Gould Land & Cattle Co. v. Rocky Mountain Bell Telephone Co.

101 P. 939, 17 Wyo. 507, 1909 Wyo. LEXIS 15

• Court: Wyoming Supreme Court
• Decided: May 29, 1909
• Status: Published

Opinion

Scott, Justice.

This action was commenced in the district court of Carbon county by plaintiff in error as plaintiff, against defendant in error as defendant, to recover damages alleged to have resulted from a breach of contract' of the defendant in failing to correctly transmit for hire over its telephone line from its office at Baggs, Wyoming, to the Western Union Telegraph Company at Rawlins, Wyoming, with directions to the telegraph company to forward the same from Rawlins to plaintiff’s agent and employee at Idaho Falls, Idaho, a message giving directions as to shipping plaintiff’s cattle, whereby and by reason of such failure the cattle were shipped to Walcott instead of Wamsutter, Wyoming. There were two defenses pleaded. To the first defense a reply was filed. To the second defense, which was in the nature of a plea in bar a demurrer was interposed which upon clue consideration was overruled, to which ruling an exception was taken and the plaintiff declining to plead further and electing to stand upon the demurrer, judgment was rendered for the defendant, and the case is brought here on error.

1. It is alleged in the petition that the plaintiff is a corporation created, organized and existing under and by virtue of the laws of the State of Nebraska, and that it was on May 4, 1907, and is now, engaged in carrying on and conducting a live stock business in this state and acting within the purpose and objects of the corporation, to-wit: in the business of buying, raising, feeding, selling and shipping live stock and carrying on a general ranch business.

It is alleged among other things in the second defense and to which the demurrer was sustained, that plaintiff has not in any manner complied with the laws of the state of Wyoming relative to foreign corporations doing business in the state, in this, that it has not filed in the office of the secretary of state a copy of its charter of incorporation, or a copy of its certificate and a copy of the general incor-portion law of the State of Nebraska, nor has it filed in the office of the Register of Deeds of Carbon county, a copy of its charter of incorporation or any certificate under any general incorporation law of the state of Nebraska or a copy of such general incorporation law duly certified and authenticated by proper authority of that state as required by section 3265 of the Revised Statutes of Wyoming. It is further alleged: “That said plaintiff has not accepted the constitution of the State of Wyoming and filed such acceptance in accordance with the laws thereof as required by Section 5 of Aidicle 10 of the Constitution of the State of Wyoming. That by reason of such failure on the part of said plaintiff, the said plaintiff never acquired the right to do business in the State of Wyoming, and has forfeited any rights that it might have to do business in the State of AVyoming, and that said plaintiff by reason of such failure, had no authority or right to enter into any contract whatever, or do any business within the State of Wyoming and any such contract attempted to be entered into by the said plaintiff as is attempted to be plead in this action is absolutely null and void and can not be enforced within the State of Wyoming.” It will thus be observed that the overruling of the demurrer sustained the second defense of the answer as a good plea in bar of the action.

Section V, article X, of the Constitution is as follows: “No corporation organized under the laws of Wyoming Territory, or any other jurisdiction than this state, shall be permitted to transact business in this state until it shall have accepted the constitution of this state and filed such acceptance in accordance with the laws thereof.”

It was undoubtedly the intention of the framers of the constitution that all corporations whether domestic or foreign, then or thereafter doing business within the state should be subject to the same rules, regulations and limitations then or thereafter prescribed in so far as such rules, regulations and limitations do' not conflict with the constitution of the United States. This requirement was to compel the submission of all corporations theretofore created under and in pursuance of the territorial laws as well as all foreign corporations then or thereafter to do business in this state, to submit to the exercise of such power by the state. While this section of the constitution is not self executing, yet the legislature has carried it into effect. The first section of Chapter 43, S. L. 1890-91, appears as section 3058, R. S. 1899, and is as follows: “No corporation organized under the laws of Wyoming territory, or any other jurisdiction than the state of Wyoming, shall be permitted to transact business in this state until it shall have accepted the constitution of this state. Such accepance shall be executed and acknowledged in all respects in the manner provided by the laws of Wyoming and the by-laws of the corporation accepting the constitution, for the execution of deeds, and when duly executed shall be filed and recorded in the office of the secretary of state, and it shall be the duty of the secretary of state, upon the filing of any acceptance of the constitution duly executed, to note on the margin of the record of the certificate of incorporation of the1 corporation filing the same the fac.t that such acceptance is filed, which notation shall also refer to the book and page wherein appears the record of such acceptance; Provided, however, That every acceptance of the constitution of this state by any corporation, railroad or other company, executed and filed in the office of the secretary of state prior to the ninth day of January, one thousand eight hundred and ninety-one, which is signed by one or more of the principal officers of such corporation, and has the corporate seal of such corporation affixed thereto, is hereby legalized and shall have the same force and effect in all respects as if the same had been executed and filed in conformity with the requirements of this section.” We thus have a statutory provision supplementary to and which, taken in connection with the section of the constitution, not only defines a duty but sets forth how such duty is to be performed as a condition precedent to embarking in business in this state by a foreign corporation. The petition is silent as to when the plaintiff established its business in Wyoming — whether before or since the adoption of the constitution; if prior to such adoption then the right to continue in such business was dependent upon a compliance with the constitutional provision. The business referred to in the section of the constitution is the corporation business which is wholly state and not within the rules regulating interstate commerce, and we are of the opinion that the business as conducted by the plaintiff out of which grew the contract damage for breach of which is sought is within the scope and meaning of the word “business” as used in that section.

