Case Name: A. BOOTH AND COMPANY, a Corporation, Respondent, v. G. M. WEIGAND, Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1904-12-31
Citations: 28 Utah 372
Docket Number: No. 1578
Parties: A. BOOTH AND COMPANY, a Corporation, Respondent, v. G. M. WEIGAND, Appellant.
Judges: BASKIN, C. J., concurs.
Reporter: Utah Reports
Volume: 28
Pages: 372–398

Head Matter:
A. BOOTH AND COMPANY, a Corporation, Respondent, v. G. M. WEIGAND, Appellant.
No. 1578.
(79 Pac. 570.)
1. Foreign Corporations: Conditions Precedent to Doing Business: Failure to Comply: Effect on Contracts.
A corporation is a creature of statute, possessing special statutory powers, and dependent on the statute of its creation for its existence, which, does not extend heyond the limits of the creating jurisdiction.
2. Same: Comity.
The comity which recognizes the corporate existence of a foreign corporation, and enforces the contracts of that corporation made within the limits of the State affording the comity, will not he extended so as to recognize the exstence of a corporation and the exercise of its powers, when they are inimical to the interest, repugnant-to the policy, or in contravention of the laws of such State.
3. Same.
It was within the power of the State to enact Constitution article 12, sections 1, 4, 9, and Revised Statutes 1898, sections 351, 352, prescribing such terms and conditions for the trail-action of business within the State by a foreign corporation as will render such a corporation amenable to the process of the courts of this State.
4. Same: Certain Contracts Held Void.
Constitution article 12, section 1, provides that all corporations doing business in this- State may be regulated by law. Section 4 provides that all corporations may sue and be sued as natural persons. Section 9 prohibits corporations from doing business in the State without.having a place of business, with an agent, upon whom process may be served, nor without first filing a certified copy of articles of incorporation with the Secretary of State. Article 1, section 26, de? Clares all the provisions of the Constitution both mandatory and prohibitory, when there are no express words declaring them to be otherwise. Revised Statutes 1898, section 351, requires foreign corporations to file a certified copy of their articles of incorporation with the Secretary of State, and with the county clerk of the county wherein their principal office in the State is situated, and designate persons upon whom process may be served. Section 352 provides that foreign corporations failing to comply with the provisions of section 351 shall not be entitled to the benefits of the corporation laws of the State. Held, that contracts of a foreign corporation made while doing business in the State, without complying with the laws of the State, respecting such corporations, are invalid, and cannot be enforced in the courts of this State by the corporation.
McCARTY, J., dissenting.
(Decided December 31, 1904.)
Appeal from the Third District Court, Salt Lake County. — Eon. T. D. Lewis, Judge.
The plaintiff, a foreign corporation, brought this action to recover the value of certain goods sold and delivered to the defendant. From a judgment in favor of the plaintiff the defendant appealed.
REVERSED.
8. P. Armstrong, Esq., for appellant.
Can a foreign corporation without complying with the laws of Utah, maintain an action in its courts on contracts entered into within the State, while it was engaged in a general business in disregard of its laws? This court has answered this question in the negative. “It will be conceded in the outset that, if the contract upon which the plaintiff’s action was brought was made in violation of a law of the State, it cannot be enforced by any court in the State. So far as appears, plaintiff had no place of business, with an authorized agent upon whom process could be served within the State, and had not filed a certified copy of its articles of incorporation with the secretary of state. The contract and notes upon which suit was brought were made in Kansas Oity, Kansas, where plaintiff conducted its business, and the notes were made payable there. The plaintiff had never done nor contemplated doing any business in this State, except in bringing this action to enforce the contract and rights sued upon. Under these circumstances, was the bringing of this action to enforce the contract and obtain the rights thereunder forbidden by the constitution and laws of this State, which provide that “no corporation shall do business in this State.” etc. “In our opinion, the constitution, when reasonably construed, was intended to prohibit corporations from transacting their ordinary corporate business within the State without first complying with its terms, ’ ’ etc. Barse Co. y. Range Co., 16 Utah 64-65.
