« AnteriorContinuar »
§ 7965. Whether Necessary for Foreign Corporation Plaintiff to Aver and Prove Compliance with Such Statutes.Judicial authority is likewise divided upon the question whether it is necessary, in an action by a foreign corporation to enforce a contract made in the domestic State, to aver and prove compliance on its part with the statutes of the State entitling it to do business therein. We have elsewhere seen that the general presumption of right-acting applies to corporations, both domestic and foreign, and that it will be presumed that a given act was within the powers of the corporation until the contrary appear. We have also met with cases which hold that it is a presumption, in the absence of evidence to the contrary, that a foreign corporation suing to enforce a contract made in the domestic jurisdiction, has complied with the local laws which entitle it to make that contract. If these principles are sound, then it must follow as a necessary conclusion to be adduced from them, that the foreign corporation need not aver and prove, in the first instance, in order to maintain an action upon a contract made within the domestic State, that it had complied with the domestic law entitling it to do business within the State, and to make that contract. But we find decisions directly to the contrary, which proceed upon the principle that compliance with the
(U. S.) 5; Doe v. Robertson, 11 Wheat. (U. S.) 332; Phillips v. Moore, 100 U. S. 208.
1 Ante, §§ 5642, 5967.
Ante, § 7883.
3 Ante, § 7883; American Ins. Co. v. Smith, 73 Mo. 368; Railway Company u. Fire Association, 55 Ark. 163; 8. c. 18 S. W. Rep. 43; White River Lumber Co. v. Southwestern Imp. Asso., 55 Ark. 625; s. c. 18 S. W. Rep. 1055; Sprague v. Cutler &c. Lumber Co., 106 Ind. 242.
4 Many illustrations of the principle could be adduced. Thus, in an action for libel by the manager of an opera, against the proprietor of a newspaper, it was held wholly unnec
essary for the plaintiff to aver and prove that he had taken out a license under certain statutes to give operatic representations: Fry v. Bennett, 28 N. Y. 324. So, if a foreign insur ance company brings an action upon a premium note given by a policy-holder, it need not prove, in the first instance, that it has complied with the statutes of the State which entitle it to do business therein, but proof of the note will make a prima facie case, and the authority to take it will be presumed, in the absence of affirmative allegations and proof to the contrary by the defendant. American Ins. Co. v. Smith, 73 Mo. 368; American Ins. Co. v. Cutler, 36 Mich. 261.
local statute is a condition precedent to the right to maintain an action in the local courts, which, like other conditions precedent, must be averred and proved by the plaintiff as the foundation of its right of action. These holdings are unphil. osophical and contrary to the analogies of good pleading. To illustrate this, let us suppose a single case. The excise lawg of the United States prohibit the sale of intoxicating liquors without the taking out of a license, and make every single act of sale a criminal offense; and it may be assumed that the same is true of the excise laws of every State, and of the ordi. nances of every considerable municipal corporation. Although there is the highest judicial authority for the proposition that, where it has shown in defense of an action by such a dealer to recover the price of a bill of such goods sold, that he has not complied with such laws, he cannot recover, yet it has never been held, as a question of pleading, that he must, in order to maintain such an action, aver and prove that he has complied with such laws. Who, for instance, ever heard of the proposition that a liquor dealer, in order to recover the price of a bill of liquors sold, must aver and prove that he has taken out a license as required by the ordinance of the city within which he carries on his business? And yet we have the authority of the highest national tribunal to the effect that the failure to take out such a license is matter of defense, which being shown, he cannot recover the price of the goods sold. The best opinion, therefore, is, that, in an action by a foreign corporation to enforce a domestic contract, it is not only not necessary for the corporation to aver and prove in the first instance' its compliance with the domestic statutes entitling it to do business within the domestic State, but that, unless the defendant makes an arerment of non-compliance in distinct terms, he cannot introduce evidence to show that such was the fact.8
Lycoming Fire Ing. Co. v.Wright, 55 Vt. 526; Christian v. American Freehold &c. Co., 89 Ala. 198; Farrior 9. New England Mortgage &c. Co., 83
Ala. 275; Mullens v. American Free-
8 § 7966. Further of This Subject. - When, therefore, a bill in equity by a foreign corporation to foreclose a mortgage, failed to allege such compliance, it was held that a demurrer to it ought to have been sustained. But if the bill had not shown that its prayer for relief was predicated on a transaction which took place in Alabama, then the objection would be matter of defense which could only be taken by answer or plea. And the rule is analogous in an action at law; so that where the complaint does not show that the contract sued on was made within the domestic State, if it was made by the plaintiff in violation of such a provision, that is matter of defense which must be set up in answer. For stronger reasons, the authority of the foreign insurance company, thus suing on a contract, to make the contract within the domestic State, cannot be questioned for the first time on appeal,' nor can such a defense be set up by a plea in abatement to an action by a foreign corporation for trespass.
