Case Name: Farmers' Mutual Telephone Company v. J. M. Howell, Appellant
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1906-10-24
Citations: 132 Iowa 22
Docket Number: 
Parties: Farmers’ Mutual Telephone Company v. J. M. Howell, Appellant.
Judges: 
Reporter: Iowa Reports
Volume: 132
Pages: 22–32

Head Matter:
Farmers’ Mutual Telephone Company v. J. M. Howell, Appellant.
1 Justices of the peace: removal of cause by agreement: jurisdiction. The district court will acquire jurisdiction to try and determine a cause transfered from a justice by agreement prior to judgment where the parties appear and by filing pleadings join issue in the district court pursuant to the agreement to transfer.
2 Tender: corporate stock. The rule that a tender must be kept good by having the money or property in court does not apply to certificates of stock.
3 Corporations: denial of legal existence. A subscriber to stock of a corporation which was then a going concern and the corporate capacity of which he had opportunity to investigate cannot plead or prove, in an action on the subscription, a lack of legal incorporation.
Justices Deemer, Weaver and Bishop dissent to portions of the opinion.
Appeal from Johnson District Court.— Hon. O. A. Byington, Judge.
Wednesday, October 24, 1906.
Suit on a stock subscription. Judgment for plaintiff, from which the defendant appeals.
Affirmed.
Bauch & Bradley, and Edwin B. Wilson, for appellant.
Wade, Dutcher & Davis and A. E. Maine, for appellee.

Opinion:
Sherwin, J.
This suit was originally brought in the justice court' of D. S. Barber of Johnson county, who had jurisdiction of the subject-matter and of the defendant. Two changes of venue were regularly taken, and the case finally reached the court of G. R. Irish, a justice of the same county, who also had jurisdiction of the subject-matter- and of the defendant. After it reached Justice Irish the parties stipulated as follows: " It is' hereby agreed and stipulated by and between the parties above named that the aboveentiled cause with the transcript therein shall be transferred to the district court of Johnson county, Iowa, for trial in said court as an original action. Plaintiffs herein agree to file their petition herein in the district court within ten days from September 12, 1904, and defendant agrees to plead thereto within five days after the same is filed." A transcript with the stipulation was then sent to the district court, where it was filed and the case docketed. On the 21st of September, following, the plaintiff filed its petition in the district court. On the next day the defendant appeared therein and filed a motion for a cost bond. Later, he filed a motion to strike, and for a mgre specific statement. On the 9th of December, 1904, he answered, putting in issue the main allegations of the petition. On the 19 th day of December he amended his answer, and therein, for the first time, questioned the jurisdiction of the district court, alleging that the transfer to the district court without a judgment in justice court conferred no jurisdiction. After this appellant moved to dismiss for want of jurisdiction. The motion was overruled, and the case was tried to the court on the issues joined, resulting in judgment for the plaintiff.
The question of the jurisdiction of the district court confronts us at the very threshold of our consideration of this case. It is contended by the appellant that, as no judgment was entered in the justice court, the district court could not acquire jurisdiction of the case through any subsequent action of the-parties or of the defendant., Evans v. Phelps, 77 Iowa, 526, is particularly relied upon as sustaining the appellant's contention. At the outset, it must be conceded that, under the rule announced in that case, parties to an action pending in justice court cannot confer jurisdiction on the district court by consenting to a transfer of the case to such court. In that case suit was commenced before a mayor and taken before a justice whereupon the parties agreed to transfer it to the district court for trial. When it reached the district court, however, the defendant moved to dismiss, on the ground that the transfer was not authorized by the statute, and hence conferred no jurisdiction on the district court. We sustained the contention saying:
The jurisdiction of our courts is prescribed by statute, and there is no provision made for the transfer of actions of this kind from a justice of the peace to the district court. On the contrary, the statute contemplates that a cause of this character once commenced before a justice of the peace shall proceed to a final determination, and the only provision made for transferring it to the district court is by appeal. As applied to the facts there presented for determination, it may be conceded that the decision is sound, for the only appearance there made by the defendant was for the express purpose of challenging the jurisdiction, of the district court, and, of course, no waiver of irregularity in or manner of acquiring jurisdiction could be predicted on such special appearance. In the early case of Kimble v. Riggin, 2 G. Greene, 245, an appeal was taken from a verdict rendered in a justice court. There being no judgment, we held that the district court had no jurisdiction, and said further, in such case, even the appearance of the parties in the supposed appeal could not confer jurisdiction over the invalid proceedings of the justice. The case would have been different had the parties appeared originally in the district court, and by consent proceeded to trial, but, as the appearance, trial, and judgment were predicated upon an appeal unauthorized by law, we can but' regard the proceedings as a nullity.
The gist of the holding in the Kimble case is that there could be no waiver of irregularity unless it clearly appeared to be the intent of the defendant; for, if the parties could have conferred jurisdiction by appearing originally in the district court, it is difficult to find any valid reason why they may not do so at any time when the case is docketed there. It is, of course, a well-settled doctrine that consent can never confer jurisdiction of the subject-matter, and such only is the holding of the following cases cited by the appellant : Dicks v. Hatch, 10 Iowa, 380; Walker v. Kynett et al., 32 Iowa, 524; Easton v. Fleming et al., 51 Iowa, 305.
