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67g, Ch. 32, Kerr's Rev. Stat., 1913. (Sec. 2531 Jones & Addington's Stat. 1913.)
The construction placed upon this provision by the Supreme Court of Illinois is that such contracts are wholly void as to the foreign corporation. In United Lead Co. v. Elevator Mfg. Co., 22 Ill. 199, 202, the Court said:
“The contract upon which this suit was brought, having been entered into in this State, when appellants were not permitted to transact business in this State, is in violation of the plain provisions of the statute, and is therefore null and void, and no action can be maintained thereon at any time, even if the corporation should at some time after the making of the contract, qualify itself to transact business in this State by a compliance with our laws in reference to foreign corporations that desire to engage in business here."
It would follow from the above decision that the corporation could maintain no‘suit on such a contract in any other jurisdiction.10 See under Wisconsin, infra. Indiana.
The statutes of this State require a foreign corporation to file a certified copy of its articles of incorporation, together with a statement as to certain facts. Sec. 4086 Burns' Stat. A penalty is provided for violation, and also the following:
"In addition to such penalty, if after this act shall take effect any foreign corporation shall fail to comply herewith, no suit may be maintained either at law or in equity upon any claim, legal or equitable, whether rising out of contract or tort, in any court in this State." Sec. 4086 Burns' Stat.
10 In Meader Furniture Co. v. Commercial Nat. S. D. Co., 192 Fed. Rep. 616, the circuit court sitting in Ohio disagreed with the holding of the Supreme Court of Illinois on this point and held a contract made in Illinois by a foreign corporation, which had not complied with the Illinois act, valid and enforceable in the Federal courts.
The Court points out, however, that the contract under considera tion had been entered into before the Supreme Court of Illinois had construed the language of the act then in force, which is substan
tially similar to the act quoted above; and for that reason, the Federal court considered itself entitled to examine the question as res nova. Also, in Vitagraph Co. of America v. Optiscope Co., 157 Fed. Rep. 699, the Court held that the Illinois statute did not invalidate contracts.
As to contracts entered into subsequent to the construction of the act by the Supreme Court of Illinois, the Federal courts would be bound by the decisions of that court. (See cases cited under Note 2, supra.)
The above provision is almost identical with those in Illinois and Missouri where they are construed by the courts to render contracts wholly void. Under earlier statutes of Indiana containing similar provisions and imposing penalties as to insurance companies, the courts of Indiana held contracts made by such corporations wholly void, for the reason that they were entered into in violation of law. Wood Mowing Co. v. Caldwell, 54 Ind. 270, 273. The principle of the case last cited would determine that contracts entered into in violation of Section 4086 of the present statutes are wholly void.1? Iowa.
The Iowa statute requires a foreign corporation to procure a permit to do business in the State. Sec. 1637 Code Supp., 1913. Penalties are provided for transacting business without compliance. Sec. 1639 Code. It is also provided as follows:
“No foreign corporation which has not in good faith complied with the provisions of this chapter and taken out a permit shall possess the right to exercise the power of eminent domain, or exercise any of the rights and privileges conferred upon corporations, until it has so complied herewith and taken out such permit.” Sec. 1638 Code.
The holding of the Supreme Court in Iowa is substantially similar to that prevailing in Delaware. It is held that a defendant sued on a contract made with a foreign corporation, the benefits of which the defendant retains, cannot take advantage of the fact that the corporation has n has no suor comply, "Book Co.,
11 The above statutory provisions must be distinguished from those of the Act of 1852 (now Sec. 4099 Burns' Stat., probably repealed by Sec. 4098, id.), providing that an agent must file an instrument of his authority with the clerk of the circuit court of the county where the corporation proposes to do business. For failure of the agent to file this authority, it is provided:
"Such foreign corporation shall not enforce, in any court of this State, any contracts made by their agents or by persons assuming to
act as their agents, before a compliance by such agents or persons acting as such with the provisions of sections 1 and 2 of this act.” Sec. 4101 Burns' Stat.
Under this act, it had been held that failure to comply did not make contracts invalid but merely suspended the right of action until such compliance. North Mercer Co. v. Smith, 27 Ind. App. 472; Security Savings & Loan Assn. v. Elbert, 153 Ind. 198; Domestic Sewing Machine Co. v. Hatfield, 58 Ind. 187; Sullivan v. Beck, 79 Fed. Rep. 200
not complied with the Foreign Corporation Statutes. Spinney v. Miller, 114 Ia. 210. In Prudential Ins. Co. v. Cushman, 130 Ia, 378, the Court states that only the State can take advantage of the failure of a foreign corporation to comply with the statutes. These holdings are, of course, followed in the Federal court. Iowa, etc., Mining Co. v. U. S. F. & G. Co., 146 Fed. Rep. 437. . Kansas.
