Maloney Mercantile Co. v. Johnson County Savings Bank

This is a suit by appellee instituted on January 28, 1908, to recover three hundred and eighty dollars with interest upon four accepted bills of exchange dated January 12, 1907, alleged to have been drawn by the Puritan Manufacturing Company for ninety-five dollars each on the appellant corporation, and to have been transferred to appellee in due course of trade before maturity. An answer was filed first suggesting that the suit be dismissed upon the ground that appellant was a domestic corporation, and that, as shown by affidavit and certificate of the Comptroller attached as exhibits to the answer, its right to do business in this State had been duly forfeited the preceding July. The answer, however, in event the suggestion was overruled, further presented a duly verified plea ofnon est factum, and a special plea setting up fraud and want of consideration for the acceptances, alleging that appellee was a purchaser, if at all, with full notice, etc. The court refused to adopt the suggestion, but on motion struck out the answer and rendered judgment for appellee upon the acceptances which had been read in evidence.

The fact that appellant's right to do business had been forfeited because of the continued failure to pay its franchise tax as provided by article 5243i of the Revised Statutes as amended by the general laws of 1905, page 21, and continued in laws of 1907, page 505, did not destroy a corporate existence not shown to have been otherwise terminated. The court therefore did not err in refusing to dismiss the suit, notwithstanding the appellant corporation may have assigned its assets and ceased to do business as alleged. See Moseby v. Burrow, 52 Tex. 396; Beach on Corporations, par. 50; Rippstein v. Haynes Medina Valley Ry. Co., 85 S.W. 314, and authorities therein cited.

The action of the court in striking out appellant's answer, however, raises a more difficult question. Revised Statutes, article 5243i as amended, provides that any corporation, domestic or foreign, which shall fail to pay the franchise tax imposed by that article at the time specified therein (May 1st of each year) shall immediately become liable to a penalty of twenty-five percent of the amount of tax due by it, "and if the amount of said tax and penalty be not paid in full on or before the first day of July thereafter, such corporation shall, for such default, forfeit its right to do business in the State, which forfeiture shall be consummated, without prejudicial ascertainment, by the Secretary of State entering upon the margin of the ledger kept in his office relating to such corporation the word 'Forfeited,' giving the date of such forfeiture; and any corporation whose right to do business may be thus forfeited shall be denied the right to sue or defend in any of the courts of this State, and in any suit against such corporation on a cause of action arising before such forfeiture, no affirmative relief may be granted to such corporation unless its right to do business is revived, as provided in article 5243j."

It is undisputed that appellant never "revived" its right to do business after the forfeiture of such right in July, 1907; but it is to be observed that the cause of action upon which appellee based this suit is one "arising before such forfeiture," and as to such causes of action we are of opinion that a proper construction of the law quoted does not preclude a trial upon appellant's said special defenses. We have not been cited to any authority in point, but the natural and common law right to defend is not to be denied, if indeed it can be, save upon the clearest necessity, and we see no reason for the Legislature to have distinguished between causes of action arising before and after forfeiture, unless it was intended that a denial of the right to defend should be limited to causes of action accruing after the forfeiture. The statute declares that "on a cause of action arising before such forfeiture, no affirmative relief may be granted." Adopting a familiar rule of construction, the declaration that no affirmative relief may be granted implies that the restriction shall not be extended beyond this, and that therefore other relief purely defensive, as here presented, may be granted in such cases. It follows that in our opinion appellant was entitled to be heard upon its pleas of non est factum, etc., and that the court erred, as assigned, in striking out such pleas. Judgment reversed and cause remanded.

Reversed and remanded.