Tarr v. Western Loan & Savings Co. , 15 Idaho 741 ( 1909 )

AILSHIE, J.

This action was commenced by the plaintiffs for the purpose of obtaining a decree canceling a certain mortgage of record and declaring the same null and void. The defendant filed its answer and also a cross-complaint seeking a foreclosure of the mortgage. The plaintiffs answered the defendant’s cross-complaint and set up the defense that the defendant is, and was at the time the contract was made and entered into, a foreign corporation doing business in this state, and that at the time the contract was made and entered into the corporation had not complied with the constitution and statutes of this state with reference to filing a designation of its agent and certified copies of its articles of incorporation. The case went to trial and resulted in a judgment of foreclosure in favor of the defendant, from which plaintiffs have appealed. The decision in this case turns upon the question as to whether or not the defendant corporation had complied with the constitution and statutes of this state governing and regulating foreign corporations doing business in this state. The contract involved was entered into between the appellants and respondent on March 11, 1904, at Bingham county, this state. The facts as to the respondent’s compliance with the constitution and statutes of the state are substantially as follows:

On October 10, 1896, the defendant filed in the office of the clerk of the district court , of Ada county, and also with the secretary of state of the state of Idaho, a designation in writing of Ada county as the county of its principal place of business in this state, and a designation of a resident of Ada county as its statutory agent upon whom process might be served. On the same day the defendant filed in the office of the secretary of state a copy of its articles of incorporation, certified to by the secretary of state of the territory of Utah. These constitute the only acts performed by the corporation in compliance with the laws of this state prior to entering into this contract. Subsequent to the execution of the contract, the company did certain acts in compliance with the statute as follows: On December 16, 1904, it filed with the recorder of Ada county a certified copy of its articles of incorporation, and on the same date filed a duly certified copy of its articles of incorporation with the secretary of state. Thereafter, and on February 14, 1907, it filed with the clerk of the district court in and for Bannock county a written designation of an agent on whom service might be made, and on the 16th day of the same month filed a like designation in the office of the secretary of state, and on February 14, 1907, filed with the recorder of Bannock county a duly certified copy of its articles of incorporation', and on the 16th day of the same month filed a duly certified copy of its articles of incorporation with the secretary of state.

It will be seen, therefore, that at the time of entering into this contract on March 11, 1904, the corporation had failed to comply with the statutes of this state in the following respects: First, it had not filed with the recorder of Ada county, or with the recorder of any other county of this state, a copy of its articles of incorporation duly certified to by the secretary of state of the state of Utah, that being the state in which the corporation was organized and had its legal existence. Second, it had failed to have the copy of its articles of incorporation that was on file in the office of the secretary of state of the state of Idaho duly certified by the recorder of Ada county or by the recorder of any other county of the state.

