source: Caselaw Access Project

author: YALLIANT, C. J.

license: Public Domain

text:
    HENRY E. TRENDLEY; TAYLOR R. YOUNG and HENRY A. GAUTIER, Appellants, v. ILLINOIS TRACTION COMPANY, EAST ST. LOUIS & SUBURBAN RAILWAY COMPANY, ELECTRIC RAILWAY EXPRESS COMPANY, J. M. ALLEN, FREDERICK E. ALLEN, C. H. STARKEL, J. WEINGAERTNER and P. J. JOHNSON.
    In Banc,
    March 1, 1912.
    1. CONTRACT: Cancellation: Unwise. If a contract made by a corporation was made in gOod faith and by lawful authority it cannot be set aside by the court at the suit of the minority stockholders and minority directors on a showing that it was unwise or that it gave to the other party the advantage. Corporations, like individuals, make bad bargains, but the courts will not for that reason set their contracts aside.
    2. -: -: Fraud. An express company had a contract with the Suburban Railway Company whereby the express company was granted the exclusive right to do an express business over the lines that the railway company then owned or might thereafter acquire, and that contract was at a subsequent date so modified as to relinquish the exclusive feature of the contract and to authorize the'Suburban Company to make a contract with the Illinois Traction Company allowing the latter to pass its cars carrying through-express* freight over certain lines of the Suburban Company. It is this modification- of the original contract that is the matter in suit, and the plaintiffs, who are minority stockholders and minority directors of the express company, claim that the modification was so unfavorable to the express company as to sustain the allegation that it was the result of fraud on the part of its president and other directors entrusted with the duty of protecting the company. The Traction Company owned a large system of completed interurban electric railways coming from Springfield, Illinois, to St. Louis, and when the contract was modified was constructing a line which if completed would reach from Edwards-ville to East St. Louis and carry both local and through-express freight, but it wished to cover the route by use of the Suburban tracks, without building that line. If that line were built the Traction Company would have hauled express freight, and would have been a more formidable competitor of the express company from Edwardsville to East St. Louis than it would have been if the concession to carry only through freight over the Suburban were made, which concession the modification of the contract permitted to be made, and by that modification the express company relinquished its exclusive right to carry through-express freight between Edwardsville and East St. Louis over the Suburban, but acquired the right to run express cars between those two cities, and between Alton and East St. Louis. Held, that these facts show that the charge of fraud against the majority directors was unfounded.
    3, -; -; Reduction of Capital by Unwise Contract. A board of directors cannot increase or reduce the capital stock of a corporation, but that rule does not prevent the directors from modifying a contract which constitutes a large per cent of the company’s assets, even though it be ninety per cent, and the modification results in great loss to the company. Nor can the board of directors, unless authorized thereto by the stockholders, put an end to the company’s business and defeat the objects of its creation by selling in mass all its property and good will; but where the modification of an existing contract had no such purpose, and the evidence tends' to show that if the majority of the directors had been left alone to carry on its business under the modified contract, and had not been harassed by hurtful suits brought by the minority directors and stockholders, the corporation might have entered upon a successful business career, it will not be held that the board of directors did not have authority to make the modified contract.
    4. -: -: Special Meeting: Specified In Notice. A notice specifying that the purpose of the special meeting of the board of directors would be to authorize the president to sign and enter into a certain contract “bearing date July 16, 1906,” sufficiently specifies that the purpose was to execute a contract bearing that date, which after being redrafted and dated July 18th, but not otherwise changed, was then signed — - especially where all the directors were present.
    5. CORPORATION: Directors: Lawful Meeting: Trapped Into Being Present. A director cannot be trapped into a meeting of the board against his will; and though the meeting is held on the day and at the hour fixed by the by-laws, yet if his presence is necessary to make a majority and he took no part in the meeting, it was not legal. So that where the by-laws provided for a regular meeting at ten a. m. on the first Monday of each month, at the company’s office, which was rarely observed, and at that hour on a certain first Monday two of the five directors called at the office where another was in charge and stated to him that they had come to hold a directors’ meeting, and he left, though counted by them as present, and no notice had been given of such meeting to either him or the other directors and no meeting was expected, said meeting was not legal. '
    6. CONTRACT: Cancellation: Equity: Forfeiture: Pleading: Decree. Where the petition to have cancelled a modification of a contract between an express company and a railway company, states that the contract has been forfeited by the railway company and asserting that it would be inequitable to permit it to be forfeited and praying that' the forfeiture and modification be annulled and that the railway company be compelled to continue to perform the original contract, to which the railway company files a general denial, a dismissal of the bill and a refusal to cancel the modified contract completely disposes of the question of forfeiture; and it was not good pleading for defendant to justify the forfeiture in its answer by way of a .cross-bill, in the equity suit, but since the dismissal of the bill disposes of the question of forfeiture, that part of the decree declaring the contracts forfeited may be ignored.
    7. RECEIVERS: Distribution of Proceeds: No Objection • to Order Until After Appeal. Where plaintiffs did not object to the failure of the final decree discharging the receivers to order that they be reimbursed for money advanced to the corporation until after their motion for a new trial had been overruled and the appeal taken, they cannot on appeal object to the decree on that account. Where the receiver’s report in all respects complies with the decree, and an appeal has been taken from that decree, any subsequent motions plaintiffs may file in the case are not for review and cannot be incorporated in the -bill of exceptions. In such case the appeal is from the decree as it stands, and new matters subsequently brought into the case are not for consideration in determining whether appellants have been aggrieved by that decree.
    Appeai from St. Louis City Circuit Court. — Hon. M. G. Reynolds, Judge.
    Affirmed.

