United Lead Co. v. J. W. Reedy Elevator Manufacturing Co.

Mr. Justice Ball

delivered the opinion, of the court.

Appellant says: “If these statutes shall he construed as prohibiting for all time a foreign corporation from recovering in the courts of this State upon a contract into which it may have entered prior to the time when it takes out a license, then the judgment of the Circuit Court was right, and the statute would then be a statute in bar, and was properly so pleaded. If, on the other hand, the proper construction of this statute is that a foreign corporation may not obtain relief in the courts of the State until it shall first obtain a license authorizing it to do business in the State, and that when such license is obtained the courts of the State are open to it, then the decision of the Circuit Court was wrong and the demurrer to the special plea should have been sustained, for it is the well settled law that matter which merely suspends the right of action must be pleaded in abatement.”

We believe that the first one of these two propositions is the law of this State.

It is elementary that the power of each State to exclude a foreign corporation, or to admit it upon such terms as the State may see fit to impose, is plenary.

In Munsell v. Temple, 3 Gilm., 93, suit was brought upon a note given by Munsell to the county treasurer in payment for a license to keep a grocery or bar; it was held, that as the statute required the payment of the license fee to precede the granting of the license, the note was void. Justice Koerner speaking for the court, said: “As a general rule, where the undertaking upon which the plaintiff relies, was either upon an unlawful consideration, or to do an unlawful act, the contract is void; and this whether the contract be illegal as being against the rules of the common law, or the express provisions or general policy of any particular statute. It is needless to cite authorities to so well established a principle. I will give, however, one reference, the case of Wheeler v. Russell, in the 17th Mass., 257, where there is a very full and interesting collection and review of English, and American cases upon this subject.”

In Cincinnati, etc. Co. v. Rosenthal, 55 Ill., 85, appellant brought an action of assumpsit against appellee to recover the unpaid balance of a note, given tfor stock in the company and for premium, subject to the call of the directors of the company. In a special plea it was averred, in effect, that appellant was a foreign insurance company and had never obtained, as was required by statute, a certificate of authority from the auditor of the State of Illinois to transact business in this State, and that therefore the note sued upon was void. A demurrer to this plea was overruled. Upon appeal, the Supreme Court, among other things, say: “The note was made and delivered, and the policy given and the contract consummated in this State, in defiance of a law which is so plain in its terms, that it can bear no construction, and which no one can misunderstand, declaring all such contracts unlawful. It says, it shall not be lawful for any such agent, directly or indirectly, to take risks, or transact any business of insurance in this State, until they comply with the terms of • the act. To permit the company, when they admit that they have disregarded all of these requirements, to recover, would be for the courts to disregard the clearly expressed will of the general assembly, and to say what it has said shall be unlawful, is and shall be lawful and binding. To enforce the payment of this note would be, virtually, to repeal a plain enactment of the legislature.” * * * “That the legislature imposed, by a subsequent section of the act, a penalty for the violation of the provisions of the law, does not, in the remotest degree, legalize or give validity to the note.” * * * ('Citing cases.) “This contract on the part of the insurance company is against the manifest policy of the law; it is expressly made unlawful by the statute and prohibited. It is, therefore, void and of no effect.”

In Stevens v. Pratt, 101 Ill., 220, the court say: “Counsel ask the question, ‘Can it be seriously pretended that a foreign corporation excluded from the State can make a contract in this State without authority and enforce it in the courts of this State ? ’ We answer, certainly not.”

In Penn v. Bornman, 102 Ill., 523, the People’s Bank of Belleville filed a claim against the estate of Bornman, deceased, which upon hearing was disallowed. Bornman, at the time the indebtedness was incurred, was a director of the bank. The charter of the bank contained a provision that “Ho director of said corporation shall be indebted to said corporation, either directly or indirectly, or individually, at any time, to an amount greater than 75 per centum of the capital stock held by such director , in his own name, in good faith as his own.” It was conceded that the debt evidenced by the claim was incurred in violation of this provision. When the cause reached the Supreme Court it said: The question in the case is, “Could the bank, in palpable violation of this express prohibition in its charter, go on and contract, ad libitum, with its directors, and yet he permitted to recover, just as though its charter contained no such provision? We put the question in this form for the reason we sée no special circumstances in the case that take it out of the general rule that all contracts made in violation of an express statutory provision are inoperative and void, and no recovery can be had upon them.”