This decision considers the law as it stood January 20, 1896. At that time the only statutory disadvantage, from non-compliance, was that the foreign corporation should not have the benefit of the statute of limitations. Com. Laws 1888, sec. 2293.
But the Constitution provides that, “no corporations organized outside of this State shall be allowed to transact business within the State on conditions more favorable than those prescribed by law to similar corporations organized under the laws of this State. ’ ’ Art. NTT, sec. 6. And “No corporation shall do business in this State, without having one or more places of business, with an authorized agent or agents, upon whom process may be served; nor without first filing a certified copy of its articles of incorporation with the Secretary of State.” Art. XII, sec. 9.
This court treated the provisions of the constitution as self executing, and hence says that “It will be conceded” that a contract made in violation of these provisions will not be enforced. That is, a contract-made in Utah, by a foreign corporation doing business therein without complying with its laws, will not be en forced. Barse Co. v. Range Co., 16 Utah. 64, After the case of Barse Co. v. Range Co., was begun an act was approved to take effect April 4, 1896, among other things providing that “All corporations, not organized under the laws of this State, before doing business within the State, shall file, etc., . . . and shall also before doing business within the State, hy resolution, etc., accept the provisions of the Constitution of this State, and also designate some person, etc. . . . Any such corporation failing to comply with the provisions of this section, shall not be entitled to the benefits of the laws of the State relating to corporations.” Laws 1896, page 308, sec. 2293.
Among the “benefits” conferred upon corporations are the rights to contract and to sue. “The corporation in its name shall have power to make all .contracts necessary and proper to effect its purposes and conduct its authorized business, to sue and be sued, etc. ’ ’ Laws 1903, p. 78; Rev. Stat., sec. 322; Com. Laws 1888, sec. 2272.
In the revision of the statutes, 1898, the following clause was added to the Act of April 4, 1896, above quoted: “And any person acting as agent of a foreign corporation which shall neglect, etc., shall be deemed guilty of a misdemeanor, and shall be personally liable on any contracts made in this State by him for and.in behalf of such corporation during the time that it shall remain so in default; provided, etc.” Rev. Stat., sec. 352.
This court considered these statutory provisions, and says: They “expressly embody these provisions of the Constitution, and prohibit foreign corporations from doing business in this State, unless they have complied with these requirements of the law; and any corporation failing to so comply with the provisions of the law is not entitled to the benefits of the law of this State relating to corporations.” “The appellant corporation did not comply with the laws of this State, and has no power to engage in its business of mining, or to
acquire any water rights under the laws of this State. ’ ’ Having failed to comply with its laws, ‘ ‘ the defendant corporation, therefore, is not entitled to the benefit of the laws of this State, with reference to corporations. ’ ’ Railroad v. Power Co>., 23 Utah 38-39. •
Power of the State to restrict foreign corporations.
The State can put any restriction or condition on a foreign corporation doing business within its territory, except that it must not interefere with Federal corporations, or with corporations in so far as they are engaged in interstate commerce, the sale of patented articles or business for the. United States. Mining Co. v. Pennsylvania, 125 U. S. 181, 190; Paul v. Virginia, 8 Wall. 168, 181; Cooper v. Ferguson, 113 U. S. 727; St. Clair v. Cox, 106 U. S. 356; Ry. v. G-ebhard, 109 U. S. 537; Ry. v. Koontz, 104 U. S. 11.
Plaintiff was doing a general mercantile business' at its storeroom in Salt Lake City from which the goods were sold and delivered and hence the ease does not come within any of the exceptions. Hynes v. Briggs, 41 Fed. 470; Robbins v. Taxing Disk, 120 U. S. 489, 500; Brown v. Houston, 114 U. S. 622, 635.
A corporation having "failed to comply with the laws of Utah cannot sue in its courts. Where the foreign corporation conducts a local business, it comes within the prohibition of the local laws, and it cannot sue until it complies therewith. Crefeld Mills v. G-od-dard, 69 Fed. 141, 149; Barse Co. v. Range Co., 16 Utah 65; Smith v. Alberta Co., 74 Pac. 1073 (Idaho); Carey-Lombard v. Thomas, 22 S. W. 745, (Tenn.)
