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The declaration of the Colorado statute that the fact that a foreign corporation has been doing business in the state without its license shall constitute an absolute defense to any action arising out of such business is ineffectual to restrain or modify the power or duty of the national courts to hear and decide the controversies of such corporations arising from its transactions of interstate commerce according to the very right of the matter. A Circuit Court of the United States may administer a new right or remedy granted by the statute of a state to its citizens according to the terms of that statute. Missouri, K. & T. Trust Co. v. Krumseig, 172 U. S. 351, 19 Sup. Ct. 179, 43 L. Ed. 474; National Surety Co. v. State Bank, 120 Fed. 593, 603, 56 C. C. A. 657, 61 L. R. A. 394; Barber Asphalt Paving Co. v. Morris, 132 Fed. 945, 949, 66 C. C. A. 55, 67 L. R. A. 761. But the power of the Circuit Courts of the United States to administer rights and remedies in equity was vested in them as part of the judicial power of the nation under the Constitution of the United States and the judiciary act of 1789, and as it was not granted by, it may not be revoked, impaired, or destroyed by, the legislation or act of any state. Payne v. Hook, 7 Wall. 425, 430, 19 L. Ed. 260; Green's Adm'x v. Creighton, 23 How. 90, 105, 16 L. Ed. 419; Insurance Co. v. Morse, 87 U. S. 445, 458, 22 L. Ed. 365; Suydam v. Broadnax, 14 Pet. 66, 74, 10 L. Ed. 357; Union Bank of Tennessee v. Jolly's Adn'rs, 18 How. 503, 507, 15 L. Ed. 472; Hyde v. Stone, 20 How. 170, 175, 15 L. Ed. 874; Blodgett v. Lanyon Zinc Co., 120 Fed. 893, 897, 898, 58 C. C. A. 79; National Surety Co. v. State Bank, 120 Fed. 593, 603, 56 C. C. A. 657, 61 L. R. A. 394; Hervey v. Illinois Midland Co. (C. C.) 28 Fed. 169, 175; Farmers' Loan & Trust Co. v. Chicago & N. P. R. Co. (C. C.) 68 Fed. 412, 417; Sullivan v. Beck (C. C.) 79 Fed. 200, 202; JarvisConklin Mtg. Trust Co. v. Willhoit (C. C.) 84 Fed. 514, 517; Eastern B. & L. Ass'n v. Bedford (C. C.) 88 Fed. 7, 12. The unavoidable result is that, if the Constitution and statutes of Colorado are to be interpreted to mean, as they clearly read, to prohibit every foreign corporation from exercising any corporate power whatever, or doing any business whatever, in the state, unless they pay the fees and the annual license tax which this legislation requires as a condition thereof, they are unconstitutional and void, so far as they apply to interstate commerce conducted by foreign corporations or suits for and against them in the national courts.
There is, however, another view of this case which is both reasonable and persuasive. The law upon the subject which has been considered was the same when the Colorado Constitution was adopted and when her statutes were enacted that it is to-day, and the legal presumption, in the absence of persuasive evidence of another purpose, is that the people and the Legislature of that state intended in the adoption of this Constitution and the enactment of these laws to obey the supreme law of the land, that they intended to prohibit the doing of intrastate business only, and the exercise by foreign corporations of corporate power unauthorized by the Constitution and laws of the United States, and that only, without a license from their state. Hence this Constitution and these statutes should be read and interpreted, if possible, in the light of this presumption, so that they will not conflict with the Constitution and the laws of the United States. The Supreme Court seems to have been inclined to a liberal interpretation of this nature, for in Fritts v. Palmer, 132 U. S. 282, 10 Sup. Ct. 93, 33 L. Ed. 317, the foreign corporation had clearly violated the plain terms of the Colorado statute. It had exercised corporate power in that state. It had acquired, held, and conveyed real estate in violation of the legislation of that state, and yet the court sustained the title. The Supreme Court of Colorado construed this legislation in this rational spirit when it held that a single act of business did not come within the purview of some of these statutes (Kindel v. Lithographing Co., 19 Colo. 310, 35 Pac. 538, 24 L. R. A. 311; Roseberry v. Valley Building & Loan Ass'n, 83 Pac. 637), although by their express terms they prohibited a single exercise of corporate power and a single act of business as imperatively as they forbade many. An interpretation of this legislation so that it may conform to the national law, and so that acts done in undoubted violation of its plain terms may be held to be without its true meaning and purpose, is rational and just, and it is supported by high authority. Harris v. Runnels, 12 How. 79, 84, 13 L. Ed. 901; National Bank v. Matthews, 98 U. S. 621, 25 L. Ed. 188; Coit v. Sutton, 102 Mich. 324, 60 N. W. 690,25 L. R. A. 819; Oakland Sugar Mill Co. v. Fred W. Wolf Co., 118 Fed. 239, 243, 55 C. C. A. 93; Watrous & Snouffer v. Blair, 32 Iowa, 58; Pangborn v. Westlake, 36 Iowa, 546, 548; Chattanooga, R. & C. R. Co. v. Evans, 66 Fed. 809, 815, 816, 14 C. C. A. 116, 121, 122.