The statutes of Kansas require certain instruments to be filed, but contain no express provision that it shall be unlawful to transact business without compliance. Sec. 1710 Gen. Code, 1909. The courts hold that a contract made by an unqualified foreign corporation is not void, but that the corporation has no standing in court until it has complied with the law; it may comply, however, during the pendency of a suit. State v. American Book Co., 69 Kans. 1; Ryan Live Stock Co. v. Kelly, 71 Kans. 874; Buck Stove & Range Co. v. Vickers, 80 Kans. 29. Although it could maintain no suit in the State court, it could do so, nevertheless, in the Federal courts, since the statute does not invalidate contracts. Blodgett v. Lanyon Zinc Co., 120 Fed. Rep. 893. Kentucky.
The statutes of this State expressly make it unlawful for a corporation to do business in the State without filing with the Secretary of State the name of an authorized agent, and provide penalties for violation. Sec. 571, Carroll's Stat., 1915. (Sec. 2158 Civ. Code, 1906.) The courts of Kentucky reach a conclusion directly contrary to those of Delaware and Iowa, and hold that a contract made by an unqualified foreign corporation is wholly void, on the ground that such contracts are entered into in direct contravention of law. Fruin-Colnon Contracting Co. v. Chatterson, 146 Ky. 504; Oliver Co. v. Louisville Realty Co., 161 S. W. 570. Louisiana.
The statutes of this State provide that a foreign corporation may be entitled to procure a certificate authorizing it to exercise the same powers as a domestic corporation upon complying with the act. Sec. 1439 Marr's Ann. Rev. Stat., 1915. A violation of the act is made a misdemeanor. Sec. 1440, id. There is no express declaration making the doing of business without compliance unlawful, nor any with respect to suing upon contracts entered into without compliance. The holding in this State is that the penalty prescribed by the statute is exclusive, Thomas Cusack Co. v. Ford, 71 Sou. 196, where the Court followed the holding of the United States Supreme Court under the Colorado statute in Fritts v. Palmer, 132 U. S. 282. This holding is in accordance with the rule prevailing in Washington and West Virginia. Maine.
The statutes of this State expressly provide that contracts of non-complying foreign corporations shall be valid:
“Such failure shall not affect the validity of any contract with such corporation, but no action shall be maintained or recovery had in any of the courts of this State by any such foreign corporation so long as it fails to comply with the requirement of said sections." Public Laws, 1911, Ch. 152, Sec. 2 (e).12
This provision is similar to that of Maryland (see below), except that it not only suspends the right to maintain a suit, but also the right of “recovery.” It would follow that a corporation in default could not recover on a counterclaim. See Note 12, infra. Maryland.
For failure to comply with the Foreign Corporation statutes in Maryland, penalties are provided but also the following:
"Such failure shall not affect the validity of any contract made with such non-complying corporation, but no suit shall be maintained in any
12 Since the statute prohibits not only the maintenance of an action but a recovery in the courts of the State, it would follow that a foreign corporation which was made a defendant in a suit could not set up
a counterclaim unless it had complied with the law. Such was the conclusion reached in similar language under the New York statute in American Ink Co. v. Reigal Sack Co., 140 N. Y. Supp. 107.
of the courts of this State by any such corporation until it has complied with the requirements of this article.” Sec. 69 of Art. 23, Code.
Under this provision, it is sufficient that a foreign corporation plaintiff complies with the statute after suit has been brought but before trial. Kendrick & Roberts v. Warren Brothers Co., 110 Md. 147; Strasbaugh v. Steward Sanitary Can Co., 96 Atl. 862, 866. Massachusetts.
The Massachusetts statute on this subject is similar to that of Maryland. It is as follows:
"Such failure shall not affect the validity of any contract with such corporation, but no action shall be maintained or recovery had in any of the courts of this Commonwealth by any such foreign corporation so long as it fails to comply with the requirements of said sections." Sec. 60 Business Corp. Law of 1903.
In National Fertilizer Co. v. Savings Bank, 196 Mass. 458, it was held that the effect of the Massachusetts statute was merely to stay proceedings until the temporary disability was removed by complying with the statute, which could be done after the suit had been begun but before the hearing. Michigan.
The statute of this State on this subject provides as follows:
"No foreign corporation, subject to the provisions of this act, shall be capable of making a valid contract in this state until it shall have fully complied with the requirements of this act, and at the time holds an unrevoked certificate to that effect from the Secretary of State." Sec. 9652, Howell's Stat., 1913.13
This provision prevented recovery in Imperial Curtain Co. v. Jacob, 163 Mich. 72.14
13 Note also Public Acts of 1915, No. 142 (p. 237), requiring annual reports to be filed by foreign cor porations during the month of Jan uary or February, and providing that for failure to file such reports, a corporation shall not maintain an action in any court of the State upon any contract entered into during the time of the default; and tho directors are made personally lia
ble for all debts contracted during such period and are liable to the corporation for their negligence.
14 Under the former Michigan statute, contracts were not made void, but the right of action upon them was suspended until compli. ance with the act. Despres, Bridges & Noel v. Zierleyn, 163 Mich. 399, 403.