Court Opinion

ID: 5169195
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:51:56.676038+00
Date Added: 2024-06-11T08:26:00.226119
License: Public Domain

ON REHEARING.
AILSHIE, J.
This case was heard and decided at the November, 1905, term of this court, and a petition for rehearing was thereafter filed by counsel for appellant. A petition for rehearing was also filed by Messrs. W. E. Borah, James E. Babb and John P. Gray as amici curiae, after having secured permission so to do from a majority of the justices. After an examination of the petitions a rehearing was ordered. The cause was again argued and submitted at this present term of court. We have been furnished with briefs by the attorneys of the respective parties to the action, and in addition thereto we are favored with an elaborate and exhaustive brief, both by way of argument and citation of authorities, signed by Messrs. W. E. Borah, James E. Babb, John P. Gray and Stiles W. Burr, ’and also a brief by Messrs. W. B. Heyburn and John P. Gray, as amici curiae, urging a reversal of our former judgment, and insisting that the same is erroneous, and that we have misconstrued the provisions of our constitution and statute. We are also furnished with a brief by Messrs. M. A. Folsom and J. E. Blair, as amici curiae, reviewing the authorities, and presenting an argument in support of the original opinion as filed by the court. Counsel, in opposition to the views originally announced by the court, submit two principal and leading propositions : First, that section 10 of article 11 of the constitution is not mandatory and self-operative, and that it does not provide any penalty for its violation; second, that*the act of February 8, 1905, entitled “An act relating to foreign corporations doing business in the state of Idaho, ’ ’ was properly *25and sufficiently entitled and that the same is constitutional and valid.
Upon the first point urged there has been presented a great array of authorities. Our examination of the decisions and constitutions of various states discloses that a number of the states, notably western states, have constitutional provisions very similar to, and in many instances identical with, section 10, article 11 of the Idaho constitution. Upon the contention that this provision of the constitution is not self-operative and self-executing, the authorities are almost uniformly against the contention made. It is quite uniformly held that all negative or prohibitory clauses in mandatory or prohibitive form are of themselves self-operative as to the subject matter or thing to be prohibited or denied. (Law v. People, 87 Ill. 385; Davis v. Burke, 179 U. S. 399, 45 L. ed. 249, 21 Sup. Ct. Rep. 210. See 6 Am. & Eng. Ency. of Law, 2d. ed., 913; Oakland Paving Co. v. Hilton, 69 Cal. 483, 11 Pac. 3.)
As to the contention made by counsel that this constitutional provision carries with it no penalty and affords no defense to an action, and that it is only available to the state in an action of ouster against noneomplying foreign corporations, we are unable to agree with the argument advanced. It is true that many authorities, while not discussing the direct effect of such a constitutional provision, upon the whole support counsel’s contention. It is noteworthy, however, that the authorities that attempt to deal with the general principle involved are in irreconcilable conflict both as to the reasons advanced for their holding and as to the conclusions reached therefrom. In the language of Justice Kellam in Wright v. Lee, 4 S. Dak. 237, 55 N. W. 933, “the conclusions of the courts are not only irreconcilable with each other, but no general controlling principle can be deduced from the judgments or the reasoning of the eases.” Some courts have held that contracts made in violation of such constitutional or statutory provisions are wholly void; others have held them voidable only, while still others hold that such provisions have no effect upon, and no application to, contracts *26made by noncomplying foreign corporations, and that the only effect of such provisions is to give the state the power to oust the disobedient corporation. The reasoning of the courts is neither conclusive nor assuring, especially when we consider their utter lack of harmony touching the reasons given for holding that such provisions amount to practically nothing in so far as the protection of the citizen is concerned. Utley v. Clark-Gardner L. M. Co., 4 Colo. 372, is an example of the strange reasoning employed in some of these cases. There it was held that a constitutional provision identical with our own was a prohibition against doing business before complying with the terms of the law, but that to sue on such a contract was 'not doing business, and that therefore the constitution did not prohibit maintaining an action for recovery on the prohibited contract. This kind of reasoning is too delicately veiled and highly technical to appeal to us with much force. We take it that when the framers of the constitution said that “no foreign corporation shall do any business in this state without having one or more known places of business and an authorized agent,” etc., and the people adopted it into their organic law, that they meant exactly what the clear and unmistakable language employed implies. We cannot understand how such language can require construction or interpretation. It carries with it, on its face, its own construction and meaning. Neither can we agree with the contention made that such a provision is only meant for the protection of the state itself in its