Let us now turn to the contracts, observe what the rubber company agreed to do and what it actually did under them, and determine, if possible, whether or not in making or in performing these agreements it was guilty of doing any business within the meaning of the Constitution and statutes of Colorado. It agreed to ship the goods from its warehouse, or its mill, upon the orders of the appellee, to that company in Denver; and it did so. It contracted to do, and it did, nothing more. It never had any office or place of business in Colorado. It never received, stored, handled, or sold any goods, or collected any money for the sales of any goods, in that state under this contract.' It never incurred, assumed, or paid any expenses of doing all these things, or of conducting any of the business. The shoe company had and maintained a place of business in Colorado, it rented or owned the place in which the business in Colorado was done, and it agreed to bear all the expenses and losses of receiving, storing, and selling the goods; and it did so. The purchasers of the goods were purchasers from it, solicited and secured by it. They were its customers, and liable to it for the purchase price of the goods. The goods were billed to them in the name of the shoe company as consignee. The profits of the business and the work of the business, the labor of receiving, storing, and selling the goods, were the shoe company's. The profits constituted its factorage, its compensation, for carrying on the business. There is no question here between the state and the shoe company, or between the shoe company and the purchasers of the goods, or between the rubber company and the purchasers of the gooas.
Tiie question here is between the consignor and the factor, and it is whether the consignor, which did not agree to do, and did not in fact, do the business of receiving, storing, and selling these goods, or the factor who did contract to do, and did actually do, the business of receiving, storing, and selling these goods, in Colorado, and who received the factorage therefor, was doing that business. In a simple transaction the true answer seems clear. A farmer sends to a commission merchant in a city a dozen barrels of apples for him to sell. The factor puts them in his store, sells them, receives the proceeds, and remits them, less his factorage. The farmer from time to time sends 1,000 barrels during the season, and they are sold and the proceeds are remitted in the same way. The farmer is not carrying on the business of selling apples in the city, but the factor is. The transaction in hand is larger, but in every element which conditions its legal character and effect it is not different. The transaction between the parties to this suit was interstate commerce. The rubber company did not agree to do, and did not actually do, any of the business of receiving, storing, and selling the goods in Colorado. The shoe company did agree to do, and did do, that business. These facts have driven our minds with compelling force to the conclusion that, within the true intent and meaning of the Constitution and statutes of Colorado, the rubber company was not doing business in that state, and the contracts between these litigants are valid and enforceable.
