Court Opinion

ID: 6689740
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:36:39.594378+00
Date Added: 2024-06-11T16:01:04.531735
License: Public Domain

POLLEY, J.
(dissenting). I am unable to agree with the conclusion reached by the majority of the court in this case. While I do not approve of the law, nor of the principle involved in the law, under which the defendant acquired its corporate existence, I do think the defendant has kept strictly within the purview of that law, and that the wrong that exists should be righted, so far as possible, by repeal of the law, to the end that this state -may no longer be the resort for a cloak of authority to those who wish to prosecute their enterprises in other states. It is a matter of public record that hundreds, if not thousands, of corporations are doing business in other states under authority of franchises issued by this state. Prior to the enactment of chapter 104, Laws of 1907, the law contemplated that corporations chartered in this state were to carry on their business operations in this state. They were authorized to do business outside the state and 'corporations for mining, manufacturing, and other industrial pursuits were allowed to establish branch offices outside the state, where certain business might be transacted; but they were all required to have their main office for the transaction of business within the state. Section 786, Civ. Code. One-third of the incorporators and one-*304third of the officers were required to be residents of this state. Sections 404 and 410, Civ. Code. But by chapter 104, Laws of 1907, these sections were amended so that only one of t’he incorporators and one director need be a resident of this state, and no requirement at all is made relative to the officers. These changes, while material, are not radical. But, by section 3 of said act, the whole policy of the law relative to corporations was changed. This section readls as follows:
“Sec. 3. Resident Agent. — Every corporation of this state which is not doing or carrying on business within this state shall appoint a resident agent, who shall reside at the place of business or domiciliary office of such corporation in this state designated in the articles of incorporation, and such resident agent may be one of the officers of the corporation, and service of legal process upon such agent shall constitute legal and valid service upon such corporation. Provided, that nothing in this section shall be construed to invalidate service of process upon any resident officer of such corporation or upon its managing agent residing within this state, and service of such process upon any such resident officer or agent shall be andi constitute legal service upon such corporation. Such appointment of a resident agent shall be made in writing, signed by the president or secretary of the corporation, and duly acknowledged, and shall be filed in the office of the secretary of state, but such resident agent may be appointed in the articles of incorporation of such corporation. A fee of five dollars ($5.00) shall be paid by such corporation to the secretary of state for filing such appointment of resident agent, in all cases where such agent is not appointed in the articles of incorporation of the corporation.”
This section contemplates the creation of a corporation that, to all intents and purposes, is a foreign corporation. As a requisite to the right to engage in business in this state, a foreign corporation is required to appoint a resident agent upon whom service of a process may be made. Said section 3 requires domestic corporations that do not intend to do buisness within this state to appoint a resident agent upon whom service may be made, and the whole purport of said section is that it shall not be necessary to keep any other officer or agent within the state. By the provisions -of section 786, Civil Code, a domestic .corporation is re*305quired to keep its -main office for the transaction of business within the state, yet in section 3, chapter 104, Laws of 1907, we find a resident agent is required to reside at the place of business' or domiciliary office of such corporation. Clearly the meaning of these two sections, when taken together, is that, where a corporation is organized for the purpose of doing business outside the state, it is necessary to maintain only a domiciliary office with a resident agent upon whom service of process may be made. If it were intended that the corporation should maintain its principal place of ¡business, and that its officers and directors should reside-within the state, the maintenance of a domiciliary office and a resident agent would be altogether superfluous. That it was the intent of the Legislature, in passing said act, to authorize the creation of corporations that should in effect foe foreign corporations, is further shown by the provision in said section providing for the naming of the resident agent in the articles of corporation.
In their brief, counsel for respondents say-:
“Corporations are either domestic' and resident, or they are foreign and nonresident. There is, and can be, no ‘twilight zone’’ in which a corporation- can, at one and the same time, claim and enjoy al-1 the protection, and all the immunities, accorded by our statutes to resident and domestic corporations, and escape all control, supervision and accountability, as completely as foreign corporations. * * *”
Yet this is exactly what the Legislature did, and what it intended to do by the -enactment of this legislation. -Of course it was not -intended that such corporations should -escape -control, supervision, or accountability. The purpose of maintaining the resident agent in- the state w-as to keep such: corporations within the jurisdiction and under the control and supervision of the courts of the state. S-aid act was intended as an invitation to people from other states to take advantage of the very -liberal incorporation laws of this state and to come to this state to secure their corporate charters to engage in various enterprises in other states. It is a matter of public record and general information that this invitation was acted upon, and the result has been that this state, for the past 10 years, has fairly spawned corporations • ’ ■ *306and sent them broadcast over the land, The only requirement or-limitation is that, by maintaining a resident agent, such corporations shall submit to the jurisdiction of the courts of this state.
