Galena Mining & Smelting Co. v. Frazier, 20 Pa. Super. 394

Galena Mining & Smelting Co. v. Frazier

20 Pa. Super. 394 | Pa. Super. Ct. | 1902

Lead Opinion

Opinion by

Orlady, J.,

For want of a sufficient affidavit of defense the court below entered a judgment against the defendant and whatever doubt there is as to the correctness of its action is due to the failure of appellant to print an important agreement in writing called “ Exhibit A,” which is attached to and made a part of the plaintiff’s statement of claim.

The plaintiff is a New Jersey corporation, and its demand in this action is for the sum of 1250 with interest thereon, which amount covers two assessments of twenty-five cents each on each share of 500 shares of stock, which the defendant had obligated himself to pay in the written agreement mentioned. The plaintiff corporation was formed for the purpose of reorganizing two other corporations, former owners of gold mining properties in South Dakota. The defendant held a certificate of stock for 500 shares “ subject to such payments of assessments as may from time to time be required by the company.” The question involved, as stated by appellant, relates to the right of a foreign corporation to do business in the state of Pennsylvania without having conformed to the requirements of the act of assembly, approved April 22, 1874, which requires the registration of foreign corporations doing business in this state. It is stated in the affidavit that: “ The plaintiff had not, when the agreement aforesaid (Exhibit A) was signed by me; when I deposited my stock in the Union Hill Company and the Edgemont & Union Hill Smelting Company; when the stock in plaintiff company was issued to, delivered to, and received by me, and when all the negotiations and arrangements with reference thereto were carried on and accomplished, conformed to the provisions of the act of assembly relating to the carrying on of business in Pennsylvania by foreign corporations, nor lias it yet so complied,” but, the date when the plaintiff corporation was formed is not given. The agreement (Exhibit A) was an agreement between certain named persons and stockholders of the Union Hill Company and the Edgemont *398.& Union Hill Smelting Company, but this record does not show chat the plaintiff was a party to it. The affidavit avers that “ the plaintiff maintains an office in the city of Philadelphia, at No. 1020 Stephen Girard Building, where the business of said corporation was carried on and where the assessments for stock mentioned in plaintiff’s statement of claim was made, but the time indicated manifestly refers to the time as suggested by the date of the affidavit, September 4, 1901, while the certificate of stock which was issued by the company in Camden, New Jersey, was delivered to the defendant on October 16,1899, at which time he paid to plaintiff the sum of $1,500, as a payment of $3.00 per share on account of the par value of $5.00 per share of the stock of the plaintiff company. In substance the affidavit means that the plaintiff company agreed to exchange a certificate of its own stock for a certificate of deposit which had been issued some time previously by a reorganization committee and held by the defendant. As to when the business of the plaintiff company was carried on at 1020 Stephen Girard Building in Philadelphia, or what the character of that “ business, making contracts and undertakings,” was, is not alleged. If they were of such a nature as to be in conflict with the act of 1874, it could and should have been explicitly stated, and .not left to conjecture. The doubt is due to want of clearness -in the affidavit of defense and the defendant should not profit by his raising of it. In these respects the affidavit is vague and uncertain and we have held in Wildwood Pavilion Company v. Hamilton, 15 Pa. Superior Ct. 389, that a subscription to the capital stock of a foreign corporation is not a doing of business by that corporation within the commonwealth of Pennsylvania. Subscription to stock is an incident to the erection of the corporation. It is an act preliminar to the doing of that business for which incorporation is effected. The prosecution of the corporate business is that which is prohibited by the act of 1874. From the record as presented to us, it appears, as in Wildwood Pavilion Company v. Hamilton, supra, that the subscription to stock in the plaintiff company, though made in Philadelphia, was made in order only that the business of the company might be actually prosecuted in another state. If it appeared clearly that this was a financing corporation merely, a very different question would be presented. The legal scope of the words *399“ doing business in this commonwealth ” has been considered in a number of recent cases, noted in Wildwood Pavilion Company v. Hamilton, supra, see also People’s Building, Loan & Saving Assn. v. Berlin, 201 Pa. 1.

To avail a defendant, the affidavit of defense must be complete and explicit, leaving nothing to inference, what is not alleged will be taken not to exist: 1 P. & L. Dig. of Dec. 171. It is to be expected that when conversant with all the facts he will detail the ones he regards as important with sufficient clearness to warrant the legal inference of a full defense to the plaintiff’s cause of action. He is bound to swear to facts, not presumptions. Looking at the affidavit in its most favorable light, there is no direct allegation that the plaintiff corporation had in this state “ an office for the general conduct of its business ” or “ conducted its corporate business ” in this state, or “ had a part of its capital invested ” in this state, or “ had an agent ” in this state. Under the decisions this transaction is not in conflict with the act of 1874.

The judgment is affirmed.

Dissenting Opinion

W. W. Porter, J.,

dissenting:

The statement of claim alleges that “ the plaintiff is a corporation, created and existing under the laws of the state of New Jersey, with an authorized capital stock of $300’000, divided into sixty shares of a par value of 15.00 per share. Said plaintiff corporation was organized and created for the purposes .'of the reorganization of the Union Hill Company and the Edgemont and Union Hill Smelting Company, former owners of certain gold mining properties in South Dakota, in accordance with the provisions of a certain agreement or plan of reorganization.” The agreement is printed neither by the appellant nor the appellee. A scrutiny of the copy in the original record as filed shows that it provides for the surrender of stock in the two companies to be reorganized, to a committee for reorganization, and that new stock shall be issued by a company to be formed. The only light furnished by the agreement as to the purposes of the new corporation (which is the plaintiff in this suit), is in this provision: “ It is proposed to organize a corporation under the laws of the state of New Jersey, under name of the Galena Mining and Smelting Company, with a capital *400stock of 60,000 shares which shall be of par value of $5.00, making the total capital $300,000. To this corporation when formed, the properties acquired under the foreclosure sale will be conveyed.” It may be, therefore, that the business of the plaintiff company is the business of mining and smelting ore in South Dakota, but from the assertion contained in the statement of claim, it may, with better reason, be inferred that the company was formed simply to be used as a vehicle for the financial reorganization of the two insolvent companies. The affidavit of defense does not in terms allege anything as to the purpose and business of the corporation, but treats the assertion of the statement of claim as true, that the purpose of the incorporation was reorganization. If this was the purpose; if this is the business of the plaintiff company, then, the calling of an assessment, as prescribed in the affidavit of defense, would seem to be the doing of business by a foreign corporation in Pennsylvania without registration. If the claim is simply for an assessment upon a subscription to the stock of the plaintiff corporation, it would be but an incident to corporate erection, and not part of the business for which the company was created. As, however, there is serious doubt on the face of the record, whether the plaintiff company in the transaction out of which the present claim grows, was “ doing business ” in Pennsylvania, I would reverse the judgment for want of a sufficient affidavit, in order that opportunity may be afforded to exhibit all the facts bearing upon the controversy. For this reason I dissent from the judgment entered by the majority of the court.