Many authorities have been examined which relate in some degree to the question which has now been decided. They are numerous, various, and conflicting, and any attempt to reconcile them must fail. The reasons for the conclusion reached have been stated, and some of the authorities examined are here cited for reference: Nutter v. Wheeler, 2 Lowell, 316, 18 Fed. Cas. 497; In re Hovey's Estate, 198 Pa. 385, 48 Atl. 311, 315; Chattanooga, R. & C. R. Co. v. Evans, 66 Fed. 809, 815, 816, 14 C. C. A. 116, 121, 122; Allen et al. v. Tyson-Jones Buggy Co., 91 Tex. 22, 40 S. W. 393, 714; Keating Implement & Machine Co. v. Favorite Carriage Co., 12 Tex. Civ. App. 666, 35 S. W. 417; Gunn v. White Sewing Machine Co., 57 Ark. 24, 20 S. W. 591, 18 L. R. A. 206, 38 Am. St. Rep. 223; Bertha Zinc & Mineral Co. v. Clute, 27 N. Y. Supp. 342, 7 Misc. Rep. 123; U. S. v. American Bell Teleph. Co. (C. C.) 29 Fed. 17, 40; Wolff Dryer v. Bigler, 192 Pa. 466, 43 Atl. 1092; Ammons v. Brunswick Co., 141 Fed. 570, 575, 72 C. C. A. 614; Blodgett v. Lanyon Zinc Co., 120 Fed. 893, 58 C. C. A. 79; Iowa Lillooet Gold Mining Co. v. U. S. F. & G. Co. (C. C.) 146 Fed. 437; Osborne & Co. v. Josselyn, 92 Minn. 267, 99 N. W. 890; Davis & Rankin Building, etc., Co. v. Caigle (Tenn. Ch. App.) 53 S. W. 240; Southern Cotton Oil Co. v. Wemple (C. C.) 44 Fed. 24; People ex rel. v. Wemple, 131 N. Y. 64, 69, 29 N. E. 1002, 27 Am. St. Rep. 512; Chicago M. & L. Co. v. Sims, 101 Mo. App. 569, 74 S. W. 128; Fertilizer Co. v. Kelly, 10 Pa. Super. Ct. 565; Elliott v. Parlin & Orendorff Co., 71 Kan. 665, 81 Pac. 500, 502; John Deere Plow Co. v. Wyland, 69 Kan. 255, 76 Pac. 863; D. M. Osborne & Co. v. Shilling (Kan.) S8 Pac. 258; Pennsylvania L. M. Fire Ins. Co. v. Meyer, 197 U. S. 407, 415, 25 Sup. Ct. 483, 19 L. Ed. 810; Commonwealth v. Parlin & Orendorff Co., 118 Ky. 168, 80 S. W. 791; New Haven Pulp & Board Co. v. Downingtown Mfg. Co. (C. C.) 130 Fed. 605; Wilson Moline Buggy Co. v. Priebe (Vo. App.) 100 S. W. 558; Pittsburgh Const. Co. v. West Side Belt R. Co. (C. C.) 151 Fed. 125; Brewing Co. v. Peimeisl, 85 Minn. 121, 88 N. W. 441; Nursery Co. v. Aughenbaugh, 93 Minn. 201, 100 N. W. 1101; Thomas Mfg. Co. v. Knapp (Minn.) 112 N. W. 989.
Finally, counsel for the shoe company argue that the decree should be reversed and the bill dismissed because the complainant had an adequate remedy at law. The adequate remedy at law which will deprive a federal court of jurisdiction in equity must be as certain, practical, prompt, efficient, and complete as the remedy in equity. Boyce's Executors v. Grundy, 3 Pet. 210, 215, 7 L. Ed. 655; Castle Creek Water Co. v. City of Aspen, 146 Fed. 8, 14, 76 C. C. A. 516. The relief which the complainant sought was the immediate possession and ultimate recovery of the goods in the hands of the defendant which subsequently realized $29,647.09, the recovery from the bank of the $8,276.47 which it owed upon the “Butler Bros. Shoe Company Consignee Account,” and the recovery from the shoe company of the $14,856.27 which it owed on account of the goods it had sold. The shoe company denied by its answer that the complainant was entitled to any of this relief. To obtain such relief at law an action of replevin and of assumpsit against the defendant, and an action against the bank, would have been necessary, and the remedy by two or three actions at law might not have been as prompt and efficient as a single suit in equity. In order to determine the issues presented by the pleadings it was necessary to take and state an account of many items, to the end that the quantities and selling prices of the goods which the defendant had sold and the amounts due to the complainant therefor might be determined. No action at law furnishes as efficient, practical, or adequate a remedy for the decision of such a controversy as a suit in a court of equity, which, with its deliberate methods, its power to select men trained in the science of accounting to take the evidence and state the result, its authority to consider and modify their reports after exceptions and hearings, is alone really competent to justly determine such an issue. Gunn v. Brinkley Car Works & Mfg. Co., 66 Fed. 382, 384, 13 C. C. A. 529, 531; Hayden v. Thompson, 71 Fed. 60, 64, 17 C. C. A. 592, 595; Fechteler v. Palm Bros. & Co., 133 Fed. 462, 465, 66 C. C. A. 336; M'Mullen Lumber Co. v. Strother, 136 Fed. 295, 303, 304, 69 C. C. A. 433.
