Court Opinion

ID: 6971266
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:02:53.513109+00
Date Added: 2024-06-11T16:08:48.515056
License: Public Domain

Mr. Justice Scott delivered the opinion of the court: The first and second sections of the statute under ■consideration are as follows: “Sec. 1. Be it enacted by the People of the State of Illinois, represented in the General Assembly: That every corporation hereafter organized under the laws of this State shall, before receiving a certificate of complete organization, file with the Secretary of State a statement setting forth the post-office address of its business office, giving street and number. “Sec. 2. Every incorporated company, other than railroad, banking, building and loan and insurance companies, existing by virtue of any general or special law of this State, or hereafter organized by virtue of any law of this State, shall annually, between the first day of February and the first day of March, report to the Secretary of State the location of its principal office in this State, with town, street and number; the name of its officers, with their residence, stating the town, street and number, with the date of the expiration of their respective terms of office; whether or not the corporation is pursuing an active*business under its charter and the kind of business engaged in, if any, which said report shall be made under the seal of the corporation and shall be signed and sworn to by the president, secretary or other officer of the corporation, and in cáse said corporation is in the hands of an assignee or receiver, then such report shall be signed and sworn to by such assignee or receiver, which said report, together with a fee of one dollar for filing the same, shall be sent to the Secretary of State, in whose office it shall be filed. The Secretary of State shall in no case receive or file said report until said fee is paid, and a failure to make said report and pay said fee shall be prima facie evidence that said corporation is out of business, and shall work a forfeiture of the charter of such corporation. And it is hereby made the duty of the Secretary of State to enter upon the records of his office, as soon as practicable after default in making such report, the cancellation of the charters of all corporations failing to make said report at the time and in the manner herein provided.” Section 3 provides that the Secretary of State shall furnish blanks for making the report contemplated by section 2, to each corporation whose address is disclosed by the records of his office, with a notice stating the effect of a failure to make the report, and provides for notice by publication to corporations whose addresses are not so disclosed. Sections 4 and 5 provide for proof of publication, and fix the rate of compensation for publication of such notice. Section 6 provides for filing with the recorder of deeds in each county a list of the corporations complying with section 2 of the statute, together with the names and addresses of their principal officers and the location of the principal business office of the corporation in this State, and a list of those failing to comply with section 2 after having in one or more years made the report required by that section. Section 7 is as follows:' “It is further provided, that any corporation which is pursuing an active business under its charter, failing to make said report at the time provided by law may, at any time, within one year from such default, be re-instated upon the records in the office of the Secretary of State upon the payment of a fee in the sum of $20 for such re-instatement and filing in said office an affidavit stating all the facts required in section 3 (2) of this act, and in addition thereto, the fact that it was at the time of such default, and still is, engaged in active business under its charter.” The remaining sections provide for the payment of expenses of publication and repeal an earlier act. The language of this act is broad enough to include corporations not for pecuniary profit. The first section applies to “every corporation.” The second is in reference to “every incorporated company,” other than railroad, banking, building and loan and insurance companies, now existing or hereafter organized under the laws of this State. It is conceded that these general terms include corporations of the class to which the petitioner belongs, but it is argued that they are restrained by the general context and by the spirit of the law, and that the act, when considered as a whole, indicates that the legislature meant only business corporations, and in support of this position, attention is called to the fact that in section 2 the corporation is required to report whether it “is pursuing an active business under its charter,” and by section 7, when it desires re-instatement, it is required to show, by affidavit, that at the time of its default it was, and still is, “engaged in active business under its charter,” and it is said that corporations not for pecuniary profit ordinarily are not engaged in active business, whence the conclusion that the act was not intended to apply to them. The term “active business,” as used in this statute, means the