Court Opinion

ID: 3383242
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:34:22.52719+00
Date Added: 2024-06-11T14:02:39.105769
License: Public Domain

This case is before the Court on rehearing. In the original opinion written by Mr. Justice Ellis it was held that the doctrine is well settled in this State that a foreign corporation has no authority to transact business in this State before it complies with requirements of the laws of this State, and that when its stockholders or officers undertake to transact any business in this State in the name of a corporation not authorized under the laws of this State to transact business here they are held to be individually liable as partners; that it was not a question of the validity of the debt incurred, but was merely a question of the liability to which the officers of the corporation subject themselves in such transactions. On the authority of Taylor v. Branham,35 Fla. 297, 17 So. 552, 39 L. R. A. 362, 48 Am. St. Rep. 249, the judgment of the court below was reversed by a majority of this Court.
On rehearing granted a majority of the Court have reached the conclusion that it is unnecessary to finally decide in this case whether or not the stockholders or officers of a foreign corporation may be held individually liable as partners when they undertake to transact business in this State in the name of such foreign corporation when it is not authorized under Florida laws to transact business here. That question will accordingly be left open for future consideration and determination in some appropriate case where such question is necessarily involved and required to be definitely decided.
In this case the declaration contained a single count. Herbert H. Pape, Inc. sued the Finches in an action at law, to recover from them individually, on a promissory note, dated October 12, 1925, whereby Broadalbin Storage Company, a New York Corporation, as maker, promised to pay to the order of Herbert H. Pape, Inc., $17,500.00 on or before *Page 433 
one year after date, but failed to do so. A copy of the note was attached to the declaration.
This declaration alleges that:
    "Henry C. Finch and Millicent M. Finch, individuals assuming to act in a corporate capacity in the State of Florida, under the name of Broadalbin Storage Company, without then having been clothed with corporate existence and authority in the State of Florida, assuming so to act as President and Secretary respectively thereof, did make, execute and deliver unto the Plaintiff their certain promissory note."
Defendants filed three pleas. The first and second pleas traverse specific allegations of the declaration. The third plea avers in substance that the Broadalbin Storage Corporation, a corporation, was organized in the State of New York, in conformity with the laws of that State, by persons resident and domiciled in that State; that all stockholders' and directors' meetings were held in that State; that the corporation engaged in business in that State several years before transacting in Florida the item of business which resulted in this suit; that the corporation purchased from plaintiff certain real estate in Dade County, Florida, and received a deed therefor from plaintiff; that to evidence a part of the unpaid purchase price of such lands the corporation executed and delivered to the plaintiff the note sued on, and also a mortgage upon the lands securing the notes; that at the time of the execution and delivery of the note and mortgage mentioned, defendants were President and Secretary, respectively, of Broadalbin Storage Company, a corporation under the laws of New York, and were acting for and on behalf of, and under authority from, such corporation; that said Broadalbin Storage Company, a corporation, had, since the execution and delivery of the note sued on, obtained a permit to transact business in the State of Florida.
Plaintiff demurred to each of the three pleas on the ground that each plea failed to set up any defense, was *Page 434 
duplicitous, vague, indefinite and uncertain, did not traverse any fact alleged in the declaration, and did not confess and avoid plaintiff's cause of action alleged in its declaration. A motion to strike each plea contained practically the same grounds as the demurrer.
The demurrer was over-ruled and the motion to strike was denied. Thereupon plaintiff announced that it would stand on its demurrer and motion to strike and suffer final judgment to be entered for defendants. Final judgment was accordingly entered for defendants and plaintiff took writ of error.
4. Plaintiff in error's contention is that inasmuch as Broadalbin Storage Company had not obtained a permit to transact business in the State of Florida at the time of the execution and delivery of the notes sued on, defendants Henry C. Finch and Millicent M. Finch, who executed the note in the name of Broadalbin Storage Company, by them as President and Secretary, respectively, became personally liable for the face of the note.
To sustain this contention, Section 6026 (4095) and Section 6029 (4098), Comp. Genl. Laws, 1927, are relied on.
Section 6026 C. G. L., referred to provides that:
"No foreign corporation shall transact business, or acquire, hold, or dispose of property in this State until it shall have filed in the office of the Secretary of State a duly authenticated copy of its Charter or Articles of Incorporation, and shall have received from him a permit to transact business in this State, etc." The statute makes it a misdemeanor for a corporation, and its officers and agents, to violate this prohibition.
