Court Opinion

ID: 8187828
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:10:34.476117+00
Date Added: 2024-06-11T16:40:29.294106
License: Public Domain

Dodge, J.
In order to correctly construe secs. 1770a-1770e, Stats. 1898, as amended by ch. 399, Laws of 1901, placing burdens upon the exercise by foreign corporations of their corporate franchises in this state, we must proceed in the light of two well-established fundamental doctrines or principles: First, that neither by constitutional provision nor otherwise has a foreign corporation the right to exercise such franchises in other than its parent jurisdiction, and that it is not a citizen either of any state or of the United States, within the provision of either sec. 2, art. IV, of the Constitution of the United States, or sec. 1 of the XFVth amendment to that constitution, protecting such citizens against the denial of certain rights by any state. Paul v. Virginia, 8 Wall. 168; Waters-Pierce O. Co. v. Texas, 177 U. S. 28, 20 Sup. Ct. 518; Ashland L. Co. v. Detroit S. Co. 114 Wis. 66, 78, 89 N. W. 904. Secondly, however, that it is the policy of this state, settled from its earliest existence, to accord to foreign corporations, by comity, full and complete privilege to exercise their corporate franchises within this state except so far as limitation is imposed by express legislation. Charter Oak L. Ins. Co. v. Sawyer, 44 Wis. 387; Wyman v. Kimberly-Clark Co. 93 Wis. 554, 559, 67 N. W. 932.
The first general scheme of regulation and restraint of all foreign corporations was sec. 1770&, Stats. 1898, denouncing certain disabilities upon them while in default in performance of certain trifling requirements, quite analogous to those imposed on domestic corporations. The only provisions of that section which can be deemed in any wise effective to support these defendants in their resistance to the attempt of the plaintiff coi’poration to maintain the present suit are these: That while in default it shall not “transact business *285or acquire, hold, or dispose of property in -this state,” and that- every contract made by it, or on its behalf, affecting its .personal liability, or relating to property within this state, shall he wholly void on its behalf, but shall be enforceable against it.
We can feel no doubt that the legislation of 1897 1 was-prospective only. That is the presumptive purpose in all enactments, except some merely remedial statutes, unless the-contrary clearly appears. State v. Atwood, 11 Wis. 422; Seamans v. Carter, 15 Wis. 548; Finney v. Ackerman, 21 Wis. 268; Vanderpool v. L. C. & M. R. Co. 44 Wis. 652, 663 ; Jochem v. Dutcher, 104 Wis. 611, 614, 80 N. W. 949. Especially strong is that presumption in the present case, when the avoiding of an existing contract or the divesting of a vested right of property would be so clearly obnoxious to the constitutional prohibition against the impairment of the obligation of contracts (sec. 12, art. I, Const. Wis.; sec. 10, art. I, Const. IT. S.), and against the deprivation of any person of property without due process of law (art. XIV, Amendment Const. U. S.). What, then, of the plaintiff corporation’s conduct since 1898 comes within these statutory provisions? Very plainly, the plaintiff is not now transacting any business in this state, by passively continuing to-hold a previously existing and valid lien or title. Such passivity is the negation of transaction of business. Neither is the mere commencement and prosecution of this suit transacting business in the forbidden sense. Charter Oak L. Ins. Co. v. Sawyer, supra. See, also, collection of authorities in-note to Cone E. & C. Co. v. Poole, 41 S. C. 70, 24 L. R. A. 289. Those, however, are the only' acts suggested as possible violations of this prohibition of the statute, except, perhaps, the taking possession of the.mortgaged land, of which, *286however, appellants have no interest to complain, for they, as judgment creditors, or even as purchasers at execution sale, have no present right to possession.
It seems equally plain that no contract relied on as support of plaintiffs’ cause of action is obnoxious to this statute, construed as prospective. The only contracts relied on wore the bonds and trust deeds, all made long prior to the legislation, and entirely valid when made. Such existing valid contracts were not .avoided by the statute. In this connection, however, it is suggested that, while the original trust deeds may have been valid, the right of the plaintiffs thereunder arises by virtue of a contract of assignment made in 1901, after the enactment of sec. 17105, Stats. 1898. The inaking of any such contract is, however, negatived by the allegations of the complaint, admitted by the answer, that the present plaintiff is the mere successor, under the law of Illinois, of all rights of the original trustee; such succession resulting by force of law from the consolidation of two Illinois corporations. For the purposes of this question, no contract of assignment intervenes any more than if the corporate name of the original trustee had been legally changed, or new stockholders admitted. This conclusion that no contract upon which this action is based is void renders immaterial the extended argument of appellants that a foreign corporation ■cannot maintain a suit in our courts upon a contract rendered void by such a statute as sec. 17705. That argument goes no further than our own decision in Ashland L. Co. v. Detroit S. Co. 114 Wis. 66, 89 N. W. 904.
So there remains of the acts prohibited by sec. 17705 only the holding of property in this state, if, indeed,, the trustee holds property, instead of a mere lien thereon, having situs, not in Wisconsin, but at' the domicile of the holder. State ex rel. Dwinnell v. Gaylord, 73 Wis. 316, 41 N. W. 521. From what has been said already, our conclusion must be obvious that the statute was not intended to apply to the acquisition of *287any property prior to its enactment, nor to the holding of any so acquired, so long as the prohibition against transacting business in this state be not breached. That one, even a foreign corporation, owning property the day before the enactment of sec. 1770&, ceased to own or hold it upon the enactment of that statute, is a result which no legislature had any right to intend, nor have courts any right to impute such an intent. The absurdity of such a construction is emphasized by the accompanying prohibition against disposing of any such property. If the legislature intended to forbid the holding of previously acquired property, they equally forbade its disposal. Hence no foreign corporation owning property in this state when sec. lllOb took effect could escape criminality save upon the theory that the statute, ex proprio vigore, confiscated the property, so that its former owner had ceased to be such without having disposed of it. Clearly such confiscation would be obnoxious to the fourteenth amendment to the federal constitution, forbidding any state to deprive any person of property without due process of law. The only reasonable construction of this portion of the statute is that the prohibitions against holding-or disposing of property must be taken as associated with that against acquiring any, so that they apply only to property attempted to be acquired after the statute, and therefore in its defiance. The question how far full enjoyment of previously acquired property so continued to be held by a foreign corporation may be affected by restraint on the doing of business or the making of contracts does not arise in the present case, since none of those prohibited acts appear to have been attempted by plaintiffs. The consideration of that question may properly wait till it arises.
We now hold that the valid title or lien which this corporate plaintiff, by permission of the state, acquired, is not divested or impaired by the subsequent legislation; that the mere bringing of this suit is not a prohibited transacting of *288business; hence, as conclusion, that the answer sets up neither any defense to this action, nor any invalidity of plaintiffs’ lien to warrant its cancellation, or the clearing of title in appellants’ favor. Having reached this conclusion, it becomes unnecessary to consider the further question, somewhat debated, whether Conley, a bondholder, might not maintain this action if the trust company were incapacitated to sue> or had been divested of the lien held by it merely in trust for the bondholders.
By the Court.' — Order sustaining demurrer is affirmed.
Siebeckeb, J., took no part.