168 Wis. 31 | Wis. | 1918
Lead Opinion
The following opinions were filed June 19, 1918:
The deeds given by the plaintiffs to the Realty Realization Company were dated and delivered February 28, 1913, at which time the Realty Realization Company admittedly had not complied with the provisions of sec. 1770b, Stats. It is claimed that the failure of the Realty Realization Company to comply with the provisions of sec. 1770b does not render the deeds absolutely void, for three reasons: (1) The business was not transacted in Wisconsin; (2) the transaction was interstate in character; and (3) the statute applies only to bilateral and executory agreements and does not apply to executed contracts.
Sec. 1770b has been considered in a series of cases beginning with Ashland L. Co. v. Detroit S. Co. 114 Wis. 66, 89 N. W. 904, and ending with Phœnix N. Co. v. Trostel, 166 Wis. 215, 164 N. W. 995. No useful purpose would be served by again reviewing these cases.
It is true that the provisions of sec. 17706 do not apply to such contracts as relate to interstate commerce. Interstate commerce has as a necessary element the transportation of goods between states. We see no circumstances connected with this transaction from which it may be inferred that it was interstate in character, as that term is used in the law relating to interstate commerce.
Beaser v. Barber A. P. Co. 120 Wis. 599, 98 N. W. 525, and Laun v. Pac. Mut. L. Ins. Co. 131 Wis. 555, 111 N. W. 660, are cited as sustaining the proposition that sec. 17706 applies only to bilateral contracts and does not operate upon executed contracts. A large number of cases from i foreign jurisdictions are álso' cited to the same effect. This question, it seems to us, is clearly determined adversely to the appellants by the prior decisions of this court to which we must adhere. Hanna v. Kelsey R. Co. 145 Wis. 276, 129 N. W. 1080. Nearly every deed or conveyance is given pursuant to an antecedent contract, written or oral, and if the statute should be held not to' apply tO' a deed given in performance of such antecedent contract its purpose would
In Hanna v. Kelsey R. Co. 145 Wis. 276, 129 N. W. 1080, the statute was expressly held to apply to the conveyance of land in this state tO' a foreign corporation, and in this case it was also- expressly held that a conveyance to a foreign corporation which had not complied with sec. 17706 was absolutely void and not merely voidable. Upon the authority of the prior decisions of this court we must hold that the deeds given by the Wisconsin Trust Company and Frederick Robinson to- the Realty Realisation Company are absolutely and wholly void as to the Realty Realisation Company and its grantees; that no- title was conveyed thereby to the Realty Realisation Company, and that the subsequent deeds given are without legal force or effect, unless (1) the title to- premises is confirmed in appellants by sec. 1770/, Stats., as amended by ch. 211, Laws 1917, or (2) unless plaintiffs are estopped to claim the benefit of sec. 17706. It is undisputed that on February 28, 1913, Robinson entered into a contract with the Realty Realisation Company, party of the second part, and Clinton S. Woolfolk, party of the third part, by the terms of which Robinson agreed to procure from the Wisconsin Trust Company a conveyance of the premises in question to the Realty Realisation Company, in consideration for which the Realty Realisation Company was to pay the sum of $75,000, $5,000 in cash upon delivery of the deeds, and the balance according to the terms of six promissory notes, the payment of which was to be secured by the deposit of preferred stock of the Realty Realisation Company as collateral security. The contract also gave to Robinson an option to purchase certain stock of the Realty Realisation Company within the time and upon the terms therein specified, and included other details
“2. No corporation, incorporated or organized otherwise than under the laws of this state, except railroad corporations, corporations or associations created solely for religious or charitable purposes, insurance companies and fraternal or beneficiary corporations, societies, orders and associations furnishing life or casualty insurance or indemnity upon the mutual or assessment plan, shall transact business or acquire, hold, or dispose of property in this state until such corporation shall have caused to be filed in the office of the secretary of state a copy of its charter, articles of association or incorporation and all amendments thereto duly certified by the secretary of state of the state wherein the corporation was organized. . . . Nothing in this section shall be construed to> prevent foreign corporations from taking or holding mortgages or trust deeds on property in this state to secure payment of money loaned or advanced. Mortgages or trust deeds heretofore taken by foreign corporations to secure the payment of money loaned or advanced are hereby declared valid.” [Sub. 2, sec. 17705, Stats. 1911.]