      Daniel Dillon and Taylor R. Young for appellants.
    (1) The contract of August 16,1904, constituting, as it did, ninety per cent of the value of the assets of Electric Railway Express Company, and having been accepted as payment for that proportion of the capital stock of the company because of its exclusive feature, could not be modified by the board of directors so as to eliminate this feature. In attempting to do so, the board of directors exceeded their power. Chicago Ry. Co. v. Allerton, 18 Wall. 233; Pressed Brick Co. v. Schoenrich, 65 Mo. App. 283; Grill v. Ballis, 72 Mo. 424; Library Hall Co. v. Pittsburg Library, 173 Pa. St. 30; Hope v. Beckman, 47 Mo. 93; Bank v. Johnson, 24 Me. 490;; Bedford v. Bowser, 48 Pa. St. 29; OUeshemer v. Mfg. Co., 44 Mo. App. 172; 10 Cyc., p. 758 to 770; Kelsey v. Sargent, 40 Hun, 150; 2 Thompson on Corporations (2 Ed.), sec. 1187; Shoe Co. v; Kurtz, 34 Mich. 89; Cáss v. Iron Co., 9 Fed. 640; Venner v. Railroad, 28 Fed. 581. This power rested in the stockholders solely. 3 Thompson on Corporations, sec. 3979'; 1 Elliott on Railroads, sec. 254. (2) Even if the directors did have thé power to so modify said contract, the execution of the contracts actually executed, dated July 18, 1906, August 10-, 1906, and November 6, 1906, were never, prior to the institution of this suit, nor at any other time, authorized by the board of directors of the Electric Railway Company, since the minutes of the directors’ meeting of July 31, 1906, are incorrect, and the officers of Electric Railway Express Company were only authorized to execute the contract read at said meeting, and which was never executed, and contains valuable features omitted in the contracts as actually executed. Campbell v. Pope, 96 Mo. 468. (3) But conceding this power as resting in the. board of directors, and also conceding the minutes of the meeting of directors held on July 31, 1906, to be correct, yet the contracts of July 18,1906, August 10', 1906, and November 6, 1906, were executed without authority for the following reasons: (a.) The modification of the contract o-f August 16, 1906, was a matter of discretion, which, if it did rest in the board of directors, and not the stockholders, could not be delegated to Mr. Allen, the president; 10 Cyc. 770; 3 Thompson on Corporations, sec, 3944; 1 Elliott on Railroads, sec. 257; State ex rel. v. Perkins, 90 Mo. App. 60®; Railroad v. Railroad, 51 Fed. 309'; York Co. v. Ritche, 40 Me. 425. (h.) Allen, having an interest in the execution of the contract of July 18,1906; believing, as he did, that it would pay for his stock in Electric Railway Express Company, and having actually executed that contract, the same is voidable and may be set aside at the instance of the stockholders. Engine Co. v. Charter, 47 111. App. 36. (c.) Prior to the execution of the said contracts of modification, a legal meeting of directors of Electric Railway Express was held on August 6, 1906, and the officers of the express company were directed not to execute said contracts of modification unless authorized so to do by a resolution of the stockholders at a duly called meeting (which was never done), .and said contracts of modification were, at said director’s meeting, expressly disapproved. 3 Clark So Marshall on Corporations, p. 2085 to 2087; Library Hall Co. v. Library Assn., 173 Pitt. 30; State v. Mayor, 37 Mo. 270; Buell v. Buckingham, 16 Iowa, 284; 2 Thompson on Corporations (2 Ed.), see. 1156; Foster v. Mill Co., 92 Mo. 79; Field v. Field, 9 Wend. 394; Cas C’o. v. Rushville, 6 L. R. A. 315 ; Stobo v. Prov. Co., 45 111. App. 440. No notice need be given of the holding of a directors’ meeting held on the regular meeting day as provided by its by-laws, (d) No proper legal notice was given to the directors of the object and purpose of the meeting of July 31,1906. The notice which was given amounts to nothing more than a request to meet. Tbe nature of the contracts should have been given under the circumstances of this particular case. Hill v. Mining Co., 119 Mo. 9; St. Louis v. Withaus, 90 Mo. 646; Clark & Marshall on Corporations, p. 2082; 2 Thompson on Corporations (2 Ed.), see. 1140,1141; Young v. South African Syndicate, 65 L. J. Ch. 638. (e.) Even if the notice would, under ordinary circumstances, be .sufficient, yet it is invalidated absolutely by the false statement of President Allen on July 27,1906, to director Young, who, upon receipt of said notice, inquired of President Allen the nature of the proposed contracts, and was told that since the defendant East St. Louis & Suburban Railway Company had acquired the Alton, Granite & St. Louis Traction Company and Edwardsville line he thought it advisable to perfect the express company’s rights to carry express over those lines by the execution of a formal contract by East St. Louis & Suburban Railway Company to that effect. Under such circumstances, it was no notice at all to Director Young. Johnston v. Jones, 23 N. J. Eq. 216. (f.) Even if the notice of the purpose of holding the meeting of July 31 be sufficient and though directors had the power to surrender the exclusive feature in the contract of August 16, 1904, and also had power to delegate this authority to J. M. Allen, yet the latter had no authority to delegate the authority thus delegated to him to a board of arbitration, which he did do, consisting of counsel for the Clark interests and Messrs. Warnock, Williamson & Burroughs. Madden v. Realty Co., 75 Mo. App. 358; Mechem on Agency, sec. 185-186-191; Morawetz on Corporations, sec. 536; Neiner v. Altemeyer, 68 Mo. App. 243. (g.) Though conceding the point raised in the last paragraph to be without merit Mr. Warnock was an incompetent arbitrator. No formal retainer is necessary to create the relation of attorney and client. Mechem on Agency, secs. 808, 822, 824, 798; Atlee v. Fink, 75 Mo. 100; Briggs v. Withey, 24 Mich. 136; Goldsmith v. Wamsganz, 86 Mo. App. 91; Stone v. Slattery, 71 Mo. App. 445; Tisdale v. Tisdale, 64 Am. Dec. 783. (h) But conceding all the foregoing points to be without merit, yet the contracts were entered into without authority, since J. M. Allen did not execute any contract which “in his judgment, would best subserve the interests of the company,” for he did not exercise his judgment or discretion in determining such contract. Fred E. Allen, his brother, substituted his discretion for the discretion of J. M. Allen, although, the former knew nothing about the contract of August 16', 1904, and for and in behalf of Electric Railway Express Company agreed upon the terms of the contract of July 18, 1906, though F. E. Allen admits he acted for the interests of his own company — the East St. Louis & Suburban Company. Lee v. Smith, 84 Mo. 309; Atlee' v. Fink, 75 Mo. 100. (4) There was no consideration given de-. fendant Electric Railway Express Company for the contract of July 18, 1906, and it should be set aside on that ground. It amounts to a fraud in this case. Railroad v. Brown, 43 Mo. 294; Durfer v. Moran, 57 Mo. 374; Holdsworth v. Shannon, 113 Mo. 508; Lamp Co. 'v. Electric Co., 64 Mo. App. 115. Even if there was any consideration for the contract of July 18th, 1906, it was so grossly inadequate as to shock the conscience of a chancellor, and said contract, for that reason, should be set aside. Holmes v. Fresh, 9 Mo. 201; Nelson v. Betts, 21 Mo. App. 219. (5) But if all the points heretofore urged as a reason for setting aside the contracts of July 18, August 10 and November 6, 1906, should be without merit, yet these contracts should be set aside on the ground of the fraudulent conduct of the defendants. Even if the Illinois Traction Company was not a party to the actual fraud, it liad notice of same since the contract of August 16, •1904, was a matter of .record, the same having been duly recorded in the office of the recorder of deeds at Belleville, St. Clair county, Illinois, during the month of August, 1904, and notice of action of directors of Electric Railway Express Company, August 6, 1906, having been given it prior to execution of the contract giving it the right to operate over the Clark rails. 16 Cyc. 81 to 88; Harkness v. Fraser, 12 Fla. 341; Atlee v. Fink, 75 Mo. 100'; Corder v. O’Neill, 207 Mo. 637; Tisor v. Labaume, 14 Mo. 198; Doss v. Davis, 60 Mo. 300; Dickson v. Kempinsky, 96 Mo. 252. (6) The court erred in overruling plaintiff’s motion to set aside its order in directing the receivers to deliver all property in their possession belonging to Electric Railway Express, and discharging the receivers, and in overruling plaintiffs’ motion for an order on defendant J. M. Allen, as president of Electric Railway Express Company to turn over to said receiver the sum $4,200 derived from the proceeds of the sale of assets belonging to Electric Railway Express Company theretofore in possession of said receivers, the plaintiffs in this case having a first lien on these assets, and on the proceeds from the sale thereof by virtue of their ownership of the receivers’ certificates issued by said receivers under order of court, and on which there remained an unpaid balance of $4000 and interest. Kneeland v. Luce, 141 U. S. 491; ALderson on Receivers, p. 468, sec. 340. It has been held that receivers’ certificates are entitled to priority of payment over the receivers’ fees, and compensation for his counsel. Bank v. Coal & Coke Co., 115 Fed. 878. Even though said motion was made and overruled after entry of final decree. St. Louis v. Brooks, 107 Mo. 380. (7) The trial court erred in enforcing the forfeiture as prayed by defendant East St. Louis & Suburban Railway Company, and in failing to relieve such forfeiture. Moberly v. Trenton, 181 Mo. 645; 2 Story, Eq. Jur. (13 Ed.), p. 652; Pomeroy, Eq. Jur. (2 Ed.), sec. 459; Messersmith v. Messersmith, 22 Mo. 369; Towne v. Bowers, 81 Mo. 491; Sease v. Cleaveland F. Co., 141 Mo. 488. In Giles v. Austin, 62 N. T. 486, and Noyes v. Anderson, 124 N. T. 175, it is held that a forfeiture will, in equity, always be relieved where the nonpayment is a mere omission, and not an act of wilful bad faith. Time was not of the essence of contract of August 16>, 1904. Pomeroy v. Fullerton, 113 Mo. 440’. But if it was it was waived. Esbell v. Railroad, 56 Mo. 282.

