State ex rel. Scott v. United States Endowment & Trust Co.

140 Ala. 610 | Ala. | 1903

TYSON, J.

We do not think the motion to dismiss the appeal should prevail. The appellant gave the required security for costs which was approved by the clerk within the time prescribed by the statute within which the appeal must be taken. — § 3437 of the Code.

Nor do we think that the application for appeal need have been in writing; nor did the conduct of appellant’s attorney in directing the clerk of the lower court to withdraw the citation of appeal from the hands of the sheriff and the withholding of it until after expiration of the time for the appeal to be taken operate as an abandonment of it which had really been perfected when the security for costs was approved.

It is next insisted by appellee that the judgment should be affirmed because the petition does not show that relator has ah interest which entitles him to institute this proceeding. As far back as 1877, this court, in Tuscaloosa Scientific & Art Association v. State ex rel. Murphy, 58 Ala. 54, construed the statutes as conferring the right to bring the action upon any person who would give the required security for costs. Speaking to this point the court said: “The Legislature thought they were sufficiently guarding the public against the abuse of its process when they required security for costs. We feel constrained, by the language of the statute, to hold that whenever security for the costs is given and approved by the clerk, any person may institute and prosecute proceedings under section 3420 of the Code of 1876.”

These statutes have been twice codified without change since this decision. We do not, therefore, feel at liberty to depart from the construction placed upon them. — §§ 3417, 3418, Code, 1896.

This brings us to a consideration of the merits of the controversy. The first contention, upon which is rested the right to have a judgment of ouster entered against the respondent excluding it from a further exercise by it of the franchise conferred.by the charter, is that it did not prior to April, 1903, maintain its principal office in the city of Anniston.

Respondent derived its corporate existence under an act of the General Assembly approved March 4, 1901. Acts, 1900-01, p. 2264. Section 3 provides: “That the principal office of said comnany shall be in the citv of Anniston, Alabama, but it shall have nower and authority to establish agencies and branch offices in other counties of said State/and in other States in the United States, and appoint agents therein, and generally to do and perform all those things which may be necessary and proper to the proper conduct of its business and to carry out the objects and purposes as in this act are authorized to be done and performed.”

Section 11 provides for the government of the corporation by a board of directors who are clothed with authority to elects its officers.

Section 12 provides: “That the annual convention of stockholders shall be held in the city of Anniston in said State; but the board of directors may meet at any other branch office or agency of said company upon due notice, and when two-thirds of said directors shall meet at the time, signified and to be named in the call for such meeting, their acts and doings shall be as valid and binding as if such meeting were held at the home office.”

Section 18 makes it the duty of the president of the company to make an annual report to the Auditor of the State, under oath, showing “the capital and assets of the company, the number and amount of debentures, bonds and annuities outstanding, and the amount of reserve set apart to meet the same, and- how and in what manner said reserve is invested and maintained.”

It appears from the first section of the act that all of the incorporators of the company, five (5) in number, were residents of the State of Georgia, except John B. Knox, of Calhoun county, in this State.