The contracts sued upon are void. This action is based on contracts made in violation of the Utah Constitution and Statutes. “Whenever a contract is prohibited, whether expressly or by implication, it is illegal, and cannot be enforced. Of this there is no doubt. ’ ’ The propositions that seem fairly deducible from the foregoing authorities are the following: First. That where a contract is prohibited by statute, it is immaterial to inquire whether the statute was passed for revenue purposes only, or for any other object. It is enough that parliament has prohibited it, and it is therefore void.” Benj. Sales (3d Ed.), secs. 694, 702; (7 Ed.), secs. 530, 538; 2 Add. Cont. 1147 (8 Ed.); 2 Chitty Cont. 1003. (11th Am. Ed.), (7th Ed.), 694-7; Smith, Cont., (5 Ed.), 241; Miller v. Ammon, 125 U. S. 426-7; Stevenson v. Ewing, 9 S. W. 230 (Tenn.); Woods v. Armstrong, 25 Am. R. 671, 674.
Where the payment of a tax is a condition to the right to carry on a business, “in snch case the business carried on without a license will be illegal, and no recovery can be had upon contracts made in the course of it.” Cooley, Taxation (2 Ed.), 572; Bish., Contracts, sec. 547; Sellers v. Phillips, 37 Ill. App. 74.
The courts have applied this general principle of law, familiar alike in England and America, to contracts made by foreign corporations doing business without complying with the law of the state into which they have come. These decisions have established the rule that, unless there is something in the statute from which the lawmakers may be presumed to limit its scope to some other consequences, its contracts will be void and unenforcible by the noncomplying corporation. Cooper v. Ferguson, 113 U. S. 727; Utley v. Clark-Gardner,' 4 Colo. 369, 372; Cin. Mut. Co. v. Rosenthall, 55 Ill. 85, 90, 93; Thomas v. Ins Co., 21 Am. Rep. 89, 92, 80 Pa. St. 15; Electric Co. v. Perry (R. I.), 75 Fed. 898-9; Carey-Lombard Co. v. Thomas, 92 Tenn. 596; Williams v. Mining Co., (Cal.), 96 Fed. 454, 463; Re Corn-stock, 3 Sawyer 227 (Or.); McCanna v. Trust Co., 76 Fed. 421; Pennington v. Townsend, 7 Wend. (N. V.), 279-80; Barber v. Boehm, 21 Nebr. 450; DeGroot v. Van Dusen 20 Wend. 393; Dobsen v. Hope, 7 Kans. 165; Williams v. Cheny, 3 Gray 222; Ins. Co. v. Chamberlain, 16 Gray 165; Gilchrist v. Ry., (Mont.), 47 Fed. 593; Flos-heim v. Lester, 46 Am. St. 161, 60 Ark. 120; Dundee v. Nixon, 10 So. 311, 95 Ala. 318; B. & L. Ass ’n v. Cannon, (Tenn.) 41 S. W. 1054; Hachney v. Leary, 12 Or. 45; Semple v. Bank, 5 Sawyer 91-2-3; Nelms v. Mtg. Co., 92 Ala. 159; Farrier v. Mtg. Co., 88 Ala. 277, 279; Christian v. Mtg. Co., 89 Ala. 198, 200; Ins. Co. v. "Wright, 55 Yt. 531.
W. R. Hutchinson, Esq., for respondent.
The right of the respondent to maintain its action against the appellant is authorized by the Constitution of the State of Utah. See Article 12, section 4-6. The ■appellant refers in his brief to section 351 of the Utah Code, and sec. 9, article 12, Constitution of Utah, and claims that foreign corporations are prohibited from making contracts in this state, and from enforcing their contracts so made in the courts of this State.
The purpose and effect of section 351-2 of Utah Code are solely to obtain a revenue for the State, and to •compel foreign corporations to comply with certain specific requirements, the sole and only purpose is to increase its revenues and to not permit foreign corporations to exercise any greater privileges than those organized under the laws of this State.
