Court Opinion

ID: 8654985
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:15:00.922238+00
Date Added: 2024-06-11T16:56:39.767502
License: Public Domain

BARTCH, O. J.
(dissenting).
I cannot concur with the majority in overruling the former decision of this court on the rehearing. After further careful consideration of this subject I am convinced that the principles adopted and announced in the former opinion are not only strictly in harmony with the mandatory and prohibitory character of our constitutional and statutory provisions, but also in strict conformity with the policy of our laws, which is that foreign corporations shall not be permitted
“To transact business within the State, on conditions more favorable than those prescribed by law for similar corporations organized under the laws of this state.” (Const., art. 12, section 6.)
Under this opinion of the majority, it is manifest that foreign corporations, or individuals through foreign corporations have advantages in the state which domestic corporations, or citizens desiring to transact business through domestic^ corpo*150rations, do not possess. For instance, suppose an aggregation of individuals, citizens of tbis state, desiring to conduct and transact a certain line of business witbin our borders, and for that purpose, would enter into and adopt articles of agreement and by-laws, and form an organization, but would not file in the proper offices any copy of such articles of agreement and by-laws, or obtain any certificate of incorporation from the proper officer, and would not pay to such officer any of the fees exacted by the state as a condition precedent to authorization for the transaction of corporate business; could it be contended for a moment that such an association of individuals would have constituted itself a legal entity entitled to the benefits of our laws relating to corporations ? Would not such an entity, in an attempt to enforce its contracts in the courts, be regarded as at most but a partnership, without any rights and privileges as a corporate body ? Surely the courts could ffibt recognize such an association as a corporation, so long as it persisted in violating the laws, nor until it had complied with the corporate laws. And yet, under the decision on this rehearing, if the same number of individuals come to this state, styled a foreign corpoi*ation, they in effect at once become a corporate entity, endowed with all the rights and privileges of a corporation,- and entitled to the benefits of our corporate laws, and can open up a regular place of business and carry on business without filing any evidence of existence as a legal entity in any office in this state, or designating any person on whom process can be served, and without paying any fees imposed by the state as a condition precedent to the conducting and carrying on of business — such fees as are required to be paid by corporations to aid in defraying the expenses of the government, whose protection both classes of' corporations alike invoke while engaged in business here. It is clear, therefore, that a foreign corporation can obtain benefits and advantages over domestic corporations by a violation of our laws, and thus can establish and transact business on more favorable terms than can corporations which are organized under and comply with the laws of this state. This places persons who violate the law upon more favorable footing than those *151wbo obey its mandates. Such is tbe sequence from tbe strange and strained construction of tbe majority placed upon tbe perspicuous language employed by our lawmakers.
Notwithstanding that in tbe majority opinion much space is devoted in an effort to render meaningless, loose and uncertain tbe statutory provision, “any-sucb corporation failing to comply with tbe provisions of the foregoing section shall not be entitled to tbe benefits of tbe laws of this state relating to corporations” (section 352, [Revised Statutes 1898), it does not seem difficult to comprehend its meaning. It is clear in thought and to tbe understanding. Tbe words employed are plain and simple, and in interpretation, under familiar rules of construction, ought to be given tbe sense in which they are ordinarily used and understood in common parlance, and not be made to apply to, or be confused with, a state of things to v.bicb they have no reference, and which was manifestly not in tbe mind of' tbe Legislature at tbe time of tbe enactment. Nor does it seem difficult to comprehend tbe meaning of tbe word “benefits,” as used in tbe quotation. I apprehend that ordinarily, when we speak of benefits to us, we mean and refer to what is advantageous to us — whatever promotes our prosperity, happiness, or enhances tbe value of our property, or property rights, or rights as citizens, as .contradistinguished from what is injurious. So, when we speak of “benefits,” with reference to laws relating to corporations, we mean the advantages which accrue from the right to invoke and enforce, through proper tribunals, such laws as a means to promote the prosperity of corporations. Now, certainly, the right to sue in our courts is a benefit or advantage to a corporation doing business within our borders, the opinion of the majority to the contrary notwithstanding, because it enables it to enforce its contracts and is thus conducive to its prosperity. So, likewise, is the right to make contracts within the state which may be enforced here. These are instances of benefits or advantages, and are unquestionably, as is apparent from the context of the statute, included within the meaning of the term “benefits” as employed in the statute; but a foreign corporation has no inherent right to them, for, in the very nature of *152things, no state is compelled to confer benefits upon a creature of a foreign state or country, and bence, if another state confers benefits upon such a creature, it may do so upon such terms and conditions as it chooses. When, therefore, the state, through its Constitution and statutes, says that no foreign corporation shall be entitled to the benefits of our corporate laws if such corporation has failed to comply with certain specific provisions of our laws, it means that it shall not be entitled, among other things, to sue in our courts upon its contracts made in opposition to law, or contracts made while carrying on business within the state without a compliance with certain prescribed precedent conditions, and in violation of our laws.
