Court Opinion

ID: 7907355
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:01:59.831782+00
Date Added: 2024-06-11T16:32:28.083055
License: Public Domain

Burch, J.
(concurring specially): This case presents an interesting question of corporation law. The question is whether the phrase “seeking to do business” and other expressions relating to engaging in business, found in the statute relating to exercise of corporate privilege in this state by foreign corporations, are limited in their application to business in the trade sense of producing, buying, selling, financing and similar activities for pecuniary profit, or extend broadly to exercise of any corporate function in the achievement of any corporate purpose. To illustrate: From 1893 until 1905 the Red Cross was a corporation of the District of *579Columbia, and hence a foreign corporation in its relation to this state. In 1905 it was reorganized and reincorporated by congress, acting under its constitutional power. The foreign-corporation statute of this state was passed two years later. If the Red Cross' had remained a foreign corporation it could not, after passage of the statute, have entered this state to mitigate the suffering caused by pestilence, famine, fire, flood and other calamities without permission of the charter board, if that work constitutes doing business. The decision of the court is that activity displayed in carrying out corporate purpose is doing business within the meaning of the statute, and under the circumstances stated the Red Cross would have been under necessity, if it desired to avoid liability to ouster, to get a permit to do the work described. Lists have been furnished to the court of incorporated societies, associations and bodies organized for purposes remote from conduct of business for pecuniary profit, which it is said will be subject to ouster under the interpretation of the statute which the court adopts. This being true, the fact brings into relief the necessity always resting upon the court of rendering decisions which will stand up after the circumstances under which the particular cases originated have been forgotten.
In the case of Topeka v. Jones, 74 Kan. 164, 86 Pac. 162, the court adverted to the different meanings conveyed by the word “business,” and noted that Webster’s International Dictionary gives seven definitions. The Oxford English Dictionary gives twenty-four uses. Replying to the inquiry of his amazed and sorrowing parents, who had been seeking him, Jesus said, “Wist ye not that I must be about my Father’s business?” Between that business and the business of certain money changers subsequently conducted in the temple there is a wide difference; and something of that difference is reflected in the classification of corporations in the statute of this state:
“Corporations are either: First, public; or, second, private.
“A public corporation is one that has for its object the government of a portion of the state.
“Private corporations are of three kinds: First, corporations for religion; second, corporations for charity or benevolence; and third, corporations for profit.” (R. S. 17-101, 17-102, 17-103.)
In stating the purposes for which private corporations may be formed, the distinction between, let us say, things spiritual and things material is maintained, and the nonprofit purposes come first.
*580“The purposes for which private corporations may be formed are: (1) The support of public worship. (2) The support of any benevolent, charitable, educational or missionary undertaking. (3) The support of any literary or scientific undertaking, the maintenance of a libary, or the promoting of painting, music, or other fine arts.” (R. S. 17-202.)
Special provision is made for organization of various kinds of corporations of the nonprofit class:
“Any religious society, military or fire company, literary, charitable or benevolent association, other than colleges, universities, academies or seminaries, or any grand or subordinate lodge of Free and Accepted Masons, or of the Independent Order of Odd Fellows, Knights of Pythias, Knights of Honor, Ancient Order of United Workmen, Independent Order of Mutual Aid, Good Templars, or any other secret benevolent association or organization, may by the consent of a majority of its members become bodies corporate under this act, by filing the charter required by this act, electing directors or trustees, and performing the things as are directed in the case of other corporations. . . .
“No religious, literary, scientific, industrial, benevolent or other society, association, company, corporation or institution that does not have a capital stock will be required, in its charter, to make any statement of the amount of capital stock or amount of each share; but such charter, if it contains the other statements therein required, and also an estimate of the value of the goods, chattels, lands, rights and credits owned by the corporation, will be sufficient.” (R. S. 17-1701, 17-1702.)