“. . . Every contract made by or on behalf of any such •foreign corporation, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions of this section, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them.” [Sub. 10, sec. 17705, Stats. 1911.]
It having been held in Ashland L. Co. v. Detroit S. Co. 114 Wis. 66, 89 N. W. 904, and other cases, notably Hanna v. Kelsey R. Co. 145 Wis. 276, 129 N. W. 1080, that contracts entered into with foreign corporations which had not
“Section 1. There is added to the statutes a new section to read: Section 1770;. 1. Any corporation organized otherwise than under the laws of this state, having acquired, or attempted to acquire, legal title by deed, or lease to any real property in this state, before complying with the terms of sec. 1770b of the statutes, or acts amendatory thereof and which has thereafter, and before the passage of this act, complied with said section, shall be. and is hereby relieved from any disability provided in said statute or prohibition therein contained, so far as said section relates to- the acquisition and holding of the property so acquired, or attempted to be acquired.
“2. Any person claiming that the legal title of any corporation or of any person claiming by, through, or under such corporation, to any real property acquired, or attempted to be acquired, is invalid by reason of the failure of any corporation coming within the terms of subsection 1 of this act, to comply with section 17706 of the statutes, or acts amendatory thereof, shall commence action to recover the property, or to declare the legal title of said corporation void, or interpose a defense on such grounds, within one year from the passage and publication of this act, and in case of failure to do so his right of action or defense, based upon the failure tO' comply with said section by any such corporation, shall be deemed to have expired; provided that this act shall not affect any action now pending.”
Section 1770; as enacted by ch. 142, Laws 1911, was amended by ch. 212, Laws 1913. We do not determine in this case what effect,.if any, the enactment of ch. 212, Laws 1913, had as to. title attempted to-be conveyed to corporations which complied with sec. 17706 after the passage of ch. 142, Laws 1911, and prior to the enactment of ch. 212, Laws 1913. Manifestly ch. 212, Laws 1913, could not operate to validate the contract and deeds in question in this case, as the Realty Realisation Company had not complied with the provisions of sec. 17706 prior to the passage of ch. 212. After the case had been tried and while it was still
“Section 1. Subsection 2 of section 17706 and subsection 1 of section 1770/ of the statutes are amended to read: (Section 17706) 2. No corporation, incorporated or organized otherwise than under the laws of this state, except 'railroad corporations, corporations or associations created solely for religious or charitable purposes, insurance companies and fraternal or beneficiary corporations, societies, orders and associations furnishing life or casualty insurance or indemnity upon the mutual or assessment plan, or corporations not organized or conducted for profit, shall transact business Or acquire, hold, or dispose of property in this state until such corporation shall have caused to be filed in the office of the secretary of state a copy of its charter, articles of association or incorporation and all amendments thereto' duly certified by the secretary of state of the state wherein the corporation was organized . . . and provided, further, that except as regards the advancing and loaning of money and the taking, acquiring, holding and enforcing of securities as above provided, nothing herein contained shall be construed as authorizing any foreign corporation to transact in this state the business of a bank or trust company, or otherwise to exempt any foreign corporation (other than the railroad, religious, charitable and insurance corporations and corporations not organized or conducted for profit above specified) from the provisions of this section or other statutes of this state. Nothing in this section contained shall affect the rights of parties in any action which may now be pending.
“(Section 1770/) 1. Any corporation organized otherwise than under the laws of this state, having acquired, or attempted to acquire, legal title by deed, or lease to any real property in this state, before complying with the terms of section 17706 of the statutes, and which is now not required to comply with said section or which has thereafter, and before the passage of this section, complied with said section, shall be and is hereby relieved from any disability pro*44 vided in said statute or prohibition therein contained, so far as said section relates to the acquisition and holding of the property so acquired, or attempted to be acquired, and the title so acquired, or attempted to be acquired, is hereby confirmed.”
