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gris River Land Company, with the defend

VERDIGRIS RIVER LAND CO. v. STAN- ant David W. Henry as its president, in

FIELD et al.

(Supreme Court of Oklahoma. Nov. 11, 1909.) 1. CORPORATIONS (§ 657*)-FOREIGN CORPORATIONS-CONTRACTS-COMPLIANCE WITH REQUIREMENTS TO DO BUSINESS.

That part of the provision of law pertaining to foreign corporations, in force in the Indian Territory prior to statehood, which provides that if any foreign corporation shall fail to file its certificate over the hand and seal of the company in the office of the United States Court of Appeals of the Indian Territory, designating a resident agent where the United States Court of Appeals of the Indian Territory is held upon whom service of summons and other process might be had, and stating the principal place of business of such corporation in the Indian Territory, and that part of said act which provides that, if any foreign corporation shall fail to comply with the foregoing provision. all its contracts with citizens and residents of the Indian Territory shall be void as to the corporation, and no United States court in the Indian Territory shall enforce the same in favor of the corporation, do not have relation to contracts of employment entered into between the corporation and its fiduciary agents in another state before the corporation commenced to do business in the Indian Territory.

[Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 2536-2554; Dec. Dig. § 657.*] (Syllabus by the Court.)

2. CORPORATIONS (§ 642*)-"DOING BUSI

NESS."

The appointment of an agent to transact the company's business is not "doing business" within the meaning of the statute.

[Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 2520-2527; Dec. Dig. § 642.* For other definitions, see Words and Phrases, vol. 3, pp. 2155-2160; vol. 8, pp. 7640, 7641.1 Error from District Court, Craig County; T. L. Brown, Judge.

Action by the Verdigris River Land Company against Wade S. Stanfield and another. Judgment for defendants, and plaintiff brings Reversed and remanded, with direc

tions.

Seymour Riddle and W. E. Clapham, for plaintiff in error. William P. Thompson and Flynn, Ames & Chambers, for defendants in

error.

KANE, C. J. This was a suit in equity, commenced by the plaintiff in error, a corporation organized under the laws of the state of Indiana, against the defendants in error, Wade S. Stanfield, a resident of Oklahoma, and David W. Henry, a resident of Indiana. The petition was in three paragraphs, the general allegations of each being to the effect that in the month of July, 1904, the defendant Henry interested a few of his friends at Sullivan and Terre Haute, Ind., in making some investments in lands in what was then the Cherokee Nation, Ind. T., and organized a copartnership, which was afterwards, on the 14th day of September, 1904, incorporated under the laws of the state of Indiana under the name and style of Verdi

which position he acted until January 1,
1907; that immediately after the formation
of the copartnership, and in the month of
July, 1904, the copartnership through the
defendant Henry, in the city of Terre Haute,
Ind., employed the defendant Stanfield to
purchase lands for it in the Cherokee Na-
tion, Ind. T., and as recompense for such
services agreed to furnish the purchase
money, and pay all his necessary expenses,
and give him an oil and gas mining lease
covering all the lands so purchased; that, at
the time of said employment, the defendant
Henry represented to his associates and co-
partners that he could secure the services
of said Stanfield upon said terms, and rec-
ommended such
such employment accordingly;
that the association or copartnership dur-
ing the month of July, August, and up to
September 14, 1904, forwarded a part of the
purchase money of said land; that after the
copartnership was incorporated on Septem-
ber 14, 1904, the company renewed and con-
tinued this employment, and continued to
advance money to its agent, the defendant
Stanfield, until about the sum of $14,000 had
been furnished; that after this money had
all been furnished, part of it by the copart-
nership and part of it by the corporation, the
defendant Stanfield, acting as the agent of
said company and copartnership, had pur-
chased certain lands in the Cherokee Nation
in the name of said company, the deeds and
conveyances to which were turned over, and
the company, in turn, executed the oil and
gas leases covering said lands agreeable to
the conditions of said employment; that im-
mediately after this transaction, and in pur-
suance of a secret agreement between Henry
and Stanfield, the defendant Stanfield assign-
ed to the defendant Henry an undivided one-
half interest in these oil and gas leases with-
out any consideration save and except as a
part of said secret understanding between
them at the time of the employment of the
defendant Stanfield by Henry acting for his
partners and associates in the beginning of
the transaction; that about this time the
plaintiff discovered that the defendant Stan-
field had purchased with its money and the
money of the copartnership about 520 acres
of land, the title to which the defendant
Stanfield had taken in his own name, and
at the time of the commencement of this ac-
tion still held in his own name and upon de-
mand refused to convey; that said Stanfield
as such purchasing agent has never furnished
to the plaintiff any receipts, checks, or vouch-
ers showing the amounts expended by him
in the purchase of said lands, but in Septem-
ber, 1906, rendered to the company a false
and fraudulent general statement of the
amounts he claimed to have expended, which
was at the time believed to be correct by the