After citing a number of authorities in support of the well-established rule “that no agreement to do an act forbidden by statute, or to omit to do an act enjoined by statute, is binding,” the court cites and discusses the effect of Linn v. State Bank of Illinois, 1 Scam., 87; Nash v. Monheimer, 20 Ill., 215; Lewis v. Headley, 36 Ill., 433; Cincinnati, etc. Co. v. Rosenthal, 55 Ill., 85 (already stated herein); Starkweather v. Am. Bible Society, 72 Ill., 50; Fridley v. Bowen, 87 Ill., 151; Law v. The People, 87 Ill., 385, and Fuller v. City of Chicago, 89 Ill., 282; and then decides: “In the light of these cases and many others that might be cited, we cannot escape the conclusion that by reason of the prohibition in the bank’s charter there was a total want of power, both on the part of the bank and of Bornman to so contract as to create an indebtedness from the latter to the former, and hence the Circuit Court properly disallowed the claim of appellant against Bomman’s estate.”

In Durkee v. The People, 155 Ill., 354, it was held that a contract, by which the holders of railroad bonds are given the right to vote in stockholders’ meetings, to which contract the corporation is a party, is void; the court saying: “Here, that which was provided for in the contract was explicitly prohibited by the statute and the Constitution of the State. An agreement to do an act forbidden by statute is not binding. (Penn v. Bornman, 102 Ill., 523; Cincinnati Mutual Health Ass’n v. Rosenthal, 55 id., 85; Rockhold v. Canton Masonic Benevolent Society, 129 id., 440, and 26 Ill. App., 152.) And it would be absurd to say that either persons or corporations can abrogate such a statute, upon the theory of an estoppel, by simply contracting to do the prohibited act.”

In the Supreme, etc. v. Grigsby, 178 Ill., 57, it is held that a foreign corporation cannot collect money in Illinois unless it has complied with the laws of this State prescribing the terms upon which it may transact business in this State. The court say: “The right of the Indiana corporation to collect the money rests upon its right to transact business in this State, and as it had no such power, it could not collect the money.”

The Illinois Trust Co. v. St. Louis, etc. Ry. Co., 208 Ill., 419, was an appeal from a judgment in a condemnation proceeding fixing the compensation to he paid by appellee, a foreign corporation, to appellant for land taken for the use of appellee. The case was reversed and remanded, the court saying: “Petitioner was asking the aid of the court to exercise a right which it claimed had been delegated to it by the legislature of this State, and the evidence showed that it had not complied with the condition upon which the power was delegated, but, on the contrary, had violated it. This court has uniformly held that a foreign corporation which has not complied with the conditions prescribed for transacting business in this State cannot maintain an action in the courts of the State. (Cincinnati Mutual Health Assurance Co. v. Rosenthal, 55 Ill., 85; Supreme Order of Iron Hall v. Grigsby, 178 id., 57; Thompson Co. v. Whitehed, 185 id., 454.) The legislature have power to impose such conditions upon foreign corporations for the exercise of powers or privileges in this State as they may choose, and such conditions must be complied with.”

The object of the Act of 1899 is to enable the State to control foreign corporations. Its provisions place no grievous burdens upon them. Its language is plain and requires no learned interpretation. It means exactly what it reads. It is for the legislative department to indicate and to control the public policy of the State; and when clearly indicated, as it is in this act, it becomes the duty of the courts to enforce and not to obstruct that policy. It is much more to the public benefit that the State control foreign corporations, than it is that a bill for merchandise shall be collected by the aid of our courts.

Appellee is not estopped to make this defense by the fact that it purchased the merchandise in question. To so hold would amount to a judicial repeal of the act. Durkee v. The People, 155 Ill., 354.

Hor does the imposition of a fine and the deprivation of the right to maintain a suit in the courts of this State, as set forth in section 67d, in the least lessen the force of the provisions of section 67b. Cincinnati, etc. Co. v. Rosenthal, 55 Ill., 85.

Believing that ever since the decision of Linn v. State Bank of Illinois, 1 Scam., 87 (1833), the rulings of our Supreme Court upon this question have been uniform, we have not gone out of that court in the citation of authorities.

The judgment of the Circuit Court is affirmed.

Affirmed.