We do not often speak of the promotion of religion or philanthropy or the liberal arts as business. We reserve the word for enterprises that deal with dollars. Sometimes the reservation is made with a circumspection which seems rather refined. Thus, the supreme court of Illinois held the Chicago Board of Trade was not organized for the transaction of business, and put the corporation in a class with those formed to inculcate morality. In the case of The People, ex rel., v. Board of Trade, 80 Illo. 134, expulsion of a member was involved. The court said:
“It is true that the body is organized under a statutory charter, and so are churches, Masonic bodies, and Odd Fellow and temperance lodges; . . . being organized by voluntary association, and not for the transaction of business, but for the purpose of inculcating their precepts and trusts, not for pecuniary gain, but for the advancement of morals and for the improvement of their members, they are left to adopt their constitutions, by-laws and regulations for admitting, suspending or expelling their members.
“This organization is not maintained for the transaction of business or for pecuniary gain, but simply to promulgate and enforce amongst its members correct and high moral principles in the transaction of business. It is not engaged in business, but only prescribes rules for the transaction of business.” (p. 136.)
*581On the other hand, there are associations organized, not for profit in the dividend sense, but for economic advantage to members, which makes them properly classifiable as corporations for profit; and, speaking generally, the private corporation has become such a potent and omnipresent factor in our economic affairs that when the doing of business by a corporation is mentioned, habit of thought gives rise to the idea of business for material gain.
In final analysis the basis of the court’s decision reduces to this: Because usage of the language permits us to refer to the work of a missionary exercising the functions of a corporation for promotion of religion as business; because it is permissible to speak of the business of benevolence, the word “business” as used in the statute may be dissociated entirely from the thought of material profit or advantage. No text cited in the opinion of the court was written with this specific subject in mind, and but two of the decisions quoted touch this specific subject — Pacific Typesetting Co. v. I. T. U., 125 Wash. 273, and Knights of Ku Klux Klan v. Commonwealth (Va.), 122 S. E. 122. In the Washington case a labor union organized to improve the lot of workingmen with respect to hours, working conditions and wages was seeking to accomplish its purposes. The court simply made the pronouncement that the union was doing the business for which it was organized. In the Virginia case the court said it found nothing in the Virginia statutes justifying restriction of the phrase “doing business” to exercise of some commercial or manufacturing function. The court did not undertake to demonstrate from the statutes that the legislature of Virginia intended the phrase to embrace exercise of corporate function generally. The court did buttress its decision by authority. Out of the compendious literature of corporation law, one case was cited — the Washington case— and so the court said, “There is nothing unusual about this conclusion.” That being true, this court, with two cases before it, would be justified in referring to the unbroken line of judicial decisions.
Now the question is not whether it is permissible to interpret the statute in a certain way; the question is, What did the legislature mean? It is not easy to return an answer with a feeling of confidence in its correctness; but consideration of the history of the legislation inclines me to the opinion the legislature did not choose its phrases with nice discrimination of meaning, and that “seeking to do business in this state” probably meant no more than seeking admission to the state.
*582At the special session of the legislature in 1898 the law relating to private corporations was revised. A charter board was created to pass on applications to form domestic corporations, and to pass on applications of foreign corporations to do business in this state. Section 2 of the act reads as follows:
“Sec. 2. Persons seeking to form a private corporation under any of the laws of this state, or any corporation organized under the laws of any other state, territory or foreign country, and seeking to do business in this state, shall make application to said board, upon blanks supplied by the secretary of state, for permission to organize a corporation, or to engage in business as a foreign corporation in this state. Such application shall set forth—
“If a corporation to be organized under the laws of this state: 1st, The name desired for such corporation. 2d, The place where its principal office or place of business is to be located. 3d, The length of time for which said corporation is to exist. 4th, The full nature and character of the business in which it proposes to engage. 5th, The names and addresses of the proposed incorporators. 6th, The proposed amount of the capital stock.
“If a corporation organized under the laws of another state, territory or foreign country and seeking to do business in this state: 1st, A certified copy of its charter or articles of incorporation. 2d, The place where its principal office or place of business is to be located. 3d, The full nature and character of the business in which it proposes to engage. 4th, The names and addresses of the officers, trustees or directors and stockholders of the corporation. 5th, A detailed statement of the assets and liabilities of said corporation, and such other information as the board may require in order to determine the solvency of the corporation. Such statement shall be subscribed and sworn to by the president and secretary or by the managing officer of said corporation.” (Laws 1898, Sp. Sess., ch. 10.)