This is a logical sequence from the Constitution itself, which, in article 12, section 9, says:
“No coi'p oration shall do business in this state, without having one or more places of business, with an authorized agent or agents, upon whom process may be served; nor without first filing a certified copy of its articles of incorporation with the Secretary of State.”
These provisions are mandatory and prohibitory, not only in form but by express provision of the same instrument, where, in article 1, section 26, it declares:
“The provisions of this Constitution are mandatory and prohibitory, unless by express words they are declared to be otherwise.”
The provisions under consideration are not declared to be otherwise. So, the legislative enactments in question are mandatory and prohibitory in form and as appears from the context. When the statutory provision above quoted is read in connection with the preceding section (section 351, Revised Statutes 1898), and other provisions of the laws, constitutional and statutory, upon this subject, there will readily be perceived an obvious intention on the part of the Constitution and lawmakers to compel a compliance with our laws by foreign corporations, the same as.is required by domestic corporations, before establishing and conducting any kind of a business within this state in a corporate capacity. It is use*153less, therefore, to obscure and confuse this case, where the foreign corporation had in fact located within our borders, secured a place of business, had established and was actually conducting its business, when, in the regular course of its business, the transactions in controversy took place, with a case of a single transaction, or a number of single transactions, by a foreign corporation which never located here, never established a place of business here, and never conducted any continuing business here. No one contends that a single transaction made by a citizen of this state with a foreign corporation through its foreign office or place of business is not binding upon the parties without the corporation previously filing its articles here and paying the fees. Such a transaction, if otherwise valid, would be enforced by the comity of the state. This, however, is not a question of a single transaction, and therefore, in disposing of this case, an argument based on the case of a single transaction or a number of single transactions serves, like the wandering meteor, but to -mystify and' mislead.
Nor is it material that several of the transactions in controversy consisted of assignments of claims, since such assignments were made in the course of the business which was being conducted in violation of law. In the present prevailing opinion it is said: “The state is authorized to enforce the statute, and may do so by proper proceedings on its behalf.” (Secs. 3610 and 3611, Rev. St. 1898.) But no “proper proceedings” for the state to pursue are pointed out, (secs. 3610 and 3611, cited by the majority applying only to corporations organizéd under the laws of this state), and the remedy or penalty prescribed by statute against the offending foreign corporation is that, if it fails to comply with the conditions precedent to its doing business here, it shall not be entitled to the benefits of our corporate laws. But this court now in effect says that, notwithstanding such a corporation carries on and transacts business in violation of our laws, it shall be entitled to the benefits of our corporate laws. How, then, can the state enforce the statute ? The other penalties of the statute are prescribed simply against the person acting as agent *154in tbe unlawful conduct of business, and do not affect tbe corporation itself. Tbe fact is that this decision appears to me much more indicative of concern about tbe promotion of tbe material interests of a foreign law-defying institution tban about equal justice to a domestic corporation, or to our own citizens, who are thereby left practically without a remedy to enforce, in our own courts, their claims against such a corporation while thus unlawfully transacting business in competition with those who obey the laws, and while receiving the protection of the state government without contributing to its burdens; for, under the decision, such a corporation, it- seems, is not even required to appoint an agent in this state upon whom process can be served. Every principle of justice and fair dealing demands that the laws of the state be obeyed alike by foreign and domestic corporations, and this I conceive to be embraced within the mandates of our Constitution and statutes.