      N. S. Brown, Seddon & Holland, and Schaefer, Farmer $ Kruger for respondents.
   YALLIANT, C. J.

— This is a snit in equity wherein the plaintiffs are the minority stockholders and the minority directors, and the individual defendants are the majority stockholders and the majority directors of the defendant corporation the Electric Railway Express Company; the other defendants are the East St. Louis and Suburban Railway Company and the Illinois Traction Company, both of which are Illinois corporations. The object of the suit is to cancel certain contracts whereby a previous contract between the East St. Louis & Suburban Railway Company ancl another corporation called the Electric Express Company, of date August 16, 1904, which contract had been duly assigned by the Electric Express Company to the defendant the; Electric Railway Express Company, was modified or changed in certain important particulars. The ground on which the plaintiffs seek to have the contracts of which they complain set aside is that they were the result of fraud and conspiracy on the part of the individual defendants assuming to represent the Express Company on the one hand, and the East St. Louis & Suburban Railway on the other.

The East St. Louis & Suburban Railway Company at the time referred to owned and operated certain lines of railroad which extended from East St. Louis east and southeast, over which lines cars were propelled by electricity. That railroad company, August 16, 1904, entered into a contract with a corporation called the Electric Express Company, whereby the latter company, in consideration of a certain per cent of its earnings to be paid to the railroad company, was granted the exclusive right to do an express business over the lines that that railroad company then owned or might thereafter acquire, and the railroad company was to furnish the Express Company cars for that business, and the Express Company was to furnish the railroad company an account of its earnings for each month on the 10th day of the month next following, and pay the rate per cent of its earnings agreed on to the railroad company on the 15th, and on failure to render the account and make the payment at the time specified the railroad company had the right to cancel the contract.

The petition alleges that the exclusive right to do an express business over the lines of the East St. Louis & Suburban Railroad Company (which we will hereinafter call the Suburban Company) was of great value and the chief asset of the Electric Railway Express Company which will hereinafter be called the Express Company). It is further alleged that the individual defendants as officers and directors of the Express Company “fraudulently and covinously” for their personal profit and to the injury of the Express Company, entered into “three pretended contracts” with the Suburban Company of dates respectfully July 18, August 10 and November 6, 1906, whereby the valuable right held by the Express Company under the contract of August 16, 1904, was attempted to be annulled.

At a special meeting of the board of directors of the Express Company, held July 31, 1906, defendant Allen presented to the board for its approval a paper then unsigned, dated July 16, 1906, in form of a proposed contract to be made between the Express Company and the Suburban Company, in which the Express Company was to agree, for the consideration therein expressed, to relinquish the exclusive feature of its contract of date August 16, 1904, and to authorize the Suburban Company to make a contract with the Illinois Traction Company allowing the latter to pass its cars carrying through-express freight over certain lines of the Suburban Company. A full board was composed of five directors, but one director had resigned; the remaining four were present at that meeting; three of those present voted to approve the contract and to authorize its officers to execute it on the part of the Express Company; one director voted no on the proposition. Two days after the adjournment of the meeting, August 2, 1906, one of the directors who had voted to approve the contract and authorize its execution, notified Mr. Allen, the president of the Express Company, that he had examined the contract carefully and was then of the opinion that it was not for the best interest of the Express Company and requested that it be not executed and he also notified the officers of the Suburban Railway Company not to execute the contract. The petition also states that this director at the same time notified Mr. Allen, president of the Express Company, that he, the director, had been deceived by Mr. Allen and misled by false statements made by him into voting for the contract at the meeting, but there is no specification as to what the statements'of Mr. Allen were that are alleged to be untrue, further than the general statement that he said it was for the best interest of the Express Company.

The contract of August 10,1906, above mentioned, was an agreement between the Suburban Company, represented by its vice-president, and the Express Company, by its president, agreeing to submit the draft of the proposed contract of July 16th to their respective attorneys,'to decide “whether it clearly expresses its intent,” and the attorneys were to draft a new form if the one presented was not- clear in its meaning, or. draft a supplement thereto, interpreting any clause of uncertain meaning. Then came the above mentioned contract of November 6, 1906, drawn by those attorneys, in which it is .recited' that there were some uncertainties or ambiguities in the language of the draft of July 16th, and these were interpreted and their meanings pnt at rest by that instrument. The two instruments, that of July 16th and November 6th, are but one contract, the latter explaining the first.

A charge is made in the'petition that the attorney intrusted with the matter of interpreting the draft of the contract of July 16th on the part of the Express Company was really an attorney for the Suburban Company, but that charge went no farther in specification than asserting that he was employed by the Suburban Company to represent it in certain other matters of litig-ation. There is no suggestion that the draft of the contract of November 6th is an unfair exposition of the meaning of that of July 16th.

The petition charges that on August 6, 1906, that is, six days after the special meeting of the directors of July 31, 1906, at which the contract in question was approved and authorized to be executed, there was a regular meeting of the board of directors held, at which a resolution was adopted disapproving that contract and forbidding the officers to execute it unless a majority of the stockholders at a duly called meeting should approve it. It is alleged that that meeting was composed of three directors who constituted a majority of the board, to-wit, the director who had voted against the proposition to approve the contract at the meeting of July 31, 1906, and the director who had voted in favor of it at the meeting but who afterwards notified Mr. Allen, the president, that he had changed his mind; the resolution of disapproval is alleged to have been adopted'by the vote of those two directors who constituted a majority of those present; the other director who is alleged to have been present, Mr. Allen, did not vote. The legality of that meeting is denied by the defendants; we will return to it herein later. The business of the Express Company was conducted under the new contract until the collapse of the company after this suit was instituted.

The Express Company failed to pay the Suburban Company on January 15, 1907, the amount due for cars furnished and the service rendered in the preceding month of December, as required by the original contract of August 16, 1904, and also in the new contract of July 18, 1906, and the Suburban Company on January 16th notified the Express Company that the contracts existing between the two companies were, because of such failure, forfeited, and thereafter the Suburban Company refused to furnish cars to the Express Company and its business practically ceased. On January 19, 1907, on motion of the plaintiffs herein, the court appointed receivers to take possession .of the property and affairs of the Express Company and conduct its business and authorized them to borrow $5000 to be used in the conduct of the business and issue certificates therefor. The plaintiffs loaned that amount of money to the .receivers, taking receivers’ certificates therefor; the receivers were ordered by the court to pay the Suburban Company $1400; the amount due it for the month of December and for the non-payment of which the forfeiture had been declared. The receivers made the payment and the court ordered the Suburban Company to continue furnishing cars and service to the Express Company as required under the contract of August 16, 1904, until the further o.rder of the court. The business of the Express Company was conducted by the receivers until the final judgment in the cause, when they were discharged.

The petition states that defendant Allen was a stockholder in the Suburban Company and others of the defendants were also interested in that company, and were moved in their conduct in this matter by a desire to promote the interest of the Suburban Company at the expense of the Express Company.

The answers of all the defendants are in effect general denials, except that of the Suburban Company, which in addition to the general denial states, as by cross-bill, the failure of the Express Company to perform its part of the contract in the particular of paying fox the service rendered and that in consequence thereof the Suburban Company had declared the contract forfeited, having first given notice in writing to the Express Company on December 19th that it would do so unless the payment was made on January 15th in compliance with the contract. The cross-bill prayed that the court decree the contract forfeited.

