« PreviousContinue »
For failure to procure this permit, Sec. 3653 provides: “No such corporation, its agents, officers, or servants, shall transact any business for or in the name of such corporation within the State of Alabama without having first procured said permit, and all contracts, engagements, or undertakings or agreements with, by, or to such corporation, made without obtaining such permit, shall be null and void."
Sec. 3647 requires the payment of an initial tax. Sec. 3649 provides :
"The tax required by the second preceding section shall be paid but once, only; but such payment does not relieve any foreign corporation from the duty of complying with the requirements of existing laws. All contracts made in this State by any foreign corporation which has not first complied with the provisions of the two preceding sections, shall, at the option of the other party to the contract, be wholly void.”
From the foregoing, there can be no doubt of the effect of non-compliance with the laws of Alabama. The courts hold that a contract made by a foreign corporation without complying with the laws is wholly void. Dudley v. Collier, 87 Ala. 431; Hanchey v. Southern Home B. & L. Assn., 140 Ala. 245, and cases cited; Alabama Western R. R. Co. v. Talley-Gates Const. Co., 162 Ala. 396; Mullen Mfg. Co. v. Bank, 57 South. 762. Since a contract so made is void, it will not be enforced by the Federal courts. In re Conecuh Pine Lumber & Mfg. Co., 180 Fed. Rep. 249; Thomas v. Birmingham Ry. L. & P. Co., 195 Fed. Rep. 340; Chattanooga Natl. B. & L. Assn. v. Denson, 189 U. S. 408.3 A novel and important decision has lately been rendered by the Fifth Circuit Court of Appeals, which will be of interest in all States having statutes similar to Alabama. In Montgomery Traction Co. v. Montgomery L. W. & P. Co., 229 Fed. Rep. 672, it appeared that the foreign corporation was not competent to enter into a contract in Alabama at the time it did so, but that several months after entering into the contract it complied with the statute. Thereafer the parties by their conduct manifested an intention to govern themselves by the provisions of the contract. The Court held that by their conduct the parties adopted the provisions of the contract as expressing their respective obligations; and that, while they could not ratify a void contract, they could, when each was qualified to contract, elect to adopt the instrument as their contract. The Court followed its holding in Turner Construction Co. v. Union Terminal Co., 229 Fed. Rep. 702, infra, where the former Florida statute was considered.* Arizona.
3 See also the provisions of the commerce, or maintain or defend Annual Franchise Tax Law, Laws any action in any of the courts of of 1915, No. 464, Sec. 16, Subdiv. 4, this State upon a contract made which provides as follows:
in this State other than contracts "No foreign corporation required based upon interstate commerce, to pay a tax under this article shall unless such corporation shall have do any business in the State of Ala- paid such tax within sixty (60) bama not constituting interstate days after the same became due.” 4 The lower court reached the Lumber & Mfg. Co., 180 Fed. Rep. same conclusion on the above and 249; Allen V. City of Milwaukee, additonal grounds. See 219 Fed. 128 Wis. 678; Pittsburgh ConstrucRep. 963. The writer is informed tion Co. v. Westside Belt R. R. Co., that a petition for a writ of cer- 154 Fed. Rep. 929; Heileman Brew. tiorari will be presented to the Su ing Co. v. Peimeisl, 85 Minn. 121– preme Court of the United States in which the courts held that comto review this case.
The Foreign Corporation Law of Arizona provides as follows:
"No corporation such as is mentioned in Section 149 of this title shall transact any business whatsoever in this State until and unless it shall have first filed its articles of incorporation and the appointment of an agent and shall have paid its license fee and shall have received from the Corporation Commission a license authorizing said company to do and transact business in this State, as required in the two preceding sections, and every act done by said corporation prior to said filing, payment of fees, and the procurement of said license, shall be utterly void.” Sec. 2228 Civ. Code, 1913. (Sec. 149 referred to in the above statute is now Sec. 2226 Civ. Code, 1913.)
The Supreme Court of Arizona does not seem to have construed the above provision, but its meaning is sufficiently clear. Arkansas.
The Constitution of Arkansas contains an express provision to the effect that no foreign corporation shall do business in the State except while it maintains one or more known places of business, and has an authorized agent at the same upon whom process may be served. Art. XII, Sec. 11. It has been held, however, that this provision is not self-executing. Railway Co. v. Fire Assn., 60 Ark. 325. Legislation has been enacted carrying the Constitution into effect. The present statute, passed in 1907, provides for the imposition of a fine for violation of the law and further
pliance with the statute after the The decision is contrary to the contracts had been entered into spirit, if not the express adjudica- did not avail the foreign corporations of the following cases: United tions. Lead Co. v. Reedy Elevator Co., Compare, also, the decisions of 222 Ill. 199; in re Conecuh Pine the Alabama courts, and Gilmer y. "Every corporation which complies with the provisions of this chapter is thereafter entitled to the benefit of the laws of this State, limiting the time for the commencement of civil actions, but no corporation not created by or under the laws of this State is entitled to the benefit thereof, nor can any such corporation maintain or defend any action or proceeding in any court of this State until the corporation has complied with the provisions of the preceding sections." Sec. 406, Id.
