Court Opinion

ID: 5170925
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:55:01.727175+00
Date Added: 2024-06-11T08:26:05.372717
License: Public Domain

ON REHEARING.
J. B. Eldridge and E. G. Davis, for Appellant.
“If there are statutes which prevent corporations from taking the legal title to lands, they cannot evade the statutes by taking the legal title to trustees and the beneficial interest to themselves; thus they cannot be cesiuis que trust in lands the legal title to which they are not licensed or enabled to take.” (Hill on Trustees, sec. 52; Lewin on Trusts, secs. 19, 36; Perry on Trusts, sec. 63; Myers Mfg. Go. v. Wetzel (Tenn. Ch.), 3.5 S. W. 896; 2 Thompson on Corporations, 2d ed., 695, sec. 1605; 1 Mechem on Agency, 2d ed., sec. 129, p. 90; Hanna v. Kelsey Realty Co., 145 Wis. 276, 140 Am. St. 1075, 129 N. W. 1080, 33 L. R. A., N. S., 355.)
These contracts were void, because in violation of the statute. (Lindsey v. Rottaken, 32 Ark. 619, 631; Chateau v. Singla, 114 Cal. 91, 94, 55 Am. St. 63, 45 Pac. 1015, 33 L. R. A. 750; Estate of Groome, 94 Cal. 69, 29 Pac. 487; Buck v. Eureka, 109 Cal. 504, 42 Pac. 243, 30 L. R. A. 409; Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538, 551; Bishop on Contracts, arts. 471-547; Buckley v. Humason, 50 Minn. 195, 36 Am. St. 637, 52 N. W. 385, 16 L. R. A. 423.)
“A ‘void contract’ is in fact no contract, since an instrument of that nature does not alter the relations previously existing between the contracting parties, nor will it serve as the foundation of any right.” (Allen v. City of Davenport, 132 Fed. 209, 65 C. C. A. 641; Perm v. Bornman, 102 111. 523, 529; Bush on Contracts, sec. 458; Downs v. Blount, 170 Fed. 15, 22, 95 C. C. A. 289, 31 L. R. A., N. S., 1076; Gist v. Smith, 78 Ky. 367; Bank of the United States v. Owens, 2 Pet. (27 U. S.) 527, 539, 7 L. ed. 508, 512.)
The transaction of business by a foreign corporation which had not complied with the laws of the state is unlawful and contrary to state policy, and every contract in furtherance of such business is void. (Parke, Davis & Co. v. Mullett, 245 Mo. 168, 149 S. W. 461; Thomas v. West Jersey R. R. Co., 101U. S. 71, 87, 25 L. ed. 950, 953.),
Longley & Walters and P. B. Carter, for Respondents.
In this state, a contract made with a noncomplying corporation is not void. It is merely unenforceable in any court of this state. (Valley Lumber & Mfg. Co. v. Driessel, 13 Ida. 662, 13 Ann. Cas. 63, 93 Pac. 765, 15 L. R. A., N. S., 299; Tarr v. Western Loan & Savings Co., 15 Ida. 741, at 750, 99 Pac. 1049, 21 L. R. A., N. S., 707.)
RICE, J.
A rehearing was granted in this case and the argument on rehearing was had at this term of court. The facts are very fully stated in the original opinion of the court.
Sec. 10 of art. 11 of the constitution and sec. 2792, Rev. Codes, are mandatory. (Katz v. Herrick, 12 Ida. 1, 86 Pac. 873; Dickens West Min. Co. v. Crescent Min. & Mill. Co., 26 Ida. 153, 141 Pac. 566.) It is unnecessary to decide in this case whether under sec. 2792, Rev. Codes, a foreign corporation in any case may take title to real estate in Idaho without first filing its articles of incorporation, except as an incident to interstate commerce, since under the facts of this case the foreign corporation was doing business within the purview of the statute and constitution. The taking of title to the Thousand Springs property, assuming such taking of title to be an act of the Thousand Springs Power Company, was not a single isolated transaction, even though it be conceded that it was the first act of doing business. If it was the first act, it was but the first of a series of acts intended to be done by the corporation under its corporate powers. This view is in harmony with the opinion of the supreme court of the United States as expressed in Cooper Mfg. Co. v. Ferguson, 113 U. S. 727, 5 Sup. Ct. 739, 28 L. ed. 1137. In the course of its opinion the court says:
“The obvious construction, therefore, of the constitution and the statute is, that no foreign corporation shall begin any .business in the state, with the purpose of pursuing or carrying it on, until it has filed a certificate designating the principal place where the business of the corporation is to be carried on in the state, and naming an authorized *757agent, residing at sneh principal place of business, on whom process may be served. To require such a certificate as a prerequisite to tbe doing of a single act of business, when there was no purpose to do any other business or have a place of business in the state, would be unreasonable and incongruous.”