sovereignty. Now, it is clear to our minds that it was adopted for the protection of the citizen. A foreign corporation permitted to do business in this state does not obtain its franchise or legal existence from the laws of this state, but from the laws of the foreign state in which it was created. It obtains recognition and the right to do business here, not through and by reason of becoming incorporated under the laws of this state, but by reason of the performance of certain acts within this state in its corporate name and by its corporate authority. A failure to comply with these requirements and obtain the legal right to transact business is not in fact so much of an invasion *27or violation of the sovereignty of the state as it is a violation of the private and property rights of the citizens with whom it does business. At the time of the adoption of the constitution, as well as now, it was the practice of many tramp, predatory and rapacious foreign corporations organized under the laws of —nobody knew where — to come into this jurisdiction and, without appointing an agent or establishing a place of business, make contracts and transact business, and after having violated their contracts or committed injuries and depredations upon the rights of the citizen, avoid the process of the state courts — which practically amounted, in many instances, to complete protection and immunity from the consequences of their unlawful acts. In the great majority of instances, if the citizen be unable to prosecute his action and secure redress for his grievances'in the state courts and in the county where he resides, it' amounts to denying him redress at all. In other words, to be dragged two or three hundred miles to prosecute his action in the federal court, amounts to denying him justice at all. These and other like reasons were undoubtedly the moving considerations for the framers of the constitution, and the people in its adoption, incorporating such a provision into that instrument. In view of these facts, for the courts to turn round and hold that no one but the state can invoke the provisions of that constitutional inhibition would be an utter perversion of justice and the plain intent of the people. A citizen has a right to presume that any foreign corporation that offers to enter into contracts and do business with him has complied with the law, and has a right to do business in the state, and has subjected itself to the state’s jurisdiction, and we'know of no principle either of law or justice that would put him under the necessity of examining the records of the Secretary of State and the county auditor of his county every time a foreign corporation offers to transact business with him. If he has a right to assume that such corporations have complied with the law, then he must undoubtedly and of necessity have the right to invoke the provisions of the constitution and statute against the recalcitrant and offending corporation that has not, in fact, sub*28jected itself to the jurisdiction of the state whenever it seeks to prosecute an action against him founded upon a right accruing during the time he would have been unable to procure service of process upon such corporation. And the fact that the corporation has kept its contract, although failed to comply with the law, so long as the transaction is not clqsed on both sides, does not alter the reason for the requirement, nor retroactively give the other contracting party means of serving process had he so desired or had the exigency arisen.
A great deal is said in the briefs of counsel, as well as in some of the authorities cited, about the evil the courts encourage in upholding a citizen of the state in dishonest transactions by allowing him to interpose this defense. That sounds very reasonable and is quite persuasive, but these authorities in this line of reasoning seem to lose sight of the honesty and morality — or, rather, lack thereof — involved on the other side of the question when corporations come into the state and decline to comply with its laws and subject themselves to the service of its process for the depredations and transgressions they commit while thus doing business in violation of its laws. "We fail to see any greater evil in allowing a citizen to interpose as a defense the fact that a foreign corporation has failed to comply with the constitution and statute in appointing an agent and establishing a known place of business than there is in allowing such companies to come into the state and prey upon its citizens in total disregard of the law and say that such contracts are binding and enforceable. We -have never held, and never intended so to do, that such contracts are entirely and absolutely void. On the contrary, we .intimated in the original opinion that they are enforceable on the side of the party with whom they have assumed to contract. We did say, however, that the corporation should be without any remedy in the courts on an action to enforce contracts made by them while in default of compliance with the requirements of law. The evil does not exist so much in the contract as in the legal existence of one of the contracting; parties. They are in some respects in the same position as a de facto domestic corporation that has failed or neglected *29to become a de'jure corporation. They .come into the state, transact business in some capacity, but refuse to comply with the laws of the state that gives them a standing within its jurisdiction as corporations. They do business, therefore, without name, identity or legal existence.
