Tabor v. Commercial Nat. Bank of Cleveland

62 F. 383, 10 C.C.A. 429, 1894 U.S. App. LEXIS 2307

• Court: Court of Appeals for the Eighth Circuit
• Decided: June 25, 1894
• Docket: No. 370
• Status: Published

Opinion

SANBORN, Circuit Judge,

after stating tbe facts as above, delivered the opinion of tbe court.

Corporators and directors who secure the grant of a corporate franchise under the general corporation laws of a state ought to bear the burdens as well as enjoy the benefits of those laws. The corporation formed under such laws is conclusively presumed to be a resident and inhabitant of the state under whose laws it is organized. ‘•It must dwell in the place of its creation, and cannot migrate to another sovereignty.” Bank v. Earle, 13 Pet. 519, 588; Runyan v. Coster, 14 Pet. 122, 129; Ex parte Schollenberger, 96 U. S. 369, 377. The statures of the state by virtue of which the franchise vests become the' charter of the corporation, and those who seek and accept; such a franchise tacitly agree to perform the requirements, assume the responsibilities, and discharge the liabilities the laws of the state impose, fciuch laws have no extraterritorial force, no operation beyond the borders of the state that enacts them, except by comity alone; and hence it must be presumed that all their requirements must be fulfilled within the border of that state, unless the statutes otherwise clearly provide.

The state of Colorado, for the protection of the stockholders and Hue security of the creditors of its corporations, has required each corporation to make and to file with the recorder of deeds of the county in which the principal business of the corporation in that siate shall be carried on, annual reports of the amount of its capital stock, the proportion actually paid in, and the amount of its existing debts; and has provided that, in case of a failure of any corporation to lile any of these reports within (>0 days after the 1st day of January in each year, the directors of the corporation shall be jointly and severally liable for all its debts contracted during the year pre ceding the time when such report should have been ñled and until it is filed. The plaintiff in error was one of the corporators, and has ever since been one of the directors, of the Montana Mining, Land & Investment Company, which was a corporation organized several years ago under the la.ws of the state of Colorado. This corporation has never filed any report of its financial condition, and on this account the court below rendered judgment against the plaintiff in error for one of the debts of the corporation. He admits that the written certificate which he signed, and on which this corporation is founded, stated that the principal place and business office of the corporation in Colorado would be in the city of Denver, in the county of Arapahoe, and state of Colorado, and that the corporation has always maintained, and still maintains, an office in that city. But be says that tbis certificate also stated that tbe principal business of tbe corporation was to be carried on in the state of Montana and in any part of tbe state of Colorado where tbe corporation might desire to transact business; and be further says that none of the mining or other business of tbe corporation was intended to be, or was in fact, carried on in any of tbe counties of Colorado.

In our opinion, tbis constitutes no defense to tbis action, and these allegations were properly stricken from his answer. Corporations and directors who accept tbe franchise to be a corporation under the general laws of a state can no more free themselyes or their corporation from tbe discharge in that state of tbe duties those statutes impose upon them, or divest themselves of the responsibilities and liabilities imposed upon them by those statutes, by simply conducting their business beyond the borders of the state, than the Ethiopian can by migration change his skin, or the leopard his spots. The ’ corporation statutes of Colorado constitute the charter of this corporation, — the law of its being. They required annual reports of its financial condition to be filed in the county in which its business was carried on. Gen. Laws Colo. 1877, p. 149, § 16. This meant that these reports should be filed in the county in Colorado in which its business was carried on; not in Montana, nor in any other state. Any other construction would be absurd, because this statute is without force beyond the boundaries of Colorado. The directors cannot escape this duty and liability by conducting their business in another state. The statutes of Colorado require them to maintain an office and place of business in that state, and to file their reports in the county in which that place of business is located. It is no answer to the charge of their failure to perform the latter duty that they failed to perform the former.

Moreover, it was with the recorder of deeds of the county in which the certificate of incorporation stated the business of the corporation in Colorado would be carried on, not with the recorder of tlie county in which it was actually carried on, that the corporation was required by this statute to file these reports; and the answer admits that the certificate stated* that the business office of the corporation was in Arapahoe county, and that it did not name any other county in Colorado where its business would be carried on. In sections 125-127 of the general laws of Colorado for the formation of corporations (pages 184, 187, G-en. Laws 1877; sections 625, 630, Mills’ Ann. St. 1891), a method is provided through which, by a vote of the stockholders and the filing of a proper certificate, a change of the name, or of the place of business, or of the number of the members of the board of directors, or of the amount of the capital stock of such a corporation may be made. It goes without saying that the place where the business was to be carried on named in the certificate could no more be changed without a compliance with this statute than could the name or the amount of the capital stock or the board of directors, and until it tvas so changed the reports were required by the statute to be filed Avith the recorder of deeds of Arapahoe county. Starch Factory v. Dolloway, 21 N. Y. 449, 454; McHarg v. Eastman, 4 Rob. (N. Y.) 635, 639.

Again, the last clause of section 2, p. 144, (ten. Laws Colo. 187-7 (section 473, Mills' Ann. St. 1891), which relates to a corporal ion organized in Colorado to do a part of its business without tin» state dot's not require the certificate of incorporation to state the name of the county in which the principal place of business of the corporation is to be carried on, but only the name of the county in which the principal business of the corporation within the state of Colorado is to be carried on. The answer nowhere denies that the certificate' did state that the principal office and the place where the principal business of the corporation in Colorado was to be carried on was in Arapahoe' county, and it admits that all the business that the corporation ever did carry on in Colorado — the business of maintaining an office — was conducted in that county. Under these admissions it was not mal erial that ihe corporation carried on the principal part of its business in another state. The certificate fixed the county in which it was required to file its reports.