"As an additional penalty, any foreign corporation which shall fail or refuse to file its articles of incorporation or certificate, as aforesaid, cannot make any contract in this State which can be enforced by it, either in law or in equity, and the complying with the provisions of this act after suit is instituted shall in no way validate said contract." Sec. 824r Kirby's Supp. Dig. 1911.
Under this provision, it is held that a contract made within the State by an unregistered foreign corporation is not void, but in order to be enforceable the corporation must comply with the statute before suit is brought; it is not sufficient to comply after suit has been brought. Waxahachie Medicine Co. v. Daly, 183 S. W. 741.5 California.
The statutes of this State require a corporation to file with the Secretary of State an instrument designating an agent upon whom process may be served. Sec. 405, Civ. Code. For failure to comply with Sec. 405, it is provided :
Savings & Loan Co., 103 Tenn. 272, where it was held that a mortgage taken by a foreign corporation before compliance with the statute of Tennessee was void, and that a subsequent mortgage taken after compliance, for the secret purpose of validating the first, but under pretense of making concessions to
the mortgagor was likewise void.
5 Under the former statute passed in 1901, it was held that a contract made by a non-complying corporation was not void, and a corporation could comply during suit. Woolfort v. Dixie Cotton Oil Co., 77 Ark. 203, and cases cited.
From the above provision, it would seem that the corporation could comply with Sec. 405 at any time before the trial of a suit. The statute further requires the foreign corporation to file in the office of the Secretary of State a certified copy of its articles of incorporation. Sec. 408, id.; Sec. 1 of Ch. 190, Laws of 1915. For failure so to do, a penalty is provided, and also the following:
"In addition to which penalty, no foreign corporation which shall fail to comply with Sections 408 and 409 of this code can maintain any suit or action in any of the courts of this State, or acquire or convey any legal title to any real property within this State, until it has complied . with said sections." Sec. 410, Civ. Code.
Before the enactment of the corporation license tax law of 1915, it was held that a corporation could file the certified copy of its articles after it has begun suit and then make the proper allegations to that effect in an amended complaint. The Court construed the provision strictly and held that it did not prohibit the commencement of an action by a foreign corporation, but merely its maintenance. Ward Land & Stock Co. v. Mapes, 147 Cal. 747, 752-753. It was also held that a foreign corporation which had not complied with Sec. 408 could nevertheless defend an action brought against it in the courts of the State. American DeForest, etc., Co. v. Superior Court, 153 Cal. 533.
Whether the Corporation License Tax Law (Ch. 190, Laws of 1915), has made any change in the law of California on this subject is not clear. The statute applies both to domestic and foreign corporations, but we are concerned only with its application to the latter. Section 1 of the Act contains the same requirements as Section 408, Civ. Code. Section 3 provides as follows:
"No corporation heretofore or hereafter incorporated under the laws of this State, or of any other State, territory, or foreign country, shall do or attempt to do any intrastate business within this State, by virtue of its charter, or certificate of incorporation, without a State license therefor."
Section 4 requires corporations to procure an annual license and to pay a license tax. Sections 7 and 10 provide for the forfeiture of the right of all foreign corpora
onday in the after sixorporation, of as in this ather domes
tions to do intrastate business in the State, which fail to pay the license tax and penalties by six o'clock p. m. of the Saturday preceding the first Monday in March. Section 12 provides, in part:
"It shall be unlawful for any corporation, either domestic or foreign, which has not paid the license tax, as in this act prescribed, to exercise the powers of such corporation, or to transact any intrastate business in this State after six o'clock p. m. of the Saturday preceding the first Monday in March next following the delinquency." The balance of the section imposes a penalty for transacting intrastate business after such forfeiture. The statute also provides for relief against such forfeiture by making payment in full. The act does not, in terms, impose any penalty upon a foreign corporation which fails to register, and which thereupon does business in the State without a license. The forfeiture provided for by the act applies only to such foreign corporations as have acquired the right to do business in the State, and are entered upon the record in the Secretary of State's office.
While the quotation from Section 12 above purports to make it unlawful for a non-registered and unlicensed foreign corporation to do business in the State, yet the subsequent part of the section which imposes penalties applies only to foreign corporations which had acquired the right to do business but had forfeited the same. The act is poorly drawn and probably does not carry out, in full, the intention of its framers. On the one hand, it might be urged that a contract made by a non-registered and nonlicensed foreign corporation should be void, since otherwise there would be no penalty or legal result attaching to such failure. As against this, however, it might be argued that the courts are ordinarily slow to declare forfeitures of contract rights. (See Model Heating Co. v. Magarity, 25 Del. 459, and Dunlop v. Mercer, 156 Fed. Rep. 545), and that such a legal result will not be lightly implied. It might also be said that the inhibition of Section 12 applies only by its terms to the transacting of business after the delinquency in payment of the tax. There is no declaration