The appellants claim that by the enactment of ch. 211, Laws 1917, the title of the Realty Realization Company and its grantees to the property in question was confirmed and validated. The plaintiffs claim that the enactment of said law did not affect the situation, for the reason that the Realty Realization Company is not within the terms of said chapter. Ch. 211, Laws. 1917, consisted of two sections; the first incorporated the provisions of secs. 1770b and 1770; as amended and the second provided when the act should take effect.
The controversy turns upon what is meant by the language used in that part of the first section amending sec. 1770; as follows:
“Any corporation organized otherwise than under the laws of this state, having acquired, or attempted to acquire, legal title by deed, or lease to any real property in this state, before complying with the terms of section 1770b of the statutes, and which is now not required to comply with said section or which has thereafter, and before the passage of this section, complied with said section, shall be and is hereby relieved,” etc.
Do the words “before the passage of this section” refer to sec. 1 of ch. 211, Laws 1917, or do they refer to the passage of sec. 1770;? In other words, did the legislature intend by the enactment of ch. 211, Laws 1917, to confirm and validate all titles attempted to' be acquired by foreign corporations prior to the enactment of sec. 1 of that act, or did it intend by the amendment to sec. 1770b and the first subsection of sec. 1770/ to- exempt “corporations not organized or conducted for profit” from the provisions of sec. 1770b and to confirm the titles attempted to be acquired by a corporation “which is now not required to comply with said section”?
Because the title attempted to be acquired by the deeds delivered February 28, 1913, was not confirmed and validated by the enactment of ch. 211, Laws 1917, we think the conclusion of the trial court that said deeds were void and conveyed no title is correct and should be affirmed.
Appellants claim that plaintiffs are estopped to claim the benefits of sec. 1770&. It is admitted that the- Wisconsin Trust Company was a bare trustee; that Robinson had the right to direct a conveyance of the property at such time and upon such terms and conditions as he chose. The claim of estoppel is based upon the following propositions: (1) The right to annul a contract made with a foreign corporation which has not complied with sec. 1770& is a purely personal right as to which no question of public interest attaches; (2) the right claimed by Robinson, being purely personal in character, will not be enforced if such enforcement would be inequitable; (3) Robinson is estopped by the character, form, and conditions of the contract and deeds involved herein from having the remedy he seeks; (4) Robinson is estopped from avoiding the transactions in this 'case by reason of the fact that by the transaction he became and was a stockholder of the Realty Realisation Company; (5) Robinson should be estopped because, as a stockholder of the Realty Realisation Company with full knowledge that his grantee was about to deal with the title to the prop
It cannot fairly be said that no question of public policy is involved in the determination of this question. It is clear that sec. 1770b is a declaration of a public policy of this state with reference to the transaction of business within the state by a foreign corporation. If we permit the provisions of that law to be whittled away and diminished from time tO' time in order to give effect to private rights, the whole legislative purpose will be defeated. While it has been said in Mortenson v. Murphy, 153 Wis. 389, 141 N. W. 273, that the person there referred to' “did not want to take advantage of a technicality which would permit him to sell the premises a second time, and he deeded to the bank, the then holder of the mortgage, for the apparent purpose of validating the attempted transfer of the property by the corporation,” and in Bennington Co. Sav. Bank v. Lowry, 160 Wis. 659, 662, 152 N. W. 463, that “a party has no vested right in a defense based upon an informality not affecting his substantial equities,” it does not follow from the language of these decisions that no matter of public interest is involved in a case such as the one before us. If we apply to situations such as the one presented here the doctrine of estoppel contended for by appellants, the whole statute would be practically avoided. We have already set out the terms of the contract pursuant to which the deeds in question were issued, and it is admitted that the contract was fully performed, and that pursuant to' the terms of said contract Robinson directed the Trust Company to convey the property to the Realty Realisation Company; that pursuant to such direction the Trust Company acknowledged its deed made under the authority recited; that the deed contained a special covenant of warranty as. against all persons claiming under the Trust Company; that Robinson and wife made their deed confirming the title conveyed t-o the Trust Com
As has been pointed out, practically speaking every deed is made and delivered in execution of some prior oral or written contract. Besides that, in this case it clearly appears that the making of the contract and the execution and delivery of the deeds, the payment of the money, and the execution of the notes constituted a single transaction. How can it be said that the covenants of warranty contained in the very instrument made void are or can be a ratification of the making of the deed itself?
