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the State neglects to proceed against it to oust it from so violating its sovereignty, he may innocently and rightfully conclude that it has complied with the law. In such a case it would be a perversion of the statute if the courts of the State were to use it to strike down the rights of their own citizens, they being guilty of no wrong; and it would be a violation of a well understood principle,' to allow the foreign corporation, by way of defense to a meritorious action brought by a domestic citizen, to set up its own turpitude and violation of the domestic law. Such, it is confidently believed, is not the law.?

$ 7960. Corporation Estopped to Set up its Want of Compliance with Such Statutes in Avoidance of its Own Contracts. If the State does intervene, and if the domestic citizen, for whose protection the statute was framed, does not elect to rescind it, then, upon every sound principle, the foreign corporation will not be heard to set up its own violation of the domestic law in avoidance of its contract made with a citizen of the domestic State. It will not be allowed, when sued by such citizen to enforce such a contract, to defend on the ground that it has failed to comply with the statutes of the State requiring certain things to be done as a condition precedent to its right to do business within the State. It will not be suffered thus to set up its own turpitude

· Ante, $ 6015.

had purchased it at a trustee's sale : When, therefore, there was a under the mortgage, the mortgagor constitutional provision prohibiting set up the defense that the mortgagee foreign corporations from doing busi- was a foreign corporation, that the ness within the State without having loan was made and the mortgage exeat least one known place of business, cuted in Alabama, and that, at the and an authorized agent, or agents,

time when the contract was made, the therein, the New England Mortgage corporation had no place of business Security Company, a corporation or- in Alabama and no agent or agents ganized under the laws of Connecti. therein. It was held th

this was cut, made a loan of money and not a good defense to the action: the received from the borrower a mort- mortgagor was estopped from setting gage on certain real estate situated in up these facts to defeat the mortgagee Alabama, to secure the repayment of after having received the benefits of the loan.-In an action to recover the contract. Sherwood v. Alvis, 83 possession of the land by one who Ala. 115; 3. c. 3 Am. St. Rep. 695.

in avoidance of its contracts otherwise fairly made.' For instance, although a foreign insurance company enters the domestic jurisdiction, and there does business by writing policies upon the property or lives of domestic citizens in violation of such a restrictive statute, it will not be able to defend on this ground, when an action is brought against it to recover the amount assured in the policy.” The reason is that the plaintiff and the defendant are not in pari delicto. The plaintiff may rightfully presume that the defendant has complied with the statutes entitling it to do business within the State. It has been observed that one of the objects of such statutes is the protection of the people against worthless foreign companies; and that, as the domestic citizen is not required to see that the foreign corporation has observed the laws before he enters into a contract with it, there is no reason, founded in public policy, which will enable a solvent foreign corporation which has violated the domestic law in making contracts and receiving the consideration therefor from an innocent citizen, to escape liability for its performance by setting up its own turpitude. “Such defense will not avail for merit of him who pleads it. Against an innocent party 'no man shall set up his own iniquity as a defense any more than as a cause of action.'" :

§ 7961. Whether Agent of Foreign Corporation can Defend on This Ground against an Action by the Corporation on his Bond. Some of the cases hold that where a foreign corporation enters a State by means of its agent, and does

395;

1 Lasher v. Stimson, 145 Pa. St. Hartford Live Stock Ins. Co. v. Mat30; 8. c. 23 Atl. Rep. 522.

thews, 102 Mass. 221 ; Clay Fire &c. ? Pennypacker v. Capital Ins. Co., Ins. Co. v. Huron Salt &c. Co., 31 80 Iowa, 56; 8. c. 20 Am. St. Rep. Mich. 346; The Manistee, 5 Biss. (l'.