This construction of the statute is in harmony with section 6, article 12, of the Constitution, wherein it stated, “No corporations organized outside this state shall be allowed to transact business within the state on conditions more favorable than those prescribed by law to similar corporations organized under the laws of this State. ’ ’ The Legislature of the State of Utah has the power to impose conditions upon foreign corporations •doing business, but it has not the power to take from or add to any legal right which a foreign corporation possesses by reason of its creation under the laws of a foreign state.
In the case of Bedford v. Loan Ass’n., 181 U. S. 241, the court said: “We recognize the power of the State to impose conditions upon a foreign corporation doing business in the State. We have examined the existence of this power many times, but manifestly it cannot be exercised to discharge a citizen of the State from their contract obligations.” See also Thompson in his Commentaries on the Law of Corporations, vol. 6, 7479: “There are numerous authorities to the effect' that although a foreign corporation may have neglected to comply with the provisions of the domestic statutes prescribing the terms and conditions upon which it may enter the domestic field for the purpose of doing business therein, yet it nevertheless does not forfeit the general right of action in the courts of the state which is conceded alike to non-resident persons and corporations.” In support of the foregoing doctrine the following cases are cited. Whitely v. Mining Co., 4 Colo. 369; Charleston v. Gas & Mining Co., 11 Coin. 419 ; Smith v. Little, 67 Ind. 549; Thompson on Corporations, sec. 7978.
If the statute imposing conditions upon foreign corporations expressly declare that no suit shall he brought on a contract or obligation made in violation thereof, there can be no- room for any other construction than that the contract will be void so far as the right of the corporation to enforce it is concerned. Werten P. B. Co', v. Johnson, 38 S. W. Rep., 364; 42 S. W. Rep., 320; 98 Tex., 92; Bank v. Young, 37 Mo. 398.
There is no prohibitory enactment either in the Constitution or the statutory laws of the State of Utah, which prohibits the bringing of an action in the courts of this State by a foreign corporation for any cause whatsoever.
In 1894 the State of Washington passed a statute which is found in paragraphs 1524-31 of the general statutes of that state, which requires a foreign corporation to comply with certain requisites before doing business in the state, and provides that an agent of such corporation doing business therein before the requisites are complied with shall be guilty of a misdemeanor. The Supreme Court of the State of Washington has held in the case of the L. P. Fire Engine Co. v. Town of Mt. Vernon, 9 Wash. 142, 37 Pac. 287, “That a person contracting with a foreign corporation who has failed to comply with the state statute is estopped to deny the au thority of the corporation to make the contract, and is estopped to deny the capacity of the corporation to sne thereon.” Rathbone-Sard & Co. v. Frost, 9 Wash., 162, 37 Pac. 298; Holmes v. Barnard, 15 Weekly Notes-110; Killgore v. Smith, 122 Pa. St. 48; Watt-Campbell Co. v. Youngling, 51 Hnn 302; Newberg Petroleum Co. v. Weare, 27 Oh. St. 343; Augusta v. Earle, 38 U. S. 519.
The decided weight of authorities is that where the-Legislature has not expressly declared that this result shall follow from a failure to comply with the statute,, the courts ought not to imply such a result unless this-be necessary in order-to attain the primary object for which the statute was enacted. Upon this ground it has-been held that a contract made by a foreign corporation before it has complied with the statutory prerequisites-to the right to do business, will not on that account be held absolutely void, unless the statute expressly so declares .it; and if the statute imposes a penalty upon the corporation for failing to comply with such p-rerequis-tes, such penalty will be deemed exclusive of all others. Engine Co. v. Walsh, 18 Mo. 229; Insurance Co. v. McMillan, 246 Pa. St. 67; Ehrman v. Insurance Co., 1 Mc-Crary 123, 1 Fed. Rep. 471; Insurance Co. v. Salt Co.. 31 Mich. 346; Insurance Co. v. Matthews, 102 Mass. 221.
