Washburn Mill Co. v. Bartlett

Decision Date23 December 1893
Citation54 N.W. 544,3 N.D. 138
PartiesWASHBURN MILL CO. v. BARTLETT et al.
CourtNorth Dakota Supreme Court
OPINION TEXT STARTS HERE
Syllabus by the Court.

1. Sections 3190, 3192, Comp. Laws, which prescribe the terms upon which foreign corporations may do business in this state, do not render contracts entered into with such corporations, before compliance with the terms of said sections, unenforceable and void.

2. Parties who have contracted with such foreign corporation as a corporation, and received and retained the benefits of such contract, cannot, in an action by such corporation, based thereon, raise the question of noncompliance with the terms of said sections.

Appeal from district court, Sargent county; W. S. Lauder, Judge.

Action by the Washburn Mill Company against S. J. Bartlett and another to foreclose a real-estate mortgage. A demurrer to the answer was overruled, and plaintiff appeals. Reversed.J. E. Bishop, (Akers & Lancaster, of counsel,) for appellant. Ball & Watson, for respondents.

BARTHOLOMEW, J.

The appellant herein, the Washburn Mill Company, is a corporation chartered by the state of Minnesota, and organized and existing under and by virtue of her laws. It brought this action in the district court for Sargent county, in this state, to foreclose a real-estate mortgage executed by S. J. Bartlett and F. G. Bartlett, the respondents herein, to secure a promissory note given by respondents to appellant. The answer admits the execution of the note and mortgage, and as a sole defense thereto alleges, in substance, that, at the time the same were given, appellant was a foreign corporation, and was engaged in and carrying on the regular business of dealing in lumber at Forman, and other points, in the territory of Dakota, (now state of North Dakota;) and that said note and mortgage were given and received at said Forman, and in the regular course of appellant's business; and then proceeds to set forth certain facts to show that at the time of said transactions appellant had not complied with the statutory provisions then in force in the territory of Dakota, and now in force in this state, relative to the transaction of business by foreign corporations. There was a demurrer to the answer, which the trial court overruled, and this ruling is the only question involved in this appeal. The statutes relied upon constitute sections 3190 and 3192 of our Compiled Laws, and read as follows: “No corporation created or organized under the laws of any other state or territory shall transact any business within this territory, or acquire, hold, and dispose of property, real, personal, or mixed, within this territory, until such corporation shall have filed in the office of the secretary of the territory a duly-authenticated copy of its charter or articles of incorporation, and shall have complied with the provisions of this article: provided, that the provisions of this act shall not apply to corporations or associations created for religious or charitable purposes only.” Section 3192: “Such corporation shall appoint an agent, who shall reside at some accessible point in this territory, in the county where the principal business of said corporation shall be carried on, duly authorized to accept service of process, and upon whom service of process may be made in any action in which said corporation may be a party; and service upon such agent shall be taken and held as due service upon such corporation. A duly-authenticated copy of the appointment or commission of such agent shall be filed and recorded in the offices of the secretary of the territory and register of deeds of the county where said agent resides, and a certified copy thereof by the secretary or register of deeds shall be conclusive evidence of the appointment and authority of such agent.” Three errors are assigned and argued: First, the answer does not state facts sufficient to show noncompliance with said statutes; second, said statutes do not make contracts made in violation of the provisions thereof void or unenforceable as between the parties thereto, or in any way affect their rights or remedies; third, said statutes, as applied to the case at bar, are unconstitutional, in that they interfere with interstate commerce.

As to the first point, without setting forth the allegations in detail, we have to say that a careful consideration of them leaves no doubt in our minds that the allegations fairly show noncompliance with the statute, and the trial court committed no error in so holding.