To this the plaintiffs replied that the Suburban Company had no right to declare the forfeiture when it did so, because it had never demanded strict compliance with that part of the contract as to prompt payments, but the custom had been to let the payment be made within a reasonable time after the 15th of each month, and that custom had -been a practical waiver of the strict letter of the contract; the reply also stated that the alleged notice that payment would be required on January 15th was not given to the plaintiffs or the other stockholders, but to Mr, Allen, the president.

The finding of the court was in favor of the defendants on the charges of fraud made against them and on all the issues.' The decree was that the order of the court requiring the defendant the Suburban Company to furnish ears to the Express Company be dissolved, and that the plaintiff’s bill be dismissed. It was also ordered that the receivers should make a report to the court showing the amount of money in their hands, that out of such fund they pay the expenses of the receivership and apply the balance towards payment of the certificates issued by order of court, and turn over all the rest of the property, in their hands to the defendant the Electric Railway Express Company.

From that decree the plaintiffs have prosecuted this appeal.

. I. There was a great deal of evidence in the case; it covers about 700 printed pages. A very large part of it bears on the question of whether the contract of July 18,1906, was so unfavorable to the Express Company as to sustain the charges in the petition that it was the result of fraud on the part of the individual defendants who were entrusted as directors with the duty of protecting the interests of that company.. If the contract of July 18, 1906, which modified that of August 16, 1904, was made in good faith and by lawful authority it cannot be set aside by the court on a showing that it was unwise or that it gave the Suburban Company the advantage. Corporations like individuals sometimes make bad bargains, but the courts will not for that reason set their contracts aside. We do not mean to say or imply that this was a bad bargain for the Express Company, but we merely state the point of law.

On the part of the plaintiffs there was evidence tending to show that, depriving the Express Company of the exclusive feature of the contract of August 16', 1904, and authorizing the Suburban Company to make a contract with the Illinois Traction Company, allowing it to run express cars carrying through freight over the Suburban road from Edwardsville to East St. Louis, introduced a competitor in the business destructive of the rights of the Express Company. On the other hand the testimony on the part of the defendants tended to show that the Illinois Traction Company was a corporation owning a large system of already completed interurban electric railroads coming from Springfield, Illinois, towards St. Louis, and was then engaged in the construction of a line which when completed would reach from Edwardsville to East St. Louis, and that it had ample means to complete the line and when completed it could carry not only through but local express freight between those points. But the Traction Company wanted to cover the route along the contemplated line and enter' East St. Louis with through-express freight without building that line and to devote its energies to the construction of its line into the city of St. Louis over its own bridge north of East St. Louis, and this was its inducement to seek a passage for its through East St. Louis freight over the Suburban road. If the Traction Company had been forced to complete its own line into East St. Louis it could have carried hot only through-express freight, but local also from Edwards-ville to East St. Louis, and it would have been a more formidable competitor of the Express Company than it would be if the concession to carry only through freight over the Suburban road was made. And if the Traction Company should complete its line into East St. Louis it would become a rival of the Suburban Company in carrying passengers into East St. Louis.

Upon those grounds- it was said by witnesses for the defendants that it was to the interest of the three interested parties, the Express Company, the Suburban Company and the Traction Company, that the contract of July 18, 1906, should be made. The evidence for the defendants also tended to show that by this contract of July 18th the Express Company acquired the right to run express ears between East St. Louis and Alton, and East St. Louis and Edwards-ville. The Express Company claims that it had the right before the contract of July 18th was entered into, but the evidence shows that the claim was disputed and the Express Company had not been able to exercise it. There were other features of 'less importance in the contract of July 18th that, according to defendant’s testimony, were of advantage to the Express Company.

The testimony as to the conditions that confronted the Express Company was undisputed and it shows that the charge of fraud against the defendants was unfounded. There being no fraud in the conduct of the directors, if they acted within the scope of their lawful authority, their act was lawful.

Let us now see by what authority they acted in making this contract.

• a. It is contended that the board of directors had no authority to make a contract to modify the contract of August 16> 1904, but that it could only be done by the stockholders.

The proposition is that the exclusive feature of ■ the contract of August 16, 1904, constituted fully ninety per cent of the assets of the company and therefore represented ninety per cent of the capital stock, and when that feature is eliminated from the contract it reduces the capital stock of the corporation ninety per cent, and authorities are cited to show that a board of directors cannot increase or reduce the capital stock of a corporation. The proposition of law that a board of directors cannot increase or reduce the capital stock of the corporation is correct, but it is not applicable to the action of this board of directors in authorizing the making of the contract in question. This contract does not reduce the capital stock of this company, although it may affect the value of its shares, as any business contract may. It is also true that the “directors of a corporation cannot, unless thereto authorized by the shareholders, put an end to its business and defeat the objects of its creation by selling out en masse all its property and goodwill.” [10 Cyc. 764.] But this contract had no such purpose or effect; if the managers of the company had been left alone to carry on its business under the new contract there is nothing in the record to show but that it might have entered on a more successful business career with the extended field of operation afforded by the new contract than it had theretofore enjoyed. But when these plaintiffs instituted this suit (which was before the Suburban Company had declared the contract forfeited), with their charges of fraud, their prayers for injunction and for receivers, it was enough to destroy the credit of the company and to destroy that confidence in its management that had theretofore existed, and to induce the officers of the Suburban Company to declare the contract foiy feitecl and .decline to do any more business with the Express Company.

When the suit was filed one of the city newspapers, as the evidence shows, gave it a conspicuous notice, with head lines directing attention to the alleged fraudulent conspiracy of the officers of the Express Company with the officers of the Suburban Company. A publication of that kind is likely to arouse resentment on the part of the men whose integrity is assailed. In his letter to the president of the Express Company, who had written a conciliatory letter to him, the vice-president of the Suburban Company, giving as one of the reasons for insisting on prompt payment of the amount due, made reference to the “recent receivership proceedings and other public statements affecting the credit of your company.”

Of course the company might.have gone to the wall when trying to do business under the new contract even if there had been no suit, no one knows what might have been, but the fact is, as plaintiffs themselves say, that up to that time the Suburban Company had not insisted on prompt payment for the service rendered, but had indulged the Express Company reasonable time in which to make its payments after the same became due according to the contract, but within four days after the institution of this suit the Suburban Company served notice on the Express Company that thereafter prompt payment would be required, and unless made on the 15th of January, 1907, the contract would be declared forfeited, as the contract itself authorized; on January 16th the Suburban Company did declare the contract forfeited and refused to furnish cars to the Express Company; then the receivers were appointed.

Whilst it is *the law that the directors of a corporation have no authority to put an end to- its life, yet if this corporation came to its death in consequence of the action of the Suburban Company in declaring the contract forfeited and refusing to furnish cars to carry on the business of the Express Company, who is to blame?

“The directors are merely the managers of the property and business of the corporation, and cannot therefore perform constituent acts, by which expression is meant acts which involve fundamental changes in the constitution of the corporation. ” [10 Cyc., p. 762.] But they are the managers of its business, and have authority to make contracts binding the corporation in the conduct of its business, and the contracts they make cannot be set aside at the suit of stockholders on the ground that they do not promote the best interest of the corporation.

