Opinion
8 Div. 330.
March 9, 1933.
Appeal from Circuit Court, Morgan County; W. W. Callahan, Judge.
A. J. Harris and S. A. Lynne, both of Decatur, for appellant.
The sale of its corporate stock by a foreign corporation is the exercise of a corporate function, and, when made in this state by its agent, in its behalf, is engaging in or transacting business in this state. Jones v. Martin, 15 Ala. App. 675, 74 So. 761. A note given in consideration of a sale of corporate stock by a foreign corporation, which had not procured a permit to do business, cannot be enforced by an innocent holder. Jones v. Martin, supra; Code 1923, §§ 7209, 7211, 7212, 7218, 7220. A note executed in furtherance of an act prohibited by statute is void, and is not enforceable, even in the hands of a holder in due course, nor can the maker be estopped to assert the defense of invalidity. Hanover Nat. Bank v. Johnson, 90 Ala. 549, 8 So. 42; Ala. Nat. Bank v. Parker Co., 146 Ala. 513, 40 So. 987; Moog v. Hannon, 93 Ala. 503, 9 So. 596; Joyce on Def. to Com. Paper § 455; Kyser v. Miller, 144 Ill. App. 316.
Eyster Eyster, of Decatur, for appellee.
The notes in suit, payable "to the order of myself," signed and indorsed in blank by Kyle, were negotiable by delivery. Davis v. First Nat. Bank, 192 Ala. 8, 68 So. 261; Code 1923, § 9093. Pleas of the character of plea 4 must allege certain material matters in order to be good. No part of plea 4 was proven. Leverett v. Garland Co., 206 Ala. 558, 90 So. 343; Jones v. Mosby, Bagley Co., 19 Ala. App. 468, 98 So. 313. Replications setting up estoppel were good. Moseley v. Selma Nat. Bank, 3 Ala. App. 624, 57 So. 91. The evidence shows nothing more than a contract between Kyle and Jones. There was no exercise of corporate functions by the Graphite Company. Friedlander Bros. v. Deal, 218 Ala. 247, 118 So. 508. Appellant was competent to enter into the contract with Jones. The judgment is just and should be affirmed. Couch v. Hutchinson, 2 Ala. App. 448, 57 So. 75.
The trial court overruled the demurrer to the defendant's special pleas 2 to 6, inclusive, and whether correctly so or not we are not called upon to decide, as the ruling was favorable to the appellant, and the appellee cannot complain on this appeal. The plaintiff filed several replications to these pleas, and the demurrer was overruled to numbers 6 to 10, inclusive. The substance of these pleas, of which 4 is an example, presents the illegality of the notes because the giving of same involved doing business in this state by a foreign corporation which did not have a permit as required by sections 7209, 7210, and 7211 of the Code of 1923. Some of the pleas would indicate a noncompliance with the "Blue Sky Law" (see Code 1928, § 9877 et seq.), but this phase of the defense, even if properly pleaded, is not urged in argument. The appellant insists, however, that his special plea 4 was proven, and that this was a complete defense, unless the plaintiff's replications, or one of them, were proven. As to this, we may concede the correctness of the suggestion, if the plea was proven and the replications were not, but we think it was a question for the jury as to whether or not the man Jones, with whom the defendant had the dealings, was the authorized agent of the Alabama-Quenelda Graphite Company and acting in the scope of his authority when undertaking to get the defendant to take the stock in the Dixie Company and transfer the same for stock in the former company, and, as we view this record, that was the one and sole issue for the determination of the jury under the issue made by the pleading and the evidence presented at the trial.
The replications were not proven, as each of them charge that the defendant knew of the facts relied on in his pleas, that is, had notice that the Alabama-Quenelda Company had not complied with the law as to procuring a permit, etc., and this fact was denied in the evidence of the defendant, and was in no wise contradicted. Therefore the replications not having been proved, the defendant was entitled to a verdict upon proof of his special pleas, or either of them.
Defendants requested charges 2 and P should have been given. They hypothesize the material averments of the pleas except as to the failure of the Alabama-Quenelda Company to obtain the permit as required by law and there was no proof of this fact; the burden to do so rested with the plaintiff. Indeed, the trial court affirmatively instructed the jury that the said corporation was a foreign one, and was not qualified to do business in Alabama.
The defendant was also entitled to his requested charge K. as there was no proof of notice to Kyle as charged in the replications.
The judgment of the circuit court is reversed and the cause is remanded.
Reversed and remanded.
GARDNER, BOULDIN, and FOSTER, JJ., concur.