exercise of corporate powers,— the doing of those things which the corporation is by its charter authorized to do. We are confirmed in this view of the meaning of these words by the fact that in section 29 of chapter 32, persons desiring to organize a corporation not for pecuniary profit are required to file with the Secretary of State a certificate stating “the particular business and objects for which it is formed,” and by the succeeding section it is provided, “upon complying with the foregoing conditions, the corporation, society or association shall be deemed fully organized, and may proceed to business.” It is apparent that the word “business,” as used by the legislature in the statute of 1901 under consideration, refers not alone to those things which the corporation for pecuniary profit may do. The constitutionality of the act is attacked upon the ground that the legislature has no power to dissolve a corporation or to declare a forfeiture of its franchise, nor has the legislature the power to prescribe a state of facts under which this may be done through an administrative officer, because such an act is the exercise of judicial power, which, under the constitutions of the State and of the United States, is vested in the judicial and denied, by implication, to the legislative department, and as petitioner was organized prior to the passage of the act of 1901, we are cited to the Dartmouth College case, and to other cases of like character, holding that a franchise of a corporation is property in the law, and is protected by the constitutions of the State and of the United States as a contract, which cannot be impaired by the legislature. The accuracy oh petitioner’s propositions, as abstract statements of the law, is beyond question, but we think them inapplicable here because based upon a misconstruction of the statute now before us. One of the purposes of the present statute evidently was to facilitate the taxation of corporations, and to provide information for the taxing officers in reference to the existence and location of corporations organized under the laws of the State and owning property in the State. The purpose of this statute further is to require evidence once each year that the corporation is exercising the powers granted, and its failure to make such proof is made prima facie evidence of non-user. The thing that works a forfeiture of the corporation is the fact of non-user, which can be finally determined only by a court of competent jurisdiction; (Bruffett v. Great Western Railroad Co. 25 Ill. 310; Baker v. Administrator of Backus, 32 id. 79; Board of Education v. Bakewell, 122 id. 339;) and the cancellation which the Secretary of State is required to enter upon the records of his office would, in such proceeding, make a prima facie case for the People. If the corporation is, in fact, engaged in active business and fails to make the report, it is not, by reason of that failure, deprived of its charter, but may, in a suit brought against it, show the fact and thereby defeat the proceeding. It is no doubt true, as suggested by petitioner, that if, with the records in the office of the Secretary of State in their present condition, petitioner desired a certified copy of the documents filed by its incorporators as a basis for its charter, such copy would show the cancellation contemplated by section 2 of the statute. This condition of affairs, and the fact that such entry on the record is a perpetual and continuing" notice that its corporate powers are ended, misleading though such notice may be in some instances, are incentives of the most potent character for a compliance. with section 2 of the act. The effect of the act is simply to make a failure to report, as required, prima facie evidence, and the clause providing that the failure to report .and pay the fee therefor “shall be prima facie evidence that said corporation is out of business, and shall work a forfeiture of the charter of such corporation,” was merely intended to be a statement of the effect of a condition, namely, non-user, of which condition the failure is made prima facie evidence. It may be suggested that this construction of the statute places upon the corporation an additional burden,-—■ one not contemplated by its charter, which is the contract between it and the State,—and that the statute is therefore obnoxious to the constitution for the reason that it impairs the obligation of a contract. Petitioner is organized under the general Incorporation act, passed in 1872. Section 9 of that act provides: “The General Assembly shall, at all times, have power to prescribe such regulations and provision's as it may deem advisable, which regulations and provisions shall be binding on any and all corporations formed under the provisions of this act: And, provided, further, that this act shall not be held to revive or extend any private charter or law heretofore granted or passed concerning any corporation.” (Hurd’s Stat. 1901, chap. 32, p. 455.) In City of Danville v. Danville Water Co. 178 Ill. 299, we considered this section 9, and said in reference thereto (p. 306): “By organizing under the general Incorporation act, the defendant in error agreed to submit itself to and to be bound