War Eagle Consolidated Mining Co. v. Dickie

• Decision Date: 16 March 1908
• Citation: 94 P. 1034,14 Idaho 534
• Parties: THE WAR EAGLE CONSOLIDATED MINING COMPANY, Appellant, v. JOHN K. DICKIE, Respondent
• Court: Idaho Supreme Court

94 P. 1034

14 Idaho 534

THE WAR EAGLE CONSOLIDATED MINING COMPANY, Appellant, v. JOHN K. DICKIE, Respondent

Supreme Court of Idaho

March 16, 1908

FOREIGN CORPORATION-COMPLIANCE WITH CONSTITUTION AND STATUTE IN ORDER TO ENTITLE IT TO DO BUSINESS-RIGHT TO HOLD TITLE TO REAL ESTATE-TITLE ACQUIRED PRIOR TO MARCH 10, 1903.

1. Prior to the amendment of March 10, 1903, to sec. 2653, Rev Stat., neither the constitution nor statutes of this state rendered a conveyance void that was made to a foreign corporation doing business within this state that had not complied with the requirements of the constitution and statute in appointing a statutory agent upon whom service of process might be had and maintaining one or more known places of business within the state.

2. The provisions of the amendment of March 10, 1903, that a corporation failing to comply with the requirements thereof "cannot take or hold title to any realty within this state prior to making such filings, and any pretended deed or conveyance of real estate to such corporation prior to such filings shall be absolutely null and void," do not refer to acts or transactions occurring or titles acquired prior to the passage of the law in question, and it was evidently not the legislative intent to make the law retroactive nor to divest previously acquired titles.

3. In the passage of the amendatory act of March 10, 1903, it was not the intention of the legislature to provide for or declare a legislative forfeiture of previously acquired titles, and the act contains no such provision, nor does it contain any method or procedure for carrying into effect such intent.

4. If a forfeiture had been intended and had actually taken place the property would have escheated to the state subject to the payment of debts of the corporation, and not to any private party, and such escheat or forfeiture could not avail one who does not claim his title from or through the state, but claims title from the general government.

5. In a case where the action prosecuted by a foreign corporation does not involve any contract or contractual relation or arise out of contract, and the defendant does not plead or contend that the cause of action did arise out of any contract or contractual relation, and it appears that the cause of action involved the protection of the title and possession of real property acquired at a time when the corporation had in all respects complied with the then existing law, and the defendant pleads as a defense that the plaintiff has failed and neglected to comply with the constitution and subsequent laws of this state in appointing a statutory agent and filing copies of its charter or articles of incorporation, such defendant is not in a position to maintain the defense of noncompliance with the statute on the part of the plaintiff.

6. Where a foreign corporation rightfully acquired title to real property within this state at a time when it had in all respects complied with the law of the state in respect to foreign corporations, but failed to comply with a subsequent enactment, but no forfeiture of its title has been judicially declared, it will be allowed a standing in court to protect its title and right of possession as against a private party who trespasses thereon or seeks or attempts to appropriate the same to his own use and benefit.

(Syllabus by the court.)

APPEAL from the District Court of the Third Judicial District, for the County of Boise. Hon. Fremont Wood, Judge.

Action by the plaintiff to quiet title to a mining claim. Judgment for the defendant. Plaintiff appeals. Reversed.

Reversed and remanded. Costs in favor of appellant.

H. L Fisher, for Appellant.

In Katz v. Herrick, 12 Idaho 1, 86 P. 873, this court cited with express approval the case of Fritts v. Palmer, 132 U.S. 282, 10 S.Ct. 93, 33 L.Ed. 317. The case at bar is stronger than Fritts v. Palmer in the following particulars In the Colorado case the foreign corporation was not complying, and had not complied, with the law at the time it took the deed; in the case at bar appellant, before and at the time of taking the deed, had made full compliance with the law. In Fritts v. Palmer, the corporation did not subsequently comply with the law; in this case appellant subsequently complied with the law and gave a sufficient and satisfactory reason for the delay. In the Colorado case there was no pretension made that the corporation had at any time complied, or attempted to comply, with the law; in the case at bar appellant was delinquent in the one particular only of having failed to file its articles. In Fritts v. Palmer the party attacking the right of the corporation to hold the property connected himself with the original holder of the title; the record in this case shows defendant to be a mere interloper.

