State v. Cook

• Citation: 80 S.W. 929,181 Mo. 596
• Parties: STATE ex rel. BROWN CONTRACTING & BUILDING CO. v. COOK, Secretary of State.
• Decision Date: 11 May 1904
• Court: United States State Supreme Court of Missouri

80 S.W. 929

181 Mo. 596

STATE ex rel. BROWN CONTRACTING & BUILDING CO. v. COOK, Secretary of State.

Supreme Court of Missouri.

May 11, 1904.

FOREIGN CORPORATIONS—BUSINESS IN OTHER STATES — LICENSE — PURPOSE OF INCORPORATION —EVASION OF STATE LAWS.

1. Where a corporation was organized in New Jersey for a purpose not contrary to the public policy of the state of Missouri, and duly complied with all the statutory requirements necessary to entitle it to do business in Missouri, the facts that all but one of its shares of stock were subscribed for by Missouri citizens, and that its property and business were mainly located in that state, were insufficient to establish that it was formed in New Jersey for the purpose of evading the laws of Missouri, so as to authorize the Secretary of State to refuse to grant it a license to do business in Missouri, under Laws Mo. 1903, p. 121, providing that licenses shall not be granted to foreign corporations where it appears that they were organized by citizens of Missouri for the purpose of evading Missouri laws.

Burgess and Valliant, JJ., dissenting.

In Banc. Mandamus by the state, on the relation of the Brown Contracting & Building Company, against Samuel B. Cook, Secretary of State. Writ granted.

Lathrop, Morrow, Fox & Moore, for relator. The Attorney General, for respondent.

GANTT, J.

This is an original proceeding in this court by the relator to obtain a peremptory writ of mandamus directing the Secretary of State to grant a license to the relator, a foreign corporation organized and chartered by the state of New Jersey to transact its business in this state. The relator is a business corporation organized to carry on the business of contracting for the construction by it for others of houses, buildings, structures, and works of every description, and to have the power to acquire by purchase, lease, exchange, hire, or otherwise of lands, or any interest therein, and to sell, lease, let, mortgage, or otherwise dispose of such lands, and to undertake the management of such property, buildings, and lands, and to hold, purchase, mortgage, and convey real and personal property outside of the state of New Jersey and in the several states of the Union, and especially in the city of Kansas City, Mo. The capital stock was limited to $5,000, the shares to be of the par value of $100 each; was all subscribed and paid up in full, of which Samuel J. Brown, of Kansas City, subscribed for and was apportioned 48 shares, and George J. Brown, of Kansas City, and Mark W. Hatch, of Newark, N. J., 1 share each. The petition alleges that at the time of making its application for license or certificate of authority permitting it to transact business in the state of Missouri, it presented and tendered to the Secretary of State a certified copy of its articles of incorporation duly authenticated by the proper authorities of the state of New Jersey, and, in addition thereto, all the sworn statements required by the laws of Missouri, to wit: First. A statement under its corporate seal, duly sworn to by Samuel J. Brown, its president, and George L. Brown, its secretary, setting forth the business of the corporation which it proposes and desires to carry on in the state of Missouri, as required by the act of March 24, 1903, of the General Assembly of Missouri, a copy of which statement is attached to the petition. Second. A statement duly sworn to by Samuel J. Brown, its president, and its principal officer in Missouri, setting forth the proportion of its capital stock represented by its property located in and being transacted in Missouri, which statement also set out the location of its principal office in this state where legal service may be obtained upon it, a copy of which statement is also attached to the petition, and made part of it. Third. An affidavit by the president showing that it is a corporation organized under the laws of New Jersey; that its capital stock is $5,000, divided into 50 shares of the par value of $100 each; that all of said stock has been bona fide subscribed, and all of it actually paid up—a copy of which affidavit is also attached to the petition, and made a part of it. Fourth. An affidavit of the president showing that the corporation was not and is not in contravention of the laws of Missouri against pools, trusts, and conspiracies, and that it is not a member of any pool, trust, agreement, combination, confederation, or understanding with any other person or association to regulate the price of any article, etc., as required by the laws of this state; a copy of which affidavit is also attached to the petition, and made a part of it. The issuance of the alternative writ was waived, and the secretary filed his return, in which he admits all of the allegations of the petition, but assigns as his reason for denying relator a license a proviso of the act of 1903 (Laws Mo. 1903, p. 121) in the following words: "Provided further that the Secretary of State shall not license any foreign corporation to do business in Missouri when it shall appear that such corporation was organized under the laws of a foreign state by citizens and residents of Missouri for the purpose of avoiding the laws of this state, as it would be a fraud upon the laws of both states and its pretended incorporators would be held as partners, and as such, become liable for the debts of the alleged corporation;" and that, as the articles of incorporation of relator disclosed that two of the three incorporators of relator are, and were at the time of the incorporation of said company in New Jersey, citizens and residents of Missouri, and that these two subscribed and now hold 49 of the 50 shares of the stock of relator and that the entire amount of the capital stock of relator was represented by property located in and business to be transacted in the state of Missouri, the Secretary of State concluded that said corporation fell within the above recited proviso to the act of 1903, and for that reason he declined to issue it a license to do business in this state. He admits that he has no evidence that said corporation was formed by citizens of this state to avoid our laws, unless such evidence is found in the facts above stated. Relator demurs to the return, and the issue thus tendered is whether the fact that citizens of Missouri formed a corporation in another state to do business in this state is of itself evidence that it was so formed to evade our laws.

