" within a state means the general prosecution of their business therein, not an isolated transaction with its citizens. 6 Thompson Corporations, par. 7936; Cooper Mfg. Co. v. Ferguson et al., 113 U.S. 727, 28 L.Ed. 1137; Milan, etc., v. Gorton, 93 Tenn. 590, 27 S.W. 971; Keating v. Implement Co., 35 S.W. 417; Florsheim v. Lester, 29 S.W. 34; Delaware v. Mahlenbrock, 63 N.J.L. 281; Commercial Bank of Vancouver v. Sherman, 28 Ore. 573, 43 P. 658; Colorado Iron Works v. Sierra Grande Min. Co., 15 Col. 499, 25 P. 325; Davis v. Caigle, 53 S.W. 240; Empire v. Tombstone, 100 F. 910; Ware Cattle Co. v. Anderson et al., 107 Iowa 231, 77 N.W. 1026; Wolf v. Bigler, 192 Pa. 466, 43 A. 1092; Mortgage Co. v. Worsham, 76 Tex. 556.

Pierce & Tenneson and Arthur B. Lee, for respondents.

All transactions of foreign corporations without compliance with the conditions required to do business in a state are void, and no action can be maintained thereon. Clark & Marshall, Private Corp. 2716; Bank v. Young, 37 Mo. 398; Cincinnati Health Association v. Rosenthal, 55 Ill. 85, 8 Am. Rep. 626; McCanna v. Citizens Co., 74 F. 597; Seamens v. Temple Co., 105 Mich. 400, 55 Am. St. Rep. 457, 63 N.W. 408; Seamens v. Christian Bros. Mill. Co., 66 Minn. 205, 68 N.W. 1065; Aetna Ins. Co. v. Harvey, 11 Wis. 294; Iowa Falls Mfg Co. v. Farrar, 104 N.W. 449.

After noncompliance has been alleged by the defendant, burden is upon plaintiff to prove compliance, or facts that excuse it. Clark & Marshall Prov. Corporations, 2726-27; Washington Ins. Co. v. Chamberlain, 16 Gray, 165.

Where the statute forbids doing any business, one transaction is as illegal as many. 6 Thompson on Corporations, section 7937, page 6317; Farrior v. Mortgage Company, 88 Ala. 275; Mullins v. American Freehold Company, 88 Ala. 280; Iowa Falls Mfg. Co. v. Farrar, supra.

OPINION

ENGERUD, J.

The defendant Robb-Lawrence Company is a public warehouseman, duly licensed as such under chapter 141, page 180, Laws 1901. The defendant Northern Trust Company is the surety on the former's bond as such warehouseman. The Hart-Parr Company, which we shall hereafter refer to as plaintiff, is a foreign corporation, and has brought this action by leave of the attorney general, in the name of the state, to recover for an alleged breach of the warehouseman's bond executed pursuant to the law mentioned by the two defendant corporations. The complaint, in substance, alleges that the plaintiff is entitled to the possession of certain personal property valued at $ 2,900, which it had previously delivered to the Robb-Lawrence Company as a public warehouseman; that said company had refused to deliver the property on demand, and had converted the same to its own use. The only defense involved on this appeal is the one whereby the defendants claim immunity from liability because the plaintiff is a foreign corporation. That plea is set forth in the amended answer as follows: "Denies that said Hart-Parr Company, if it be a foreign corporation, as alleged in paragraph 1 of said complaint, is entitled to maintain this action, for the reason that it has not complied with the conditions of chapter 22 of the Civil Code of this state, and particularly the provisions of section 3261 and 3263 of the Revised Codes of 1899, and defendant alleges that any contracts entered into by said Hart-Parr Company are therefore void. And in this behalf defendant alleges that said plaintiff had not, at the time of the issuing of the warehouse receipt described in the complaint, or at the time of the commencement of this action, filed in the office of the secretary of state of this state a copy of its articles of incorporation, duly authenticated, or otherwise; that plaintiff is not a corporation created for religious or charitable purposes solely; that plaintiff has not, by an instrument in writing, duly authenticated, or otherwise, filed in the office of the secretary of state and his successors in office, its attorney, true and lawful, or otherwise, upon whom process in any action or proceeding against it may be served." When the plaintiff attempted to prove the facts alleged in the complaint, the defendants objected to any evidence of such facts, unless the plaintiff first proved that it had complied with the provisions of sections 3261 and 3263, Rev. Codes 1899. The plaintiff asserted that it had never come within the terms of the statute by "doing business" in this state. The court, however, held that the transaction alleged in the complaint was of itself sufficient to constitute "doing business" in the state within the meaning of the statute, and that, although it was not necessary for the plaintiff to allege in the complaint that it had complied with the statute, yet it was incumbent on plaintiff to prove such compliance, because the plaintiff's right to sue was put in issue by the answers. The objection was accordingly sustained, and as the plaintiff offered no evidence of its authority to do business in this state, a verdict was directed for defendant. This appeal is from the judgment entered on that verdict.

Section 3261, Rev. Codes 1899, provides: "No foreign corporation, association or joint stock company, except on insurance company, shall transact any business within this state, or acquire, hold or dispose of any property, real or personal, within 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, and shall have complied with the provisions of this chapter; provided, that the provisions of this chapter shall not apply to corporations created for religious or charitable purposes solely." In addition to the conditions imposed by the foregoing provisions, section 3263 requires such foreign corporations doing business in this state to file a power of attorney in the office of the secretary of state, constituting that officer and his successors its attorney upon whom process may be served with the same force and effect as if served personally upon the corporation in this state. Section 3265 declares that "every contract made by or on behalf of any corporation, association or joint stock company doing business in this state, without first having complied with the provisions * * * of sections 3261 and 3263, * * * shall be wholly void on behalf of such corporation, association or joint stock company and its assigns, but any contract so made in violation of the provisions of this section may be enforced against such corporation," etc. Section 136 of our constitution prohibits any foreign corporation from doing business in this state "without having one or more places of business and an authorized agent or agents in the same upon whom process may be served." In view of this constitutional provision, it is clear that compliance only with the statutory provisions above referred to would be of no avail in this state, unless it also had one or more places of business within the state, as required by the constitution. The legislature could not waive a condition which the constitution imposed. The statute and the constitution must, therefore, be read together, and the former must be construed as supplementary to the latter. Both the statutory and constitutional prohibitions relate to the same class of foreign corporations, viz., those "doing business" in this state. The statute imposes additional conditions to those imposed by the constitution, and specifically declares what shall be the consequences of a violation of the statutory and constitutional prohibitions. These prohibitions apply only to those foreign corporations which do business in the state. What is meant by "doing business," or "transacting business?" Respondents contend that these terms must be taken literally and construed to include every act done by a corporation of a business nature. In that broad sense the making of a single contract, a single act of buying or selling, and even the prosecution or defense of an action would be a business transaction which could not be done in this state by a foreign corporation unless it had previously established a place of business here and complied with the statutory conditions. If that were the meaning of the language used in the statute and constitution, it is apparent that in a large number of cases the enforcement of the law would interfere with interstate commerce. Mearshon v. Lumber Co., 187 Pa. 12, 40 A. 1019, 67 Am. St. Rep. 560; Milan Milling Co. v. Gorten, 93 Tenn. 590, 27 S.W. 971, 26 L. R. A. 135; Keating Impl. Co. v. Carriage Co., 12 Tex. Civ. App. 666, 35 S.W. 417; Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 5 S.Ct. 739, 28 L.Ed. 1137.

The fact that foreign corporations proposing to do business here are required to establish a place of business within the state makes it clear that the term ...