*For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes

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suit, the nature of the contract under which the alleged liability arose, and to present the only question for review which arose upon the court below sustaining a demurrer to the petition. After the petition was filed, the court upon motion of the defendants required the plaintiff to make its petition more definite and certain by showing when and where and how plaintiff was authorized to do business in the Indian Territory by setting out the day on which it filed its certificate with the clerk of the Court of Appeals at South McAlester; and the plaintiff excepted to this ruling of the court, but complied with the order by inserting an allegation in its petition as follows: "That on the 3d day of March, 1906, said company, by its certificate, under the hand and seal of the president of said company, filed in the office of the clerk of the United States Court of Appeals for the Indian Territory, designated an agent, who resided at South McAlester, Ind. T., where the United States Court of Appeals is held, upon whom service of summons and other process may be made." The petition was sufficient without this allegation; the presumption of law being that a foreign corporation suing outside the state of its creation has complied with the domestic laws, but as the plaintiff in compliance with the order of the court inserted this amendment, and as the petition as it stands before us no doubt states the facts in relation to the filing of the certificate and appointment of the agent, we do not believe that this error could be of such a prejudicial nature as to warrant a reversal of the case. So we will treat the petition as amended in considering the ruling of the court below in sustaining the demurrer to it. The demurrer was sustained on the ground that the plaintiff as a foreign corporation did not file the certificate over the hand and seal of the company in the office of the clerk of the United States Court of Appeals of the Indian Territory designating a resident agent where the United States Court of Appeals of the Indian Territory is held, upon whom service of summons and other process might be had, and stating the principal place of business of such corporation in the Indian Territory, before it began business in the Indian Territory and before it made the contract sued on, as required by the law relating to foreign corporations transacting business in the Indian Territory.

plaintiff company and by it accepted as true | show the relation between the parties to the and correct; that, instead of settling fairly and honestly with the company, the defendants conspired together to cheat, wrong, and defraud said corporation, and, for the purpose of giving said Henry a beneficial personal interest in all lands which said Wade S. Stanfield might purchase for said company, said defendants at said time mutually agreed that the said defendants should share equally and hold jointly the oil and gas mining lease or leases which the said company was bound to execute in said agreement to the said Wade S. Stanfield, and that each of the defendants should enjoy the profits therefrom; that pursuant to the conspiracy between the defendants, the said Stanfield did on the 30th day of September, 1905, duly convey, assign, and transfer to the defendant, David W. Henry, an undivided one-half interest in all oil, gas, and mineral substances in and under all of the lands purchased under his employment, without any consideration paid or agreed to be paid, directly or indirectly, save and except the employment of the said Wade S. Stanfield by the said David W. Henry, president of the Verdigris River Land Company, and the consideration paid by said company to the said Wade S. Stanfield for the services rendered herein before stated; that the defendants are each the owners of record of an undivided one-half interest in said oil and gas mining leases executed by the plaintiff. The prayer for relief reads as follows: "Wherefore, the plaintiff prays that an account be taken of said trust property, and of the cash, rents, income, royalty, and profits thereof, which have come or should have come into the hands of the defendant David W. Henry, and that he be required to account for and pay the same to the plaintiff; that the defendants, David W. Henry and Wade S. Stanfield, be required to account with the plaintiff for all moneys which have been turned over to them by the plaintiff herein as hereinbefore set out, and the plaintiff have judgment against the defendants for $50,000, and that the defendant David W. Henry be required to convey, assign, and transfer the undivided one-half interest in the oil and gas mining leases covering the above-described real estate, which he obtained and secured from his codefendant, Wade S. Stanfield, as herein alleged, to the plaintiff, and, upon his failure so to do, that a commissioner be appointed to make said conveyance; and that the defendants, Wade S. Stanfield and David W. Henry, be required to convey all the real estate herein before described and held by them or either of them which was purchased with the plaintiff's money, as hereinbefore set out, to the plaintiff, and, upon their failure so to do, that a commissioner be appointed to make said conveyance; and for all other proper and necessary relief."