The statute, sec. 2653, Rev. Stat., as amended by act of March 10, 1903 (Sess. Laws 1903, p. 49), provided that every foreign corporation doing business in this state must, before doing any business in this state, file with the county recorder of the county in which is designated its principal place of business a copy of its articles of incorporation duly certified to by the secretary of state of the state in which such corporation was organized, and a copy of such articles of incorporation duly certified by such county recorder, with the secretary of state, paying to the latter the same fees as are provided by law to be paid for filing original articles of incorporation, and must designate some person in the county in which the principal place of -business of such corporation is conducted, upon whom process issued by authority of or under any law of this state may be served, and must file such designation in the office of the secretary of state and in the office of tbe clerk of the district court for such county. It is also provided by the same act that “no contract or agreement made in the name of, or for the use or benefit of, such corporation prior to the making of such filings as first herein provided, can be sued upon or be enforced in any court of this state by such corporation.” This statute, which is merely an amplification of the provisions of section 10, art. 11 of the constitution, has been passed upon and construed by this court in several cases. (Katz v. Herrick, 12 Ida. 1, 86 Pac. 873; Valley Lumber Co. v. Driessel, 13 Ida. 673, 93 Pac. 765, 15 L. R. A., N. S., 299; Valley Lumber Co. v. Nickerson, 13 Ida. 682, 93 Pac. 24; Bismark Mt. Gold Min. Co. v. Sunbeam Gold Co., 14 Ida. 516, 95 Pac. 14; War Eagle Con. Min. Co. v. Dickie, 14 Ida. 534, 94 Pac. 1034; Kimpton v. Studebaker Bros. Co., 14 Ida. 552, 125 Am. St. Rep. 185, 94 Pac. 1039; Weiser Nat. Bank v. Jeffreys, 14 Ida. 659, 95 Pac. 23; Zimmerman v. Bradford-Kennedy Co., 14 Ida. 681, 95 Pac. 825.) Vfe have repeatedly held that the constitutional and statutory provisions with reference to the qualifications of a foreign corporation to do business in this state are mandatory, and that they must be complied with in order to enable such corporation to maintain an action in the courts of this state to enforce its contracts. The only question of importance here is this: Do the acts and things done and performed by the respondent corporation constitute a substantial compliance with the statute? It must be conceded that the corporation had complied with the statute in the designation of an agent on whom process might be served. On the other hand, there was no attempt at compliance with the requirement for filing a certified copy of its articles of incorporation with the recorder of the county in which its principal place of business was situated, and a copy certified by such recorder with the secretary of state. The fact that the copy filed with the secretary of state was certified to by the secretary of the territory of Utah instead of being certified by the county recorder of the county in which its principal place of business was situated in this state might possibly be excused if the company had in fact filed a properly certified copy with the county recorder. The latter act had not been performed. The filing of a certified copy with the county recorder is a substantial requirement of the statute. It was wholly neglected, and no attempt was made to comply therewith. The litigant or person with whom the company is contracting has a right to go to the’recorder’s office of the county designated as its principal place of business and there find a certified copy of its articles of incorporation, as well as a notice designating its statutory agent on whom service of process may be had.

Respondent has placed a great deal of reliance on the case of Kiesel v. Bybee, 14 Ida. 670, 93 Pac. 765, 15 L. R. A., N. S., 299, wherein this court held that a “foreign corporation that had complied with the law prior to its amendment will be held to have substantially complied with the amendment law if, subsequent to the passage of the act of 1903, it performs all the additional acts and things required by the latter statute that were not required by sec. 2653, Rev. Stat., prior to the amendment.” We still adhere to the doctrine there announced, and if it were true in this case that, prior to the amendment of 1903 the respondent had, in fact, filed certified copies of its articles of incorporation with the county recorder and the secretary of state as subsequently required by the amendatory act, we would have no hesitancy in holding that it had substantially complied with the statute and was entitled to maintain its action. That was not done in this case, however, and we are forced to hold that defendant is not in a position to maintain its action on this contract.

It is further argued by respondent that since this corporation -had complied with the statute as it existed prior to the act of 1903, and was at that time lawfully doing business within the state, it was not within the power of the legislature to subsequently add additional requirements in order for it to continue to do business. It is insisted that under the provisions of sec. 2653, Rev. Stat. of 1887, it was provided that upon a foreign corporation complying with the terms of that statute, it should have “all the rights and privileges of like domestic corporations.” In support of this contention counsel cites the case of American Smelting & Refining Co. v. Lindsley, 204 U. S. 103, 27 Sup. Ct. 198, 51 L. ed. 393. In that case the supreme court of the United States, on writ of error to the supreme court of Colorado, held that: “A provision in a statute of this nature subjecting a foreign corporation to all the liabilities, etc., of a domestic one of like character must mean that it shall not be subjected to any greater liabilities than are imposed upon such domestic corporation. The power to impose different liabilities was with the state at the outset. It could make them greater or less than in case of a domestic corporation, or it could make them the same. Having the general power to do as it pleased, when it enacted that the foreign corporation, upon coming in the state, should be subjected to all the liabilities, of domestic corporations, it amounted to the same thing as if the statute had said the foreign corporations should be subjected to the same liabilities.” The rule there announced is not applicable to the case under consideration, for the reason that the requirements imposed upon foreign corporations by sec. 2653, Rev. Stat., as amended by the act of March 10, 1903, are substantially the same as are imposed upon like domestic corporations. Sec. 2719 of the Rev. Codes, which was sec. 2584 of the Rev. Stat. of 1887, requires that all domestic corporations shall file their articles of incorporation with the county recorder of the county in which the principal place of business of the company is to be transacted, and a copy there-cf certified by the county recorder with the secretary of state. The incorporators are also required to pay certain fees to the secretary of state. See. 2653, Rev. Stat. of 1887, as amended by act of 1903, requires a foreign corporation to pay to the secretary of state the same fees as are required to be paid by like domestic corporations. So it will be seen that the exactions made of foreign corporations by this statute are not different from those made of like domestic corporations, and for that reason the American Smelting and Refining Company ease, supra, is not in point here.