My Brethren have attempted to distinguish the cases cited in the former opinion of this court, but in doing so they have lost sight of the mandatory and prohibitory character of our laws, as compared with the laws of the states upon whose decisions they rely, and also of the distinction, in this class of statutes, between provisions which are merely disabling, and those which are prohibitory and mandatory, as are ours. On this point Mr. Spelling, in his valuable work on Private Corporations (section 89), says: “The effect of statutes imposing conditions precedent upon the contracts of foreign corporations made without compliance with the conditions imposed is a question upon which litigation frequently arises. There is a distinction in this respect between disabling and prohibitory provisions. In the case of the former the validity of their acts and contracts cannot be collaterally attacked. The state alone can object. If, however, the language of the constitutional provision or statute be clearly- prohibitory, or if it impose a penalty for violations, then contracts made without previous compliance with the conditions imposed are void and unenforceable by the corporation, whether expressly declared to be so or not. “It is well settled that the corporation cannot *155itself take advantage of its noncomplianee with stick conditions.” This statement of the law, by the learned author, has the support of an abundance of the highest authority, as may be observed from an examination of the cases cited in support of it. Nor, in order to enforce a compliance with the laws, is it necessary for the Legislature to say in express terms that contracts made in violation of law are void and unenforceable by the offending corporation. The legislative prohibition itself renders them so.
“Where a statute expressly declares that certain kinds of contracts shall he void, there is then no doubt of the legislative intention, and an agreement of the kind voided by statute is unlawful. The same is true where the contract is in violation of a statute, although not therein expressly declared to be void. It is immaterial whether the thing forbidden is malum in se or merely malum prohibitum. A statute prohibiting the making of contracts except in a certain manner ipso facto makes them void if made in any other way.” (9 Cyc. 475.)
The Supreme Court of Wisconsin, in Aetna Insurance Co. v. Harvey, 11 Wis. 394, upon this point said:
“It was claimed for the plaintiff in error that, inasmuch as the statute does not say that any policy issued or note taken in violation of its provisions should he void, therefore they should not be so held, and that the only effect of the law would he to render the agent liable to prosecution for violating it, or to an action for damages. But we do not see how this proposition can be sustained, in view of the well-established rule of law that a contract made in violation of a statute is void and that courts will never lend aid to its enforcement.It [the law] says the companies shall not transact any business in this state without they possess the requisite amount of capital, etc. And the only evidence it provides for showing this is the sworn statement of its officers, on filing which its agents are authorized to do business. And when we consider this prohibition, and the fact that a foreign corporation could not act in this state except by its agents, and that the agents are expressly prohibited, there seems no room to doubt that the intention of the statute was to entirely prohibit the transaction of any insurance business in this state until the provisions of the act had been complied with; and, this being so, the issuing of the policy and taking the note sued on was a violation of the law, and the company cannot sustain the action. It is not necessary that the law should expressly say that a contract in violation of it shall be void. It is sufficient for it to prohibit it, and its invalidity follows as a legal consequence.”
*156So in Bartlett v. Vinor, Carth. 251, Lord. Holt said:
“Every contract made for or about any matter or thing -which is prohibited and made unlawful by any statute is a void contract, though the statute itself doth not mention that it shall be so, but only inflicts a penalty on the offender, because a penalty implies a prohibition, though there are no prohibitory words in the statute.” (9 Cyc. 475-485, Chatanooga B., etc., Assn. v. Denson, 189 U. S. 408.)
My conviction is that the former decision of this court was not only supported by the authorities cited in that opinion, but was in line with practically all the decisions made under mandatory and prohibitory laws similar to those of this state upon this subject. Por a further presentation of my views upon this important question, I refer to that opinion reported in 28 Utah 380, 79 Pac. 570, et seq. I cannot give my judicial sanction to an interpretation of laws which, in my judgment, does violence, not only to the mandates of the Consti-. tution and statutes, but to the hitherto established policy of this state, and therefore dissent.