The foregoing general statements of the

Counsel for defendants contend that all the transactions involved in this case were completely performed before the land company had a right to transact business involving the subject-matter of the Stanfield contract, and therefore falling within the inhibition of section 5 of the foregoing act (Act Feb. 18, 1901, c. 379, 31 Stat. 795), which provides that, if any foreign corporation shall fail to comply with the provisions of

citizens and residents of the Indian Territory | liquor without license is. The statute under shall be void as to the corporation, and no United States court in the Indian Territory shall enforce the same in favor of the corporation; it being admitted that the petition otherwise stated facts sufficient to require an accounting.

We have examined with care the authorities cited by counsel for defendants in error to sustain their position, and have come to the conclusion they are distinguishable from the case at bar. The principle laid down in all of these cases is that, when a contract is illegal and prohibited by law, no action can be maintained upon it in law or equity, either to enforce its obligations or secure its fruits to either party, and, where a party cannot maintain an action without showing an illegal act on his part, he must fail in his suit. A case that is as illustrative of counsel's contention as any of the many cited by them is Ruemmeli v. Cravens, 13 Okl. 342, 74 Pac. 908. In this case Ruemmeli, a nonresident, employed Cravens as his agent to sell intoxicants at wholesale within the territory. Cravens procured a license, conducting the business in his own name without disclosing his agency for Ruemmeli. After transacting the business in this way for some time, an accounting was had between the parties, and Cravens was found to be indebted to Ruemmeli. It was held in an action by Ruemmeli for a balance due him that he could not recover even after alleging that Cravens had embezzled the money shown by the accounting to be due him, and misled and defrauded him in stating the account. The decision was based upon the proposition that Ruemmeli did not have a license to sell intoxicants in Oklahoma, and, being a nonresident, could not procure one, and that Cravens had procured it as agent for him, which was not permitted by the law. In the opinion, distinguishing the principle involved from the rule laid down in Planters' Bank v. Union Bank, 16 Wall. 483, 21 L. Ed. 473, Mr. Justice Pancoast

"It is plain to be seen that the present case does not fall within this rule. The plaintiff cannot recover in this case without the aid of the illegal transaction. This action is in the nature of an accounting between the plaintiff and defendant. Allegations of fraud, embezzlement, and bad faith generally are made against the defendant, and the court, in order to arrive at the fact of whether or not there is any money in the hands of the defendant, as agent of the plaintiff, unaccounted for, must investigate the entire transaction. This the court will not do, but will leave the parties where it finds them. To do otherwise, courts would become auxiliary to the consummation of violations of the law." It is obvious that the transactions which the court would need to inquire into in order to determine the questions involved in the case at bar are not

consideration in this case requires foreign corporations before beginning to carry on business in the Indian Territory to do certain things, and, if they fail to comply with the statute, all their contracts with citizens and residents of the Indian Territory shall be void as to the corporation, and no United States court in the Indian Territory shall enforce the same in favor of the corporation. The transaction thus necessary to inquire into in order to compel the agents of the corporation to account to them would be the contracts between the corporation and the citizens and residents of the Indian Territory that were made in relation to the lands and money in controversy. These transactions were not void except at the option of the citizens and residents of the Indian Territory with whom they were made, and, as far as the record shows in this case, they are not complaining. The defendants purchased certain lands from these citizens and residents of the Indian Territory with money belonging to the corporation, taking the deeds in the name of the defendant Stanfield, who thereafter conveyed an undivided onehalf interest in them to Henry. The fiduciary relation of the defendants to the corporation is admitted; one Henry being the president, and Stanfield an agent employed for the purpose of making the purchases. The contract of the corporation with its agent, Stanfield, which they claim to be void and under which they seek to avoid an accounting, is a contract of employment between Stanfield and the corporation, executed in the state of Indiana. We are of the opinion that the part of the provision pertaining to foreign corporations which provides that unless they comply with the provisions of the law in relation to filing their certificate, etc., all its contracts with citizens and residents of the Indian Territory shall be void as to the corporation, does not have reference to contracts of employment entered into between the corporation and its fiduciary agents; the purpose of the statute obviously being to protect citizens and residents of the territory in transacting business with foreign corporations, and not to offer opportunity to the fiduciary agents of foreign corporations to neglect to comply with the law, and then exploit the corporation. The corporation must act through its agents, and would be a helpless entity, indeed, if its chief executive officer could by his neglect to comply with a provision of the law enrich himself, and then find protection behind the statute. Mr. Chief Justice Berkshire, in Rehm et al. v. German Ins. & Savgs. Institution of Quincy, 125 Ind. 135, 22 N. E. 173, in discussing a similar contract of a foreign corporation with its agents, says: "But their cause of action did not arise out of any business transaction within the purview of the statute. The business contemplated is

A

fendants-held that the court did not err in the exercise of its discretion in taxing plaintiff with the costs of the receivership.

