Woolfort v. Dixie Cotton Oil Co.

• Decision Date: 02 December 1905
• Citation: 91 S.W. 306,77 Ark. 203
• Parties: WOOLFORT v. DIXIE COTTON OIL COMPANY
• Court: Arkansas Supreme Court

91 S.W. 306

77 Ark. 203

WOOLFORT v. DIXIE COTTON OIL COMPANY

Supreme Court of Arkansas

December 2, 1905

Appeal from Pulaski Circuit Court; EDWARD W. WINFIELD, Judge affirmed.

Judgment affirmed.

Bradshaw Rhoton & Helm, for appellant.

The power of a foreign corporation to make a contract in this State is limited by the statute. Act May 23, 1901 §§ 1, 2.

It is in the discretion of the State to exclude a foreign corporation entirely, or, on admitting it, to prescribe the terms upon which it may transact business. 8 Wall. 168; 57 Ark. 33; Murfree on Foreign Corporations, § 2; 49 Ohio St. 440; 119 U.S. 110; 155 U.S. 648, and cases cited; 2 Cook, Corp. 697-700.

If a statute simply provides that, before doing business, the company shall comply with certain conditions, and prescribes no penalty, it, in effect, withholds the comity of recognition of its corporate capacity from the foreign company, and it comes into the State without legal capacity to make a contract. Murfree on Foreign Corporations, § 80; 55 Vt. 526; 6 Oreg. 431. Its contracts are void. Beale on Foreign Corp. 214 and cases cited; 6 Gray (Mass.), 376; 2 Allen (Mass.), 398.

Marshall & Coffmann, for appellee.

Contracts made by a foreign corporation within the State before compliance with the statute are not void, and may be sued on by the corporation after compliance. Beale on Foreign Corp. § 213; 51 N.W. (S. D.), 706; 49 Pac. (Mont.), 446; 49 N. E. (N. Y.) 1043; 54 N. E. (Ind.) 753; 53 N. E. (Mass.) 855; 83 F. 403; 84 F. 514; 58 C. C. A. 79; 70 Ark. 525; 72 Ark. 327. An individual contracting with a foreign corporation is estopped to deny its right to contract. 51 S.W. 620; 3 So. 307; 37 P. 287; Ib. 298.

Unless it appears affirmatively that the Legislature intended to render the forbidden act or contract absolutely void in legal contemplation, it will not be so held. 58 C. C. A. 79; 98 U.S. 621, 627.

OPINION

MCCULLOCH, J.

The only question raised by this appeal is whether a foreign corporation doing business in this State can recover upon a contract made by it without having complied with the statute requiring that such corporations, before attempting to do business in the State, shall file with the Secretary of State and county clerk a certified copy of their articles of incorporation.

Kirby's Digest, §§ 825, 826, 827, 828, 829, and 830, provide that a foreign corporation shall, before doing business in the State, file in the office of the Secretary of State a copy of its charter and a certificate designating an agent upon whom process may be served, and declare that, if any corporation shall fail to comply with the statute, it shall be subject to fine, and that no suit can be maintained to enforce its demands.

Appellee complied with this statute before entering into the contract sued on.

The Legislature enacted a statute May 23, 1901, (Kirby's Digest, §§ 832, 833), section one of which provides that a foreign corporation, before it shall be authorized or permitted to establish or continue its business in this State, shall file with the Secretary of State and county clerk a copy of its articles and a statement of the proportional part of capital stock in its business in the State and county. The second section of said act is as follows:

"That no corporation formed or organized in another State, territory, county or country, shall be authorized or entitled to make any contract in this State until it has complied with the provisions of the foregoing section, nor shall it be authorized to sue on any contract made in this State until the provisions of section one (1) of this act are complied with; provided, that corporations now doing business in this State may have sixty (60) days to comply with this act."

This act was not complied with until after the commencement of this suit to enforce the contract, which was entered into on March 8, 1902.

In the two cases of Buffalo Zinc & Copper Co. v. Crump, 70 Ark. 525, 69 S.W. 572, and Sutherland Co. v. Chaney, 72 Ark. 327, 80 S.W. 152, it was held that a foreign corporation which complied with the first named statute after it had commenced an action was entitled thereafter to maintain it. In each of those cases the contract sued on was entered into prior to the enactment of the first-named statute (February 16, 1899), and the suit commenced after its enactment.

In the case first cited above the court said: "The penalties of the act in question are, doubtless, intended to compel an observance of its terms. When that is done, its purpose is accomplished, the condition upon which the right to maintain an action depends is performed, and the plaintiff can in the future prosecute it to a final judgment."

It will be observed that there is a substantial difference between the provisions of these two statutes. In addition to requiring, as a prerequisite to doing business in the State, the performance of entirely different acts on the part of the corporations, the first-named statute expressly provides that in the event. of failure to comply therewith it shall be subject to fine of $ 1,000. It is noteworthy also that a prior statute on the subject (act of April 4, 1887) provided that in the event of a failure of a corporation to comply with its provisions all contracts made with citizens of the State shall be void. The statute now under consideration contains no such provision. It merely declares that "no foreign corporation shall be authorized or entitled to make any contract in this State, nor sue on any contract made in this State, until it has complied with the foregoing section."

Prof Beale in his late work on Foreign Corporations (sec. 213) says: "The weight of authority supports the view that contracts made by foreign...