Iowa Falls Mfg. Co. v. Farrar

104 N.W. 449, 19 S.D. 632, 1905 S.D. LEXIS 90

Opinion

Fuller, J.

The only question presented by this appeal from an order overruling a demurrer is whether a defense to an action to' foreclose a mechanic’s lien is stated in the following paragraph of the defendant’s answer: “For’a further -answer t<? said complaint defendant alleges that plaintiff is a corporation created-under the laws of the state of Iowa, having its principal =place of business in that state; that it has not complied with the laws of the state of South-.Dakota relating to foreign: corporations, in that it has not filed in the office of- the Secretary of State a duly authenticated copy of its charter or articles of incorporation, and it has -not appointed an agent-residing in this state upon whom service of process may be made-,-and'it has not filed in the office of the'Secretary ,of State of this state a duly arithenticated copy of the appointment of such an agent as by laws provided.” Upon the theory that -the above-men- • tioned statutory .provisions relate exclusively to-transactions -.entered into within this state, it is vigorously contended by counsel that compliance therewith on the part of appellant was unnecessary, because the contract for the building material described in the lien here sought, to be foreclosed was -made in the state of Iowa. In Bradley, Metcalf & Co. v. Armstrong, 9 S. D., 267, 68 N. W., 733, it is said that: “By the enactment of sections 833, 834 and 835 of the Revised Civil Code, the Legislature has expressly prohibited -a nonresident corporation from transacting in this state any business acquiring or disposing of any property, instituting or maintaining any actions at law or otherwise, until such corporation shall have filed in the office of the Secretary of State a duly authenticated copy of its charter or articles-of incorporation, and appointed in the manner provided therein a resident agent upon whom service of process may b'e had. Any violation of this mandatory statute is declared' to be a misdemeanor punishable by fine or imprisonment, arc! justices of the peace are given jurisdiction concurrent with that’ of the circuit' court.” As originally enacted, our statute prohibited • the transaction of business or acquisition or disposition-of'property in this state by a foreign corporation until its articles of incorporation were filed in the manner required at the present time, and an agent with authority to accept service of process was appointed, “who shall reside at some accessible point in the state, in the county where the principal business of said corporation shall be carried -on.” In -a case the same as this, where one of our citizens found a corporation in another state, with which he concluded an isolated transaction, it was very properly held that “a foreign- corporation not transacting business in this territory may sue in our courts without having complied with the provisions of section's 567 and 569, Rev. Civ. Code, relating to filing its articles of incorporation and appointment of ran agent.” Fuller & Johnson Manufacturing Co. v. Foster, 4 Dak. 329, 30 N. W. 166. Having under consideration a statute thus constructed to unconditionally allow foreign corporations tc sue our citizens on claims arising in other states, the Legislature of 1895 added, by way of amendment, the further restriction that “no corporation created or organized under the laws of any other state or territory shall * * * sue or maintain actions at law or otherwise in any of the courts of this state, until such corporations shall have filed in the office of the Secretary of State- a duly authenticated copy of its charter or articles of incorporation”; and instead of requiring the agent authorized to accept service of process “to reside at some accessible point in this state in the county where the principal business of such corporation shall be carried on,” the amende ment merely provides that “he shall reside in some accessible point in this state: * * * provided, further, that no action shall be commenced or Maintained in any of the courts of this state by'such corporation on any contract; agreement or transaction made "or en tered into in this state, by such corporation, unless such corporation shall have fully complied with the provisions of this article.”