[Ed. Note. For other cases, see Costs, Cent. Dig. § 696; Dec. Dig. § 192.*]

(Syllabus by the Court.)

Error from District Court, Canadian County; C. F. Irwin, Judge.

Action by George W. Bellamy against the Washita Valley Telephone Company and others. From a judgment for defendants, plaintiff brings error. Affirmed.

E. E. Blake, for plaintiff in error. Dale, Bierer & Hegler, for defendants in error.

to transact after it has complied with the conditions imposed by the statute, and which is forbidden until such compliance. The business contemplated is that of insurance. That is the subject to which the statute relates. The statute contemplates a company having agents in the state, and relates to such business as they may do after the company has complied with its conditions. compliance with the requirements of the statute, and the appointment of agents, are preliminary conditions to the business contemplated. The contract sued upon is not a contract such as will ordinarily be intrusted to a mere agent of the company, but one ordinarily executed by the company itself TURNER, J. On February 27, 1905, through its general officers. It has no con- George W. Bellamy, plaintiff in error, plainnection with the ordinary business of insur- tiff below, sued the Washita Valley Teleance, but is preparatory to such business. phone Company, J. C. Harrel, C. I. Petty, E. This contract might have been entered into A. Harrel, F. H. Wright, G. H. Rowley, H. L. in the state of Illinois or elsewhere, and, if Rowley, and R. D. Reynolds, defendants in executed in Indiana, it is none the less a error, defendants below, in the district court valid contract because of the act of 1883 (El- of Canadian county, and in his petition liott's Supp. § 993). The contract is an ordi- states, substantially, that he is a stockholdnary common-law contract, whereby the ap- er in the defendant company. That J. C. pellants agree to serve the appellee in a par- Harrel, E. A. Harrel, and C. I. Petty are ticular manner for a certain compensation. pretended stockholders, and as such assume We think the action is controlled by the rules to act as officers therein. That they have of the common law." The appointment of taken possession of the properties thereof, an agent to transact the company's business and deny plaintiff, as stockholder and presiwas not doing business within the meaning dent, access to its books and records. That of the statute. The appointment of officers said defendants are dissipating the earnings and agents is necessarily a preliminary step and profits of said company in the way of to engage in business. If the appointment expenses and salaries to themselves, and in Indiana of Stanfield was an illegal act, prays for a receiver of the properties, franso was the election of the president and oth-chise, rights, books, and accounts of said er officers, as the company was organized and the officers all elected there. The following authorities are in point on this propoWilson v. Ohio Farmers' Ins. Co., 164 Ind. 462, 73 N. E. 892; Sullivan v. Sheehan (C. C.) 89 Fed. 247; Miller v. Williams et al., 27 Colo. 34, 59 Pac. 740; Hogan v. City of St. Louis et al., 176 Mo. 149, 75 S. W. 604; Galena Min. & Smelting Co. V. Frazier, 20 Pa. Super. Ct. 394.

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company. That the rights of all defendants except said F. H. Wright in the stock of said company be determined, and that its affairs be wound up and said corporation dissolved. On the same day notice was served on defendant F. H. Wright, as vice president of said company, and, after answer filed pursuant thereto on March 4, 1905, the judge of said court, at the time and place mentioned in said notice, heard the application of said plaintiff, and appointed a receiver according to the prayer of his petition, who qualified and took possession of the property of the company, and entered upon the discharge of his duties as such receiver. That thereafter defendants, not disclaiming, filed a motion to vacate said appointment, which said motion was thereafter, on June 20, 1905, heard and by the court overruled. That thereafter said receiver made report to the court of his trust, and on December 27, 1905, on his petition was by the court allowed $25 per month as a provisional allowance, and thereafter continued to act as receiver until November 26, 1906, at which time the cause came on for a final hearing upon its merits, on which said day, after the same was fully heard by the court, in substance, it ordered that plaintiff take nothing by his suit; that said receiver be discharged; that the prop

erty of said company be restored to defend- thus: "But where the right of the plaintiff ants; and that plaintiff pay all costs-from to subject the property for which he seeks which said order (and its modification made and entered April 13, 1907), after motion for a new trial filed and overruled, plaintiff appealed, and the only error assigned is that the court erred in taxing plaintiff with the costs of the receivership. There is no error in this.