The delivery took place on February 28, 1913; Woolfolk died suddenly on March 28, 1913, and on that day notices were served by Robinson asserting the invalidity of the conveyances on the ground that the Realty Realisation Company had failed to comply with sec. 1770b, and on March 31st a second notice signed by Robinson and the Wisconsin Trust Company was placed of record in the office of the register of deeds of Racine county, and on March 31st an action of ejectment was brought against Horace E. Walter, holder of the title as it then stood of record. ■ The plaintiffs :moved with, commendable promptness.
. While it is- true that the transaction contemplated that the property attempted to be conveyed should bé reconveyed by the Realty Realization Company, which was a dealer in real estate, we see no significance in the fact. The purpose of every conveyance is to enable the grantee to- deal with the property as his own. The purpose of the statute is mani
It is claimed that the enactment of ch. 142, Laws 1911, makes a change in the legislative policy of this state in view of the decision of this court in Hanna v. Kelsey R. Co., supra. This chapter was considered in Lanz-Owen & Co. v. Garage E. M. Co. 151 Wis. 555, 139 N. W. 393. We see nothing in the enactment of that chapter to indicate any intention or purpose on the part of the legislature tO' relieve corporations thereafter transacting business or acquiring property within this state from complying with sec. 17706. Had such been the. legislative purpose it could very easily-have been stated. On the other hand, the legislature failed to change the terms of sec. 17706 as interpreted in Hanna v. Kelsey R. Co., but chose to relieve those who prior thereto had inadvertently or mistakenly supposed sec. 17706 not
Holding as we do that the deeds in question were void and not voidable, we need not consider whether or not the Bank or Munday failed to exercise ordinary care with respect to the ownership of the property in question. It is manifest that the void deeds conveyed no title, the subsequent conveyances of the Realty Realisation Company to Walter conveyed none, and that matter need not be further considered.
It is claimed that sec. 1770& and sec. 1770/ are unconstitutional and void in that they violate the provisions of the constitution of the state of Wisconsin and the federal constitution, and that the judgment of the circuit court in failing to give force and efficacy to sec. 1770/, Stats., as amended by ch. 211, Laws 1917, infringed the rights, privileges, and immunities of the appellants under the applicable sections of the federal constitution, and that the judgment of the circuit court declaring said deeds void,'which is here affirmed, impairs the obligation of said contract, contrary to the applicable provisions of the constitution of the state of Wisconsin and of the federal constitution; that by holding sec. 1770b and sec. 1770/ of the Wisconsin Statutes, as amended, as construed by this court, valid, which holding is here affirmed, the trial court infringed the rights of the appellants under the applicable provisions of the federal and Wisconsin constitutions. We think these contentions have been disposed of in the prior decisions 'of this court and by the supreme court of the United States, and we shall not consider them, further than to say that we have carefully examined them and are of the opinion that the decision of the trial court upholding said provisions, which is affirmed by this court, in no respect contravenes any of the provisions of the constitution of this state or of the United States. Ashland L. Co. v. Detroit S. Co. 114 Wis. 66, 89 N. W. 904;
In Duluth M. Co. v. Clancy, 139 Wis. 189, 194, 120 N. W. 854, the court said:
“There is doubtless a limit beyond which the law cannot go in holding one party to an illegal contract bound and the other free, but that limit is not reached or passed in a case where this provision can be considered an additional penalty on that party for violation of law.”