The next averment stricken from ihe answer was that section 16, supra, is unconstitutional, because the title of the act in which it was enacted did not; clearly express the subject embraced in that section. Section 21, art. 5, of the constitution of Colorado provides that “no bill, except general appropriation bills, shall be passed containing more than one subject, which shall be clearly expressed in its title. ” Mention 16 was one of one hundred and thirty-two sections of a general law providing for the formation and government. of corporations in the state of Colorado, and for the responsibilities and liabilities of their stockholders and officers. The title of the bill which became this law was, “An act: to provide for the formation of corporations.” The section in question was clearly germane to the subject expressed in this title, and fully protected by the settl'd rule for the interpretation of such a provision in constitutions. That rule is that, where the subject of ihe bill is clearly stated in the title, the law will not be held obnoxious to this clause of the constitution on account of the presence in it of any provisions that are germane to the subject: expressed in the title, or that would be naturally suggested by it as necessary or proper to a complete accomplishment of the purpose it discloses. Travelers’ Ins. Co. v. Township of Oswego, 7 C. C. A. 669, 59 Fed. 58, 64; In re Breene. 14 Colo. 407, 24 Pac. 3; State v. Cassidy, 22 Minn. 312, 322, 326, and east's cited; State v. Barrett, 27 Kan. 213, 218, and cases cited.

The only other allegation stricken from the answer was that the mining company had no corporate existence, because it was organized to do all its business without the state of Colorado. In an earlier parr of ihe answer the plaintiff in error liad expressly admitted that the mining company was a corporation organized under the laws of that state, and there was certainly no error in striking from the answer this inconsistent statement. This disposes of all the objections made to the order of the court striking out portions of the answer. Then' was no error in this order.

It: is assigned as error that the court below admitted in evidence the judgment roll and proceedings in the Montana, court in the case of the Commercial National Bank against the mining company, but upon an examination of the bill of exceptions we find that, while the plaintiff in error objected and excepted to the introduction of this evidence, he assigned no ground for his objection. It is well settled that an appellate court cannot consider an objection unless the specific ground for it was brought to the attention of the trial court. U. S. v. Shapleigh, 12 U. S. App. 26, 4 C. C. A. 237, 249, 54 Fed. 126; Ward v. Manufacturing Co., 5 C. C. A. 538, 56 Fed. 437; Burton v. Driggs, 20 Wall. 125, 133; Camden v. Doremus, 3 How. 515, 530; Baldwin v. Blanchard, 15 Minn. 489, 496 (Gil. 403).

It is next assigned as error that the court erred in finding for the defendant in error on the evidence. This assignment, however, rests upon a single exception to the finding of the court and the judgment thereon. It is as futile as an exception to the verdict of a jury. The finding of the court below was general, and that court was not requested, before the trial closed, to make a peremptory declaration that the evidence was insufficient to entitle the defendant in error to judgment; and in the absence of such a request it is well settled that this court is not authorized to review the finding of the court below. Adkins v. W. & J. Sloane, 61 Fed. 791; Village of Alexandria v. Stabler, 1 C. C. A. 616, 50 Fed. 689; Martinton v. Fairbanks, 112 U. S. 670, 5 Sup. Ct. 321; Cooper v. Omohundro, 19 Wall. 65; Insurance Co. v. Unsell, 144 U. S. 439, 451, 12 Sup. Ct. 671.

Finally, it is insisted that the complaint is insufficient to sustain the judgment below because it counts upon the judgment against the mining company, and does not plead the original debt on which that judgment is founded. The argument is that, under section 16, supra, the plaintiff in error is only liable for the debts of the mining company contracted within a certain time, and that a judgment is not a contract debt, and is not such a debt as this statute contemplates. It is worthy of notice that in this case there is no question of the time when the debt in question was incurred, because the corporation never filed any reports, and the plaintiff in error became liable for all its debts. The only question is, was this judgment a debt of the corporation within the meaning of this statute? A judgment for the recovery of money is the highest evidence of a debt. While, as against others than parties and privies to it, it may not be evidence of the facts on which it was rendered, it is evidence against everybody of its rendition, and of the fact that the judgment debt- or owes the judgment creditor the amount of the judgment. Greenl. Ev. § 538. By force of the statutes of Colorado the plaintiff in error has become liable for the debts of this corporation. Whatever was a debt of the corporation is now his debt. This judgment was a debt of the corporation, and, while many contradictory decisions may be found in the state of Hew York as to the effect of such a judgment as evidence in a suit against a stockholder or director, we are of the opinion that the weight of reason and of authority is that this judgment may be counted upon in a complaint to recover its amount under this statute from the plaintiff in error, and may be introduced in evidence to prove the debt it establishes. Frost v. Investment Co. (Minn.) 59 N. W. 308; Slee v. Bloom, 20 Johns. 669, 682; Grund v. Tucker, 5 Kan. 70, 78; Donworth v. Coolbaugh, 5 Iowa, 300; Wilson v. Coal Co., 43 Pa. St. 424, 427; Merrill v. Bank, 31 Me. 57; Came v. Brigham, 39 Me. 35; Milliken v. Whitehouse, 49 Me. 529.

The judgment below is affirmed, with costs.