Transacting business in the State without complying with the statutory conditions is a usurpation of power by the corporation, but with the State rests the right to elect whether it will acquiesce in such usurpation, or dispute and prevent it. This is the rule in respect to a domestic corporation, certainly where it is-conceded there was legal authority for its creation. Ang. & A. Corp., page 94, 636; Lehman v. Warner, 61 Ala. 455; Cochran v. Arnold, 58 Pa. St. 399; North v. State, 107 Ind. 356.
Barse Live Stock Co. v. Range Valley Co., 16 Utah 59, 50 Pac. 630; Railroad v. Power Co., 23 Utah 22, 63 Pac. 995.

Opinion:
BARTCH, J.
The plaintiff, a foreign corporation incorporated and existing by virtue of the laws of the state of Illinois, and doing business in that state and in Utah, brought this action to recover the value of mer chandise sold and delivered to the defendant. The complaint is in the nsnal form, and contains three canses of action. The defendant demurred to the complaint upon the ground, among others, that the plaintiff had not the legal capacity to sue, being a. foreign corporation, and not having complied with the laws of this state. The demurrer was overruled, and thereupon the defendant filed an answer alleging, inter alia, that the plaintiff had not legal capacity to sue, because it is a foreign corporation, and is maintaining an office and storeroom and doing a general mercantile business in Salt 'Lake City, buying and selling at retail; that it has not filed a copy of its articles of incorporation with the Secretary of State or the county clerk, and that it has failed to designate an agent upon whom process may he served, and has not accepted the provisions of the Constitution of Utah, and has wholly failed to comply with the provisions of the Revised Statutes and of the Constitution relating to foreign corporations; that, by reason of such failure to comply with the laws of Utah, plaintiff was unlawfully, engaged in and doing an unlawful business; and that, as a consequence, the contracts, assignments of accounts, and transactions sued on are illegal and void. To this a demurrer was interposed and sustained and, the defendant electing to stand on his answer, judgment was entered in favor of the plaintiff. The decisive question presented upon this appeal is whether the contracts of a foreign corporation, made while doing business in this State, without complying with our laws relating to such corporations, are valid and can be enforced in the courts of this state by the corporation. The appellant insists that under our Constitution and statutes, and the facts admitted in this case, such a question must be answered in the negative.
The Constitution, so far as material here, provides, in section 1, art. 12, that "all corporations doing business in this state, may, as to such business, be regulated, limited or restrained by law;" and in section 4, Id., that "all corporations shall have the right to' sue, and shall be subject to be sued, in all courts in like cases as natural persons." Section 6, same article provides., "No corporations organized outside of this State, shall be allowed to transact business within the State on conditions more favorable than those prescribed by law to similar corporations organized under the laws of this State." Section 9' of the same article reads: "No corporation shall do business in this State, without having one or more places of business, with an authorized agent or agents, upon whom process may be served; nor without first filing a certified copy of its articles of incorporation with the Secretary of State." All of the provisions of the Constitution are both "mandatory and prohibitory," because there are no "express words" which declare them to- be otherwise. Section 26 art. 1, Const. On this subject, section 351, Rev. St. 1898, provides: "All corporations, not organized under the laws of this State, before doing business within the state shall file with the Secretary of State and with the county clerk of the county wherein their principal office in the state is situated, a certified copy of their articles of agreement, certificate of incorporation, and bylaws and in case of alteration or amendment of said articles of incorporation or by-laws, shall file certified copies of such alterations or amendments with each of said officers, and shall also, before doing business within the State, by resolution of their board of directors, accept the provisions of the Constitution of this State, and also designate some person residing in the county in which its principal place of business in the state is situated, upon whom process issued by authority of or under any law of the State may be served. A copy of such resolution shall be certified by the president and secretary, under seal of the company, and filed in the office of the Secretary of State and in the office of the county clerk of the county in which its principal office is situated. ' ' Here are express provisions of statute requiring certain things to be done before a foreign corporation can legitimately transact business within this State, and these provisions are in terms mandatory and prohibitory, and in entire harmony with the provisions of the Constitution relating to such corporations. For the evident purpose of compelling a compliance with these laws by foreign corporations before attempting to transact business in this state, the Legislature, in section 352, Rev. St. 1898, further provided: "Any such corporation failing to comply with the provisions of the foregoing section shall not be entitled to the benefits of the laws of this state relating to corporations; and any person acting as agent of a foreign corporation which shall neglect or refuse to comply with the foregoing provisions, shall he deemed guilty of a misdemeanor, and shall he personally liable on any and all contracts made in this State by him for and in behalf of such company during the time that it shall remain so in default; provided, that this section shall not be held to apply to persons acting as agents for foreign corporations for a special or temporary purpose or for a purpose not within the ordinary business of such corporation, nor shall it apply to attorneys-at-law as such." This section, as will be observed, is also in its terms mandatory and prohibitory, and fixes certain penalties for a failure on the part of foreign corporations to comply with the provisions of the preceding section. The first penalty is directed against the corporation itself which has failed to comply with the laws in question, and that is that such corporation "shall not be entitled to the benefits of the laws of this State relating to corporations; ' ' and then there are further penalties provided as a punishment for any agent who acts for such corporation which has failed to comply with the provisions contained in the..preceding section.