If this be a correct interpretation of our incorporation •statutes, then the defendant has violated no law of this state and is guilty of no offense; and certainly is guilty of no offense that •warrants its destruction by a decree of court. Tihie incorporators accepted the invitation that was sent broadcast by the state and came here to secure a charter. It is not claimed that such corporation has not at all times maintained a domiciliary office and a resident agent in the state, nor that it has ever violated or refused to obey the order or decree of any court of this state.
It is alleged, as a ground for dissolution, that defendant has not published the annual reports required by the provisions of section 784, Civil Code; but it is not contended that any demand for such report has ever been made, or that the rights of any interested party -have been imposed upon by the failure of defendant to publish such reports. It is also alleged that none of the books, papers, or documents of defendant are, or have been, kept in this state, or within the reach of summary process issued by the courts of this state, and that, because of that fact, this state is deprived of its rights to exercise visitorial supervision or control over it. This contention is -well answered by -what is said by the Supreme Court of Illinois, in North & South R. S. Co. v. People, 147 Ill. 234, 35 N. E 608, 24 L. R. A. 462. In that case all the officers and directors of an Illinois corporation resided in and> kept all the -books and records of such corporation in the state of Missouri, and upon that point the court said:
“It is true that keeping its books for most of the time in 'St. Louis -may not be a strict compliance with the statute in that behalf, but it does not appear that any interest, either public or private, has been or is likely to be imperiled or incommoded thereby.”
And, along this same line, the court further said:
“The thirteenth- section of the statute under which the defendant was incorporated provides that -it shall be the duty of the directors or trustees of every stock corporation to cause to be kept at its principal office or place of 'business in this state correct books of account of all its business, and every stockholder in such *307corporation shall have the right at all reasonable times, by himself or by his attorney, to examine the records and books of account of the corporation. It would seem, that the primary object of this statutory provision is to-protect the rights of stockholders, and the evidence is positive that, whenever a stockholder has desired to examine the books at that place; they have been produced there for his examination. It is probable that the statute may ■have had other objects in view in requiring the 'books to be kept at tibe principal office in this state, as, for instance, to aid the state in exercising its visitorial power over the corporation, or perhaps to enable creditors of the several stockholders to ascertain the number of shares of stock standing in the names of .each, so as ■to levy their executions or attachments thereon; but there is no reason to suppose that the books would not have been instantly produced whenever required for either of those purposes.
“It is not every failure to comply with the exact letter of the statute which will expose a corporation to the loss of its franchises. In determining whether such departure from the provisions of the act of incorporation has occurred as will work a forfeiture, the same general principles of construction are applicable which govern valuable grants to individuals upon conditions subsequent or precedent. In all such cases, a substantial performance of the conditions, according to the intent of tthe charter, is all that is required, and slight departures are overlooked. High, on Extra. Leg. ■Rem. § 651.”
And in State v. Thresher Mfg. Co., 40 Minn. 213, 41 N. W. 1020, 3 L. R. A. 510, the Minnesota court said:
“To constitute a m-isuser of the corporate franchise, such as to warrant its forfeiture, the ultra vires acts must be so substantial and continued as to amount to a clear violation of the condition upon which the franchise was granted, and so derange or destroy the business of the corporation that it no longer fulfills the end for which it was created. But, in case of excess of powers, it is only where some public mischief is done or threatened that the state, by the Attorney General, should interfere. If, as between the company and its stockholders, there is a wrongful application of the capital, or an illegal incurring of liabilities, it is for the stockholders to complain. If the company is entering into contracts ultra vires, to the prejudice of persons outside the cor*308■poration, such as. creditors, it is for such persons to take steps to protect their interests. The mere fact that acts are ultra vires is not necessarily a ground for interference by the state, especially .by quo warranto to forfeit the corporate franchises.”
It is not claimed! that the public has been, or is likely to be, ■injured in any manner by any act, or threatened act, of defendant. It is not claimed, that the plaintiff Kremer has any grievance ■against the defendant, and, if he had such grievance his counsel ■frankly admit that a court of equity could afford him adequate •relief. But, if his own statement of the case correctly represents 'the facts, he 'has no standing in a court of equity. According to -his showing, he, with other residents of Minnesota, came to this ■state to secure a corporate franchise for tire purpose of doing business in that state, but with no intention of complying with the laws of this state. So long as the management of the affairs of the corporation accorded with his views, he was satisfied to accept ■his share of the benefits of the unlawful venture; but, when the time came that he was not able to agree with the majority of ■those in control of the affairs of the corporation, he proceeded to wreck the enterprise and invoked the aid of a court of equity for that purpose. He should have been given no consideration what■ever.
It is not shown that anything done by defendant in the past has been or is likely to -be detrimental to any interest, either public or private, and no useful purpose would be served by a dissolution .of the corporation.
Defendant’s demurrer to the complaint should have been sustained.