Union Stock Yards National Bank of South Omaha, Nebraska v. Bolan

• Decision Date: 14 January 1908
• Citation: 14 Idaho 86,93 P. 508
• Parties: UNION STOCK YARDS NATIONAL BANK OF SOUTH OMAHA, NEBRASKA, Respondent, v. J. H. BOLAN, Appellant
• Court: Idaho Supreme Court

93 P. 508

14 Idaho 87

UNION STOCK YARDS NATIONAL BANK OF SOUTH OMAHA, NEBRASKA, Respondent, v. J. H. BOLAN, Appellant

Supreme Court of Idaho

January 14, 1908

APPEAL from the District Court of the Seventh Judicial District Washington County. Hon. Frank J. Smith, Judge.

Action by the plaintiff on a promissory note. Judgment for the plaintiff and defendant moved for a new trial, and thereupon appealed from the judgment and order denying his motion. Reversed.

Reversed and remanded, with direction. Costs awarded in favor of appellant.

Rhea &amp Son, for Appellant.

By the act relating to negotiable instruments, Sess. Laws 1903, p 380, sec. 1, an instrument to be negotiable "Must be paid on demand or at a fixed or determinable future time." In said act there is nothing to qualify this requirement in a negotiable instrument, and it is but the codification of the law-merchant upon the subject. Therefore, the note is not negotiable paper, and, in whosesoever hands it may be, is subject to the defenses claimed, as by its terms the time is not fixed or determinable. (Glidden v. Henry, 104 Ind. 278, 54 Am. Rep. 316, 1 N.E. 369; Matchett v. Anderson etc. Works, 29 Ind.App. 207, 94 Am. St. Rep. 272, 64 N.E. 229; Merchants' etc. Bank v. Fraze, 9 Ind.App. 161, 53 Am. St. Rep. 341, 36 N.E. 378; Oyler v. McMurray, 7 Ind.App. 645, 34 N.E. 1004; Clark v. Trueblood, 16 Ind.App. 98, 44 N.E. 679; Mitchell v. St. Mary, 148 Ind. 111, 47 N.E. 224; Second Nat. Bank v. Wheeler, 75 Mich. 546, 42 N.W. 963; Smith v. Van Blarcom, 45 Mich. 371, 8 N.W. 90; Woodbury v. Roberts, 59 Iowa 348, 44 Am. Rep. 685, 13 N.W. 312; Brooks v. Hargreaves, 21 Mich. 254; 1 Dan. Neg. Inst. 34; Hubbard v. Mosley, 11 Gray, 170, 71 Am. Dec. 698; American Exch. Bk. v. Blandard, 7 Allen, 333; Fralick v. Norton, 2 Mich. 130, 55 Am. Dec. 56; Mattison v. Marks, 31 Mich. 421, 18 Am. Rep. 197.)

The failure of the Uinta Hereford Cattle Company to comply with the constitution and the statutes of the state does, as we think, render the note or contract unlawful and defeat recovery thereon. Noncompliance with a statute which declares it unlawful for a foreign corporation to do business in the state without first complying with the requirements therein set forth, such as filing copies of its articles and appointing agents on whom to serve process, can be interposed as a defense to such action, and the contract sued on will be held to be void. (Henni v. Building and Loan Assn., 61 Neb. 744, 87 Am. St. Rep. 519, 86 N.W. 475; Fire Ins. Co. v. Hayden, 60 Neb. 636, 83 Am. St. Rep. 545, 83 N.W. 922, and cases therein cited; Barbor v. Boehm, 21 Neb. 450, 32 N.W. 221.)

Harris & Smith, for Respondent.

By the terms of the act of March 10, 1903, it went into effect sixty days after the adjournment of the legislature, or on May 7, 1903; and all foreign corporations then doing business within this state were given three months, or until August 7, 1903, within which to comply with its provisions. During this period, on May 8, 1903, the note in suit was executed and delivered to the "Uinta Hereford Cattle Co."; and afterward, on June 25, 1903, it was sold and indorsed by the payee to the plaintiff, a resident of a foreign state.