The allegation of the declaration is that the two named defendants, Henry C. Finch and Millicent M. Finch,individuals assuming to act in a corporate capacity in the State of Florida, under the name of Broadalbin Storage Company,without then having been clothed with corporate existence and authority in the state of Florida, assuming *Page 435 
to so act as President and Secretary, respectively, thereof,did make, execute and deliver unto the plaintiff their certainpromissory note which was sued on.
The principal plea demurred to alleged that the corporation purchased a piece of property in Florida, which under the laws of New York, said corporation was allowed to take and hold title to in its corporate capacity. This plea further shows that the purchase of said real estate, and the making, execution and delivery of said promissory note and mortgage, constituted the only transaction of business in Florida by said corporation; that the property so purchased is the only property which was ever owned by the corporation in Florida, throughout its existence. The plea also shows that the Broadalbin Storage Company, after it made the notes and mortgage on October 12, 1925, obtained from the Secretary of State on March 19, 1926, before the institution of the suit, a proper permit to do business in Florida as a foreign corporation.
Upon further consideration by the court, it appears that this plea presented a good defense and that the demurrer thereto was properly over-ruled.
A corporation lawfully organized in another American State, by persons resident in that State, when the organization is consummated in the State of incorporation, may lawfully transact in Florida business authorized by the corporate charter and the laws of the State of incorporation, if notspecifically prohibited by the laws of this State. Duke vs. Taylor, 27 Fla. 64, 19 So. 192.
The statute seems to make a distinction between the transaction of business in Florida, without securing a foreign corporation permit, and the simple act of acquiring, holding and disposing of property in this State until such permit is procured.
This distinction is emphasized by a proviso added to original Section 6026 (4095) by Chapter 6876, Acts of 1915. Such proviso is to the effect that "no violation of *Page 436 
this law shall affect the title to property thus acquired, held or disposed of in violation of the provisions hereof."
To the extent that this proviso to the statute is applicable, transactions within it appear to have been taken out of the rule which might otherwise apply. Therefore, while it continues to be a violation of the statute for an unlicensed corporation of another State to "acquire, hold or dispose of" property in this State, the consequences of the violation are not made the same as when a corporation transacts business in this state without securing the required permit to act in a corporate capacity in this jurisdiction.
It appears, therefore, that in its corporate capacity, a foreign corporation lawfully organized under the laws of another state, may actually take, subject to the specific penalties provided by law for a violation of the statute (Section 7449 C. G. L., 5321 R. G. S), valid title to property in Florida. This is so because the statute distinctly provides that no violation of the corporation law shall "affect" the title to property acquired by such foreign corporation.
If the Broadalbin Storage Company had power, in itscorporate capacity to take title to Florida property, even though it was without a legal permit to otherwise exercise its corporate franchise in Florida, it would seem to follow that notes and mortgages executed by the corporation as a part of the transaction by which the title was acquired in such corporate capacity, might also be regarded as having been executed in a corporate capacity as a consideration for such title.
This brings the status of such notes and mortgages within the rule recognized in Duke v. Taylor, 27 Fla. 64, 19 So. 172, where it was declared that by comity the corporate status of a foreign corporation would be recognized in Florida in all cases where recognition is not specifically prohibited by the laws ofthis State.
The legislature originally raised a general prohibition *Page 437 
against corporate recognition of unlicensed foreign corporations by which not only the transaction of all corporate business but the acquisition, holding and disposition of property was made absolutely and without reservation unlawful. See Chapter 5717, Acts of 1907. But this general and rigid prohibition was modified and relaxed by Chapter 6876 Acts of 1915, in so far as the title to property acquired, held or disposed of in violation of the statute is concerned.
So the effect now is to extend a limited recognition to thecorporate character of a duly organized foreign corporation when it takes title to property in Florida, even though such foreign corporation has not been domesticated in this State.
This recognition of the corporate character is to the extent of permitting the corporation to take valid title in itscorporate capacity, and carries with it the recognition that notes and mortgages given by the corporation as a consideration for acquiring such corporate title, are corporate notes and mortgages and not the notes and mortgages of the individuals who assume to act for such unauthorized corporation in connection with the matter.
Therefore the plea showing that the note sued on was given as part of the purchase price for property purchased by an unauthorized foreign corporation in this State, must be regarded as having been given in the corporate capacity of the corporation and not as the individual obligation of the persons who assumed to execute the same as President and Secretary of such corporation.
Consequently the plea was good and the demurrer was properly over-ruled. The judgment must accordingly be affirmed on rehearing.
It is so ordered.
BUFORD, C.J., AND WHITFIELD, TERRELL AND DAVIS, J.J., concur.
BROWN, J., concurs specially.
ELLIS, J., dissents.