Much is said as to the evil effects to flow from such holding, but we are satisfied from our examination of the question that the greater number of these evils are imaginary and chimerical rather than real. We hold the citizen liable criminally even though he did not know the law he has violated, and we know of no valid reason why a corporation should not be equally chargeable with knowledge of the law and its requirements. Courts of equity are always able to protect innocent and honest persons in legitimate transactions, and we are satisfied that the courts of this state can and will protect all persons who have had honest dealings with noneomplying foreign corporations where they deserve protection. The best way, however, to secure a compliance with and obedience to the laws is to begin at the fountainhead and enforce its obedience on all alike. These corporations can always get service on the citizen; but where they fail to comply with the law, he can seldom get service on them. Indeed, he can seldom find where they live, from whence they came or whither they have gone.
Counsel lay much stress on Fritz v. Palmer, 132 U. S. 282, 33 L. ed. 317, 10 Sup. Ct. Rep. 93. A careful perusal of that case discloses that it is not in point here. That was an action in ejectment to recover possession of certain real estate. Plaintiff’s grantor had previously conveyed the property to a foreign corporation that had not complied with the laws of the state of Colorado prior to its commencement to do business in the state. The court said: ‘ ‘ It may be' assumed, therefore, that the Comstock Mining Company, being a corporation of another state, had no right to do business in the state of Colorado until after it had one or more known places of business within its limits, and an authorized agent designated upon whom process could be served, nor until it had made and filed in the proper office the certificate prescribed by *30section 260 of the statute' relating to foreign corporations. .... But it does not follow that the title to the property-conveyed to the Comstock Mining Company remained in Groshon, notwithstanding his conveyance of it to that company, in due form, and for a valuable consideration.”
The Fritz-Palmer decision did not arise from an action to enforce a contract, but from a suit to cancel and avoid a contract; the holding that incompetency of the corporation to take and hold title to real estate could only be invoked by the state was a sound, equitable principle peculiarly applicable to that class of cases, but has no application here. There no right had been jeopardized, no risk had been incurred by the party pleading the noncompliance of the adversary; here the hazard and risk is admitted — hazard and risk of being unable to get service of process on the noncomplying corporation. The right to take and hold title to real property is one that can neither legally nor equitably concern the vendor thereof after he has parted with his title and received the purchase price therefor.