by such regulations and provisions, as the legislature should deem it advisable-to make. * * * The language of section 9 is different from and broader in its scope than the language contained in many charters which reserve to the State the power to repeal, alter, amend or modify the charter itself. We apprehend, therefore, that the decisions restricting the power of the State as to charters which are given subject to the right of the State to repeal, alter, amend or modify them do not apply to such broad language as is used in.section 9. By the terms of section 9 it is something more than the mere right to change the charter of the corporation which is reserved to the legislature. The authority is thereby reserved to provide the regulations and provisions under which the corporation may proceed in the transaction of its business. We have held that the legislature may impose duties on corporations the same as on individuals, in the absence of special enactments. We have also held that the constitution of 1848 by implication reserved to the legislature the right to change or increase the liability of a shareholder in a corporation.—Illinois Central Railroad Co. v. City of Bloomington, 76 Ill. 447; Weidenger v. Spruance, 101 id. 278; Diversey v. Smith, 103 id. 378; Arena v. Weir, 89 id. 25; Butler v. Walker, 80 id. 345.” We think it apparent from the language just quoted that this statute of 1901, as we construe it, is within the terms of section 9, supra, which must be deemed to be a part of the charter of every corporation organized under the act of 1872, and that while it is true that neither the legislature nor a ministerial officer can declare a forfeiture, still it is within the power of the legislature, under section 9, supra, to require corporations to make the reports required by section 2 of the act of 1901, and to provide that a record of their default, made by a ministerial officer, shall be prima facie evidence of non-user, and to authorize, prima facie, a forfeiture of the charter. It is true that this statute makes that, viz., failure to report, evidence of non-user which before the passage of the statute would n'ot have been proof on that subject at all; but this is not a valid constitutional objection. “No man or corporation has a vested right in the rules of evidence. They pertain to the remedies provided by the State for its citizen's and do not constitute a part of any contract. They are subject to control and modification by the legislature, whether affecting proof of existing rights or rights subsequently acquired. Changes in them may be made applicable to existing causes of action.—Cooley’s Const. Lim. (6th ed.) p. 451; Gage v. Caraher, 125 Ill. 447.” Chicago, Burlington and Quincy Railroad Co. v. Jones, 149 Ill. 361. It is not, however, within the legislative power to declare what shall be conclusive evidence, as that would be an invasion of the power of the judiciary. “8 Cyc. p. 820; Corbin v. Hill, 21 Iowa, 70; White v. Flynn, 23 Ind. 46; United States v. Klein, 13 Wall. 128; Missouri, Kansas and Texas Railway Co. v. Simonson, 64 Kan. 802. To give to this statute the meaning contended for by petitioner is to say that the purpose of the legislature was to make the failure to report conclusive evidence that a forfeiture has taken place, although the statute expressly says it shall be prima facie evidence, merely. This construction of petitioner finds support, it is true, in the fact that the statute provides that the failure to report shall work a forfeiture of the charter, thereby attempting to give to the evidence, which it says is prima facie, the effect of evidence that is conclusive. The provisions of this statute are in that respect inconsistent with' each other, and the meaning of the act must be determined by the construction placed thereon by the courts. To say that it merely provides what shall be prima fa.cie evidence of non-user and for recording that evidence, is to uphold it; to say that the act of the Secretary of State which it directs absolutely forfeits the charter of the defaulting corporation, is to destroy it. Where a statute may receive either of two constructions, one of which would result in its being upheld and the other of which would bring it within the inhibition of the constitution, that construction will be adopted by the courts which will avoid conflict with the constitution. Newland v. Marsh, 19 Ill. 376; People v. Simon, 176 id. 165. It becomes our duty, therefore, to construe this statute, not as a law authorizing the Secretary of State to declare absolute forfeitures of the charters of defaulting corporations, but as merely establishing a new rule of evidence against these artificial persons. The corporation which has defaulted in making this report can, within a year thereafter, have affirmative relief and clear the records in the office of the Secretary of State of the evidence against it by complying with section 7 of the act of 1901. What its right, if any, is to affirmative relief after the expiration of that year if it does not avail itself of the right given by that section, it is unnecessary now to determine. The facts averred by the petition do not entitle the petitioner to the relief sought. Writ ^enie^