Southwestern Imp. Asso., 55 Ark. the mortgage taken,- upon the prin625; 8. c. 18 S. W. Rep. 1055.
ciple that doubtful averments are 1 Christian v. American Freehold to be taken most strongly against &c. Co., 89 Ala. 198; Farrior v. New the pleader. It is, therefore, not an England Mortgage &c. Co., 88 Ala. averment that the corporation had 275; Mullens v. American Freehold a duly constituted agent and known &c. Co., 88 Ala. 280.
place of business at the time when ; Ibid.
the transaction took place, as re• Railway Co. v. Fire Association, quired by the constitution and the 55 Ark. 163; 8. c. 18 8. W. Rep. 43. statute; and for that reason such a
• Utley v. Olark-Gardner Lode bill is demurrable. Farrior v. New Mining Co., 4 Colo. 369.
England Mortgage &c. Co., 88 Ala. • Ibid. A bill in equity, in a court 275; Mullens v. American Freehold of Alabama, by a foreign corporation, &c. Co., 88 Ala. 280. Under the to foreclose a mortgage which merely Indiana rule already set out (ante, avers that the complainant“has com- $ 7956), an answer defending on this plied with the laws of Alabama which ground, which merely alleges that the authorize foreign corporations to do agent of the plaintiff corporation business in this State," is considered failed to comply with the requireas averring that the company had a ments of the statute, is insufficient; duly constituted agent and known but it is necessary to allege that it place of business in that State had failed to comply with such provionly at the time when the suit was sions, at or prior to the commencement commenced, and not at the time of the action. Singer Man. Co. v. when the money was
loaned Brown, 64 Ind. 548.
§ 7967. Rule where the Foreign Corporation is Sued. Turning the question around, and taking the case where an action is brought, we will say, by a domestic citizen against a foreign corporation, to enforce a contract made with the corporation while it was doing business within the State without having complied with the statutes of the State entitling it to do business there, and remembering that all the cases, so far as discovered, hold that the company is estopped to defend on this ground,' — it follows, as a rule of pleading, that it is not necessary for the plaintiff to allege and prove compliance on the part of the defendant with such local statutes.'
8 7968. Effect of Non-compliance upon the Interpretation of Contracts. — Although there is judicial opinion to the effect that the situs of a contract of insurance made by a corpo. ration in one State, insuring property situated in another State, is the former, and not the latter State, - yet the contrary seems to be the better view. It is that the situs of such a contract is not the place where it is formally written, but the place where it is delivered and accepted.' This is especially true, where, as is generally the case with such policies, the policy, by its own terms, is not to be valid until it is countersigned by the local agent within the State where it is deliv. ered. The rule is the same, although there is no local agent who can rightfully sign it and deliver it, by reason of the fact that the foreign insurance company has not complied with the conditions of the local statutes which entitle it to do business within the domestic State.
$ 7969. Effect of Withdrawing Agency from State. — It has been held by the Court of Appeals of Maryland, in a case where a Pennsylvania insurance company had an agency in Maryland, and while so doing business in Maryland, and through its Maryland agency made a contract of insurance
Gray (Mass.), 131; 8. C. 69 Am. Dec. 308.
6 Thwing v. Great Western Ins. Co., 111 Mass. 93, 109.
. upon property situated in Virginia, and afterwards withdrew its agency from the State of Maryland, – that the holder of the policy in Virginia could nevertheless maintain an action thereon in the courts of Maryland. The decision proceeded upon the ground that at the time when the contract was made, and also at the time when the suit was brought, a non-resident of the State of Maryland had, by an express provision of its statute law, the right to maintain an action against any foreign corporation doing business in that State. Under another statute, process against foreign insurance companies might be served upon the State Insurance Commissioner. The court reasoned, in view of these statutes, that the foreign insurance company could not, by withdrawing its agency from the State, defeat the remedy upon the contract which it had made within the State, through its agency there.'
$ 7970. Situs of the Contracts of Foreign Corporations for Purposes of Jurisdiction. — In view of what has preceded it is evident that this becomes in many cases, though not in all, an important and controlling question; for although the situs of such a contract may, for some purposes, be the State of the home office of the company, yet if it appear that it procured the contract by sending its agent into the State of the forum to solicit business there, before having complied with the laws of that State entitling it to do so, it will not, under many theories, be allowed to recover in that forum. In other cases the question whether the contract was made in violation of the laws of the domestic forum has been made to depend upon the technical question of its situs. Thus, it has been held that while a single purchase of machinery within the State of Colorado, by a foreign mining corporation, to be transported to and set up in the State of its domicile, is not within the prohibition of the statute of that State restraining corporations from doing business therein until they have filed with the Secretary of State a certificate designating their principal
i Ben Franklin Ins. Co. v. Gillett, 54 Md. 212.
· Ante, $ 7950; and see especially ante, $ 7968.