The cases holding that a single isolated transaction is not to be considered doing or carrying on of business within the state are cases where the matter involved was a single transaction without any intention on the part of the foreign corporation of continuing to transact other acts of business within the state. (See Commercial Bank v. Sherman, 28 Or. 573, 52 Am. St. 811, 43 Pac. 658; Meddis v. Kenney, 176 Mo. 200, 98 Am. St. 496, 75 S. W. 633; Florsheim Bros. Dry Goods Co. v. Lester, 60 Ark. 120, 46 Am. St. 162, 29 S. W. 34, 27 L. R. A. 505; Keene Guaranty Sav. Bank v. Lawrence, 32 Wash. 572, 73 Pac. 680; Miller v. Williams, 27 Colo., 34, 59 Pac. 740; Livestock Commission Co. v. Haston, 68 Kan. 749, 75 Pac. 1028.)
Such cases are to be distinguished from those where the act complained of was one of a series of transactions intended to be performed within the state. (See Deere Plow Co. v. Wyland, 69 Kan. 255, 2 Ann. Cas. 304, 76 Pac. 863; Farrior v. New England Mortgage Security Co., 88 Ala. 275, 7 So. 200; Chattanooga Nat. Bldg. & Loan Assn. v. Denson, 189 U. S. 408, 23 Sup. Ct. 630, 47 L. ed. 870.)
It is claimed, however, that the statute applies to foreign corporations only, and does not prohibit the taking and holding of title to realty by trustees for the use and benefit of such corporations, and does not render null and void deeds and conveyances to such trustees; that the statute is penal in its nature and should be strictly construed. The rule of construction to be applied to all our statutes is found in sec. 4, Rev. Codes, which provides that “the rule of the common law that statutes in derogation thereof are to be strictly construed has no application to these Revised Codes. The Revised Codes establish the law of this state respecting the subjects to which they relate, and their provisions and all *758proceedings under them are to be liberally construed, with a view to effect their objects and to promote justice. ’ ’ The rule of strict construction is one used in determining what the real intent and object of the law is in cases where it is properly applicable. The law under consideration, however, is not properly considered a penal statute of such a nature that the rule of strict construction may be invoked. Foreign corporations have no natural or inherent right to carry on business in any state other than that in which they are organized. (Paul v. Virginia, 8 Wall. (75 U. S.) 168, 19 L. ed. 357; Bank of Augusta v. Earle, 13 Pet. (38 U. S.) 519, 10 L. ed. 274; Fritts v. Palmer, 132 U. S. 282, 10 Sup. Ct. 93, 33 L. ed. 317.) Statutes prescribing the terms upon which a foreign corporation may carry on business within the borders of a state, strictly speaking, are statutes granting a privilege.
In this case Bancroft took the deed in his own name as agent for the Thousand Springs Power Company. He acted under a power of attorney executed by the company, and immediately upon receiving the deed executed a declaration of trust to the effect that he held the property in trust for the use and benefit of the said company. According to the record he had no personal interest in the property. His action was the action of the company. The trust resulting from such a transaction would have been a passive trust and the Thousand Springs Power Company for all intents and purposes would have been the absolute owner of the property. A prohibitory statute providing that such foreign corporation cannot take or hold title to any realty within this state prior to making the filing required by the statute ■must be construed to mean any title. _ The mere agent of such foreign corporation cannot be permitted to take title in himself for the use and benefit of such corporation. Such a transaction would be a palpable evasion of the statute. Bancroft’s deed, therefore, was void.
