Fairbanks Steam Shovel Co. v. Wills, 212 F. 688

Fairbanks Steam Shovel Co. v. Wills

212 F. 688 | 7th Cir. | 1914

KOHLSAAT, Circuit Judge

(after stating the facts as above). On the hearing of the appeal herein, appellant orally urged upon the court the question of the right of the trustee to bring and maintain this cause in the District Court, for the reasons:

[1] First. That the District Court had no jurisdiction over the subject-matter of this suit under the decision of the Supreme Court in Harris v. First National Bank, 216 U. S. 382, 30 Sup. Ct. 296, 54 L. Ed. 528. With regard to this objection, it suffices to say that appellant’s answer to the merits, and its acts in contesting the merits during the pendency of the suit, amount, beyond question, to a consent to such jurisdiction. Whether under clauses 23a and 23b, construed together with clause 70e as amended in 1903, consent to jurisdiction of the District Court is required need not therefore be considered.

[2] Second. That the District Court, by its finding in the present suit that the bankrupt’s principal office and principal place of business under the Illinois corporation and recording statutes was in the Northern District of Illinois, in legal effect found that the District Court of -the Southern District of Illinois, sitting in bankruptcy, had no jurisdiction under the national bankruptcy statute to make the adjudication and appoint the trustee. This present cause is an independent and plenary suit by the trustee (who adopted the bill of complaint filed by the bankrupt in anticipation of the appointment of the trustee), professing to act in the right' of the bankrupt mortgagor and its general creditors against appellant as mortgagee to recover possessiqn of property taken by appellant under an alleged invalid mortgage. This suit might therefore have been brought, as well in a state court. But wherever brought, if appellant desired to challenge the right of the trustee to sue as representative of the bankrupt and its *691general creditors, appellant should have raised the issue in this suit by a proper plea. Appellant’s answer to the merits of the question of title and right of possession of the property was an admission of the trustee’s capacity to sue. 31 Cyc. 171, 172. If appellant had filed such a plea, it would then, and only then, have become necessary to consider (with the bankruptcy record introduced into this cause as evidence, and if the bankruptcy record showed the question in a way to be determined collaterally) whether principal office and principal place of business inevitably have identical meanings under the Illinois corporation and recording statutes, and under the National Bankruptcy Act. As the record stands, appellant will not be heard to question the right of the trustee to maintain the present suit.

[3] While, upon the merits, other points were made by the trustee, the special master properly held that the only one necessary to be considered was whether the chattel mortgage was acknowledged and recorded according to the statutes of Illinois. Unless it was, the rights of the trustee would intervene as of the date of filing of the petition in bankruptcy, and would not be affected by the subsequent act of the mortgagee in taking possession. Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405; In re Rodgers, 125 Fed. 169, 60 C. C. A. 567, decided by this court; section 70 of Bankruptcy Act as amended Feb. 5, 1903, Supp. of 1911, U. S. Comp. Stat. of 1901, p. 1511; Everett v. Judson, 30 Am. Bankr. Rep. p. 1, 228 U. S. 474, 33 Sup. Ct. 568, 57 L. Ed. 927, 46 L. R. A. (N. S.) 154, decided by United States Supreme Court April, 1913; Toof v. City Nat’l Bank, 30 Am. Bankr. Rep. 79, 206 Fed. 250, 124 C. C. A. 118, decided by United States Circuit Court of Appeals June, 1913; Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 300, 32 Sup. Ct. 96, 56 L. Ed. 208.

[4] Section 2 of chapter 95 of mortgages of the statutes of Illinois provides that chattel mortgages in counties having over 200,000 population, if the mortgagee is a resident of the state at the time, must be acknowledged before officers therein enumerated, in the town, precinct, district, or county wherein the mortgagor resides. The articles of incorporation of the bankrupt stated that the location of bankrupt’s principal office was “in the city of Chicago, in the county of Cook and state of Illinois,” and the commissioners in their report to the Secretary of State set out—

“tliat the post office address of the business office of said company is at number - Park Hotel * * * in the city of Beardstown in the county of Cass and state of Illinois.”

The special master found that the charter was filed for record and recorded in Cass county, Ill.; that all but two of the stockholders’ and directors’ meetings were held at Beardstown, and that after a short time no office was maintained in Chicago, but that the bankrupt did maintain an office at Beardstown, where it kept its records, books, etc.; that its stationery carried the address of Beardstown, and that address was given in its reports to the Secretary of State and collector of internal revenue as the location of its principal office, and that for all practical purposes the principal office was at Beardstown when *692the mortgage was given in June, 1912. Upon this state of facts the special master found, as above stated, that the bankrupt’s residence was at Chicago, Ill.