Counsel furnish an exhaustive argument and cite a great number of authorities in support of their position that the title to the act of February 8, 1905, is a sufficient compliance with section 16 of article 3 of the constitution. The citations are entirely too numerous for us to undertake to analyze them; besides, they are all on such different subjects of legislation and concern such a variety and diversity of topics of legislation, and the facts and circumstances under which they were enacted and considered by the courts so at variance with the ease at bar, that a review and analysis of them would be of no special value in this opinion. A great many -of the eases cited in support of the title to the act under consideration were cases where the legislature had amended municipal charters or charters of public or governmental institutions, wherein the various legislatures have ratified and confirmed some municipal or public act in which the rights of private individuals were not abridged or affected, and where the public only were interested and concerned. We do not conceive that that line of cases are authority in determining the suffi*31ciency of the title to an act like the one under consideration. It is argued in this ease that the title of the act covers the subject of the legislation, and that it was sufficiently general and comprehensive to include the subject concerning which the act attempted to legislate. The main trouble with this title is that it is misleading, and does not furnish notice as to the subject matter about which it attempts to legislate. There is a vast difference between a general and comprehensive title that covers a general subject about which it is attempted to legislate, and which will, of course, embrace all incidental and ancillary matter proper or necessary to perfect the legislation and make it operative in all its parts, and a title referring to a general subject where the legislation does not touch that subject, but is merely and solely an incident of the subject. In this case the title gives notice that the legislation proposed concerns “foreign corporations doing business in the state of Idaho,” but when we come to examine the actual legislation, we find that it has no reference to business that foreign corporations are either doing in praesenti or intending to do in futuro, nor does it even affect all foreign corporations. Its sole business is to cure and validate business transactions already consummated of that class of foreign corporations that have previously disregarded the constitution and the statutes of the state. Its object is to remove a disability from a class of foreign corporations that have transacted business under conditions and a state of facts that the constitution and statutes say they should not. We might say with equal propriety here, as we said in Turner v. Coffin, 9 Idaho, 338, 74 Pac. 962, that: ‘ ‘ The trouble with this act is that the title and the act do not fit each other. The title indicates one thing while the bill attempts to write an entirely different thing into the law.” It is true that none of the authorities, so far as we know, have held that the title should consist of an index in the sense that it should enumerate item after item upon which it is intended to legislate; but it should be an index in the sense that it should point out in a general way the scope and object of the proposed legislation.
*32It has been asserted by counsel that Lockport v. Gaylord, cited in the original opinion, has been expressly repudiated by the supreme court of the United States in Mohomet v. Quackenbush, 117 U. S. 508, 29 L. ed. 982, 6 Sup. Ct. Rep. 858. Our examination of the latter authority fails to satisfy us that the United States supreme court has meant to disapprove the doctrine there announced. On the contrary, that case is referred to and cited as authority by the Illinois supreme court as late as 1890, in Snell v. Chicago, 133 Ill. 413, 24 N. E. 532, 8 L. R. A. 858. In the latter case the court says: “It must also be held, upon the authority of Lockport v. Gaylord, 61 Ill. 276, that section 3 of the act of March 1, 1854, is unconstitutional. The title of the last-named act is ‘An act to incorporate the Northwestern Plank Road Company.’ Section 3 thereof, after reciting that the corporators had theretofore organized, and proceeded to prosecute the construction of the road under the void act of February 12, 1849, attempts to legalize and make valid the acts done in pursuance of such void act. The legalization of unauthorized acts cannot be regarded as germane to the subject expressed in the title.”
Counsel also assert that Brieswick v. Brunswick, cited by this court, was overruled in Hope v. City of Gainesville, 72 Ga. 246, and Bonner v. Milledgeville Ry. Co., 123 Ga. 973, 50 S. E. 973. An examination of these latter authorities entirely fails to justify the assertion made as to their effect upon the former authority. The principal case in which the Georgia court held that its former decisions contained obiter, and in which it distinguished, was Gardner v. Georgia R. & B. Co., 117 Ga. 534, 43 S. E. 863, but the point on which the court was distinguishing was an entirely different proposition from that involved here, and did not involve the Brieswick-Brunswick case. Indeed, the latter case is not mentioned or cited in the Gardner case.
The elaborate, exhaustive .and able briefs with which we have been favored have seemed to demand more than ordinary consideration and examination of the authorities and questions touched, and we have accordingly devoted to them much *33time and labor. We have contented ourselves, however, in this opinion with only a statement of some of the principal and controlling considerations which have led us to the conclusion at which we have arrived, without any attempt at the interminable task of analyzing, discussing or reviewing the enormous mass of authorities to which we have been directed and which we have examined with diligence.
We conclude that the judgment of the court as previously announced must stand as the unanimous conclusion and judgment of the court, and it is so ordered.
Stockslager, C. J., and Sullivan, J., concur.