It appears from the testimony that after the organization of the company it established an office in the city of Anniston, but that all of its officers except its general counsel, who was also one of its directors, resided in the city of Atlanta, where it also had an office, and that its books were kept there, until April, 1903. Since April, 1908, all of its managing officers have resided in the city of Anniston and all of its books have been kept in its office in that city. Tt also appears that in July, 1901, the company purchased and became the owner of a valuable piece of property in the- city of Anniston, which it now owns. Conceding that the requirements put upon the company of having its principal office in the city of An-niston is of the essence of the contract between the State and the corporation, its violation by the company is not expressly made a ground of forfeiture in the charter; and if a ground at all it must be upon the theory that the charter expressly imposes it as a duty without providing-in so many words that a violation thereof shall be a cause of forfeiture, or that it is an implied condition resting upon the corporation by virtue of its acceptance of the charter. Whether it be the one or the other, courts are clothed with a discretion which they may exercise, even though there may have been a violation by the corpora-' tion of the charter contract, in declaring a forfeiture, if the interest of the public do not demand such a judgment. — 2 Morawetz on Private Corporations (2d ed.), § 1028; note by Mr. Freeman in 8 Am. State Rep. p. 181, in which is cited the following cases, viz.: State v. Oberlin Building and Loan Association, 35 Ohio St. 258; State v. People’s Mut. Ben. Association, 42 Ohio St. 579; State v. Minnesota Central Railway, 36 Minn. 246, 258; State v. Crawfordsville, etc. Turnpike Co., 102 Ind. 283, 289; State v. Essex Bank, 8 Vt. 489. An examination of these cases will disclose that they fully support the learned annotator in his statement that “If a corporation is found guilty of acts or omissions which are expressly declared to be a cause of forfeiture of its franchise, plainly a court has no discretion to refuse such a judgment; * * * but in other cases the court is vested with a discretion, and may refuse a judgment of ouster, if, in'its opinion, the interests of the public do not require such a judgment.” This principle was clearly recognized by the court in Capital City Water Co. v. Macdonald, 105 Ala. 425, 426, notwithstanding the facts of that case did not authorize the exercise of the court’s discretion in favor of the respondent corporation. So, then, if it be conceded that the respondent is shown to have been guilty of a violation of its charter, in respect of not having its principal office in the city of Anniston for the period of time pointed out above, ought this court in the exercise of its sound discretion forfeit its franchise? We think not.

This information was filed on November 7th, 1903. Por more than six months prior thereto the respondent had met with the requirements of this provision of its charter even to the full measure of its duty according to relator’s conception of it. And prior to this period, it had only violated its duty, according to relator’s conception of it, by not keeping its books in its office at An-niston and one of its managing agents there in charge of them. It may be seriously doubted that such was its duty in view of section twelve and other provisions of its charter. But, however, this may be, its violation is shown to have been without prejudice to any citizen of the State or any other person. It has all along been solvent, and during that period it practically did no business in this State. No person ever brought a suit against it in this State until the filing of this information, nor does it appear that any person had any cause to bring suit.

To deprive it of its right to enjoy its franchise would doubtless entail loss upon its stockholders, a penalty that should not be imposed upon them when no public good would be subserved by it. And especially is this true when it cannot be affirmed without some misgivings, that they have not been guilty of a willful abuse of the franchise granted to them.

The only other matter insisted upon as a ground of forfeiture, is the failure of respondent’s president to make an annual report to the Auditor as required by-section 13 of the charter act. Relator contends that the company was fully organized in July, 1901, and that no report was made until November 1st, 1902. In this statement he appears to be sustained by the record. The report that was filed was clearly such as is required by section 13, as was the second report made in November, 1903.

If it be admitted that an entire failure to comply with this provision of the charter would be a ground of forfeiture, a proposition about which the courts do not seem to be in harmony, it does not appear that the omission here complained of was willful or intentional. Indeed, the making of the report in November, 1902, and the making of the second annual report in November, 1903, Avould indicate that its president was mistaken as to the time when he should have made his first annual report, or that his omission to make it, within the twelve months after his company was organized, if it be admitted that this limitation as to time began to run from that date rather than from the date the company commenced to do business, was merely an oversight, and not attributable to willful or intentional misconduct. “It is to be observed that courts proceed with extreme caution in proceedings which have for their object the forfeiture of corporate franchises, and a forfeiture will not be allowed except upon express limitation, or for a plain abuse of power by which the corporation fails to fulfill the design and purpose of its organization.”—State ex. rel. Johnson v. Southern B. & L. Association, 132 Ala. 50, 57. Furthermore, “Substantial performance of conditions is all that is required.”—Freeman’s note, supra.

Several exceptions were reserved during the trial to the admission of testimony. It is, however, unnecessary to pass upon these, since with this testimony excluded from consideration the result would be the same.

Affirmed.