It is not necessary to here discuss the question as to what extent the power to regulate and control the actions or business of a foreign corporation would exist in the absence of such a law. Nor in our view of the case is it germane to discuss section 3268 as amended by Chap. 83, S. R. 1901, providing a penalty to be imposed upon a foreign corporation which attempts to do business in the state before filing its charter or certificate of incorporation in the manner provided by section 3265, R. S. 1899. There is no statutory enactment in this state upon the subject of filing an acceptance of the constitution as a pre-requisite to doing business in this state other than section 3058, supra, nor does the statute anywhere prescribe a penalty for a failure so to do. The question, and we think the only one that need be considered, is, how does the failure to file such acceptance affect the corporation with reference to its contracts? In our view the conclusion we have reached upon that question is controlling in the case. It may be conceded, and we think properly, that all laws in conflict with this section of the constitution, that is to say, any act of the legislature purporting to give authority to transact business by a non-complying foreign corporation temporarily or at all would be unconstitutional. The authority from the state to do so is expressly withheld by the constitutional provision until this condition precedent is performed. The law is mandatory in terms and should be construed in accordance with its plain.import unless it is made clear and explicit that such construction was not intended. There is no constitutional provision that changes or modifies in any manner the rule or its effect when so applied. That the law was intended to be rigidly enforced is made clear by consulting the constitutional debates.

The section of the constitution as originally worded was the subject of considerable discussion and it was doubted whether as so worded it would prohibit the transaction of business by a non-complying corporation and which object was desired by the members. After thorough consideration and to accomplish this’ purpose and thus meet the views of the members the section was amended to its present wording. (Pp.613-616, Constitutional Debates.) There can be no doubt that the members of the convention intended that this section should be rigidly enforced, for after debating the question they used great care in its wording with that purpose in view. We have then not only a constitutional provision but a statute in furtherance of such provision both in mandatory terms, and the former so worded with the expressed intention of its rigid enforcement. It seems clear then that the policy of our state with reference to non-complying corporations has become established by the constitution and the statutory enactment.

A corporation can transact business within and co-extensive with the jurisdiction covered by the law under which it is created. It has no strictly legal existence by force of any obligatory law outside of such jurisdiction. It can transact and conduct its business in another state when such business is state and not interstate in character only by comity or statute, and such statute may make such right conditional upon the performance of prescribed duties. The performance, of such duties are sometimes conditions precedent and sometimes conditions subsequent to the exercise of that right. It may be said however from the adjudicated cases that when in defiance of statutory restrictions or regulations a non-complying corporation undertakes or attempts to establish a place of business in another state a remedy by infliction of a penalty, if any is provided by statute, accrues to the state whose laws are thus violated. In such a case the question of comity as it exists between the states is not involved, for the rule of comity can never be permitted to annul express provisions of a constitution or statute.

The demurrer raises the question of the validity of the contract damage for breach of which is sought to be recovered. That question has been ably argued and presented on the briefs and the counsel are to be commended for their diligence and labor in that respect. The statute does not in terms make or declare such contract void. The decisions however treat them as void contracts, but in the absence of a statute expressly declaring them to be void, they are not void, but as against such corporation voidable by a plea in bar, either admitted or by extrinsic evidence supporting such plea. In such case they are sometimes referred to in the decisions as void because non-enforceable and that is a defense which may be interposed or waived. It should be remembered that we are not here treáting of such contracts as are inherently void on the ground of public policy and upon which no suit could be tolerated in any event. The matter pleaded in the second defense went to the question as to whether plaintiff had any legal standing in court. This question also involves the validity or invalidity of the contract, for if non-enforceable in this, jurisdiction as against the plea in bar it is everywhere non-enforceable as against such plea.