In requiring the filing of corporate articles and the appointment of an agent as a condition precedent to the commencement of an action in any court of this state by a foreign corporation to enforce a claim arising in another state, the Legislature has used the plainest of words in sentences free from ambiguity, and whether an action is maintainable on account of a transaction entered into in this state by such corporation prior to complying with the statute is a question not now presented for determination, and concerning which no opinion is expressed. However, it is noticeable that section 883 of the Revised Civil Code provides generally that no action is maintainable by a foreign corporation until its articles are filed and an agent appointed, while section 885 specifies that no action is maintainable “on any contract, agreement, or transaction made or entered into in this state by such corporation, unless such corporation shall have fully complied with the provisions of this article.” Quite uniformly foreign corporations are expressly prohibited by a constitutional provision or legislative enactment from carrying on business in states where they are not domiciled unless they have first complied with conditions similar to the requirements of our statutes; but a thorough research discloses but few decisions based upon a provision like ours, where in express terms every foreign corporation is required to file its articles and appoint an agent before it can maintain any action at law or otherwise in any of the courts of this state. Inferentially, the suggestion is made by counsel for the corporation that the foregoing statute, literally construed, interferes with interstate commerce by depriving their client of its constitutional right to maintain an action for the enforcement of a contract made beyond the boundaries of this state, and it must be conceded from the nature of the transaction in controversy that appellant was engaged in interstate 'commerce. Plainly, the provision for the appointment of an agent upon whom service of process may be made does not infringe upon the right of a foreign corporation to sue in the courts of this state, and the requirement that its articles of incorporation be filed before-commencing an action is just what domestic corporations must do for the protection of the public, and as a matter of practice which in no manner interferes with commercial intercourse between states. Failure to appoint an agent and file the articles of incorporations does not render the contract for building material void, but merely suspends appellant’s right to commence or maintain ah action for the foreclosure of its lien until the statute is complied with. Daly v. Ins. Co., 64 Ind. I. In the case of The State v. American Book Co., 65 Kan. 847, 69 Pac. 563, the court say: “The claim that because the defendant company is engaged in interstate trade it cannot be subjected to the regulations of the law of 1898 is untenable. It may be that it cannot be excluded from doing business here, but it can be laid under such reasonable conditions as the filing of its charter, the payment of charter fees, the making of reports and furnishing of information concerning its business, the appointment of agents to receive service of process, etc. These are not burdens on the company; they are measures of justice and protection to the people of the state.” In imposing the statutory penalty upon a corporation engaged in interstate commerce for the violation of a provision similar upon principal to ours, it was decided by the Unitéd State Supreme Court to be neither a' regulation of interstate business nor an infringement upon the exclusive power of Congress to require railroad companies to post up their passenger and freight rates for the information of the public. R. R. Co. v. Fuller, 17 Wall. 560. We quote from the case of Ashley v. Ryan, 153 U. S. 436, as follows: “At the present day corporations are multiplied to an almost indefinite extent. There is scarcely a business pursued, requiring the expenditure of a large capital or the union of large numbers, that is not carried on by corporations. It is not too much to say that the wealth and business of the country are to a great extent controlled by them. And if, when composed of citizens of one state, their corporate powers and franchises could be exercised in other states without restriction, it is easy to see that, with the advantages thus possessed, the most important business of those states would soon pass into their hands. The principal business of every state would in fact be controlled by corporations created by other states. It follows from these principles that a state, in granting a corporate privilege to' its own citizens, or, what is equivalent thereto, in permitting a foreign corporation to become one of the constituent parts of a consolidated corporation organized under its laws, may impose such conditions as it deems proper, and that the acceptance-of the franchise in either case implies a submission to the conditions without which the franchise could not have been obtained. In Paul v. Virginia, 8 Wall. 168, 19 L. Ed. 357, the court said: ‘Having no absolute right of recognition in other states, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those states may think proper to impose. They may exclude the foreign corporations entirely. They may restrict its business to particular localities, or they may-exact- such security for the pcrfomance of its contracts with their citizens as in their judgment will best promote the public interest.’ ” Section 1283 of the General Statutes of Kansas 1901 provides that: “It shall be the duty of the president and secretary or of the man- * aging officer of each corporation for profit doing business in this state, except banking, insurance and railroad corporations, annually on or before the 1st day of August, to prepare and deliver to the Secretary of State a complete detailed statement of the condition of such corporation on the 30th day of June next preceding. * * * No action shall be maintained or rocevery had in any of the courts of this state without first obtaining the certificate of the Secretary of State that statements provided for in this section have beer, properly made.” In sustaining the above statute in a case like this the court say: “It may be said that the question here .is not the power of the state of Kansas to lay a charge on interstate commerce, or to prevent a foreign corporation from engaging in interstate commerce within its confines, but simply the right of the state to determine upon what conditions its laws as to the enforcement of rights through its courts may be availed of. The part of the statute under consideration lays no embargo or burden upon interstate commerce. It does not seek to prevent or hamper, the transactions of corporations engaged in that business. It does not declare their contracts void, or deny them the enforcement of any rights whatever. It merely provides that, if they wish to make use of the machinery of the state courts for their own benefit, they must do so upon the same terms as other corporate suitors. In this we find no interference with the powers reserved to Congress by the federal Constitution.” Deere v. Wyland, 69 Kan. 255, 76 Pac. 863.

Without any distinction as to isolated or multifarious corporate transactions it was held in Bradley, Metcalf & Co. v. Armstrong, supra, that a foreign corporation is expressly prohibited from instituting or maintaining any action at law or otherwise until the statutory requirements have been answered, and upon that case and the law here enunciated the order appealed from is affirmed.