Where a corporation is competent by its charter to get a title to real estate, a conveyance to it is not void but only voidable; the sovereign alone can object. It is valid until assailed in a direct proceeding instituted for that purpose. (Reynolds v. Crawfordsville Bank, 112 U.S. 412, 5 S.Ct. 213, 28 L.Ed. 736; Smith v. Sheeley, 12 Wall. 361, 20 L.Ed. 430; Hickory Farm Oil Co. v. Buffalo, 32 F. 22; Carlow v. C. Aultman & Co., 28 Neb. 672, 44 N.W. 873; Myers v. McGavock, 39 Neb. 843, 42 Am. St. Rep. 627, 58 N.W. 529; Davis v. Old Colony R., 131 Mass. 258, 41 Am. Rep. 236; Galveston etc. Imp. Co. v. Perkins (Tex. App.), 26 S.W. 258; Regan v. McElroy, 98 Mo. 352, 11 S.W. 735; Whitman Gold & S. Min. Co. v. Baker, 3 Nev. 386.)

In Katz v. Herrick this court clearly distinguished between a suit to enforce a contract and one to annul and make void an executed contract. The court will not permit a defaulting corporation to enforce the fulfillment of an uncompleted contract, but, on the other hand, it will not allow an executed contract to be rescinded. (Hennessy v. City of St. Paul, 54 Minn. 223, 55 N.W. 1123; Barrow v. Nashville & C. Turnp. Co., 9 Humph. (Tenn.) 304; Edwards v. Fairbanks & Gilman, 27 La. Ann. 449.)

Appellant in this case is not seeking to enforce a contract; it never had any contractual relations with defendant. It is merely attempting to prevent the confiscation of property already acquired and eject trespassers therefrom. (Powder River Cattle Co. v. Custer Co., 9 Mont. 145, 22 P. 384; Fisk v. Patton, 7 Utah 399, 27 P. 3; Pleuffer v. Maltby, 54 Tex. 454, 38 Am. Rep. 631; Clements v. Yturria, 81 N.Y. 285; United States Express Co. v. Lucas, 36 Ind. 361.)

A partial noncompliance with the statute on the part of the corporation, even if such failure had the effect of preventing it from further prosecuting its business in this state, should not close the courts of the state to it, so as to prevent it from asserting rights and recovering property already acquired. (Texas Mortgage Co., Ltd., v. Worsham, 76 Tex. 556, 13 S.W. 384; Middle Brook v. David Bradley Mfg. Co. (Tex. Civ. App.), 27 S.W. 170; O'Reilly etc. Co. v. Greene, 40 N.Y.S. 361, 17 Misc. 302.)

The provisions of the act respecting foreign corporations and their agents in this state are applicable only to actions brought for the enforcement of contracts, and have no applicability whatever to actions, such as this, brought by a foreign corporation, or its agent, to recover the possession of its property. (Smith v. Little, 67 Ind. 556; American Type Founders Co. v. Conner, 26 N.Y.S. 742, 6 Misc. 391; Wright v. Douglas, 10 Barb. 106.)

Hawley, Puckett & Hawley, for Respondent.

There can be no controversy as to the facts in so far as they relate to the plaintiff's omitted duties. It had failed, prior to the commencement of this action, to comply with the requirements essential to its corporate life in Idaho, viz.: The filing of its articles of incorporation, and the filing of its statutory designation of agent in either Ada or Boise counties. (Sec. 2353, Rev. Stats., as amended, Laws of 1903, p. 49.)

We take it that when the framers of the constitution said that "no foreign corporation shall do any business in this state without having one or more known places of business and authorized agent, etc.," and the people adopted it in their organic law, that they meant exactly what the clear and unmistakable language employed implies. (Katz v. Herrick, 12 Idaho 1, 86 P. 873.) The statute is just as clear in its statement that because of its noncompliance the corporation cannot take or hold title to any realty.

Although the Idaho case was one in which the corporation tried to enforce a contract, and not one in which it was trying to establish title to realty, we cannot see why in principle the corporation should be refused a right to sue on its contract on the theory that it has no legal entity, and yet have a right to sue to quiet its title to realty, or how the fact of real property standing in the corporation's name works such magic as to make it a corporation, when it tried to enforce its title, yet when it attempts to enforce a contract makes it an invisible nonentity.

Illinois has held that the title to realty in foreign corporations is void, and citizens have been the ones to invoke the law in this regard. (Carroll v. East St. Louis, 67 Ill. 568, 16 Am. Rep. 632; United Trust Co. v. Lee, 73 Ill. 142, 24 Am. Rep. 236-241.)

As to the Fritts v. Palmer case, our Idaho statutes were formed evidently with the Colorado statute's defects, as disclosed in the Fritts-Palmer case, in the mind of the legislature. Our statute is a positive, clear assertion of duty and penalty, while the Colorado statutes are more of an expression of a wish or an objection than of a direct and positive command.

In the Fritts-Palmer case the Colorado corporation had deeded its property five years before the law was passed, and was in an...