We hold that the contract of July 18, 1906 (which includes also the construing contract of November 6, 1906), was within the legitimate scope of the powers of the board of directors in this case.

b. The meeting of the directors July 31, 1906, at which the contract in question was approved and the officers were authorized to execute it, was a special meeting and the objection which the plaintiffs fake to its action is on the ground that the notice of the meeting did not specify the purpose of the call; but that is a mistake. The notice was: “ This is to notify you that there will be a special meeting of the board of directors of the Electric Railway Express Company at this office at ten o’clock a. m. on Tuesday, July 31, 1906, for the purpose of then and there authorizing the president of this -company to sign and enter into a certain contract with the East St. Louis and Suburban Railway Company bearing date July 16, 1906. And for the further purpose of electing a director to fill the vacancy caused by the resignation of Martin J. Baker.” At that date the draft of -the contract submitted to the board bore the date July 16th, but it was redrafted before signing and dated' July 18th. There was no material difference in the two drafts, in so far as concerns -the plaintiffs’ complaint. All the directors, four in number, attended that meeting and no objection was made to the notice; the contract was discussed and all of them voted on it. It is the same contract as that referred to throughout the record as the contract of July 18, 1906. The director who voted against making the contract vigorously opposed its adoption. “Clause by clause [he testified] I took up the contract and offered objections to it. Mr. Allen undertook to answer the objections which I raised.” The objector then requested that the matter be laid over and he be given further time to examine it, but that was refused, because they said the manager of the Suburban Company was going away for the summer and action must be taken then. The proposition was put to a vote and carried three yeas and one no. We discover no illegality in thé proceeding’s of that meeting. ■

c. The plaintiffs claim that there was a meeting of the board of directors' on August 6, 1906, at which it was resolved that the contract bearing date July 16, 1906, which was presented “at a special meeting of the board of directors July 31, 1906, be disapproved, and the officers of this company be and are hereby forbidden to execute and deliver said contract unless the majority of the stockholders at a duly called meeting shall approve the same.”

By the laws of the company it is provided: “Regular meetings of the board of directors shall be held at the office of the company on the first Monday of every month at ten o ’clock a. m. ’ ’ On August 6, 1906, which was the first Monday in that month, at ten o’clock a. m., two directors came to the office of Mr. Allen, which was the office of the company. Those two directors were the director who had opposed the execution of the contract at the special meeting July 31, and the director who had voted in favor of its execution but who two days thereafter notified the president of the Express Company and also the vice-president of the Suburban Company that he had been deceived into voting for it and was then opposed to the contract. Mr. Allen being in the office when they came in, there were three directors present. The two brought the resolution already written with them to the office. According to the testimony of the director who had voted no at the meeting July 31st, when the two entered the office he told Mr. Allen that they had come to hold a directors’ meeting; that Mr. Allen said: “I recognize a quorum is present and I will have to put any motion you make; ’ ’ but when the motion to disapprove the contract was made, Mr. Allen charged them with sharp practice -and with trying to take advantage of him in the absence of the other director; “he started to leave the office, but did not get away until the motion was put and passed; that is, he did not get out of the room, he tried to.” The secretary of the company being absent this director acted as secretary. The board had not been holding-regular meetings on the day mentioned in the by-laws; it held a regular meeting in October, 1905, and one in February, 1906, not since.

The other one of these two directors was also a witness for plaintiffs on this point. He testified that he went there at the request of his companion, “Well, he said we would go down and pass these two motions. Q. He said if you went down Mr. Allen would be the only other director there and you could carry anything you wanted, didn’t he? A. He didn’t say that, but I guess he meant that. Q. And you knew that when you went down there neither Dr. Starkel nor Mr. Weingaertner would be there? A. I knew it, yes, sir. Q. You knew that when you went in there and began negotiations, tried to have a meeting, that it was a fake meeting, didn’t you? A. I don’t know whether you would call it a fake meeting. Q. Well, I.am not' asking you what I would call it, but you knew that it was a fake meeting, didn’t you? A. I am not familiar enough to know what a fake meeting is. I knew it was not a regular meeting that we had there. Q. You knew that it was not a bona fide meeting? A. I don’t know how to answer that either. Q. Do you know what that word means? You knew the meeting was not a fair one to all the directors. A. Yes, sir. Q. You knew that Mr. Weingaertner and Dr. Starkel, if they were present, would not vote with you and Mr. Young? A. Yes, sir. Q. You made no effort to apprise them in any way that you were going to take this exceptional course and try to have a meeting on that day, did you? A. No.” That director testified that soon after that meeting he resigned. “Q. Why did you resign? A. Why, I got thoroughly disgusted with the wrangle.”

Mr. Allen’s testimony was to the effect that when these two gentlemen came to his office he did not understand that they came to hold a directors ’ meeting, they talked in a conversational way about the contract, then one of them made a motion and the other seconded it; then Mr. Allen understood for the first time that they were trying to hold a meeting, he went to the telephone and communicated with his attorney and after getting his advice left the room. He denied that he said that he recognized that there was a quorum present, and would have to put any motion they made.

There is no legál process by which a director of a private business corporation can be forced to attend a meeting, and he cannot lawfully be compelled by physical force to attend, nor can he be trapped into an attendance against his will. It happened to be the fact that Mr. Allen’s office was the office of the company and he was there for his daily work, not expecting a meeting of the board. These gentlemen knew that they would find him there, knew the other directors would not be there and they planned to force a meeting at which they would constitute a majority. We hold that that was not a lawful meeting of the board of directors.

d. At a special meeting of the board on November 8, 1906, the minutes of the meeting of July 31st, approving the contract' in question, were adopted.

At a meeting held November 27th the director who had voted no at the meeting of July 31st, offered a resolution to the effect that the company employ counsel to bring suit to set aside the contract of July 18th; and the contracts of subsequent dates, on the ground that they were entered into without authority and were void. The resolution was lost by a vote of three-to two, the two being the two who attempted to hold a meeting on August 6th. Then the same director offered a resolution of like effect with the addition that the officers of the company had fraudulently conspired with the Suburban Company and others to enter into the contracts in violation of the rights of the stockholders of the company. Another director then moved to adjourn, stating as a reason therefor that he declined to sit in a meeting with a member who would offer such an insulting resolution; the motion was carried by a vote of three to two.

On December 15, 1906, a stockholders’ meeting was held, at which a resolution was offered ratifying and approving the action of the officers in executing the contract of July 18th and November 6, 1906. Thereupon canvassers were appointed to collect the votes of the stockholders on the resolution and report at the regular annual meeting of the stockholders January 8, 1907. At that regular meeting the canvassers appointed reported, showing that there were 600 shares voted in favor of the resolution and 320 against it, and thereupon it was announced that the resolution was adopted and it was so entered on the record.

At the stockholders’ meeting January 8, 1907, Mr. Allen stated that the Suburban Company had given notice that unless the car rental was paid on the 15th the contract would be declared cancelled, and he urged that action be taken to raise the money. After a full discussion the matter was referred to a meeting of the board of directors to be held on the 15th inst. That meeting was held and various ways and means were discussed, but the money was not raised. Mr. Allen offered to indorse the note of the company for the amount required, provided the director who had opposed the execution of the contract of July 18th would join him in the indorsement, but that director refused to do so, saying that plenty of money could be raised if the contract of July 18 and November 6, 1906, were cancelled, and the old contract of August 16', 1904, restored.

The evidence amply sustains the chancellor’s findings of the facts and justifies the decree discharging the receivers and dismissing the plaintiff’s bill.

II. By the decree in this case the contracts between the Express Company and the Suburban Company, under which the latter was to furnish to the former express cars to be carried over its road, are declared to be “canceled, forfeited and of no effect.” On this the appellants make the point that a court of equity has not jurisdiction to declare a forfeiture. It is true the question of forfeiture is one to be dealt with by courts of law. A court of equity never interferes with the subject unless to prevent a forfeiture when conditions are such as to render it inequitable to allow it to be enforced. But that clause may be stricken out of this decree without changing its effect. The fact is, that part of the answer of the Suburban Company which undertakes to set np as if by cross-bill the facts justifying the action of that company in declaring the forfeiture, and praying the court to decree the contracts forfeited, was unnecessary and bad pleading. The plaintiff’s petition stated that the Suburban Company had declared the contract forfeited and had refused to further perform its part, and then the petition went on to make statements showing why it would be inequitable to permit the forfeiture, and prayed that it be annulled and that the Suburban Company be required to continue its service. The general denial of the Suburban Company put in issue those statements and the court found that the evidence did not sustain the plaintiff’s statements and dismissed their bill. That disposed of the question of the forfeiture as completely as if there had been no cross-bill or as if it had been ignored. The forfeiture having been declared by the defendant company, the plaintiffs having prayed the court to set it aside, and the court having refused in its final decree to do so left the forfeiture standing and that- was the end of the subject. The plaintiffs were not prejudiced by the decree declaring the contracts forfeited, although the decree would have been in better form if that clause had been omitted.