The complainant had no adequate remedy at law, and the decree below must be affirmed.
It is so ordered.
(156 Fed. 21.)
NATIONAL SURETY CO. v. STATE SAVINGS BANK.
(Circuit Court of Appeals, Eighth Circuit. June 18, 1907.)
No. 2,478. 1. COUNTIES-DEPUTY AUDITOR-LIABILITY ON OFFICIAL Bonds—MISCONDUCT
A deputy county auditor in Minnesota, authorized by law to act in the name of his principal and for whose official acts the auditor and his bondsmen were responsible, not only to the county, but to any person injured by his "misconduct in office" (Gen. St. Minn. 1894, 88 710, 3931), issued spurious refund orders on the county treasurer in favor of fictitious payees, purporting to be for the refunding of taxes received through redemption from tax sales. He procured the orders to be authenticated by the chairman of the board of county commissioners, forged the names of the fictitious payees to assignments thereof, and sold the same to a bank. Held, that any loss sustained by the bank through its purchase of the orders could not be attributed to the official misconduct of the deputy in issuing the same, but that its proximate cause was his individual acts in forging the assignments and selling the orders as genuine; that, the orders being nonnegotiable, the bank was put on inquiry, and acquired no greater rights than the supposed payees, and had no claim to recover any such
loss, either from the county or the surety on the auditor's bond. 2. SUBROGATION-PAYMENT OF DEBT BY SURETY.
A year after the issuance of such orders they were presented to the county treasurer and paid, with interest. Upon the discovery of their fraudulent character the county brought suit against the auditor on his bond, and by the final judgment of the Supreme Court of the state recovered a judgment, which was paid by the surety. Held, that the bank was primarily liable to the county for the amount received from its treasurer as money had and received to the county's use, and that the surety of the auditor, having paid the debt to the county, was entitled by equitable sub
rogation to enforce its right of recovery against the bank. 3. SAME-SCOPE OF DOCTRINE-RIGHTS OF SURETY.
Subrogation is not a matter of strict right, but is purely equitable in its nature, dependent upon the facts and circumstances in each particular case, and intended to serve the purpose of compelling the ultimate discharge of a debt or obligation by him who in good conscience ought to pay it. The doctrine is sufficiently broad to entitle a surety who has paid the debt of his principal to the remedies which the creditor had, not only against the principal, but against others.
(Ed. Note.-For cases in point, see Cent. Dig. vol. 44, Subrogation, $8 17, 18.]
Hook, Circuit Judge, dissenting.
Appeal from the Circuit Court of the United States for the District of Minnesota.
W. B. Bourne having been duly appointed deputy auditor of Ramsey county, Minn., by W. R. Johnson, the auditor, and being as such authorized to sign all papers and do all other things that the auditor himself might do, purporting to act by authority of the statute of that state providing for refunding to the holders of invalid certificates of sale for nonpayment of taxes the amounts paid by them therefor, drew seven spurious refunding orders, some purporting to be in favor of William Mannering, a fictitious person, and some purporting to be in favor of E. J. Trowbridge, another fictitious person, upon the treasurer of the county, requiring him to refund to those fictitious persons the different sums specified in each order, which aggregated in all $7,352.49. Bourne in some way procured the chairman of the board of county commissioners to authenticate the orders as genuine. They did not purpurt to be negotiable or transferable. One of them, which may be referred to as a sample of all, is in the following words: "Treasurer of Ramsey County. Minnesota :
“Refund to William Mannering, the sum of fifteen hundred and 54/100 dollars as follows: [Here appears a description of the lands against which the taxes purported to have been assessed and a statement of several particulars, including the amount assessed against each tract, the penalties, costs, etc.) -being tax refunded. Sec. 1697, Laws of 1894. "[Signed] W. R. Johnson, Auditor of Ramsey County, Minn.
"Per W. B. Bourne, Deputy. "By order of Board of Co. Com. “[Signed]
A. R. Kiefer, Chairman,"