Hall v. Woods

After the adoption of the foregoing opinion a rehearing was allowed on the petition of the appellees, additional arguments were filed, and the cause has been further considered by the court in the light of the newly presented arguments.

In the petition it is contended that the fundamental proposition of the opinion that the Addressing Machines Securities Company is an agency and loan corporation, and for that reason is prohibited by section 9 of the general Corporation act from purchasing the stock of the Addressograph Company, is based on a misconception of the policy of the State in regard to agency and loan corporations; that the policies of this State have nothing to do with the mere terms of a corporate charter, which is governed by the public policy of the State creating it, and that it is only when a foreign corporation begins to function in this State that the policy of this State becomes applicable. There is essentially no difference between foreign and domestic corporations under the statutes of this State. Their rights and privileges, liabilities and duties, are the same. All are alike subject, in the exercise of their charter powers, to the law of this State. A foreign corporation having the powers which an agency and loan corporation may exercise in this State is subject to the same restrictions as a domestic agency and loan corporation and cannot acquire the stock of any other corporation, whether organized under the laws of this or any other State. Although the Addressing Machines Securities Company has not obtained a license to transact business in this State, all the business which it has done has been transacted in this State except the organization of the corporation in Delaware and the establishment there of a "technical office," as it was designated in the testimony, and the establishment of a technical office in New York. The object and purpose of the corporation was, among other things, to acquire, purchase and hold stocks of every kind and nature and of any corporation of any State, territory or country, and in pursuance of that purpose it entered into a contract in the city of Chicago to purchase the stock of the Addressograph Company, all its directors' meetings have been held in that city, and it authorized there the execution of a proxy to vote its shares of stock in the Addressograph Company at the stockholders' meeting in Chicago. It has no other assets than its shares of stock in the Addressograph Company, and the only inference to be drawn from the evidence is, that the chief purpose of its organization within two months of the purchase of Duncan's stock by Woods, Russell and Morse was the purchase and holding of this stock. The words "doing business" or "transacting business," as used in statutes regulating foreign corporations, refer to the transaction of the ordinary business in which the corporation is engaged and not to acts not constituting any part of its ordinary business, such as instituting and prosecuting actions in courts. (Alpena PortlandCement Co. v. Jenkins Reynolds Co. 244 Ill. 354.) In this view of the meaning of these terms the corporation had, in the language of the petition for rehearing, begun to function in this State. It was carrying on within this State the very business which it was created to carry on, and it is not giving the public policy of this State an extra-territorial effect to apply to a foreign corporation thus entering the State the same rules which apply to domestic corporations. This corporation has the powers of an agency and loan corporation organized under the laws of this State and must be subject to the same limitations. It might have applied to the Secretary of State for a license to do business in this State, filing a statement setting forth the character of business intended to carry on in this State and omitting the business of an agency and loan corporation, (General Corporation act, secs. 81, 82,) and it then could have exercised only the powers stated; but it did not do so. It is an agency and loan corporation and is subject to the disabilities of such a corporation, and the fact that it has no license to do business in this State does not relieve it of the disabilities.

Section 44 of the general Corporation act requires a list of stockholders to be made and filed at the principal office of the corporation ten days before each election and the stock ledger or transfer book shall be the only evidence as to who are stockholders entitled to vote at any meeting of stockholders. It is contended that since the name of the Addressing Machines Securities Company appeared on this list it was conclusively entitled to vote at the election. Every stockholder of a corporation has the right to vote his stock at every election of directors, and the legislature has no power to enact a law which will prevent his doing so. It may, however, declare a rule of evidence which will show a primafacie right but not one which will conclusively establish it. Stockholders may appeal to the courts to protect their right to participate in the corporate management and prevent the usurpation of control by persons not stockholders. Section 44 provides a rule for determining in advance who are stockholders entitled to vote, but the list made under that rule cannot deprive a stockholder of his right to vote or give the right to one who is not a stockholder. On a bill filed to determine the result of a past election the question of the rights of stockholders is the same as on a bill filed before the election, and in either case the statutory rule may determine the prima facie right, but it cannot, under the constitution, be conclusive.

The objection is made that if the Securities Company had no right to vote there was no quorum and no valid meeting. This is on the theory that the Securities Company is the beneficial owner, which is not true. Russell, Morse and Woods are the beneficial owners and each had one share in his name, which, with the Hall 250 shares, was more than a majority.

It is contended that the Addressograph Company is not a corporation because the certificate of organization was not filed for record in the recorder's office of Cook county, and therefore the appellants have no cause of action. It was held in People v. Mackey, 255 Ill. 144, that a failure to file the final certificate of incorporation within two years from its date was fatal to the legal existence of the corporation and justified a judgment of ouster. It has, however, been held in several cases that the organization of a corporation which had failed to file its final certificate of organization within two years after its date was not subject to collateral attack in a suit between the corporation and an individual litigant. (Bushnell v. Consolidated Ice Machine Co. 138 Ill. 67; Marshall v. Keach, 227 id. 35; Inter-Ocean Newspaper Co. v. Robertson, 296 id. 92.) In Africani Loan Ass'n v. Carroll,267 Ill. 380, the rule in People v. Mackey, supra, was referred to and the statement made that unless a homestead and loan association files for record with the recorder of deeds of the proper county its certificate of organization within two years it ceases to be a corporation and has no right to exercise any of the powers conferred by its charter. This was a misapplication of a rule which concerns only suits involving the de jure existence of a corporation, it was not essential in the decision of that case, which was decided on general equitable principles, and it has not been followed.

The opinion filed at the October, 1926, term will be again adopted and filed as the opinion of the court.