III. On June 17,1907, the court rendered the final decree, finding all the issues in favor of the defendants and dismissing the plaintiffs’ bill; in the decree was the following: “And it is further ordered that said receivers pay out of the funds in their hands such other expenses and obligations incurred by such receivers in the management and conduct of the business of said Electric Railway Express Company that are unpaid. And it is further ordered that any balance that may be in their hands shall be applied to the payment of the receivers ’ certificates heretofore issued by this court, pursuant to tbe order of <^ourt made on January 19, 1907, and that all other property shall be turned over to the defendant Electric Railway Express Company.” On June 20, 1907, plaintiffs filed a motion for a new trial, which was by the court overruled October 7, 1907, and plaintiffs excepted. Appellants in their brief now say that there was at that time outstanding certificates issued by the receivers to the amount of $4000, for money advanced them by plaintiffs, and that it was error in the court to order the property of the Express Company returned to it instead of having the property sold by the receivers and the proceeds applied to the payment of the certificates. They say in their brief that this property, which consisted in the main of horses and wagons, was, after it was returned to the Express Company, sold by the president of the company for $4200, and he should now be required to pay those certificates out of that fund.

"Without passing on the question of whether, under the facts of this case, the plaintiffs would have been entitled to have the personal property of the Express Company sold to reimburse them for the money they claim to have advanced, it is sufficient to say there is no such question now before us. In their motions for a new trial they did not assign that the court had erred in ordering the property turned back to the Express Company and there is no general assignment in the motion that covers, the point. The motion for new trial was filed June 20, 1907, overruled October 7, 1907, appeal prayed and granted November 12, 1907, but it was not until January 31, 1908, that the plaintiffs filed a motion in the court asking that the order discharging the receivers be set aside and that the Express Company and its president be ordered to turn over to the receivers the proceeds of the sale of the property; that was several months after the final judgment had been rendered and more than two 'months after this appeal had been taken. None of that matter is embraced in the bill of exceptions, and conld not have been, because it did not occur during the proceedings covered by the bill of exceptions; it is all printed(in the abstract, but is outside of the bill of exceptions. The bill of exceptions covers the proceedings at the October, 1907, term, this matter occurred at a subsequent term, and there is no bill of exceptions covering it; its insertion in the abstract is unauthorized.

A final decree determines the rights of the parties on all the points in issue; when there is a receiver in the case it is proper that in the final decree he should be directed to make disposition of funds and property in his hands and report subsequently what he has done in obedience to the decree. If his report filed at a subsequent term .shows that he has acted contrary to the decree parties have a right then to except to his action, but if he has acted in accordance with the decree the party deeming himself aggrieved can be heard in an appellate court only on appeal from the decree. In this case the final report of the receivers was made at a subsequent term, but that report is not in this bill.of exceptions, therefore we cannot take notice of it; there is no bill of exceptions covering that term, therefore we do not know what evidence if any was before the court; we do not know that there were at that time outstanding certificates or for what amount or who owned them; we have statements on those points in what purports to be the motion of plaintiffs filed at that subsequent term, but even that motion is not authenticated by a bill of exceptions, and is not a legitimate part of this record. Appellants in their brief say that when the motion was overruled they excepted, but the record does not so show.

If appellants should now take the position that there was no final decree until the order of the court approving the final report of the receivers and discharging them (which position would not be tenable) they would on that theory he out of court entirely, because this appeal is from the decree rendered June 17, 1907; if that is not a final decree then this appeal is premature.

We find no error in the record. The judgment is affirmed.


author: FERRISS, J. WOODSON, J.

text:
    THE STATE ex rel. ATLANTIC HORSE INSURANCE COMPANY v. FRANK BLAKE, Superintendent of Insurance.
    In Bano,
    March 1, 1912.
    1. STATUTE: Amendment: Substitution: Intermediate Act: Insurance Company Capital. When a section of a statute is amended or displaced by a later substituted act, 'and still later an act is enacted which in terras purports to amend the original repealed section, referring to it by section number, such intermediate amendment or substitute is to be regarded as if it had always been a part of, or in place of, the original section, and such last amendment of or substitute for the original act is valid. When Sec. 7957, R. S. 1899, was'amended and displaced by the Act of 1901, which reduced the capital stock certain insurance companies must have to $100,000, and in' 1909 an act was passed which in terms purports .to amend Sec. 7957, R. S. 1899, by requiring such companies to have $200,000 capital, and which does not refer to the Act of 1901, the Act of 1909 applies to the intermediate substitute of 1901, which is to be regarded ns if it had always been a part of said section 7957. The Act of 1901 was amended by the Act of 1909, and this act by the Act of 1911, and the insurance companies embraced within its provisions are required to have a capital of $200,000.
    2. CONSTITUTIONALITY OF STATUTE: Raised by Foreign Corporation. A foreign corporation which has never been licensed to do business in this State has no right to challenge the constitutionality of a statute which denies to it the right to be admitted to this State. A corporation organized in one State cannot as a matter of right immigrate into another, and no other State is bound to receive it within its borders, and it can enter only upon such terms as the State may see fit to impose; and until it is admitted a statute which imposes onerous conditions or even impossible conditions upon its original admission violates no right of such foreign corporation, and it is only persons whose rights are invaded that can question the constitutionality of a statute.
    3. -: -: Invoking U. S. Constitution: Equality of Citizenship. A foreign corporation, which has never been admitted to this State, cannot invoke that part of the U. S. Constitution which says that “the citizens' of each State shall be entitled to all the privileges and immunities of citizens of the several States,” nor that clause in the Fourteenth Amendment which forbids a State to “deny to any person within its jurisdiction the equal protection of its laws.” A corporation is not a citizen within the meaning of this constitutional provision, nor is an unadmitted foreign corporation a person within the jurisdiction of the State.

      Held, by WOODSON, J., dissenting, that since relator has complied with all the laws of this State except the statutes it claims are unconstitutional and which deny to it a license, it has the same legal right that a domestic corporation has to question the constitutionality of'that part of them that denies to it a right to a license.
    Mandamus.
    Peremptory writ denied.

      Charles H. Broclc for relator.
    (1) When it is the evident intention of the legislative body to amend tbe existing law in a single matter only, and tbe amendment is incorporated by mistake in a repealed statute, tbe court will bold that tbe amendment adheres to tbe existing law and is valid as to tbe said law. Commonwealth v. Kenneson, 143 Mass. 418; People v. Canvassers, 143 N. Y. 84; State v. Corbett, 61 Ark. 226; Svennes v. West Salem, 114 Wis. 650; Reeves v. Gray, 92 Gra. 309'; Custin v. Yiroqua, 67 Wis. 314; 1 Lewis’s Sutherland on Statutory Construction, pars. 233, 234. (2) When tbe .respondent sets up as a ground fo.r refusing tbe. license an act of tbe Legislature, tbe relator may attack tbe constitutionality of such act; and tbe court may, in mandamus proceedmgs, pass upon its constitutionality. State ex rel. v. Turner, 210 Mo. 77; State ex rel. v. Vandiver, 222 Mo. 206. (3) A foreign corporation, seeking admission to a State under its valid laws, may attack the validity or constitutionality of a particular provision of the statute which is the sole .reason for its exclusion from the State. State ex rel. v. Cooper, 18 N. D. 583; State ex rel. v. Vandiver, 222 Mo. 236, 249; Text-Book Co. v. Gillespie, 229 Mo. 397.