45 N. W. Rep. 408; 8 L. R. A. S.) 381 ; Brooklyn Life Ins. Co. r. 230; Union Mutual Life Ins. Co. v. Bledsoe, 52 Ala. 538; Watertown McMillen, 24 Ohio St. 67; Behler v. Fire Ins. Co. v. Rust, 141 Ill. 85; alGerman Mut. Fire Ins. Co., 68 Ind. firming 8. c. 40 Ill. App. 119. 347; Swan v. Watertown Fire Ins. & Watertown Fire Ins. Co. v. SiCo., 96 Pa. St. 37; Watertown Fire mons, 96 Pa. St. 520, 526. Ins. Co. v. Simons, 96 Pa. St. 520;

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business there, in violation of restrictive statutes such as those under consideration, it cannot maintain an action against its agent upon the bond given by him to the corporation to secure, the faithful fulfillment of his duties, for the reason that, the doing of the business by the agent being expressly prohibited by the local statute, no recovery can be had without proving that both the plaintiff and the defendant have violated the law.1

§ 7962. Non-compliance with Such Statutes Prevents Agent from Recovering Commissions. On the same ground, it has been held that an agent who does business within a State for a foreign corporation, which is there in violation of the laws of the State, cannot maintain an action against a citizen of the State to recover his commission for a loan of money procured for such citizen from the foreign corporation.2

§ 7963. Legislature may Validate Such Contracts. Moreover, it has been held competent for the legislature by a retrospective statute to validate contracts made between domestic

1 Thorne v. Travelers' Ins. Co., 80 Pa. St. 15; s. c. 21 Am. Rep. 89; Mutual Benefit Life Ins. Co. v. Bates, 92 Pa. St. 352; Dudley v. Collier, 87 Ala. 431; s. c. 13 Am. St. Rep. 55; United States Life Ins. Co. v. Adams, 7 Biss. (U. S.) 30. Concurring with these decisions see Lemon v. Grosskopf, 22 Wis. 447; s. c. 99 Am. Dec. 58,where the plaintiff was not allowed to recover of his agent money collected by the latter in running a lottery scheme. Similarly, see Hunt v. Knickerbocker, 5 Johns. (N. Y.) 326. Some of the cases suggest a distinction between the right to recover money collected by the agent, and the right to recover back money paid into his hands by the principal, allowing a recovery in the latter case. See Lemon v. Grosskopf, 22 Wis. 447, 453; s. c. 99 Am. Dec. 58. For an action on the bond of an agent

of a foreign insurance company, where the question was whether the agent acted without a license, and the case was determined on the theory that his license was not shown to have expired, see Scottish Commercial Ins. Co. v. Plummer, 70 Me. 540. Other courts hold that in such a case the agent will not be allowed to set up his own violation of the law as a reason why he should not keep the contract which he has made with his principal (Penn Mut. Life Ins. Co. v. Bradley, 21 N. Y. Supp. 876); and that, as his sureties have no better rights in this respect than himself, they cannot set up such a defense. Manhattan Ins. Co. v. Ellis, 32 Ohio St. 388.

Dudley v. Collier, 87 Ala. 431; 8. c. 13 Am. St. Rep. 55; 27 Am. & Eng. Corp. Cas. 440; 6 South. Rep. 304.

citizens and foreign corporations in violation of a previous prohibitory statute; since such curative legislation does not have the effect of divesting vested rights, or of impairing the obligation of contracts, but merely of preventing men, upon reasons which concern the State alone, from repudiating the honest engagements into which they have entered.'

8 7964. Foreign Corporation can Acquire and Transmit Valid Titles without Complying with Local Law. We have already had occasion to note the principle that, although a corporation has no power, except upon a principle of comity, to acquire and hold lands within the limits of another sovereignty, yet if it does acquire such lands, it may hold them until the State intervenes and escheats them, and consequently that, prior to such intervention by the State, it may transmit a good title to such lands to a third person. This principle operates in respect to the question we are consider. ing; so that, although the constitution of Colorado provided that no foreign corporation should do business in that State without having a known place of business and an agent upon whom process might be served; and although a statute of that State provided for the filing by such corporation with the Secretary of State, of a certificate showing their place of business, and designating such agent, or agents, and also a copy of their charter or certificate of incorporation, and providing that, in case of their failure to do so, their officers and stockholders should be jointly and severally liable on their contracts made while in default; and although another statute provided that "no foreign or domestic corporation established or maintained in any way for pecuniary profit of its stock. holders or members shall purchase or hold real estate in this State, except as provided for in this act,” — yet, where a resident of Colorado conveyed real estate to a corporation organized under the law of Missouri, which had not taken the steps above prescribed to entitle it to do business in Colorado, and such corporation afterwards conveyed the land to another, its