There is nothing in the ease of Keating v. Keating Min. Co., 18 Ida. 660, 112 Pac. 206, inconsistent with this view. In that case Keating conveyed the title to one Watson. Watson was not at the time of the conveyance to him, nor at any other *759time, trustee for a foreign corporation. At the time title to the property was conveyed to him he was under no disability and was competent to acquire and hold the title. The court’s opinion was based in the first instance upon the ground that the contract for the sale of said mining claims (to Watson) was a legal valid contract, procured without conspiracy or fraud on the part of the defendants, and that Keating had accepted and received the entire purchase price therefor. The court also held that Keating was estopped by his laches in any case from maintaining the action. The defendants in this case were not entitled to rely upon the decision in the Keating case as a rule of property by which to justify their course of action.
All this,, however, cannot avail the plaintiff and appellant. He comes into a court of equity seeking to set aside the conveyance of the Thousand Springs Land & Transportation Company to Bancroft, and of Bancroft to the Thousand Springs Power Company, also the trust deed of the Thousand Springs Power Company to the Salt Lake Security & Trust Company, and to have the property subjected to the lien of his judgment. The lien of the judgment attaches only to the real interest which the judgment debtor has at the time the lien becomes operative, and is subject to all equities, secret or latent. The plaintiff in this case is in the same position as a purchaser from the Thousand Springs Land & Transportation Company with full knowledge of all existing legal or equitable rights belonging to third persons. (Freeman on Judgments, sec. 357.) A judgment creditor cannot be considered a bona fide purchaser for value. (Holden v. Garrett, 23 Kan. 98.) And, since a privity in estate exists between a judgment debtor and a judgment creditor claiming under the lien of his judgment, this principle applies to cases of equitable estoppel, as well as to defects in title. (Key West Wharf etc. Co. v. Porter, 63 Fla. 448, Ann. Cas., 1914A, 173, 58 So. 599; McCravey v. Remson, 19 Ala. 430, 54 Am. Dec. 194; Hasenritter v. Kirchhoffer, 79 Mo. 239; Bliss v. Tidrick, 25 S. D. 533, Ann. Cas. 1912C, 671, 127 N. W. 852, 32 L. R. A., N. S., 854.)
*760It is conceded by appellant that the Thousand Springs Land & Transportation Company could not obtain the relief prayed for in this case. He who seeks equity must do equity. Having received full consideration for the transfer, it could not now obtain from a court of equity the affirmative relief of a cancelation of its deed. (Tarr v. Western Loan & Sav. Assn., 15 Ida. 741, 99 Pac. 1049, 21 L. R. A., N. S., 707; 1 Pom. Eq. Juris., sec. 391; George v. New England Mortgage Security Co., 109 Ala. 548, 20 So. 331; Cox v. Railway Bldg. & Loan Assn., 101 Tenn. 490, 48 S. W. 226; 9 C. J. 1207, sec. 93; Id. 1218, see. 114. And compare following cases cited in the original opinion: Long v. Georgia Pac. Ry. Co., 91 Ala. 519, 24 Am. St. 931, 8 So. 706; Holmes & Griggs Mfg. Co. v. Holmes & Wessell Metal Co., 127 N. Y. 252, 24 Am. St. 448, 27 N. E. 831.) The appellant is in no better position.
There is another reason why the plaintiff cannot prevail. The Ponsford option, as it appears from the record in this case, was valid and was made by parties laboring under no disability. The option was not abandoned by either of the parties to it. Abandonment implies union of act and intent. There was no intent to abandon the option by either party. This option created an equitable estate in Ponsford. It would seem that the attempted assignment of the option by Ponsford and his associates to the Thousand Springs Power Company was null and void, leaving the option unaffected thereby. The full consideration called for under the option, as modified with the consent of the company, having been paid and accepted as a fulfilment of its terms as so modified, the Thousand Springs Land & Transportation Company parted with its entire equitable interest in the property mentioned therein.
It follows that the judgment pronounced by this court should stand and that the judgment of the district court should be affirmed.