This finding of the special master is in accord with the weight of authority. By section SO of the Illinois Corporation Act, it is provided :

“That whenever the board of directors, managers or trustees of any corporation * * * hereafter organized by virtue of any law of this state, may desire to change * * * the place of business * * * they may call a special meeting of the stockholders of such corporation * * * for the purpose of submitting to a vQte of such stockholders * * * the question of such change of place of business.”

Section 51 prescribes the notice — not less than 30 days, and the manner in which it shall be given, while section 52 provides that such change must be effected by a two-thirds vote of all the stock of the corporation. Section 53 provides that when such change is voted' a certificate thereof, verified by the affidavit of the president and under seal of said corporation, shall be filed in the office of the Secretary of State and recorded in the county where the principal business of such corporation is located, whereupon the change as to the place of business, etc., shall become effective. Section 54 requires publication of such change to be made in a newspaper published in or nearest the county in which the principal office is located.

Here no attempt was made to comply with the statute in the above respect.

While section 2 of the corporation act uses the language, “the location of the principal office,” and the language of section 50 of said act is to change the “place of business,” we are of the opinion that the two are synonymous as used in the statute.

It has been held that the domicil of a corporation is that place where its principal office is located. Every corporation has a' residence within the meaning of the word as used in the Practice Act, where its principal office or place of business is established. Jenkins v. California Stage Co., 22 Cal. 537.

In Connecticut, etc., R. R. Co. v. Cooper, 30 Vt. 476, 73 Am. Dec. 319, it is said that, where a corporation is not located by the terms of its charter, its residence and location are regarded as being in the place where it keeps its principal office and does its corporate business.

It was held in Western Transportation Co. v. Scheu, 19 N. Y. 408, that a corporation had its domicil for the purpose of taxation in the city or town in which the principal office for managing the affairs of the company was located, as evidenced by its charter.

The Supreme Court of the United States said, in Galveston, etc., Ry. Co. v. Gonzales, 151 U. S. 504, 14 Sup. Ct. 401, 38 L. Ed. 248, that the question of inhabitancy of a corporation must be determined, not by the residence of any particular officer, but by the location of the principal offices — where its books are kept and its corporate business is transacted, even though it may transact its most important business elsewhere, citing Conn., etc., R. R. Co. v. Cooper, supra.

In Ex parte Schollenberger, 96 U. S. 377, 24 L. Ed. 853, the court *693decided that a corporation can have its legal home only at the place where it is located by or under the authority of its charter.

It was early decided in Illinois that:

“The residence of a corporation, if it can be said to have a residence, is necessarily where it exercises corporate functions. It dwells in the place where its business is done. It is located where its franchises are exercised. * * * It has voluntarily established its residence in Cook county. It has there located its chief business office.” Bristol v. C. & A. R. R. Co., 15 Ill. 436.

A chattel mortgage covering property in Chenoa, Ill., was held to have been properly acknowledged in St. Louis, Mo., that being the home office of the company. Hewitt v. General Electric Co., 164 Ill. 420, 45 N. E. 725.

A statement in a certificate of incorporation as to the location of the corporation’s principal place of business is conclusive on the corporation. People v. Barker, 5 App. Div. 227, 39 N. Y. Supp. 88.

The general act under which a corporation was organized granted the power to “change the location of its principal office.” Held, that the term “principal office” was intended to include “principal place of business,” and such a change of the place of business to another city in the state was authorized. Bernstein v. Kaplan, 150 Ala. 222, 43 South. 581; C., D. & V. R. R. Co. v. Bank of North America, 82 Ill. 493-496, citing Bristol v. Chicago & Aurora R. R. Co., 15 Ill. 436. See, also, First National Bank v. Wilcox, 72 Wash. 473, 130 Pac. 756, 131 Pac. 203; Clark & Marshall’s Private Corporations, p. 363; sections 464 and 496, Thompson on Corporations (2d Ed.).

In Crofut v. Brooklyn Ferry Co., 36 Barb. (N. Y.) 201, it is said that the certificate of incorporation of a company, together with its acts in the exercise of its franchise, show where it is established. The place where its books are kept, where the office of its attorney is, where its directors meet, or where it is assessed for personal property, are not proof conclusive of the locus of its establishment.

[5] The court was right in approving the report of'the special master and holding that the residence of the bankrupt was at Chicago, that therefore the chattel mortgage in suit, having never been properly acknowledged, was invalid as against the trustee of .the bankrupt, and in refusing to dismiss the temporary injunction and ordering the dredge to be turned over to the trustee.

The decree of the District Court is, therefore, affirmed.