The expression “persons seeking to form a private corporation” under any of the laws of this state includes persons seeking to form a private corporation not for profit, as well as persons seeking to form a private corporation for profit. The corresponding expression relating to foreign corporations begins with words equally general: “any corporation organized under the laws of any other state,” etc. The expression “seeking to do business in this state” is the correlative of “seeking to form” a domestic corporation, and it is difficult to attribute to the legislature an intention then and there to make a classification of corporations and to limit the phraseology to corporations for profit only.
The application to form a domestic corporation must state the full nature and character of the business in which the corporation proposes to engage. The requirement necessarily applies to corporations not for profit, and nature and character of business mean *583nature and character of the proposed undertaking. The same requirement is made respecting a foreign corporation, and of course to the same end; that is, to inform the charter board of the full nature and character of the proposed undertaking.
The statute embraced many subjects, and seemingly because its various requirements — except some expressly limited to corporations for profit — would otherwise extend to corporations foreign and domestic, for profit and not for profit, without distinction, the act concluded with the following section:
“Sec. 16. Nothing in this act shall be construed to apply to religious, educational, charitable, fraternal, benevolent or beneficiary societies, or other associations or lodges, not organized for pecuniary profit, except that they may incorporate under the provisions of this act by submitting their application to the charter board and paying the fee for filing and recording.” (Laws 1898, Sp. Sess., ch. 10.)
This section opened the state to foreign corporations of the char- ■ acter indicated without preliminary application and without restriction of any kind.
The various sections of the act of 1898 were given paragraph numbers in the General Statutes of 1901, and section 16 of the act of 1898 became paragraph 1268. In 1907 the corporation law was again revised. (Laws 1907, ch. 140.) Section 16 of chapter 10 of the law of 1898, as paragraph 1268 of the General Statutes of 1901, was repealed. The section was expressly mentioned for repeal in the title of the act, but the act itself contained no repealing clause. The act, however, was revisory, and the only portion of the exemption made by original section 16 which was saved was that relating to payment of an application fee. The act of 1898 contained the following provision:
“Each application for permission to organize a corporation, or to engage in business in this state as a foreign corporation, shall be accompanied by a fee of twenty-five dollars, to be known as an application fee. . . .” (Laws 1898, Sp. Sess., ch. 10, § 3.)
Corporations not for profit, whether foreign or domestic, were exempted from payment of this fee by section 16. Section 21 of the act of 1907 reads as follows:
“Each application to the charter board for permission to organize a domestic corporation or to engage in business in this state as a foreign corporation shall be accompanied by a fee of twenty-five dollars, to be known as an application fee: Provided, That corporations organized for religious, educational or charitable purposes, having no capital stock, shall not be required to pay such fee.” (Laws 1907, ch. 140.)
*584As indicated above, the exemption here provided for is all that remains of section 16 of the act of 1898. The next section (section 22) of the act of 1907 provides for a filing and recording fee, but grants no exemption.
The result is, the legislature fully considered the general exemption from the act of 1898 of corporations not for profit, preserved the exemption with respect to the one subject only, and refused to extend it to any other provision of the act. There was good reason for this legislation. The period was one in which states were spawning corporations with amazing fecundity. Corporate morals were not always the best. This state ought to know what corporations, no matter for what purposes created, are operating in the state, and all corporations operating in the state, whether for profit or not, ought to be embraced within the provision of section 27 of the Laws of 1907, which is the same as section 9 of the act of 1898:
“Any corporation organized under the laws of another state, territory or foreign country, and authorized to do business in this state, shall be subject to the same provisions, judicial control, restrictions and penalties, except as herein provided, as corporations organized under the laws of this state.” (Laws 1907, ch. 140, § 27.)
The statute which applies to the present controversy is the act of 1907, and if the intention of the legislature in passing the act has been correctly apprehended, it is not important that executive officers have neglected to enforce it according to its true meaning.
I concur in the judgment of ouster.