It is not asserted that relator has in any particular failed to comply with the laws of New Jersey, and it is not suggested that the business it proposes to transact in this state is in contravention of any law of this state; on the contrary, a reading of the articles will demonstrate that they are such as are recognized by our laws providing for the incorporation of domestic business corporations. It is conceded that the general purposes for which this company is organized are not in contravention of any law, either of New Jersey or Missouri. Certainly it cannot be urged as an objection to this corporation that all of its capital shall be invested in property in this state, and subject to taxation by this state, and that it shall otherwise be amenable to all the laws governing our domestic corporations. Looking to our statutory provisions for the public policy of the state, it will be readily observed that we have adopted a most liberal comity toward corporations organized under the laws of other states and countries. Indeed, we have placed them upon substantially the same footing of our own domestic corporate bodies, and give them the same powers, and subject them to the same obligations, that are provided for like corporations in this state. Section 1024, Rev. St. 1899. We have nowhere prohibited such foreign corporations from doing business in this state on account of the citizenship of the incorporators, save in the proviso to the act of 1903; and in that proviso the fact that our citizens are the incorporators does not bar such corporations, but, on the contrary, the implication amounts to a positive permission, provided only they have not formed such corporation for the purpose of evading our laws. When, therefore, such foreign corporation presents itself for admission to the state, and not only shows that its articles provide powers and a business not opposed to our laws, but such as we grant to our own like domestic corporations, there is nothing in the proviso to the act of 1903 which would exclude them. "It is only if some rule of law or principle of policy adopted by a state would be interfered with by allowing a foreign corporation to transact business within its jurisdiction that the usual comity will be refused." 2 Morawetz on Private Corporations (2d Ed.) p. 925. If the articles of relator disclosed that it was its purpose to transact a business forbidden by our laws, organic or statutory, then it was clearly the duty of the respondent Secretary of State to refuse it a license; but when he concedes that no such purpose appears in its charter, and that the only objection he has to granting it a license is that two of the incorporators are citizens of this state and own a majority of the stock, and that all of its business and property will be located in this state, then he is not justified in refusing to license it. The question before us is not new either in Missouri or in the courts of last resort in other states of the Union. In Demarest v. Flack, 128 N. Y. 205, 28 N. E. 645, 13 L. R. A. 854, the defendants, who were citizens of New York, organized a corporation under the laws of West Virginia to do business in the state of New York. It was urged that the corporation thus formed was a fraud upon the laws of New York, and that the individual corporators were liable as partners. The corporation was formed in compliance with the laws of West Virginia. The Court of Appeals of New York held that whether said corporation so...