Tabor v. Commercial Nat. Bank

• Decision Date: 25 June 1894
• Docket Number: 370.
• Parties: TABOR v. COMMERCIAL NAT. BANK OF CLEVELAND.
• Court: U.S. Court of Appeals — Eighth Circuit

62 F. 383

TABOR v. COMMERCIAL NAT. BANK OF CLEVELAND.

No. 370.

United States Court of Appeals, Eighth Circuit.

June 25, 1894

Horace A. W. Tabor, the plaintiff in error, brings this writ of error to reverse a judgment in favor of the Commercial National Bank of Cleveland, the defendant in error, and against him as a director of the Montana Mining, Land &amp Investment Company, a corporation of Colorado, for one of the debts of that company. His liability to pay this debt was adjudged to have arisen from the failure of that corporation to make the annual reports required by section 16 of the general law of Colorado for the formation of corporations. Gen. Laws Colo. 1877, p. 149; Mills' Ann. St. 1891, Sec 491.

Section 2 of that law provides that: 'Any three or more persons who may desire to form a company for the purpose of carrying on any lawful business may make, sign and acknowledge before some officer competent to take the acknowledgment of deeds certificates in writing, in which shall be stated the corporate name of the company, * * * the name of the town or place, and the county, in which the principal office of the company shall be kept, * * * and when any company shall be created under the laws of this state for the purpose of carrying on part of its business beyond the limits thereof such certificate shall state that fact, and shall also state the name of the town and county in this state in which the principal office of said company shall be kept, and shall state the name of the county in which the principal business of such company is to be carried on within this state.'

Section 3 provides that a certified copy of the record of one of these certificates shall be evidence of the existence of the company named in it, and section 4 that such company shall be a body corporate and politic in fact and in name. Gen. Laws Colo. 1877, pp. 146, 147; Mills' Ann. St. Colo. 1891, Secs. 475, 476.

Section 16, supra, provides that: 'Every such corporation shall annually, within sixty days from the first day of January, make a report, which shall state the amount of its capital and the proportion actually paid in, and the amount of existing debts; which report shall be signed by the president and shall be verified by the oath of the president or secretary of said company, under its corporate seal, and filed in the office of the recorder of deeds of the county where the business of the company shall be carried on. And if any such corporation shall fail so to do, unless the capital stock of such corporation has been fully paid in and a certificate made and filed as provided in section twelve (12) of this act, all the directors or trustees of the company shall be jointly and severally liable for all the debts of the company that shall be contracted during the year next preceding the time when such report should by this section have been made and filed, and until such report shall be made.'

The complaint, which was filed August 5, 1892, alleged that the Montana Mining, Land & Investment Company was a corporation of the state of Colorado; that in December, 1891, the defendant in error recovered a judgment against it in one of the courts of general jurisdiction of the state of Montana; that execution was issued thereon, and the judgment thereby satisfied in part, but that the mining company still remained indebted to the defendant in error on account of this judgment in the amount of $3,820.84; that the plaintiff in error had been a stockholder and director of the mining company from its incorporation; that the certificate of incorporation of this company, which had been signed by the plaintiff in error, stated that the principal place and business office of the company was in the city of Denver, in the county of Arapahoe, in the state of Colorado; that neither the mining company nor any of its officers or agents had ever filed in the office of the recorder of deeds of that county, or anywhere else, any of the reports required by section 16, supra, nor had any of them ever filed a certificate that the capital stock of the company had ever been paid in as required by the section 12, referred to in that section.

In the amended answer, upon which the case was tried, the plaintiff in error admitted the incorporation of the mining company under the laws of Colorado; that the office of the corporation was in the city of Denver, in the county of Arapahoe, in that state; that he was a stockholder and director of the corporation; and that the company had never filed any report or certificate in the office of the recorder of deeds of any county in Colorado or elsewhere. He denied the incorporation of the defendant in error, the rendition of the judgment against the company, that there was anything due on account of this judgment, and the issuance and return of the execution upon it. The foregoing admissions and denials remained in the answer through the trial.

The plaintiff in error complains that the court below struck out of the answer, before the trial, allegations to the effect that the certificate for incorporation of the mining company did not name any county in Colorado in which its principal business would be carried on, but stated that the principal business of the company was to be carried on in certain counties in the state of Montana and in any part of the state of Colorado in which the corporation might desire to do business, and allegations to the effect that none of its mining operations or other business was intended to be or was carried on in the state of Colorado; that the mining company was a corporation without any corporate existence, because it was organized under the laws of Colorado to do all its business without that state; and that section 16, supra, was an unconstitutional law, because its subject was not clearly expressed in the title of the act in which it was contained.

A jury was waived, and the court tried the case, made a general finding in favor of the defendant in error, and rendered judgment accordingly.

M. B. Carpenter and W. N. McBird, for plaintiff in error.

Henry T. Rogers, Lucius M. Cuthbert, and D. B. Ellis, for defendant in error.

Before CALDWELL and SANBORN, Circuit Judges, and THAYER, District Judge.

SANBORN Circuit Judge, after stating the facts as above, .

Corporators and directors who secure the grant of a corporate franchise under the general corporation laws of a state ought to bear the burdens as well as enjoy the benefits of those laws. The corporation formed under such laws is conclusively presumed to be a resident and inhabitant of the state under whose laws it is organized. 'It must dwell in the place of its creation, and cannot migrate to another sovereignty. ' Bank v. Earle, 13 Pet. 519, 588; Runyan v. Coster, 14 Pet. 122, 129; Ex parte Schollenberger, 96 U.S. 369, 377. The statutes of the state by virtue of which the franchise vests become the charter of the corporation, and those who seek and accept such a franchise tacitly agree to perform the requirements, assume the responsibilities, and discharge the liabilities the laws of the state impose. Such laws have no extraterritorial force, no operation beyond the borders of the state that enacts them, except by comity alone; and hence it must be presumed that all their requirements must be fulfilled within the border of that state, unless the statutes otherwise clearly provide.

The state of Colorado, for the protection of the stockholders and the security of the creditors of its corporations, has required each corporation to make and to file with the recorder of deeds of the county in which the principal business of the corporation in that state shall be carried on, annual reports of the amount of its capital stock, the proportion actually paid in, and the amount of its existing debts; and has provided that, in case of a failure of any corporation to file any of these reports within 60 days after the 1st day of January in each year, the directors of the corporation shall be jointly and severally liable for all its debts contracted during the year preceding the time when such report should have been filed and until it is filed. The plaintiff in error was one of the corporators, and has ever since been one of the directors, on the Montana Mining, Land & Investment Company, which was a corporation organized several years ago under the laws of the state of Colorado. This corporation has never filed any report of its financial condition, and on this account the court below rendered judgment against the plaintiff in error for one of the debts of the corporation. He admits that the written certificate which he signed, and on which this corporation is founded stated that the principal place and business office of the corporation in Colorado would be in the city of Denver, in the county of Arapahoe, and state of Colorado, and that the corporation has always maintained, and still maintains, an office in that city. But he says that this certificate also stated that the principal business of the corporation was to be carried on in the state of Montana and in any part of the state of Colorado where the corporation might desire to transact...