State v. The St. Louis & San Francisco Railroad Company

• Decision Date: 11 December 1909
• Docket Number: 16,284
• Citation: 105 P. 685,81 Kan. 404
• Court: Kansas Supreme Court
• Parties: THE STATE OF KANSAS, ex rel. Fred S. Jackson, as Attorney-general, Plaintiff, v. THE ST. LOUIS & SAN FRANCISCO RAILROAD COMPANY, Defendant

105 P. 685

81 Kan. 404

THE STATE OF KANSAS, ex rel. Fred S. Jackson, as Attorney-general, Plaintiff, v. THE ST. LOUIS & SAN FRANCISCO RAILROAD COMPANY, Defendant

No. 16,284

Supreme Court of Kansas

December 11, 1909

Decided July, 1909.

Original proceeding in quo warranto.

Demurrer overruled.

SYLLABUS

SYLLABUS BY THE COURT.

1. FOREIGN CORPORATIONS -- Permission to do Business -- Subsequent Legislation Not Applicable. Where a foreign corporation complies with the terms of a statute providing that upon performing certain conditions it shall possess in this state all the rights, privileges and franchises conferred by law upon a domestic corporation, it will not be deemed to be within the purview of a subsequent enactment requiring foreign corporations seeking to do business in the state to make application to a charter board for permission to do so, this requirement not being exacted of domestic corporations already formed.

2. FOREIGN CORPORATIONS Fees -- Increase of Capital Stock -- "Authorized" Capital. The statutes (Gen. Stat. 1901, § 1265; Laws 1907, ch. 140, § 23) requiring the payment of certain fees upon the increase of the capital stock of a corporation doing business in this state refer to an increase in the authorized capital, and such fees are payable whenever there is an increase in the power of the corporation to issue stock in addition to the amount of its original capitalization, regardless of whether any part of the new stock is actually issued or subscribed for.

3. FOREIGN CORPORATIONS Increase of Stock a Question of Fact under the Pleadings. A pleading which denies that a corporation organized under the laws of another state has increased its capital stock unless that result follows from certain facts stated, which do not include the filing of any certificate of increase with the secretary of state of such other state, in effect denies the filing of such certificate and thereby puts the question of such increase in issue.

4. FOREIGN CORPORATIONS Liability for Fees Not Affected by Failure to File Certificate in this State. The fact that the statute provides that the fee exacted when the capital stock of a corporation doing business in this state is increased shall be paid at the time the certificate of such increase is filed with the secretary of state of Kansas does not enable a foreign corporation, which has effected a valid increase in its capital, to defeat or postpone the right of the state to exact such payment by omitting to file such certificate.

Fred S. Jackson, attorney-general, John Marshall, assistant attorney-general, and Charles D. Shukers, special assistant attorney-general, for the plaintiff.

W. F. Evans, Frank Hagerman, and R. R. Vermilion, for the defendant.

MASON, J. PORTER J., concurring.

OPINION

MASON, J.:

This is an original action brought by the state against the St. Louis & San Francisco Railroad Company to oust it from the exercise of the franchise of doing intra-state business in Kansas (1) without complying with various requirements exacted of foreign corporations seeking to do business here, including the payment of certain fees, and (2) without paying further fees on account of a recent increase in its authorized capital stock. It is submitted upon a demurrer to the answer.

Section 5871 of the General Statutes of 1901, which originated in 1870 and has been in force in its present form since 1887, reads in part as follows:

"Any railroad company of this state may sell or lease the whole or any part of its railroad and branches, constructed or to be constructed, or any interest therein, together with all the property, rights, privileges and franchises thereto pertaining, to any railroad company organized or existing under the laws of this state or of any state or territory of the United States; . . . provided, however, that no purchase, lease or guaranty under this act shall be entered into unless the line of railroad so purchased or leased, . . . shall when constructed form a continuous line with the road of the company purchasing, leasing or guaranteeing, either by direct connection therewith, or through an intermediate line or lines constructed or to be constructed, which such company shall have the right by contract or otherwise when completed to use or operate. . . . Any railroad company of any state or territory which shall so purchase or lease a railroad or railroads in this state shall possess and enjoy within this state all the rights, powers, privileges and franchises conferred by the laws of this state upon a railroad corporation of this state: . . . provided, further, that before any railroad corporation of any other state or territory shall be permitted to purchase or lease a railroad in this state, such corporation shall file with the secretary of state a true copy of its charter or articles of incorporation, together with a certified copy of the resolution of its board of directors authorizing service of process to be made upon any of its officers or agents in this state engaged in transacting its business, in the same manner as may be provided by law for the service of process upon railroad corporations of this state; and said resolution to further contain a stipulation that said company shall be and become subject to the provisions of this act. Upon the filing as aforesaid of a true copy of its charter and of such resolution, such foreign company shall be and become fully entitled to the benefits of this act; provided, that no such foreign corporation so purchasing or leasing under this act, which may be sued or impleaded in any of the courts of this state upon any contract made or executed in this state or to be performed in this state, or for any act or omission, public or private, arising, originating or happening in this state, shall have the right to remove any such cause from said state court into any of the federal courts held or sitting in this state on the ground that such corporation is a nonresident of this state; but as to such litigation and the jurisdiction of the court in relation thereto it shall be deemed to be a domestic corporation of this state, and subject to the jurisdiction of its courts in all respects as if formally incorporated in this state."

The answer admits the noncompliance with the requirements referred to, but alleges that in 1896 the defendant, a corporation organized under the laws of Missouri, for the purpose of taking advantage of the statute quoted from, filed with the secretary of state of Kansas a copy of its charter and articles of incorporation, together with a certified copy of a resolution of its board of directors authorizing the service of process upon its agents in the state and agreeing that it should be subject to the provisions of the statute; that it then purchased a line of railroad in this state which formed a continuous line with its road in Missouri, and which it has ever since operated in connection therewith.

In 1898 a general corporation law was enacted requiring persons seeking to form a corporation under the laws of this state and foreign corporations seeking to do business here to obtain permission from the state charter board and to pay certain fees. (Gen. Stat. 1901, §§ 1260, 1264.) These provisions are perpetuated in sections 9, 13, 21 and 23 of chapter 140 of the Laws of 1907. They have not been made applicable to domestic corporations organized prior to 1898, and the defendant asserts that it is exempt from their operation, under the facts pleaded. The plaintiff maintains the contrary. The issue thus formed presents the first question to be determined under the demurrer.

It has been held that the phrase "seeking to do business in this state" applies to foreign corporations which had engaged in business here prior to 1898 (The State v. Book Co., 65 Kan. 847, 848, 69 P. 563) and desired to continue doing so, even although their presence here had been taken notice of and acquiesced in by the state (The State v. Telegraph Co., 75 Kan. 609, 618, 659, 90 P. 299). But the situation of the defendant in the present case is very different from that of a foreign corporation which has been allowed to operate within this jurisdiction merely by sufferance, even although it may have been subjected to some form of surveillance or regulation. The act of 1870 offered to foreign railroad corporations certain privileges upon certain conditions. If they purchased local roads forming a continuous line with their own, and subjected themselves to the provisions of the act, they were to "possess and enjoy within this state all the rights, powers, privileges and franchises conferred by the laws of this state upon a railroad corporation of this state." (Gen. Stat. 1901, § 5871.) The companies which complied with these conditions constituted a distinct class. They stand upon a footing entirely different from that of ordinary foreign corporations, and indeed occupy practically the same status as domestic corporations. This has been recognized by the legislature and by the courts. In a subsequent statute foreign corporations which have availed themselves of the act referred to are described as having become corporations of this state. (Gen. Stat. 1901, § 5872.) And this court has been at pains to suggest that such companies were not within the operation of the formerly existing rule which denied foreign corporations the right to avail themselves of the statute of limitation. ( Williams v. Railway Co., 68 Kan. 17, 29.)

In American Smelting Co. v. Colorado, 204 U.S. 103, 51 L.Ed. 393, 27 S.Ct. 198, it was held (four justices dissenting) that a statute providing that a foreign corporation upon coming into the state should be subjected to all the liabilities of domestic corporations implied that it...