In Baily v. Birkhofer, 123 Iowa, 59, an action was commenced before a justice of the peace who had no jurisdiction of the subject-matter, and we held, following Porter v. Welsh, 117 Iowa, 144, and other like cases, that the district court could acquire no jurisdiction by an appeal from a judgment void for want of jurisdiction in the justice. The last two cases cited are in line with McMeans v. Cameron, 51 Iowa, 691; Gates v. Wagner, 46 Iowa, 355; Hamilton v. Millhouse, 46 Iowa, 74; Boyer v. Moore, 42 Iowa, 544; Ebersole & Son v. Ware, 59 Iowa, 663.
In our opinion, the instant case is clearly distinguishable from the above cases. Here, the justice of the peace and the district court had jurisdiction of the subject-matter; the ease was docketed in the district court by consent; the plaintiff filed his original petition therein in pursuance of the agreement and the defendant appeared in said court, and submitted his person to the jurisdiction of the court by answer and other pleadings, which was not done in any of the cases cited and relied on by the appellant. If the plaintiff had filed its petition in the district court in the first instance, and the defendant had appeared thereto by answer on the merits, there can be no question as to the court's jurisdiction of his person; it having jurisdiction of both the subject-matter and of the person. In Wilgus v. Gettings, 19 Iowa, 82, the suit was commenced before a justice, and proceeded to trial and judgment. An appeal was taken to the district court, where the plaintiff moved for a continuance, which was granted. Later, he moved, to dismiss, because the appeal was not taken within the statutory time therefor; the motion was overruled, and we held correctly so, because the appearance of the plaintiff in the district court, and voluntarily submitting to its jurisdiction and obtaining a continuance of the cause, was a waiver of " any defect or irregularity in the statutory means of requiring such appearance, or obtaining jurisdiction of the person." Neither the stipulation, nor the filing of the motion and answer, attempted to confer jurisdiction of the subject-matter, for the court at all times possessed such jurisdiction. The acts amounted to nothing more than submitting the person to the court's jurisdiction, and there is abundant authority sustaining jurisdiction under such circumstances. German Bank v. Am. Ins. Co., 83 Iowa, 491; Schrader v. Hoover, 87 Iowa, 654; Groves v. Richmond, 56 Iowa, 69; Danforth v. Thompson, 34 Iowa, 243. In the latter case a justice of the peace in Wisconsin failed to enter judgment on a verdict, but an appeal was taken as if a judgment had been entertained; both parties appeared and tried the case without objection that no appeal lay from the verdict of a jury. In an action on the transcript of such judgment, we held that the appearance of the parties, and their going to trial on the merits, gave the appellant court jurisdicition of their persons, and rendered its judgment valid; it appearing that it had jurisdiction of the subject matter.
In Davidson v. Wheeler, Morris, 238, this court held that, where a court has jurisdiction of the subject-matter, it may acquire jurisdiction of the parties by consent, and that a change of venue taken by consent of both parties conferred jurisdiction upon the court to which the change was taken, although such change was not authorized by law; the court being one having jurisdiction of the subject-matter. We reach the conclusion that the district court had jurisdiction, and that the motion to dismiss was rightly overruled.
The plaintiff sued on the following written agreement: " To the Sharon Farmers Mutual Telephone Company. We, the undersigned, wishing to become stockholders of the said company, do hereby request the directors to build a line to our respecive houses and connect us on their switchboard at Sharon Center, for which we agree to pay thirty dollars each for stock in said company and do the work required by the company building the line and purchase our own telephone." In his answer, the defendant denied the corporate existence of the plaintiff, and, upon the trial, the plaintiff offered in evidence its articles of-incorporation, the certificate of the secretary of state, certifying that it was a corporation organized under the laws of the State, and that it had filed its articles of incorporation in his office and the subscription paper sued on. These exhibits went in over the defendant's objection thereto, and the appellant now argues that they were erroneously admitted without evidence, showing that plaintiff was intended to be bound by, and described in, the subscription paper Exhibit C. We think the position not tenable because, in our judgment, there is sufficient evidence of the identity of the plaintiff as the corporation making the contract with the defendant.
The plaintiff tendered a certificate for the stock that the defendant had agreed to take, but such tender was not kept good by the certificate into court. Ordinarily a tender must be kept good by having the money or property tendered in court, but this rule is held not to apply to certificates of corporation stock. 1 Cook on Corporations section 192, and cases cited. This holding is not in conflict with our former decisions in the following cases: Cooper v. McKee, 49 Iowa, 286; Courtright v. Deeds, 37 Iowa, 503, and cases following the same rule as to similar contracts. The evidence clearly shows that the contract was mutual, and that the plaintiff had fully performed its entire agreement so far as it was permitted to do by the appellant. Colfax Hotel Co. v. Lyon, 69 Iowa, 683.
The appellant further contends that the plaintiff was not legally incorporated, that he may become liable for all of its debts, and that on account thereof there has been a failure of consideration for his promise. The plain-tin: had been incorporated, and had been doing business for several years before the defendant became a subscriber for its stock. He had the right and opportunity to fully investigate its corporate existence and to determine for himself the liability incurred by becoming a stockholder therein. The law permits such corporations, and the plaintiff was a de facto corporation at least. The defendant cannot therefore, plead or prove a defective obganization for the purpose of defeating his subscription obligation. 1 Cook on Corporations sections 5, 183, 186; 2 Cook on Corporations section 637; Chubb v. Upton, 95 U. S. 667 (24 L. Ed. 523); Bank Building Co. v. Pierce, 92 Iowa, 668.
We think the judgment fully sustained by the evidence, and find no cause for a reversal of the case. Affirmed.