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1 United States Mortgage Co. v. Gross, 93 Ill. 483, 494.

Ante, 8 7918.

grantee could hold it against a subsequent grantee of the original grantor. In other words, notwithstanding the foregoing constitutional and statutory provisions, a foreign corporation could acquire a title to land in Colorado which it was capable of transmitting to a third party so long as the State did not intervene.1

1 Fritts v. Palmer, 132 U. S. 282. Mr. Justice Miller dissented, on the ground that the foreign corporation could not acquire land in Colorado in the face of the prohibition of the statute last quoted. So, under a statute of Pennsylvania (1 Purd. Pa. Dig. 361), which forbids a foreign corporation "to acquire and hold" real estate, a deed of conveyance of land to such a foreign corporation is void, but it passes a title which a corporation may hold subject to the right of escheat in the Commonwealth, its title being merely defeasible at the election of the State like that of an alien. Hickory Farm Oil Co. v. Buffalo &c. R. Co., 32 Fed. Rep. 22; and see ante, § 7913, note. The principle of these decisions is elsewhere alluded to (ante, § 7918). See, in affirmation of the principle, Leazure v. Hillegas, 7 Serg. & R. (Pa.) 313; Goundie v. Northampton Water Co., 7 Pa. St. 233; Runyan v. Coster, 4 Pet. (U. S.) 122; Bone v. Delaware Canal Co. (Pa.), 5 Atl. Rep. 751; Chicago, Burlington &c. R. Co. v. Lewis, 53 Iowa, 101; s. c. 4 N. W. Rep. 842; Missouri Valley Land Co. v. Bushnell, 11 Neb. 192; s. c. 8 N. W. Rep. 389; Jones v. Habersham, 107 U. S. 174; 8. c. 2 Sup. Ct. Rep. 336; Barnes v. Suddard, 117 Ill. 237; 8. c. 7 N. E. Rep. 477; National Bank v. Matthews, 98 U. S. 621; National Bank v. Whitney, 103 U. S. 99; Swope v. Leffingwell, 105 U. S. 3; Reynolds v. Crawfordsville Bank,

112 U. S. 405. There is an analogous proposition of law to the effect that a corporation which exists by usurpation and a violation of positive law, is, nevertheless, capable of receiving and transmitting a good title to real estate, so long as the government does not intervene to oust it of the franchise which it usurps: Smith v. Sheeley, 12 Wall. (U. S.) 358, 361. See also Myers v. Croft, 13 Wall. (U.S.) 291, 295; Jones v. Guaranty &c. Co., 101 U. S. 622, 628; Fortier v. New Orleans &c. Bank, 112 U. S. 439, 451. It was also pointed out by Mr. Justice Harlan, in giving the opinion of the court in Fritts v. Palmer, 132 U. S. 282, 293, that an analogy of the principle is found in cases holding that the question whether a corporation having capacity to purchase and hold real estate for certain defined purposes, or in certain quantities, has taken title to real estate for purposes not authorized by law, or in excess of the quantity permitted by its charter, concerns only the State within whose limits the property is situated, and cannot be raised collaterally by private persons, unless there be something in the statute expressly, or by necessary implication, authorizing them so to do: Cowell v. Springs Co., 100 U. S. 55, 60; Jones v. Habersham, 107 U. S. 174, 188. The analogy to the cases of titles held and transmitted by aliens has already been alluded to: Cross v. De Valle, 1 Wall.

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