Montana Attorney General Opinion 16-193

Opinion No. 193. Corporations - Foreign Corporations "Doing Business Within This State" Defined - Bids Do Not Constitute "Doing Business." HELD: A foreign corporation which bids for the construction of any pub- lic work in the State of Montana is not thereby doing business within the state and is not obliged to comply with the provisions of R. C. M. 6651. October 30, 1935. Hon. Sam W. Mitchell Secretary of State The Capitol In your letter of October 9, you ask us whether or not in our opinion a foreign corporation which tenders a bid for the construction of any pub- lic work in the State of Montana is thereby doing business within the' State in the sense in which the term is used in Section 6651, Revised Codes 1921. That section reads in part as fol- lows: "All foreign corporations or joint stock companies, except foreign insurance companies and corporations otherwise provided for, organized un- der the laws of any state, or of the United States, or of any foreign gov- ernment, shall, before doing business within this state, file in the office of the Secretary of State, and in the of- fice of the County Clerk of the county wherein they intend to carry on busi- ness, a duly authenticated copy of their charter, or articles of incorpora- tion, and also a statement, verified by oath of the president and secretary of such corporation, and attested by a majority of its board of directors, showing: "1. The name of such corporation and the location of its principal of- fice or place of business without this State; and the location of the place of business or principal office within this State; "2. The names and residences of the officers, trustees, or directors; "3. The amount of capital stock. "4. The amount of capital stock invested in the State of Montana." In the case of General Fire Extin- guisher Co. v. Northwestern Auto Supply Co., 65 Mont. 371, the record disclosed that the plaintiff sent its agent to Montana to secure a con- tract with the defendant for the in- stallation of plaintiff's automatic sprinklers and fire-extinguishing ap- paratus in defendant's building at Bil- lings; that such contract was there- upon entered into; that the sprinklers and appartus were fabricated at War- ren, Ohio; Chicago, TIlinois, and Au- burn and Providence, Rhode Island; that they were shipped to Billings, where they were installed in said building under the direction of a trained expert in plaintiff's employ; that in connection with the work plaintiff employed certain necessary local labor and purchased in Billings many articles, such as nails and strips of tin. The plaintiff never established any office or place of business in Montana and did not manufacture any of its appartus or materials with- in the State. The plaintiff equipped one other building in Montana with fire-extinguishing apparatus shortly before the job done by it for the de- fendant, in the same manner and un- der similar circumstances so far as process of installation and place of se- curing necessary incidental labor and materials were concerned. The court held that the plaintiff, in doing what it did, as shown by the record, was not doing business in the State of Montana within the meaning of the statute, and among other things said: "We entertain the view that isolated transactions whereby a foreign cor- 200 OPINIONS OF THE ATTORNEY GENERAL poration sells goods or other manu- factured products on sample or speci- fications, the same being fabricated in another state and shipped into this state by such corporation for use or installation, does not constitute the doing of business in this state, within contemplation of the statute. Were the law given a contrary construc- tion, it is easy to see the far-reach- ing and absurd consequences which would result. Transactions of this character were never in legislative contemplation. It is our opinion that the two isolated transactions of the plaintiff in this case, under the facts recited, do not constitute the 'doing 01' business' in this state within the intent of the statute." (State v. Dis- trict Court, 98 Mont. 278; 17 Fletch- er's Cyclopedia Corporations, Sec. 8466, p. 470.) In the case of Odell v. City of New York, 200 N. Y. S. 705, aff. 144 N. E. 917, the appellate division of the Su- preme Court held in effect that a for- eign corporation was not doing busi- ness in the State of New York merely because it entered into a contract with the City of New York to con- struct an aqueduct to supply the lat- ter with water. (Hanley Co. v. Brad- ley, 259 N. Y. S. 278.) The general rule is that a foreign corporation which has done only those acts within a state which are preliminary to the doing of the busi- ness for which it was incorporated, is not thereby doing business within such state. Thus a foreign. corpora- tion does not come under the provi- sions of a law regulating