State v. Merchants' Protective Corp.

Decision Date06 January 1919
Docket Number15010.
Citation105 Wash. 12,177 P. 694
CourtWashington Supreme Court
PartiesSTATE ex rel. LUNDIN, Pros. Atty., v. MERCHANTS' PROTECTIVE CORPORATION.

Department 1.

Appeal from Superior Court, King County; J. T. Ronald, Judge.

Proceeding in quo warranto by the State of Washington, upon the relation of Alfred H. Lundin, Prosecuting Attorney of King County, to inquire as to the right of the Merchants' Protective Corporation to do business in the state of Washington. Judgment for defendant, and relator appeals. Reversed, and judgment of ouster directed.

Alfred H. Lundin, of Seattle, for appellant.

R. L Blewett, of Seattle, for respondent.

CHADWICK J.

This is a proceeding in quo warranto, brought by the prosecuting attorney of King county to inquire as to the right of the respondent to do business in the state of Washington. The respondent is a corporation organized under the laws of the state of Indiana, and has complied with the laws of this state by the filing of proper certificates. The avowed object of the corporation, as stated in its articles of incorporation, is 'the collection of accounts and bills receivable due its members and subscribers.' Its method of operation is to engage an attorney at law or a firm of attorneys, and to then send solicitors about the business community to solicit memberships. The membership fee is $10. When the solicitation for membership has been concluded, the respondent takes $9 of the membership fee and gives $1 to its attorneys. The considerations for the membership fee are recited in the certificate of membership which is handed to each member. They are as follows:

'The Merchants' Protective Corporation (Incorporated 1913).
'Membership Certificate.
'This is to certify that _____ is admitted to membership in the above corporation, and is entitled to legal advice and consultation on all business, personal or private matters without charge at the office of the attorneys retained by and at the expense of the above corporation, for the period of one year from the date hereof.
'Members are defended in all civil or criminal actions brought against them, at any time, in police or justice of the peace courts of this city, without charge by our attorneys.
'Members receive legal advice and information on all new state laws or ordinances of this city, without charge. The object of this corporation is to protect the above member from loss through fraud, bad credits, bad checks, unfair claims, and to arbitrate all matters when dissension arises.
'Warning.
'All persons committing crimes against the above member will be prosecuted to the full extent of the law.
'In witness whereof, the corporation has caused this certificate to be signed by its duly authorized officer and sealed with the seal of the company this ___ day of July, _____.
'[Corporate Seal.] S. Reiker, President.
'Gill, Hoyt & Frye, Attorneys at Law, 426-27-28-29 Colman Building, Seattle, Wash.'

When the membership fee is collected and divided between the respondent and the attorneys, the work of the respondent is done. As said in the case of In re Gill et al., 176 P. 11:

'It plainly appears that the Merchants' Protective Corporation has no business in Seattle or elsewhere, other than the solicitation of members and the collecting of the membership fees, the larger part of which fees are retained by the corporation; the balance being turned over to attorneys with whom it may have entered into contracts of this nature in a number of different cities and towns throughout the country.'

Respondent maintains no offices, but, on the contrary, as was said by one of its officers, the attorneys from thenceforward become and are to all intents and purposes the corporation.

The relator contends that by its manner of doing business respondent is practicing law, and that the statutes of this state afford no warrant for such practice by a corporation. The methods of the respondent are so elusive that it is extremely difficult to treat the case from any certain premise. Technically speaking, whatever the avowed purpose of the respondent may be, and whatever its holding out to its subscribers may imply, it can hardly be said that it is engaged in the practice of the law, for, as we have indicated, its only function seems to be to collect a membership fee and leave the shell of its existence in the hands as some lawyer, or firm of lawyers, who are willing to receive business through such methods of solicitation. On the other hand, and if its object as declared in its articles is rejected, and the promises of the respondent as contained in its certificate of membership are retained, there can be but slight question that it is unlawfully engaged in the practice of the law. For certainly, if it be a corporate entity, it is in no position to urge that it is not responsible to its subscribers, or that it could not be held to answer under its contract to furnish legal advice and...

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    ...of law. (Id. at p. 538, 209 P. 363.) Adopting the reasoning of the Washington Supreme Court in State ex rel. Lundin v. Merchants Protective Corp. (1919), 105 Wash. 12, 177 P. 694, it held: "`The practice of law is not a business that is open to a commercial corporation. "Since, as has been ......
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