It is claimed that by the use of this language this court has placed an interpretation upon the act which makes it unconstitutional, it having been held in Lanz-Owen & Co. v. Garage E. M. Co. 151 Wis. 555, 139 N. W. 393, that a conveyance to an unlicensed corporation was not absolutely void, but was voidable merely at the election of the other contracting party; it being claimed that the power to impose this additional penalty for the doing of the prohibited act lies with a private citizen and may be imposed or not at his whim or caprice, and that the delegation of legislative power to a private individual to impose a penalty or not at his election renders the act unconstitutional and void.
The language of these decisions, fairly construed, is not subject to this interpretation. On behalf of the corporation and its assigns the contract is by the express provisions of the section absolutely void. That the character of the contract on behalf of the offending corporation is not altered or changed by its enforcement by the other party is abundantly established by the prior decisions of this court. In Rib Falls L. Co. v. Lesh & Mathews L. Co. 144 Wis. 362, 129 N. W. 595, it was distinctly held that while the plaintiff had a right to enforce its contract against a foreign corporation, and even if it exercised that right, the foreign corporation could not assert its rights under the same contract by way of counterclaim, but that it might show by way of defense that it had not received the goods contracted for and for the purchase price of which it was being sued. In Phœnix N. Co. v. Trostel, 166 Wis. 215, 164 N. W. 995, the plaintiff had
“We fully concur in the view called to our attention by counsel for plaintiff that courts should not without good cause permit parties to reap the benefit of their contracts and then be relieved from their burdens. Where, however, a constitutional legislative declaration is explicit in declaring a prohibited contract void and the case is clearly within the prohibition, courts have but one course to- pursue, and that is to enforce the statute.”
We think this disposes of the question raised by appellants, and while, as pointed out by the late Justice Timlin, the language used, if considered apart from the text, may form a basis for the claim made, we think that the decisions in Hanna v. Kelsey R. Co. 145 Wis. 276, 129 N. W. 1080, and Lanz-Owen & Co. v. Garage E. M. Co. 151 Wis. 555, 139 N. W. 393, are not inconsistent with the other decisions of this court, and that it is clear that the contract does not become.void or not at the election of the opposite party, hut is void by the terms of the statute, and that the law has been SO' construed by this court from the beginning. To be sure, the opposite party may at his election enforce it, but so far
The statute has been repeatedly applied to' executed contracts, as in Hanna v. Kelsey R. Co., supra, where the deed to the foreign corporation had been delivered and the price paid, the corporation being admittedly an innocent purchaser. The grantor had in no' manner repudiated the conveyance or sought to recover the property, and the court held the deed void at the instance of a third party. And in Indiana R. M. Co. v. Lake, 149 Wis. 541, 136 N. W. 178, a rock crusher had been delivered to and accepted by the town officers and town orders had been issued in payment, yet the contract was declared void. Again in Mortenson v. Murphy, 153 Wis. 389, 141 N. W. 273, a deed to a foreign corporation was declared void although the contract was fully executed and the purchase money paid.
There remains to' be considered the disposition of the $5,000 paid by the Realty Realization Company under the contract of February 28, 1913, to the plaintiff Robinson. While the Realty Realization Company acquired no title to the realty in question and conveyed none to Walter and therefore Walter had no title which he could mortgage to the Bank, we think as between the Realty Realization Company and the receiver of the Bank, under the settled maxim that equity considers that done which ought to be done, and the Realty Realization Company having through Walter in fact mortgaged its interest in the premises, if any, to Mun-day as trustee for the Bank, the $5,000 in equity and good conscience belongs to the Bank and William C. Niblack, its receiver, and the judgment of the circuit court is modified accordingly. Mr. Robinson, to whom the sum was paid, agrees to repay the amount to whomsoever the court shall find entitled thereto. A similar disposition should b¿ made of the notes, stocks, and securities which he received from the Realty Realization Company.