      Elliott W. Major, Attorney-General, and John M. Dawson and Ca/tnpbell Cummings, Assistant Attorneys-General, for respondent.
    (1) A litigant asking relief by mandamus must show itself possessed of a clear and legal right to the remedy. State ex rel. v. Hudson, 226 Mo. 265. As a general rule, courts will not declare an act unconstitutional in an application for a writ of mandamus. State ex rel. v. McIntosh; 205 Mo. 635; 26 Cyc. 156. Relator will not be heard to complain that the statute is unconstitutional on the ground that its license to do business in this State will be a benefit to citizens therein. Ordelheide v. Modem Brotherhood, 226 Mo. 210; McCully v. Railroad, 212 Mo. 54. Relator, being a foreign, unlicensed corporation, is precluded from assailing the constitutionality of the Acts of 1909 and 1911. The law is well settled that foreign corporations licensed to do business in a State are precluded from challenging the constitutionality of laws in force in such State at the time the corporation was admitted to do business therein, and this principle should apply with greater force to the case of a foreign corporation seeking a license to entitle it to enter and do business in another State. State ex rel. v. Vandiver, 222 Mo. 206; Daggs v. Ins. Co., 136 Mo. 398; Ins. Co. v. Daggs, 172 U. S. 566; Railroad v. Kentucky, 183 H. S. 503; Ins. Co. v. Herriott, 91 Fed. 711; 19 Cyc. 1317; State v. Green Lake Co., 98 Wis. 143; Tel. Co. v. Tel. Co., 7 Houst. (Del.) 269. (2) The Act of April 17, 1911, with emergency clause, amending section 7008, Revised Statutes 1909 (not mentioned and not attacked in relator’s brief), was in force and effect- prior to the petition filed herein, and required a capital of $200,000.
   FERRISS, J.

— This is an original proceeding in which the.relator, a foreign insurance company, seeks by mandamus -to compel the respondent to issue to it a permit to do business in this State. The cause is submitted upon a demurrer to the petition.

The relator is engaged in the business of live stock insurance, under charter from the State of Rhode Island, in-which State it has its chief business office. On March 1, 1911, relator, having complied with all the laws of this State in that regard, save the statutory requirement of $200,000 capital, demanded from the respondent a permit to do business in the State. This permit was refused upon the sole ground that relator, having a capital of $110,000 only, failed to meet the requirement of section 7008, Revised Statutes 1909 (Laws 1909, p. 602), as amended by the Act of 1911 (Laws 1911, p-. 271), then in force, and which .requires such a company as this to have a capital of $200,000 as a condition prerequisite to admission into this State.

Relator in its petition asserts that it is entitled to a permit notwithstanding this statute, because the Act of 1901, which requires a capital of $100,000 only, has never been repealed or amended, and is still in force, and because the Act of 1909, if its effect is to amend said Act of 1901, is violative of both the State and Federal Constitutions, and therefore void. The respondent challenges the legal sufficiency of the peti tion. ' ,

The case presents three questions:

1. Do the statutes, properly construed, require this corporation to have a capital of $200,000 as a condition of its admission?

2. Is the relator entitled to challenge the validity of the Act of 1909, now section 7008, Revised Statutes 1909?

3. Is the Act of 1909 a valid law?

Whether this last question shall be considered depends upon our answer to the second question.

I. Prior to 1901 the statute required such a foreign corporation as this to have a capital of $200,000’. [R. S. 1899, sec. 7957.] In 1901 the Legislature, by the terms of an act entitled, “An Act to repeal section 7957 of article 4 of chapter 119 of the Revised Statutes of Missouri 1899, and to enact a new section in lieu thereof to be known as section 7957, and to take the place of said section in said Article '4 of said chapter 119, and relating to insurance,” reduced the capital requirement to $100,000’, but otherwise re-enacted substantially section 7957.

So stood the law until 1909, when the Legislature amended section 7957, Revised Statutes 1899, by a bill with this title: “An Act to amend sections 7877 and 7957 of chapter 119 of the Revised Statutes of Missouri for the year 1899, relating to insurance, by inserting in each of said sections a clause permitting the investment of funds in bonds issued by school districts of the State of Missouri.” In the body of the act appears a provision requiring a capital of $200,000, being similar in this regard to the original section in Revised Statutes 1899 as it stood prior to the Act of 1901, which reduced the required capital to $100,000. The Act of 1909 also provides for the investment in school bonds, as indicated in the title.

Relator claims that the original section 7957, Revised Statutes 1899, had been repealed by the Act of 1901, and tliat consequently the Act of 1909, which purported to amend section 7957, Revised Statutes 1899, and which did not refer to the Act of 1901, was inoperative, and left the Act of 1901 in full force; also that by the same reasoning the amendatory Act of 1911 is likewise inoperative to affect the Act of 1901.

In our opinion the contention of relator in this regard is unsound. The Act of 1901, by its terms, took the place of section 7957, Revised Statutes 1899, and became, after it took effect, to all intents and purposes, section 7957, Revised Statutes 1899, and subsequent reference to said section applied to the said 1901 act. Consequently, when the Act of 1909 amended said section, such amendment referred to the Act of 1901, which had been substituted for said section 7957.

The rule of law is that when a section of a statute is amended or displaced by a later substituted act, and still later an act is passed which in terms purports to amend the original section, referring to it by number, such last amendment applies to any intermediate amendment of, or substitution for, the original section, such intermediate amendment or substitute to be regarded as if it had always been a part of, or in place of, the original section. [State v. Schenk, 238 Mo. 429; Kamerick v. Castleman, 21 Mo. App. 587; Blake v. Brackett, 47 Me. 28; Greer v. State, 22 Tex. 588; Rowan v. Ide, 107 Fed. 161; Endlich on Int. of Stat., sec. 294; McKibben v. Lester, 9 Ohio St. 627.]

In the last-named case the court said: “When one or more sections of a statute are amended by a new act, and the amendatory act contains the entire section or sections amended, and repeals the section or sections so amended, the section o,r sections as amended must be construed as though introduced into the place of the repealed section or sections in the original act.”

• II. The right of a foreign corporation, seeking-admission into this State, to challenge the constitutionality of a Missouri statute which refuses such admission, is a question of first impression in this court. We have in the case of State ex rel. v. Vandiver, 222 Mo. 206, permitted a foreign insurance company, doing business in this State under a permit, to question the validity of a condition subsequently imposed by the Legislature upon the granting of the annual renewal certificate. The reasons for that ruling are not discussed in the opinion of the court, but are set out in the dissenting opinion by Graves, J., concurring on this point, however, with the majority opinion.

The consideration of some general principles everywhere recognized will indicate clearly that a foreign corporation which has never been admitted into the State, as is the case here, but is standing, a stranger at the door, asking to be let in, occupies a position quite different from that of a corporation which has been admitted and has for many years done business within the State, and acquired property interests, thereby earning recognition as a “person” within the jurisdiction of the State.

A corporation exists by right only within the State that gave it the right to exist. It is purely a creature and creation of law, and the law of its being has no extraterritorial force or effect. Consequently, it cannot as a matter of right immigrate into another State, and no other State is bound to receive it within its borders. The permit which authorizes a foreign corporation to come into this State rests not on any right belonging to the corporation, but alone on comity, and the permission may be withheld for a good or a bad reason, or for no reason at all, and it may be granted upon such conditions as the State may see fit to impose. [Daggs v. Ins. Co., 136 Mo. 393; State ex rel. v. Vandiver, supra; Paul v. Virginia, 8 Wall. 168; Security Mutual Life Ins. Co. v. Prewitt. 202 U. S. 246.] It follows from, the foregoing that a statute of this State, imposing an onerous or even impossible condition upon the original admission of a foreign corporation, violates no right of such corporation.

