Case ID: sd_46/html/0234-01.html
Source: Caselaw Access Project
Author: {"author": "GATES, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MT. ARBOR NURSERIES, Respondent, v. GURNEY SEED & NURSERY CO., Appellant.
    (191 N. W. 835.)
    (File No. 5172.
    Opinion filed January 22, 1923.)
    1. Corporations — Foreign Corporations — Bills and' Notes — Pleadings —Answer—Answer Alleging Note Was Made in State and Payee’s Nonconipliance With. Foreign Corporation Daws Held Insuffrcüfent to Raise Defenses Under Statute.
    In an action on a note toy a foreign corporation, an answer setting up the corporation’s -nonco-mpl'i'ance with the foreign corporation laws (Rev. Code 1919, Secs. 8900-8916), and alleging the not© was made within the state, is not sufficient as stating a defense under Section 8909, invalidating contracts made by or on 'behalf of any foreign corporation, affecting the ■personal liability thereof, or relating to property within this state, before it shall have complied with the law relating thereto, since it does not indicate that the note in suit is a contract affecting the personal liability of plaintiff or relating to property within this state, and neither is it sufficient as stating a defense under Section 8902, providing no such corporation shall transact business or acquire, hold, or dispose of property in this state until it has caused to be filed in the office of the secretary of state a copy of its charter, etc., since it does not show that plaintiff either transacted business or acquired or holds or has disposed of property within the state.
    2. Corporations — Foreign Corporations — Bills and Notes — Pleading —Answer—Plaintiff Corporation's Failure to Comply With Foreign Corporation Daw Must be Raised by Answer Unless Apparent From Complaint.
    The defense of failure to comply with foreign corporation laws must be raised by answer, unless such failure appears on the face of the complaint; to this end, the answer must allege facts sufficient to constitute a defense.
    Appeal from Circuit Court, Yankton County; Hon. R. B. Tripp, Judge.
    Action by the Mt. Arbor Nurseries, a corporation, against the Gurney Seed & Nursery Company, a corporation. From a judgment for plaintiff, defendant appeals-.
    -Affirmed.
    
      H. A. Robinson, of Yankton, for Appellant.
    
      H. A. Dotyle, of Yankton, for Respondent.
    Appellant cited!: American Button Hole Company v. Moore, 2 Dak. 280; Fuller & Johnson M'fg. Go. v. Foster, 4 D!ak. 332; Wright v. Lee, 2. S. D. 596; Foster- v. Charles Bechter Lbr. Co., 5 S. D. 57; Feoh v. Groves, 6 S. D. 504; Bradley, Metcalfe & Co. v. Armstrong, 68 N. 'W. 733; Citizens’ Bank v. Corkings, 9 S. D. 614; Acme Merc. Co. v. Rockford, 10 S. D. 203; Roohv. Sweeney, 12 S. D. 43; Iowa Falls Mfg. Co. v. 'Farrar, 19 S. D. ■632; Bishop & Babcock Co. v. Schleuning, 20 S. D. 71; Thompson v. Juve v. Schroyer, 20 S. D. 72; D'ewey v. Komar, 20 S.. ‘D. 117; American 'Copying Co. v. Eureka Bazaar, 20 S. D. 536; Flint & Walling v. McDonald, 21 S. D. 526; 14 E. R. A. (N. S.) ■673; Rex Buggy Co. v. Dineen, 23 S. D. 474; Reed v, Todd, 25 S. D. 421; Sioux Remedy Co. v. Cope, 28 S. D. 397; Otucalt Adv. Co. v. Sherman Dry Goods Co., 28 S. D. 307; Sioux Remedy Co. v. Cope, 234 U. U. 198, 59 L. Ed. 197; Williamson v. Aberdeen Automobile & Supply Co., 36 S. D. 387; Walters v. Hahn, 43 S. D. 153; Schiller Piano Co. v. Hyde, 43 S. D. 581, 181 N. W. 196; Tripp State Bank v. Jerke, 45 S. D. 448, 580.
    Respondent cited: Sioux Falls Remedy Co. v. Cope, 235 U. S. 197, 59 E. Ed. 197; Wlright v. Eee, 2 S. D. 596; 'Reed v. Ford, 25 S. D. 421; Schiller Piano Co. v. Hyde, 181 N. W. 196.
   GATES, J.

This is a suit upon a promissory note madle and' executed by defendant at Yankton in this state in which plaintiff is the payee. The plaintiff is a foreign corporation. The defendant answered setting up as a defense the failure of plaintiff to •comply with fhe foreign corporation laws of this state. Sections .8900-8916, Rev. Code of 1919.

The plaintiff demurred to the answer as not stating sufficient facts, and1 the demurrer was sustained. The defendant ■served and filed an amended answer which was in all respects similar to the original answer, except that the amended answer contained the affirmative allegation that the note was executed at the city of Yankton. Plaintiff then moved for judgment upon the pleadings, and judgment was entered accordingly. Therefrom defendant appeals.

Appellant contends that under section 8909, Rev. Code 1919, the promissory note was void. That section reads:

“Every contract made by or on behalf of any foreign corporation, subject to the provisions of this chapter, affecting the personal liability thereof or relating to property within this state, ibefore it shall -have complied with the provisions of this chapter, shall be wholly void, on its behalf and on behalf of its assigns,, but shall be enforceable against it or them.”

It dloes not appear from the pleadings that the note in suit is a “contract affecting the personal liability” of respondent, nor does it appear from the pleadings that the note in suit is a contract “relating to property within this state.” There is therefore nothing in the pleadings which makes that section applicable as a defense to 'the note.

Appellant also contends that the answer states 'a defense under section 8902, Rev. Code 1919. That section, so far as here material, reads:

“No corporation, incorporated or organized otherwise than under the laws of this state, * * * shall transact business or acquire, hold or dispose of property in this state until such corporation shall have caused to be filed in the office of the secretary of state a copy of its charter,” etc.

It is not alleged in the answer, nor does it appear from the complaint, that respondient has transacted business in this state,, nor that it has acquired property within this state, nor that it holds property Within this state, nor that it has disposed of propery within this state. The mere allegation that the note in suit' was executed in this state does not bring the case within any of such necessary allegations.

The defense of failure to comply with the foreign corporation laws is one that must be raised by answer, unless such failure appears on the face of _the complaint. Acme Merc. Agency v. Rochford, 10 S. D. 203, 72 N. W. 466, 66 Am. St. Rep. 714. Such being the case, the answer must allege facts- sufficient to constitute a defense. The answer in this case does not state a defense.

The judgment appealed from, is affirmed.

(Note — Reported, in 191 N. W. 835. See American Key-Numbered' Digest, (1) Corporations, Key-No. 672(4), 14A C. J. Sec. 4151; (2) Corporations, Key-No. 672(4), 14A C. J. 4151.

On validity of contracts made by foreign corporations which, have not complied with statutory conditions of the right to do business in. a state, see notes 24 L. R. A. 315 and 1 L. R. A. (N. S.) 1041.