to have a receiver appointed to the payment of his claim is resisted from the beginning, and the effect of the appointment of a receiver is to subject to the control of such receiver property in which the plaintiff is, as the result of the litigation, found to have had no interest or right whatever, it would evidently be manifestly unjust that, after determination of the cause against the plaintiff, he should be allowed to have the expenses of the receivership, which he has occasioned by his unfounded claim, and from which the opposite party derives no benefits, satisfied out of the property itself. Such a result would be inequitable, for it would throw upon defendant the burden of litigation instituted by plaintiff without right." See, also, Beech on Receivers, § 773; Howe et al. v. Jones, 66 Iowa, 156, 23 N. W. 376; Moyers v. Coiner, 22 Fla. 422; Myres v. Frankenthal, 55 Ill. App. 390; Weston v. Watts, 40 Hun, 219: Lockhart v. Gee, 3 Tenn. Ch. 332.

But, independent of anything we have said, as Wilson's Rev. & Ann. St. 1903, c. 66, art. 23, § 585 (section 4783), gives the trial court while sitting as a chancellor a very

which said discretion we do not think the court has in this instance in any wise/abused, we see no reason why the order of the lower court should not be affirmed, and it is so ordered. All the Justices concur.

On a hearing on the merits the court, in effect, found that plaintiff had unwarrantably procured the appointment of the receiver, and should therefore in all fairness pay the expenses of the receivership. This the court sitting as a chancellor had a right to do in the exercise of its sound legal discretion in the taxation of costs, and that, too, independent of statute. With this discretion we will not interfere, unless it clearly appears that the same has been abused. And into said alleged abuse we cannot inquire, as the testimony on the hearing is not before us. That the court had a right to make the order is clear. 23 Am. & Eng. Enc. of Law, 1107, says: "So, also, where a party unwarrantably and improperly obtains the appointment of a receiver, the party procuring such appointment has been held liable to pay the entire expense of the receivership"-wide discretion on the taxation of costs, citing authorities. In St. L., K. & S. Ry. Co. v. Wear, 135 Mo. 230, 36 S. W. 357, 658, 33 L. R. A. 341, the court said: "Where the order appointing a receiver is adjudged to be unauthorized, the receiver is not entitled to compensation from the funds coming into his hands by virtue of the order." In McAnrow v. Martin, 183 Ill. 467, 56 N. E. 168, the court states the rule thus: "If the order appointing a receiver is revoked, and he is directed to return the property to the persons entitled thereto, his compensation, as a general thing, will not be paid out of the funds placed in his hands. When the appointment of the receiver is upon an application adverse to the defendant in the cause, and is without authority of law, the receiver must look for his fees and compensation to the complainant in the suit, upon whose application he was appointed. So, when a reSo, when a receiver obtains possession of money or property under an order which is afterwards reversed on appeal, and he is required to restore the money to the person entitled thereto, he cannot claim compensation out of the funds in his hands, but must look therefor to

the party who secured his appointment.

Weston v. Watts, 45 Hun (N. Y.) 219; French

In

LEIBER, Justice of the Peace, v.
ARGAUBRIGHT.

(Supreme Court of Oklahoma. Nov. 9, 1909.)
JUSTICES OF THE PEACE (§ 71*)-JURISDICTION
-TRIAL OF CAUSES OUTSIDE OF TOWNSHIP.

Under the statutes of Oklahoma (section 3, art. 1, c. 81 [section 6664], Wilson's Rev. & Ann. St. Okl. 1903), justices of the peace are township officers, and are required to reside and hold their office within the township where elected (section 4, art. 1, c. 81 [section 6665], Wilson's Rev. & Ann. St. Okl. 1903), and jurisdiction to try and determine causes outside of the township, not being granted, cannot be conferred by agreement of parties.

[Ed. Note.-For other cases, see Justices of the Peace, Cent. Dig. §§ 232-233; Dec. Dig. § 71.*]

(Syllabus by the Court.)

Error from District Court, Muskogee Coun

ty; John H. King, Judge.

Application of Laura Argaubright for writ of prohibition against John G. Leiber, Justice of the Peace in and for Harris Township, Muskogee County. From an order granting the writ, defendant brings error. Affirmed.

v. Gifford, 31 Iowa, 428; Verplanck v. Insurance Co., 2 Paige (N. Y.) 438; Radford v. Folsom, 55 Iowa, 276, 7 N. W. 604." Frick v. Fritz, 124 Iowa, 529, 100 N. W. 513, the court, after stating the general rule, in substance, to be that the expenses of the receivership should be satisfied out of the property coming into the hands of the receiver, hill and Wm. A. Green, for defendant in erlays down the well-recognized exception | ror.

William T. Hutchings and William P. Z. German, for plaintiff in error. W. D. Half

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