Herbert H. Pape, Inc. v. Finch

Ellis, J. — Herbert IT. Pape, Inc., a Florida Corporation, commenced an action in the Circuit Court for Dade County against Henry C. Finch and Millicent M. Finch as partners doing business under the firm name of Broad Albin Storage Company. The action was based upon a promissory note for the sum of seventeen thousand five hundred dollars payable on or before one year after date with interest at the rate of eight per cent, per annum from date, dated at Miami, Florida, on October 12, 1925, and was signed by Broad Albin Storage Company by Henry C. Finch, President, Millicent M. Finch, Secretary, and payable to the order of Herbert H. Pape, Inc. The word “seal” appears opposite the name Broad Albin Storage Company and that of Henry C. *429 Finch, President, but none after the name of Millicent M. Finch, Secretary. The note contained, clauses waiving demand, notice of non-payment and protest, an agreement to pay reasonable attorney’s fees in the event of suit to collect it and that deferred interest should bear interest from maturity. The note was more than nine months over-due when the declaration ay as filed. The declaration alleged that the defendants assumed to act in a corporate capacity in making the note without having been clothed with corporate existence and authority in the State of Florida; that the note was over-due and unpaid. The plaintiffs claimed damages. A motion for compulsory amendment of the declaration Avas 'denied and a demurrer was overruled. The defendants then interposed three pleas to which the plaintiff demurred and interposed its motion to strike them. Both the demurrer and the motion to strike were overruled and the plaintiff announcing that it Avould not plead further but would stand on its demurrer the court entered judgment for the defendant. The plaintiff seeks a reversal on Avrit of error. The order denying the motion to strike and overruling the demurrer Avas error so the judgment was erroneous. The first plea was bad because it was argumentative and because it tendered no issue. The declaration declared upon a promissory note executed by two persons assuming to act in a corporate capacity Avithout having been authorized so to act in this State. The plea merely denied that they, the defendants, assuming to act in a corporate capacity AAÚthout having been authorized so to act in this State executed the note. From which it Avas intended doubtless to infer that their act was no assumption (that is a taking unjustly) of corporate power but an exercise by them lawfully of the corporation’s power to execute the note and that it was therefore the corporation’s note and not theirs. *430 Pleading is a statement of fact and not a statement of argument. See 1 Chitty on Pleading (Ed. of 1809) 216, 517. No issue was tendered by the plea by way of an averment of an issuable fact constituting a defense to the declaration. The second plea is amenable to the same objection. In one part it denies that the Broad Albin Storage Company was not clothed with corporate existence and authority in Florida and in the closing part of the sentence, consisting of ten lines, explains that the corporation is a duly organized and existing corporation under the law's of New York State and by the laws of that State authorized by its President and Secretary to execute and deliver the note, from which averments it is to be inferred that as the Corporation was organized and authorized to transact business in New' York State under the laws of that sovereign power it was authorized through its President and Secretary to transact business in Florida. If the argument was good it w'ould nevertheless not constitute a good plea because it should aver that the note was not the note of the defendants but the note of the corporation and the latter was authorized to do business in this State. The third plea is very lengthy. Tt avers the organization of the “Broad Albin Storage Company” as a corporation under the laws of New' York, attaches a certificate of the record of the incorporation, avers its transaction of business in New' York, that it obtained from the Secretary of State of the State of Florida on March 19, 1926, five months and a half after the execution of the note by the defendants, a permit to transact business in this State under the statutes of this State, attached the permit as an exhibit to the plea, recited in detail the transaction out of which the action grew', averred it to be a real estate transaction in which the corporation acquired lands in Dade County and attached a copy of the deed of conveyance as an exhibit and averred that the note was executed to evidence the part of the purchase price of the land not paid in cash, averred *431 the execution of the note to be the corporation’s act, and on the same day executed a mortgage to the plaintiffs upon the property conveyed to secure the payment of the note and averred that at the time of the transaction the Corporation was by the laws of New York authorized to receive from the plaintiff a conveyance of the property and to make and execute the notes and mortgage and that at the time the defendants were respectively President and Secretary of the Corporation and that in its behalf they executed the notes sued on. The plea closes with the averment that the purchase of the land and the execution of the notes and the mortgage constitute the only transaction of business in Florida by the corporation. Stripped bf all unnecessary averments, the plea merely amounts to an admission that the defendants executed the note sued upon while acting for a New York Corporation which at the time was not authorized to transact business in Florida, but that it was the only business transaction that it had in this State. The doctrine is well settled in this State that a foreign corporation has no authority to transact business in this State before it complies with the requirements of the laws of this State and that when its stockholders or officers undertake to transact any business in this State in the name of a corporation not authorized under the laws of this State to transact business here they are held to individual liability as partners. It is not a question of the validity of the debt incurred, it is merely a question of the liability to which the officers of the corporation subject themselves in such transactions. The judgment is reversed on the authority of Taylor v. Branham, 35 Fla. 297, 17 South. Rep. 552, 39 L. R. A. 362, 48 Am. St. Rep. 249. Judgment reversed. Buford, C.J., and Whitfield and Davis, J.J., concur. Terrell and Brown, J. J., dissent.