The second point is difficult, and involved in much confusion. While these provisions have been upon our statute books for years, appearing as sections 567 and 569 in the Civil Code of 1877, yet they are now, for the first time, to be passed upon by the court of last resort in this jurisdiction. On three different occasions (Machine Co. v. Moore, 8 N. W. Rep. 131, 2 Dak. 280;Manufacturing Co. v. Foster, (Dak.) 30 N. W. Rep. 166; and Lumber Co. v. Keefe, 41 N. W. Rep. 743, 6 Dak. 160) an effort was made to raise the point before the supreme court of Dakota territory, but no ruling was ever made, In declaring the effect of statutes prohibitory in form, courts have but one object in view,-the real purpose of the statute; the real intention of the legislature in its enactment. It may be stated as a rule at common law that if a statute forbids an act to be done-provides a penalty for doing it-any contract to do the forbidden act is void, whether the statute expressly so declares or not. Machine Co. v. Caldwell, 54 Ind. 276. And when the purpose of the enactment is the absolute prohibition of a certain act, then the performance thereof is invalid, whether the prohibited act be malum in se, or simply malum prohibitum. Holt v. Green, 73 Pa. St. 198; Pratt v. Short, 79 N. Y. 437. But in determining the purpose of the enactment, courts consider the nature of the forbidden act, for the very obvious reason that when such act is immoral or criminal in its nature, or dangerous to life, health, or property, the presumption must prevail that legislative wisdom intended to stamp it out; while if the act be innocent in itself and in its consequences, no such presumption necessarily arises. Among the former may be mentioned gaming contracts, contracts for the sale of intoxicating liquors, where such sales are made criminal, contracts for the sale of diseased food, champertous contracts, etc. A large number of the cases arose under statutes of this kind, and are not authority for the case at bar. To properly construe statutes of the nature of the one here involved, it is necessary to first consider the powers and privileges of foreign corporations in the absence of all statutory regulations. While it is undoubtedly true, as stated by Chief Justice Taney in Bank v. Earle, 13 Pet. 588, that “a corporation can have no legal existence out of the boundaries of the sovereignty by which it is created,” and that “every power, however, of the description of which we are speaking, which a corporation exercises in another state, depends for its validity upon the laws of the sovereignty in which it is exercised, and a corporation can make no valid contract without their sanction, express or implied,” yet this implied sanction is always presumed to exist until the contrary appears. In the same case it is said: We think it well settled that by the law of comity among nations a corporation created by one sovereignty is permitted to make contracts in another, and to sue in its courts, and that the same law of comity prevails among the several sovereignties of this Union.” In Elston v. Piggott, 94 Ind. 17, it is said: “This principle of the comity of nations is a part of the common law, and is by long-settled rules, as well as by positive statute, ingrafted on our law.” And to same effect are Christian Union v. Young, 101 U. S. 352;Thompson v. Waters, 25 Mich. 214;Lumber Co. v. Thomas, 33 W. Va. 566, 11 S. E. Rep. 37; Ang. & A. Corp. §§ 372-376. Of course, this comity only extends to the exercise of such powers as are expressly granted in the charter conferred by the creating sovereignty. It is true, also, that one sovereignty has the power to exclude from its territory any corporation created by another sovereignty; but this must be done by express statute, or by the settled policy of the state, as evinced by the decisions of its courts of last resort. And this includes the lesser right to prescribe terms with which such foreign corporation must comply. We have no statute excluding foreign corporations, except as heretofore quoted, nor has it ever been the policy of this state to exclude foreign corporate capital and business enterprise. Appellant, unless forbidden by the statute quoted, had the power to transact business and enter into contracts in the territory of Dakota. The nature of its contracts contravened no policy of that territory. The contract was innocent in itself and in its consequences. Under these facts, was it the legislative purpose, by the enactment of sections 3190, 3192, Comp. Laws, to declare contracts of this character, entered into before the foreign corporation had complied with the provisions of said sections, unenforceable and void? Similar statutes upon this and other subjects are found in all the states of this Union, and in their construction so much is left to judicial determination that uniformity in the decisions would hardly be expected. The statutes, too, present great variety. Some, like ours, are prohibitory in form, with no penalty attached, and silent as to the consequences of noncompliance. Others, while not prohibitory in form, attach a penalty for doing or failing to do certain specified things. Others have both the prohibitory form and the penalty. Some declare contracts made without compliance with their provisions void and unenforceable or unlawful. Others specify various consequences that shall follow noncompliance. One class of cases, where the...

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