Laws enacted by the Legislature are presumed to be valid, and even if defective because violative of some provision of the State Constitution, are not void, although they may in a proper case be voidable; that is, upon complaint by a party whose rights are impaired by such statute. Upon this point Cooley says:

“The statute is assumed to be valid, until some one complains whose rights it invades. ‘Prima facie, and upon the face of the act itself, nothing will generally appear to show that the act is not valid; and it is only when some person attempts to resist its operation, and calls in the aid of the judicial power to pronounce it void, as to him, his property or his rights, that the objection of uneonstitutionality can be presented and sustained. Respect for the Legislature, therefore, concurs with well-established principles of law in the conclusion that such an act is not void, but 'voidable only; and it follows, as a necessary legal inference from this position, that this ground of avoidance can be taken advantage of by those only who have a right to question the validity of the act, and not by strangers. To this extent only is it necessary to go in order to secure ¿nd protect the rights of all persons against the unwarranted exercise of the legislative power, and to this extent only, therefore, are courts of justice called on to interpose.’” [Cooley’s Const. Lim. (5 Ed.), p. 197.]

The foregoing text is substantially the language of Shaw, C. J., in Wellington, Petitioner, 16 Pick. 87, which thoroughly discusses this question. The general doctrine that only one whose rights are. invaded can assail the validity of a statute is amply sustained by authority.

In Williamson v. Carlton, 51 Me. 1. c. 453, the court, while asserting the power of the court to declare an act a nullity, says: “But at whose instance shall this he done? Plainly those whose rights were injuriously affected by the act complained of, their representatives or assigns, and they only can call upon the court to do this. A stranger to those rights, merely interposing a cavil at the tenure by which a neighbor holds his property, cannot be permitted to do it”

In Plumb v. Christie, 103 Ga. 686, the court says: “Before a law can be attacked by any citizen on the ground of its unconstitutionality, he must show that its enforcement is an infringement upon his rights.of person or property.”

To the same effect are Smith v. Inge, 80 Ala. 283; Dejarnette v. Haynes, 23 Miss. 600.

A close analogy may be found in the decisions of this court. In State v. Siebold, 192 Mo. 720, Siebold objected to the validity of a dramshop law which gave to the excise commissioner power to revoke his license. We held that “a license to sell intoxicating liquors is not property, but a mere privilege subject to revoca-' tion or to such conditions as the State may see fit to impose,” and that therefore Siebold was “in no position to.raise objection” because “his personal or property rights are not affected by the act of the excise commissioner.” We cite in the Siebold case, with approval, the statement of the law by Cooley, quoted above, and other authorities to the same effect.

Relator asserts that the Act of 1909, which bars its admission because of insufficient capital, violates the State Constitution in that the amendatory provision requiring a capital of $200,000' is not within the title of the act. We hold, however, that as relator has no right to admission into the State which the; statute violates, it is not in position to challenge the validity of the statute. Nor can relator invoke the aid of section 2, article 4, of the Constitution of the United States, which provides that “the citizens of each State shall he entitled to all the privileges and immunities of citizens of the several States;” nor the aid of the Fourteenth Amendment, which forbids a State to “deny to any person within its jurisdiction the equal protection of its laws.” “A' corporation is not a citizen within the meaning of the above constitutional provision; nor is relator, although a “person,”1; within the jurisdiction of the State. [Paul v. Virginia, supra; Blake v. McClung, 172 U. S. 239.]

Herein lies the distinction between the case at bar and the Vandiver case, supra: In the Vandiver case a renewal certificate was refused a foreign insurance company which had been doing business in the State for many years, its license having be&n renewed at the end of each year, as provided by statute. In 1907 the Legislature enacted a statute which, if valid, imposed upon the relator a new and burdensome condition upon the issuing of a further renewal certificate, whereupon, the relator failing to comply with the Act of 1907, the Superintendent of Insurance refused the renewal license. In the mandamus proceedings instituted by the insurance company to compel the issuance of the renewal certificate the Attorney-General earnestly contended that the relator had no standing to contest the validity of the statute. This contention was made upon the ground that the relator, when asking for a renewal license, was in legal effect in the same position as if it were seeking original admission into the State, and that a foreign corporation had no right, merely because it was trying to gain admission into the State, to question the constitutionality of a statute of the State. This last proposition was practically conceded by the relator in that case. Its contention in that behalf was that it was already domiciled in this State, and hence was a person within its jurisdiction. This contention of the company was in effect sustained by this court, which, without discussing the point in the majority opinion, heard the .case and passed upon the constitutionality of the act in question. In his dissenting opinion, G-raves, J., in the course of his discussion of the point, said:

“This petition for mandamus relates back to the time when relator was entitled to have its report passed upon and approved or rejected, at which time relator was legally domiciled in this State, although a foreign corporation. By this statement we mean: that it was so domiciled in the State as to give it the > .right to challenge unconstitutional laws. It acquired ' that right by virtue of the original certificate, and the renewed certificate is but to the effect that it was still in good standing under the original certificate, which — original gave to it admission to the State. Under the t facts in this record, we are of opinion that relator is . in position to question the constitutionality of the law now under consideration. And in this we heartily concur in what we take to be an acquiescence in this position by the majority opinion.”

He says, further, on page 249:

“It may be true (a question we do not decide, because unnecessary in this case) that a foreign corporation, not domiciled in the State but simply applying for admission, cannot even question a law upon the statutes at the time of its proposed entry in the State, yet that does not affect this case, because the Act of 1907 was passed whilst relator was actually in the State, doing business.”

The Vandiver case was briefed, argued and decided upon the proposition that the right to mandamus rested upon the fact that the foreign corporation was at the time it applied for the renewal certificate domiciled within the State, and it was strongly intimated, although not expressly decided, that a foreign corporation, seeking original admission into the State, would have no standing to maintain mandamus proceedings to challenge the constitutionality of a- statute of the State.

Holding, as we must, that the relator cannot attack the validity of the statute which, as we have construed it, denies relator admission into the State, it follows that respondent was right in refusing the license, and the peremptory writ must be denied. It is. so ordered.

All concur, except Woodson, J., who dissents in opinion filed; Kennish, J., concurs in the result only.

DISSENTING OPINION.

WOODSON, J.

— I dissent from the opinion in this case, for the reason that the record shows that the relator has complied with all the laws of this State, except the statutes which it claims are unconstitutional. If unconstitutional, then they are the same as if they had never been enacted, and if never enacted then clearly under the facts disclosed by this record, the writ would have to go.

That being true, I -think that under section 1 of article 14 of the Constitution of the United States, the relator has the same legal right to test the constitutionality of those statutes, in the courts of this State, that a domestic corporation has.

There is a broad distinction between the right of a foreign corporation to sue in the courts of this State, and the right to do business herein.

In the case at bar, the relator is not claiming the right to .do business here, but is simply asking the courts of this State to declare whether or not it has so complied with the laws of this State as to entitle it to a license to do business herein; and if so to command the Superintendent of Insurance to issue such a license.

I think both this court and the Supreme Court of the United States have clearly held that relator is entitled to be heard in the courts of this State. [State ex rel. v. Turner, 210 Mo. 77; McCully v. Board of Railroad Commissioners, 212 Mo. l. c. 54 to 59; United Shoe Machinery Co. v. Ramlose, 231 Mo. 508; International Text-Book Co. v. Gillespie, 229 Mo. 397; Chambers v. Baltimore & Ohio Ry. Co., 207 U. S. 142, 148; State ex rel. v. Grimm, 239 Mo. 135.]

In my opinion the alternative writ should be made permanent.