These several constitutional and statutory provisions are in harmony with each other, and, undoubtedly, were enacted for the purpose of placing foreign corporations which would comply with such provisions upon the same plane, in the transaction of corporate business in this State, as domestic corporations. The principal terms and conditions prescribed are that the foreign corporation shall file certain evidence of its corporate existence, designate its principal place of business within this State, and appoint an agent, at snch place of business, upon whom process may be served. Such terms and conditions are reasonable, and were doubtless prescribed to protect the citizens of the State in their dealings with such corporations from the hardships and inconveniences which might otherwise be entailed upon them by being compelled to pursue their rights in other jurisdictions. That the State has a right to impose such terms upon such corporations, as conditions precedent to their right to carry on corporate business within its limits, we entertain no doubt. A corporation is a creature of statute — of local laws— and, except for such laws, it would have no existence. The grant of its corporate existence is • a grant of special powers and privileges to its incor-porators to pursue the objects of its creation, and transact its corporate business the same as an individual transacts his private business. The persons who compose the legal entity, generally, so far as ordinary trading, manufacturing, and mining corporations are concerned, are hot responsible individually for the corporate debts. A corporation being such a creature of local laws, it has no legal existence without the limits of the jurisdiction which created it. "It exists- only in contemplation of law, and by force of the law; and where the law ceases to operate, and is no longer obligatory, the corporation can have no existence. It must dwell in the place of its creation, and cannot migrate to another sovereignty." Bank of Augusta v. Earle, 13 Pet. 588, 10 L. Ed. 274. In these respects a corporation is not like an individual, who exists because of the laws of God, our Creator, and may reside in one State or country and do business and make valid contracts in another. The corporation is endowed, with no natural attributes, but has only such powers as are conferred upon it by its charter and laws of its creation, and one state or country can make no laws nor create any corporation for another, although the corporate existence of a corporation may he recognized by another State, and its contracts made therein enforced by the comity of the State. Comity, however, will not be extended by States to such an extent as to recognize the existence of a corporation and the exercise of its powers when the same are inimical to their interest, repugnant to their policy, or contravene their laws. "Having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely, they may restrict its business to- particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion." Paul v. Virginia, 8 Wall. 168, 181, 19 L. Ed. 357. In Pembina Min. Co. v. Pennsylvania, 125 U. S. 181, 8 Sup. Ct. 737, 31 L. Ed. 650, it was said: ' The State is not prohibited from discriminating in the privileges it may grant to foreign corporations as a condition of their doing business or hiring offices within its limits, provided always such discrimination does not interfere with any transaction by such corporations of interstate or foreign commerce. It is not every corporation, lawful in the state of its creation, that other States may be willing to admit within their jurisdiction, or consent that it may have offices in them; such, for example, as a corporation for lotteries. And, even where the business of a foreign corporation is not unlawful in other States the latter may wish to limit the number of such corporations, or to subject their business to such control as would be in accordance- with the policy governing domestic corporations of a similar character. '