the doing of business in a state by securing the lease of premises thertin in order that it might thereafter engage in its chartered business, or by agreeing with the owner to purchase timber situated therein, with the view of sub- sequently engaging in the business for which it was organized, or by making bids for public or private work therein or for supplying mate- rials or articles to residents thereof, or by entering into a contract to per- form such work, or by giving a bond to secure performance of such con- tract. (17 Fletcher's Cyclopedia Cor- porations, Sec. 8468, p. 475; 14a Cor- pus Juris, Sec. 3986, p. 1279; Automo- tive Material Co. v. American Stand- ard M. P. Corp., 158 N. E. 698; Philip A. Ryan Lumber Co. v. Ball, 177 S. W. 226.) Under the authorities generally, therefore, only one reasonable conclu- sion can be reached, namely, that a foreign corporation which bids for the construction of any public work in the State of Montana is not thereby do- ing business within the State and is not obliged to comply with the provi- sions of Section 6651, Revised Codes 1921. Indeed, without the aid of author- ity, we should be constrained to reach the same conclusion by reason of the lahguage of Section 6654, Revised Codes 1921, which is as follows: "Every corporation enumerated in Section 6651 of this code shall annu- ally and within two months from the first day of April of each year make a report, which shall be in the same form and shall contain the same in- formation as required in the state- ments mentioned in said section, and, in addition, shall contain the follow- ing information: "1. The gross amount of its busi- ness in the State of Montana for the preceding year. "2. The amount of money actually expended in transacting its business in the State of Montana for the pre- ceding year. "3. The net profits on its business transacted in Montana for the pre- ceding year. "Said report shall be filed in the office of the county clerk of the coun- ty wherein the principal business of such corporation is carried on and the duplicate thereof in the office of the Secretary of State." How can a for- eign corporation whose bid is not ac- cepted make the report required by this section? Furthermore, we do not think that Section 6651 is in any way affected by Chapter 178, Laws of 1935, which defines a "public contractor" as any person, firm, association or corpora- tion that "submits a proposal to or enters into a contract with the State of Montana, or with any board, com- mission or department thereof, or with an Board of County Commis- sioners, or with any City or Town Council, or with any agency of any OPINIONS OF THE ATTORNEY GENERAL 201 thereof, or with any other public board, body, commission or agency, authorized to let or award contracts for the construction or reconstruction of any public work when the contract cost, value or price thereof exceeds the sum of One Thousand Dollars ($1,000.00)," and makes it unlawful for any such person, firm, associa- tion or corporation to engage in the business or act in the capacity of public contractor, as so defined, with- in the State of Montana without ob- taining a license there:(or from the State Board of Equalization. It is evident that Section 6651 relates to one thing and Chapter 178 to another thing. They are separate and distinct in their purpose and deal with differ- ent subject matters. The former requires a foreign cor- poration, before engaging in business in this State, to file in the office of the Secretary of State, and in the of- fice of the county clerk of the county wherein it intends to carryon busi- ness, an authenticated copy of its charter, or articles of incorporation, while the latter requires every per- son, firm, association or corporation, whether foreign or domestic, to se- cure a license as a public contractor from the State Board of Equalization before bidding for the construction of any public work in the State having a value in excess of one thousand dollars. The term "doing business" used in Section 6651 cannot in reason include the status of public contractor which results from making a proposal to some public officer or board for the construction of some public work or another in the State of a value above one thousand dollars. (17 Fletcher's Cyclopedia Corporations, Sec. 8465, p. 468. See, also, 59 C. J. 978; Atlantic Cleaners & Dyers v. United States, 286 U. S. 427; State v. Desmarias, 123 Atl. 582; Board of Education v. Bry- ner, 192 Pac. 627; In re Segregation of School Dist., 200 Pac. 138; Bouch- er v. Lizotte, 161 Atl. 213; City of Enderlin v. Pontiac Township, 242 N. W. 117; California Packing Corp. v. Sun-Maid Raisin Growers, 64 Fed. (2d) 370; 2 Lewis' Sutherland on Stat- utory Construction, Secs. 367, 602.). (Note: What constitutes "doing business"? See, Vol. 13, Opinions of Attorney General, p. 243; Vol. 13, p. 283.)