There is no statute in this state which expressly precludes a foreign corporation from maintaining an action in its courts whether that corporation has or has not complied with the laws of this state. The law as above stated goes to the establishment and transaction of business by such corporation in this state. Under the rule of comity a foreign corporation is not required to domesticate in order to maintain an action in our courts. There is however a distinction when such corporation attempts to establish a place and transact business in this state in defiance of its laws and then seeks the aid of its courts to enforce its contracts made in this state in the course of such business. It was never intended that such corporation should have greater privileges than a domestic corporation, and in order that it may enjoy the privileges of a domestic corporation it must perform the duties prescribed by our laws. It can not be said to be the policy of our law to permit a non-complying corporation to enter and settle in this state for the purpose of operating its business. On the contrary we think the settled policy is the other way. This policy being so settled by fundamental and statutory law there is no judicial comity that requires our courts to actively engage in giving them relief for breach of contracts which were made in violation of such policy. Such contracts need not be expressly declared by statute to be void. It is the right to invoke the action of the court by the offending corporation that is denied. This rule has been applied by the Supreme Court of Nebraska in the case of Mutual Fire Ins. Co. v. Hayden, 60 Neb. 637, 83 Am. St. 545, 83 N. W. 922. The same court extended and applied that principle to the case of an attempted foreclosure of a mortgage by a non-complying building and loan association. (Henni v. Fidelity Building & Loan Association, 61 Neb. 744, 87 Am. St. 519, 86 N. W. 475; P. S. & L. Co. v. Eyer, 62 Neb. 810; Peoples Building & Loan Association v. Gilmore, 90 N. W. 108; pp. 1222-1223, 19 Cyc.) Upon this subject the supreme court of Michigan in a case (Thompson v. Waters, 25 Mich. 214, 12 Am. Rep. 243) where the right to purchase and sell real estate by a railroad incorporated under .the laws of Indiana says that “the rule seems to be generally and well settled that the corporate existence, rights of' making and enforcing contracts, of acquiring property and transacting business (not requiring the exercise of official corporate action or franchises within the state) of a corporation created by the laws of one state will be recognized and protected in another; subject only to the qualification that the enjoyment and exercise of such rights shall not be contrary to the laws or settled policy of the state in which they are sought to be enjoyed or exercised, or prejudicial to the interests of such state or its citizens.” * * * “A corporation, however, in any aspect in which it is here essential to consider it, is but an artificial person, whose strictly legal existence, by force of obligatory law, is confined to the State which has created it and endowed it with its powers, capacities and rights; and it can only exercise those powers, capacities and rights in another state by the permission, express or implied, of the sovereign or legislative power of the latter, which must be its own judge how far and upon what conditions it is consistent with its own domestic policy, and the interest of its citizens, to accord such recognition.” This case was cited with approval by that court in Seaman v. Tenple Company, 105 Mich. 400, 55 Am. St. 457, where it was again stated ‘ that the doctrine of state comity will not be applied in behalf of a foreign corporation seeking to recover upon a claim or contract expressly prohibited by law, or one which is clearly at variance with the settled policy of the state.” In a later case that court adhered to the same rule. (Rough v. Breiting, 117 Mich. 48, 75 N. W. 147.) This doctrine is followed in a large number of states, the courts saying in effect that there is no remedy equally effective to compel obedience to conditions to admission as to hold such contracts to be unenforceable. (Hanchey v. Southern Home Bldg. &c. Ass’n, 140 Ala. 245, 37 So. 272; Utley v. Clark-Gardner Lode Min. Co., 4 Colo. 369, 372; Cin. Mut. Health Ass’n v. Rosenthal, 55 Ill. 85, 8 Am. Rep. 626; United Lead Co. v. Elevator Mfg. Co., 222 Ill. 199; Farmers &c. Ins. Co. v. Harrah, 47 Ind. 236; Reliance Mut. Ins. Co. v. Sawyer, 160 Mass. 413, 36 N. E. 59; Sherman Nursery Co. v. Aughenbaugh, 93 Minn. 201, 100 N. W. 1101; Tri-State Am. Co. v. Forrest Park Am. Co., 192 Mo. 404; Kent &c. Co. v. Tuttle, 20 Mont. 203, 50 Pac. 559; Charles Roome Pannele Co. v. Haas, 67 N. Y. App. Div. 457, 73 N. Y. Supp. 986; British Columbia Bank v. Page, 6 Ore. 431; Del. River Quarry Co. v. Bethlehem &c. Pass R. Co., 204 Pa. St. 22, 53 Atl. 533; Harris v. Columbia Water &c. Mfg. Co., 108 Tenn. 245, 67 S. W. 811; Huffman v. Western Mortg. Co., 13 Tex. Civ. App. 169, 36 S. W. 306; Booth & Co. v. Weigand (Utah, 1904), 79 Pac. 570; Ashland Lumber Co. v. Detroit Salt Co., 114 Wis. 66, 89 N. W. 904; Diamond Glue Co. v. U. S. Glue Co., 187 U. S. 611, 23 S. Ct. 206, 47 L. Ed. 326; American Copying Co. v. Eureka Bazaar (S. D. June 13, 1906), 108 N. W. 15.)

Upon the record we are forced to the conclusion that the contract damages for breach of which are sought was a corporation contract non-enforceable as against the second defense under the law and the decisions above cited. The question of estoppel of the corporation to set up the same matter as a defense against an action upon such a contract is not. here involved. The plaintiff cannot be permitted to maintain its action against the plea in bar which is admitted by the demurrer without annulling the law. The plea or second defense answered the entire petition.

As already stated we do not deem it necessary to discuss the effect of the statute providing certain penalties for noncompliance’with section 3265, R. S. 1899, which section requires the filing of the certificate or charter in the manner as therein provided. Such discussion is rendered unnecessary by the conclusion reached as to the effect of the constitutional provision and the statutory enactment supplementary thereto and plaintiff’s failure to comply therewith. The conclusion reached upon that question is controlling of the case.

The court committed no error in overruling the demurrer, and the judgment will be affirmed.

Affirmed.

Pottlr, C. J., and Blard, J., concur.