It is further contended by the respondent that since it affirmatively appears in this case that appellants had paid twelve interest installments on the contract sued upon, they had therefore waived their right to raise the question of respondent’s noncompliance with the statute and are now es-topped from so doing. That position is not well founded.

The making of these interest payments, or any other payments on the contract, could not amount to an estoppel. The fact that the appellants made payments on the contract did not place the respondent in any worse or more unfavorable position than it was in before the making of the payments. On the contrary, the making of the payments inured to the benefit of the corporation and placed it in a better position than it was in prior thereto. The making of such payments did not cause the corporation to change its conduct toward appellants or assume any course of conduct prejudicial to its interests.

The judgment in this case must be reversed, upon the grounds that the respondent failed to establish that at the time of entering into this contract it had substantially complied with the statute governing foreign corporations doing business in this state. In reversing this judgment it is necessary for us to make some observations as to the condition of the pleadings in this action. In the first place, the appellants filed their complaint praying for a cancellation of the mortgage on the ground that it was void because of the uoncompliance of the defendant corporation with the statute.That kind of action cannot be maintained by the appellants. They cannot be heard to come into a court of equity admitting the receipt of the money and the indebtedness and asking for a cancellation of the mortgage merely on account of the noncompliance by the corporation with the foreign corporation statutes of this state. Those who seek equity must first do equity. Besides, this court has held in at least two cases that such contracts are not absolutely void, but that the corporation making such contracts is left without a remedy. (Katz v. Herrick, 12 Ida. 1, 86 Pac. 873; War Eagle Con. Min. Co. v. Dickie, 14 Ida. 534, 94 Pac. 1034.) The appellants’ complaint praying for a cancellation of the mortgage should be dismissed. On the other hand, appellants had a perfect right under the statutes and repeated decisions of this court, to plead in defense of the action to foreclose the corporation’s noncomplianee with the statute.

6. Sec. 15, art. Ill of the constitution, requires that a bill shall not become a law unless the same shall have been read on three several days in. each House previous to the final vote thereon, and also provides that in case of urgency, two-thirds of the House, where such bill is pending, may, upon a vote of the ayes and nays, dispense with this provision. This provision of the constitution applies alike to amendments as to the original bill, and the reading of amendments on three several days may be dispensed with in like manner. 7. Where the journal record of a bill shows that it was read the first and second time on different days, and after the second reading amendments were adopted, the first and second reading of which on different days was dispensed with under the constitution, and the amendments were read a first and seeond time on the same day, and printed, and the bill as amended was thereafter read at length section by section and the yea and nay vote taken thereon and entered upon the journal, it is a compliance with the provisions of see. 15, art. HI of the constitution. 8. While sec. 15, art. Ill, of the constitution requires that a bill on its final passage shail be "read at length, section by section," yet if the record shows that the bill was read "in full," it shows a substantial compliance with this provision of the constitution. To "read in full" means to read from the beginning to the end without abridgment or omission, and if so, the bill is read at length, section by section. (Syllabus by the court.) (February 26, 1909.)

The judgment is reversed, with direction that if the respondent, cross-complainant in the court below, desires a new trial, it b„e granted, and appellants’ complaint for cancellation of the mortgage will be dismissed. Costs awarded in favor of appellants.

Stewart, J., concurs.