This jurisdiction, therefore, had the absolute right to prescribe, as it did in the foregoing constitutional and statutory provisions, such terms and conditions upon which a foreign corporation might do business here, as would put the corporation in a position to be amenable to the process of the courts of this State. When, therefore, the plaintiff corporation established a place of business and commenced to ' ' do business" in this State, it was bound to recognize our laws and their mandatory and prohibitory character, especially of the Constitution. Having failed to do this, and having proceeded in violation of such laws to exercise its corporate powers, its contracts cannot be enforced by the corporation in our courts. The force of this position was clearly recognized by this court in Barse Live Stock Co. v. Range Valley Cattle Co., 16 Utah 59, 50 Pac. 630, where it was said: "It will be conceded in the outset that, if the contract upon which the plaintiff's action was brought was made in violation of a law of the state, it cannot be enforced by any court in the State." In Thorne v. Travellers' Ins. Co., 80 Pa. 15, 21 Am. Rep. 89, it was said: "There can be no doubt of the constitutional power of the Legislature to prescribe the conditions under which a foreign corporation shall transact business in this State, and the manner in which its agents shall be qualified before entering on their duties. It has often been held that an action founded on a transaction prohibited by statute cannot be maintained, although a penalty be imposed for violating the law, and it be not expressly declared that the contract be void." So, in Cincinnati Mut. H. A. Co. v. Rosenthal, 55 Ill. 85, 8 Am. Rep. 626, it was said: "When the Legislature prohibits an act, or declares that it shall be unlawful to perform it, every rule of interpretation must say that the Legislature intended to interpose its power to prevent the act, and, as one of the means of its prevention, that the courts shall hold it. void. This is as manifest as if the statute had declared that it should be void. To hold otherwise would be to give the person or corporation or individual the same rights in enforcing prohibited contracts as the good citizen who respects and conforms to the law. To' permit snch contracts to he enforced, if not offering a premium to violate a law, it certainly withdraws a large portion of the fear that deters men from defying the law. To do so, places the persons who violates the law on an equal footing with those who strictly observe its requirements. That this contract is absolutely void as to appellee we entertain no doubt." Likewise in Re Comstock, 3 Sawy. 218, Fed. Cas. No. 3,078, it was stated. ' ' This foreign corporation having no power to do business in this State except by the consent of the State, and consent having been given upon a condition precedent which was never performed, the power to make this contract was never in the corporation. So far as it was concerned, the act was ultra vires," 6 Thomp., Corp., secs. 7959-7960; 2 Morawetz, Priv. Corp., sections 662-666; Railroad v. Power Co., 23 Utah, 22, 63 Pac. 995; Cary-Lombard L. Co. v. Thomas, 92 Tenn. 587, 22 S. W. 743; Dudley v. Collier, 87 Ala. 431, 6 South. 304, 13 Am. St. Rep. 55; Webb v. Alexander, 7 Wend. 281; Smith v. Alberta (Idaho), 74 Pac. 1071; Farrior v. New Eng. M. S. Co., 88 Ala. 275, 7 South. 200; Stevenson v. Ewing (Tenn.), 9 S. W. 230; Miller v. Ammon, 145 U. S. 421, 12 Sup. Ct. 884, 36 L. Ed. 759; Cooper M. Co. v. Ferguson, 113 U. S. 727, 5 Sup. Ct. 739, 28 L. Ed. 1137; Electric N. & M. T. Co. v. Perry (C. C.) 75 Fed. 898; Crefeld Mills v. Goddard, (C. C.), 69 Fed. 141.
It must be conceded that the authorities as to the question herein presented and considered are in conflict and irreconcilable, but we are of the opinion that the conclusion reached is inevitable under the mandatory and prohibitory character of our constitutional and statutory provisions, and that the court erred in sustaining the demurrer to the answer.
The judgment must be reversed, with costs, and the case remanded for further proceedings in accordance herewith. It is so ordered.
BASKIN, C. J., concurs.