Under this act there was no obligation upon the cattle company to file its articles of incorporation, if it were doing business in this state, which the note upon its face does not show, until August 7, 1903; and all of its acts during this period are as legal and binding as if the act in question had never been passed.

Defendant should have alleged that at the time of bringing suit plaintiff was doing business in this state. (Sigel-Campion L. S. Com. Co. v. Haston, 68 Kan. 749, 75 P. 1028.)

Under the authority of Katz v. Herrick, 12 Idaho 1, 86 P. 873, it is immaterial, so far as the plaintiff herein is concerned, whether the original transaction is unlawful or not, so long as it is neither alleged nor proved that the plaintiff had notice, before or at the time of taking over the note, that the Uinta Hereford Cattle Co. was doing business in violation of the foreign corporation laws of this state at the time the same was given. (2 Clark & Marshall on Private Corporations, 847; Sigel-Campion Livestock Com. Co. v. Haston, 68 Kan. 749, 75 P. 1028.)

AILSHIE, C. J. Sullivan, J., and Stewart, J., concur.

OPINION

AILSHIE, C. J.

This action was commenced by the respondent as the indorsee of a promissory note made and executed by the appellant in the following form:

"$ 900.00 No. 0187.

"Cambridge, Idaho, May 8, 1903.

"Six months after date, for value received, I, we, or either of us jointly and severally promise to pay to the order of Uinta Hereford Cattle Company the sum of nine hundred dollars, with interest at the rate of ten per centum per annum from date until paid.

"Payable at the office of the People's Bank, Salubria, Idaho.

"Should this note be collected by suit, ten per cent shall be allowed holder as attorney fee. The sureties, guarantors, and endorsers of this note severally waive presentation for payment, protest and notice of protest. No extension of time of payment with or without our knowledge by the receipt of interest or otherwise shall release us or either of us from the obligation of payment.

"J. H. BOLAN."

The plaintiff alleged that it was a bona fide purchaser of this note for value before maturity and received it in the due and ordinary course of business. Defendant answered, admitting the execution and delivery of the note, but denied that the plaintiff was a bona fide purchaser of the note for value and in the due course of business. He alleged as a defense to the action, that the note was executed in payment for certain livestock purchased by him from the payee of the note, the Uinta Hereford Cattle Company, and that the stock purchased were not up to the guaranty furnished him by the company at the time of the sale; and he thereupon claimed damages in the sum of $ 1,000. He also alleged that the Uinta Hereford Cattle Company was a foreign corporation organized and existing under the laws of the state of Nebraska, and that it was on the date of the execution of the note, and had been for a long time previous thereto, doing business in the state of Idaho, and that it had failed and neglected to comply with the laws of this state in filing certified copies of its articles of incorporation and the designation of an agent upon whom process could be served, and that it never at any time made any designation of an agent in any county of this state upon whom process might be served. Other matters were pleaded in defense and as counterclaims to plaintiff's cause of action.

On motion of the plaintiff, the court struck from defendant's answer all the allegations with reference to the Uinta Hereford Cattle Company being a foreign corporation and failing and neglecting to comply with the laws of this state in designating an agent upon whom service of process might be made and filing a certified copy of its articles of incorporation. Defendant took an exception to the ruling of the court and assigns the same as error.

After the plaintiff had submitted its proofs at the trial, the defendant moved for a nonsuit upon the grounds, among other things, that it appeared from the evidence introduced by the plaintiff that the Uinta Hereford Cattle Company was a foreign corporation organized under the laws of the state of Nebraska, and that the plaintiff had failed to prove that such corporation had complied with section 10 of article 11 of the constitution of the state of Idaho, and the act of the legislature in reference to foreign corporations doing business in this state. The motion was denied by the court, whereupon the defendant asked leave to file an amended answer again setting up the facts as to the Uinta Hereford Cattle Company being a foreign corporation doing business within this state, and having failed and neglected to comply with the constitution and statutes in reference to foreign corporations doing business within the state. Thereupon defendant offered to pay the actual costs that had been incurred in the case, in the event it became necessary for a continuance over the term on account of such amendment. The motion and application was denied by the court, and the defendant excepted and assigns the action of the court as error on this appeal.

It was clearly error on the part of the court to sustain plaintiff's...