Dissenting Opinion
(dissenting). ~ I am unable to concur in the view that the amendment to sec. 1770/ of the Statutes made by ch. 211, Laws 1917, did not operate to validate the deeds to the Realty Realisation Company, which had theretofore complied with sec. 1770&. Briefly stated my reasons are these: The case of Hanna v. Kelsey R. Co. 145 Wis. 276, 129 N. W. 1080, holding that a deed to a foreign corporation that had not complied with sec. 1770b of our Statutes was void, was decided February 21, 1911. No doubt many titles were affected by that decision. To grant relief, ch. 142, Laws 1911, enacted sec. 1770/, which took effect May 13, 1911. That section provided that any corporation which had before the passage of the act complied with sec. 1770& was relieved from any disability in the previous acquisition of real property in this state, and that a person claiming that the title of any corporation was void because of a fail
“Section 1. Section 1770/ of the statutes is amended to read: Section 1770/. 1. Any corporation organized otherwise than under the laws of this state, having acquired, or attempted to acquire, legal title, by deed, or lease to any 'real property in this state, before complying with the terms of section 17705 of the statutes, and which has thereafter, and before the passage of this section, complied with said section, shall be and is hereby relieved from any disability,” etc.
If, as the court construes it, the words “this section” mean sec. 1770/ of the Statutes and not sec. 1 of the amendatory act in which they are found, then the amendment of 1913 was entirely nugatory. All titles depending upon conditions existing prior to May 13, 1911, had been fully cured by the act of 1911 as construed in the Lanz-Owen Case. The same nugatory result, except as to non-profit-sharing corporations, is true of the amendment of 1917, ch. 211, which is in the same form as that of 1913. It is true that the law. of 1911 says “this act” and that of 1913 “this section.” But the natural construction is to- refer the words to- the section in which they are found in the amendatory act, namely, sec. 1, and not to the original section passed years prior thereto— especially when the latter construction nullifies the whole act. That they are intended to relate to the amendatory act
Dissenting Opinion
(dissenting). Upon the motion made for a rehearing in this case we are now constrained to dissent from the construction given by the majority opinion construing the amendment of 1917. And we concur with the views on that subject of Justice Vinje in his dissenting opinion.
The following opinion was filed November 16, 1918:
We have considered the matters urged upon our attention in the briefs of counsel for appellants in support of the motion, for rehearing. While some verbal inaccuracies are disclosed by the hypercritical analysis to which the opinion has been subjected, still, when .the opinion is read in connection with the facts and circumstances of the case, these largely if not entirely disappear. It was not supposed by the court that the question involved was whether the legislature intended by the enactment of ch. 211, Laws 1917, to confirm and validate the titles theretofore attempted to be acquired by all foreign corporations which had not complied with sec. 17706, Stats. It is perfectly clear that the enactments in question have no application to the acts of those foreign corporations which do not comply or have been excused from complying with sec. 17706, and that fact is assumed without repetition throughout the opinion.
In the opinion it is said: “If the legislature had intended by the re-enactment of sub. 1 of sec. 1770/ to confirm and validate the title theretofore attempted to> be acquired by all foreign corporations which had not complied with sec. 17706,” etc. In the interest of clearness of expression there
It is not accurate to say that a foreign corporation which has been excused from complying with sec. 17706 has in effect complied therewith, as is argued in the opinion. But, nevertheless, after re-examination, we are clearly of the opinion that the legislature did not, by the re-enactment in ch. 211, Laws 1917, of secs. 17706 and 1770/, intend to do anything except to exempt corporations not organized or conducted for profit from the provisions of sec. 17706 and to confirm the title attempted to be acquired by such corporations prior to the enactment of said chapter.
By the Court. — Motion for rehearing denied.
Dissenting Opinion
(dissenting in part). As between the grantor of the real estate, Robinson, who conveyed knowing that it was in effect to- be used for trading purposes, and the La Salle Street Trust & Savings Bank, wbich advanced the $40,000 upon the strength of such conveyance, I think that Robinson should be estopped from taking advantage of the statute relied upon. . ,
I concur in the foregoing dissenting opinion of Justice Eschweiler.
A motion by the appellants for a rehearing was denied, with $25 costs, on October 8, 1918, and the following opinions were filed November 6, 1918:
