[Ed. Note. For other cases, see Building and Loan Associations, Cent. Dig. § 2; Dec. Dig. $ 2.*] 3. COMMERCE (§ 46*)-REGULATION-SAVINGS AND LOAN CONTRACT. auditor of public accounts, and shall have the July, 1913, being then and there the agent and powers and duties in connection therewith pre-employé of the National Mercantile Company, scribed by law, since such associations are in Limited, a corporation duly organized and extheir nature public and subject to regulation, isting under and by virtue of the laws of the and their accounts are therefore public, and the Province of British Columbia, in the Dominion duties of the auditor in connection with such of Canada, did then and there willfully and unregulation, although involving judicial deter- lawfully violate and fail to comply with the minations, are essentially ministerial. provisions of an act of the Legislature of the state of Washington, passed and approved February 14, 1913, and March 19, 1913, respectively, entitled 'An act relating to the organization of building and loan and savings and loan asand to the management, regulation and control sociations and societies,' etc. In that he did then and there willfully and unlawfully conduct a savings and loan association business, said business being in the form and of a character similar to that authorized by the foregoing act by then and there selling and knowingly caus ing to be sold and issued to one F. H. Lieben one certain contract and share of the National Mercantile Company, Limited, said contract and share being more particularly described as No. L. P. Issue 1 Series 5, said the National Mercantile Company, Limited, being then and there a foreign building and loan association not theretofore or at any time lawfully engaged in the state of Washington in the business of a savings and loan association." Nor is the act void as an attempt to regulate interstate commerce, since the contracts of such association are not commerce. [Ed. Note.-For other cases, see Commerce, Cent. Dig. §§ 100, 113, 126; Dec. Dig. § 46.*] 4. CONSTITUTIONAL LAW (§§ 240, 296*) · EQUAL PROTECTION-DUE PROCESS OF LAW -FOREIGN BUILDING AND LOAN ASSOCIA TIONS. Laws of 1913, p. 326, which prohibits foreign corporations, not theretofore authorized to do a savings and loan business within the state, from engaging in such business, does not deny due process of law or the equal protection of the laws to a foreign corporation authorized by its charter to do a savings and loan business, so as to permit it to do a general business within the state, since the corporation has no rights within the state except such as are granted to it. [Ed. Note. For other cases, see Constitutional Law, Cent. Dig. §§ 688, 692, 693, 697699, 825-838, 840-846; Dec. Dig. §§ 240, 296.*] 5. BUILDING AND LOAN ASSOCIATIONS (§ 46*) -REGULATIONS-CONSTITUTIONALITY. Nor is the provision of that act, making it a crime to sell stock in a building and loan association not authorized to do business, unjustly discriminatory, for the state can prevent the sale of stock of a corporation not authorized to do business within the state. [Ed. Note. For other cases, see Building and Loan Associations, Cent. Dig. §§ 6, 69, 82; Dec. Dig. § 46.*] 6. BUILDING AND LOAN ASSOCIATIONS (§ 46*) -REGULATIONS-OFFENSES-AGENT. One who admitted that he was acting as correspondent of a foreign savings and loan association, and as such received applications for the purchase of a share contract therein, sent the application to the home office of the company and delivered the executed contract to the purchaser, can be convicted of violating Laws of 1913, p. 345, § 27, imposing a penalty upon every agent or employé who violates the pro visions of the act. [Ed. Note.--For other cases, see Building and Loan Associations, Cent. Dig. §§ 6, 69, 82; Dec. Dig. § 46.*] Department 2. Appeal from Superior Court, King County; Mitchell Gilliam, Judge. Charles Merrill was convicted of conducting as agent a savings and loan business for a foreign corporation, and he appeals. Affirmed. After a demurrer to this information was overruled, the cause was tried to the court; a jury having been waived. The defendant was found guilty as charged, and a fine of $200 was adjudged against him. This appeal followed. It is admitted by the appellant that the National Mercantile Company, Limited, named in the information, is a corporation organized and existing under and by virtue of the laws of the Province of British Columbia, in the Dominion of Canada; that its home office is at Vancouver, B. C., and from that office it transacts all its business; that the what is called a "loan contract." company, as a part of its business, issues The contention on the part of the company is, so far as the state of Washington is concerned, that it sells its contracts through certain persons whom it calls correspondents; that Merrill was its correspondent in Seattle. The contention further is that on July 28, 1913, one Lieben went to Mr. Merrill, the appellant, and made application to purchase one of the company's loan contracts; that Merrill took his application and told Mr. Lieben that he had to send to Vancouver, B. C., for the contract; that it would be executed in Vancouver within a few days and sent over to Seattle. This contract was executed and forwarded to Merrill, and was delivered by Merrill to Lieben. It was shown at the trial that the National ized under the act referred to in the infor John W. Roberts and Philip Tworoger, Mercantile Company, Limited, is not authorboth of Seattle, for appellant. John F. Murphy and H. B. Butler, both of Seattle, formation to do a savings and loan business the State. MOUNT, J. The appellant was charged with a misdemeanor under an information as follows: "He, said Charles Merrill, in the county of King, state of Washington, on the 28th day of within the state of Washington. It has, however, filed articles of incorporation with the Secretary of State under the general incorporation law. Its articles of incorporation, which are in the record, indicate that the company is authorized to do most any kind of business. So far as this record shows, it is engaged principally in the building and loan, in that it imposes a burden upon interstate or savings and loan, business. [1] It is insisted by the appellant that the information is filed under section 22 of the act in question, which section is as follows: "Any officer, director or agent of any savings and loan association or any other person who shall sell or issue or knowingly cause to be sold or issued to any resident of this state, any stock of said association while said association does not have on deposit with the state auditor as required by this act, securities of the value and at the time herein prescribed, or while such association shall not have the certificate of the state auditor authorizing it to do business as herein prescribed shall be guilty of a gross misdemeanor." Counsel for the state insist that the in formation was filed under the next succeeding section, which provides: " Section 27 of the act provides that every agent or other employé who shall willfully violate any provision of the act shall be guilty of a misdemeanor. commerce. (3) That it is in violation of the Fourteenth amendment to the Constitution of the United States because it abridges the privileges and immunities of citizens of the United States, and because it deprives investment companies or citizens of property without due process of law, and deprives them or other persons similarly situated of the equal protection of the law, and denies that freedom of contract guaranteed by the Constitution; and is class legislation. (4) That it is in violation of article 2, § 19, of the Constitution of this state. We shall notice these contentions briefly. [2] The Constitution of this state, at section 20, art. 3, provides: "The auditor shall be auditor of public accounts, and shall have such powers and perform such duties in connection therewith as may be prescribed by law. * * The appellant argues that no other duties can be imposed upon the state auditor under this constitutional provision than the duties "After the passage and approval of this act, it shall be unlawful for any person, association or persons or domestic associations not already organized and doing business under sections 3601 to 3638, both inclusive, of Remington & Ballinger's Annotated Codes and Statates of Washington, to conduct a business in the form or of a character similar to that authorized by this act without first incorporating to audit public accounts, and such other duunder this act. After the passage and approval ties in connection therewith as may be preof this act no foreign association not already scribed by law. For the purposes of this lawfully engaged in the state of Washington in case we shall concede that this is the plain the business of a savings and loan association shall be permitted to conduct such a business in meaning of the constitutional provision quotthis state. ed. Counsel for the appellant then set out the different sections of the act under consideration and argue that the provisions of the act are contrary to the constitutional provision above quoted for the reason that it makes a judicial and executive officer of the auditor, and that his decisions are final. Many pages of the appellant's brief are taken up with this discussion. We think it is sufficient to say that these building and loan or savings and loan associations, as provided for in this act, are within the control of the Legislature of the state. They are in their nature public associations doing busi ness with the public, as banks, insurance companies, and other trust companies, and are subject to regulation on the same theory that these other trust companies are subject to lawful regulation. State Savings & C. Bank v. Anderson, 165 Cal. 437, 132 Pac. 755. The accounts of these savings and loan associations are therefore in their nature public. We think it is not overstating the Constitution to say that the Legislature has the power under this provision to authorize the state auditor to examine and audit accounts of such trust companies, and in connection therewith to perform such duties as are necessary to a full and fair control of the business of such associations. It is true that some of the duties placed upon the The principal contention of the appellant is auditor by the provisions of this act may be that the act named in the information is un- said to be in their nature executive, and posconstitutional and void for several reasons, sibly judicial; but they are only such as are as follows: (1) That the act delegates both accorded to every other officer having control judicial and legislative power to the state of that class of business. The auditor is auauditor. (2) That it is in violation of sec- thorized under the terms of the act to ex tion 8, art. 1, of the Constitution of the Unit-amine into the accounts of such corporations ed States and of the Fourteenth amendment, to determine the financial standing of the In order to hold that the information was filed under section 22, and is governed by that section, it would be necessary to hold that "any stock of said association" means contract certificates which represent stock in the association, and does not mean capital stock of the association. We find it unnecessary to construe this section, or to hold that the information was filed under the provisions of this section, for it is clear that the information charges the defendant with conducting a savings and loan business by then and there selling and knowingly causing to be sold and issued to one F. H. Lieben one certain contract and share of the National Mercantile Company, Limited. It was not the capital stock of the association that was sold in this instance, but a contract certificate share. In other words, the defendant is charged here with conducting a savings and loan business when the company or business which he represents was not authorized to do business within this state. Clearly, it seems to us that the information was filed and intended to be filed under the provisions of section 23 and section 27. said: "If the power to regulate interstate commerce applied to all the incidents to which said commerce might give rise and to all contracts which might be made in the course of its transaction, that power would embrace the entire sphere of mercantile activity in any way connected with trade between the states, and would exclude state control over many contracts purely domestic in their nature. The business of insurance is not commerce. The contract of insurance is not an instrumentality of commerce. The making of such a contract is a mere incident of commercial intercourse. * stockholders, and to determine the responsi- In Hooper v. California, 155 U. S. 648, 15 pility of the incorporators, and the character Sup. Ct. 207, 39 L. Ed. 297, the same court and general fitness thereof. These requirements necessitate the exercise of discretion and judgment, but are not necessarily "judicial" or "executive" as these terms are used in the Constitution. They are ministerial in their character. When an account is presented to the auditor to be allowed or rejected, he must base his final determination upon his judgment. This is in a sense judicial. When he issues a warrant in payment of an account which he has approved, this is in a sense an executive act. But these acts are acts in connection with his duties as auditor and are ministerial acts. The same is true of the examination and the control of these savings and loan associations. The Legislature, we think, undoubtedly had the right to impose such duties in connection with the duties of auditor as were necessary to determine the financial standing and character of the business and of the persons connected therewith as would insure the people of the state a solvent going concern. Notwithstanding the many authorities and technical reasoning presented by the appellant in his brief, we are satisfied that the Legislature was authorized to make the state auditor a general supervising officer over this class of corporations, and that the act is not void on that account. [3] It is next argued that the act is an unlawful interference with and a burden upon Counsel interstate and foreign commerce. argue, under this head, that it is without the power of the state to prevent outside companies or corporations from selling its If these concontracts within this state. tracts were interstate and foreign commerce, there would be force in this contention. But it is plain, we think, that a contract of the nature of a savings and loan contract is In neither interstate nor foreign commerce. the case of Paul v. Virginia, 8 Wall. 168, 19 L. Ed. 357, the Supreme Court of the United States said: "Issuing policy of insurance is not a transaction of commerce. The policies are simple contracts of indemnity against loss by fire, entered into between the corporations and the assured, for a consideration paid by the latter. These contracts are not articles of commerce in any proper meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one state to another, and then put up for sale. They are like other personal contracts between parties which are completed by their signature and the transfer of the consideration. Such contracts are not interstate transactions, though the parties may be domiciled in different states. The policies do not take effect-are not executed contracts-until delivered by the agent in Virginia. They are, then, local transactions, and are governed by the local law. They do not constitute a part of the commerce between the states any more than a contract for the purchase and sale of goods in Virginia by a citizen of New York whilst in Virginia would In Nathan v. Louisiana, 8 How. 73, 12 L. Ed. 992, it was held that a broker dealing in foreign bills of exchange was not engaged in commerce; that a state tax on money or exchange brokers was not void as a regulation of commerce. The same is true of these contracts. The National Mercantile Company, Limited, mentioned in the information, issued a contract in the usual form of building and loan or savings and loan contracts. The contract provided that upon a certain number of monthly payments a certain loan would be made in its order upon the contract; that after a certain number of payments the contract would be matured, or the loan would be paid. It is the usual form of savings and loan contracts, and is like a policy of insurance which is to be paid upon the happening of a particular event, and depends altogether upon the performance of the contract and of the responsibility of the parties. It is in no sense interstate commerce. [4] It is next argued that the act is in violation of the due process of law, denial of equal protection, and unlawful discrimination clauses of the Constitution of the United States and of the state. There is clearly' The National no merit in this contention. Mercantile Company, Limited, is not a citizen of this state. It has not been authorized by the state to do the class of business that the accused was attempting to do in this state. There can be no doubt that a corporation is a creature of the laws of the state where it is created, and has no legal existence beyond the limits of such state, except such as are granted to such corporations by the laws of the states in which such corporations apply for permission to carry on their business. As was said in Pembina C. S. M. & M. Co. v. Pennsylvania, 125 U. S. 181, 8 Sup. Ct. 737, 31 L. Ed. 650: "It was decided long ago, and the doctrine has been often affirmed since, that a corporation created by one state cannot, with some exceptions, to which we shall presently refer, do business in another state without the latter's consent. express or implied. In Paul v. Virginia, 8 Wall. 168 [19 L. Ed. 357], this court, speaking of a foreign corporation (and under that definition the plaintiff in error, being created under the laws of Colorado, is to be regarded), said: "The recognition of its existence even by other states, and the enforcement of its contracts made therein, depend purely upon the comity of those states-a comi He was of the corporation or the exercise of its powers [appellant, as stated heretofore in this opinare prejudicial to their interests or repugnant ion, show that he was acting, as he says, to their policy. Having no absolute right of recognition in other states, but depending for not as an agent but as a local correspondent such recognition and the enforcement of its of the National Mercantile Company, Limitcontracts upon their assent, it follows as a ed. He was confessedly selling their shares, matter of course that such assent may be grant- taking the contract in his own name, received upon such terms and conditions as those states may think proper to impose. They may ing a commission therefor, and then transexclude the foreign corporation entirely; they ferring them to the person purchasing. In may restrict its business to particular locali- short, he was authorized by the company to ties; or they may exact such security for the do and was doing by indirection what he was performance of its contracts with their citizens as in their judgment will best promote the pub- prohibited from doing directly. lic interests. The whole matter rests in their clearly an agent of the company. The comdiscretion.' The only limitation upon pany held him out as an agent in their adthis power of the state to exclude a foreign corporation from doing business within its limits, vertising matter. And there can be no doubt, or hiring offices for that purpose, or to exact under these facts, that he was a recognized conditions for allowing the corporation to do acting agent and is liable under the statute. business or hire offices there, arises where the We find no merit in any of the contentions corporation is in the employ of the federal government, or where its business is strictly of the appellant, and the judgment is therecommerce, interstate or foreign. The control fore affirmed. of such commerce, being in the federal government, is not to be restricted by state authority." Authorities might be duplicated indefinitely upon this question, but there is no necessity therefor. The existence of this company within the state was upon condition that it should not do a savings and loan association business because that business was prohibited to foreign corporations. At the time it filed its articles with the Secretary of State, it did not attempt to comply with the savings and loan association act, because it was prohibited from so doing by that act. As a citizen of this state, the appellant and the company which he represented were entitled to the privileges and immunities of citizens under like conditions and no more. [5] It is next argued that the law is void as class legislation, because it undertakes to make it a crime for any person within the state to sell stock of building and loan associations while the stock of other kinds of associations may be sold. The act clearly does not make it a crime to sell the stock of building and loan associations which are organized under the laws of this state, or which properly do business within the state. It simply says that, where a corporation is not authorized to do business within this state, its contracts and its stock shall not be sold within the state. The act is not discriminatory. There is no merit in this contention. CROW, C. J., and MAIN, FULLERTON, and ELLIS, JJ., concur. (83 Wash. 699) STATE v. GARNESS. (No. 12219.) (Supreme Court of Washington. 1914.) Dec. 22, Department 2. Appeal from Superior Court, King County; Kenneth Mackintosh, Judge. S. P. Garness was convicted of conducting as agent a savings and loan business for a foreign corporation, and he appeals. Affirmed. Howard O. Durk and John W. Roberts, both of Seattle, for appellant. John F. Murphy and H. B. Butler, both of Seattle, for the State. PER CURIAM. This case is in all respects the same as the case of State v. Merrill, 144 Pac. 925, just decided, except that the corporation attempting to do business in this state is of British Columbia. The method of conducta corporation of the state of Alabama instead ing business in this state was the same method pursued as stated in the other case, and the character of business was also the same. The appellant was convicted upon substantially the same evidence, and has appealed from a judgment imposing a fine of $1 and costs. For the reasons stated in the case of State v. Merrill, the judgment in this case is affirmed. (82 Wash. 623) In re SALARY OF SUPERIOR COURT It is next argued that the National Mer-(Supreme Court of Washington. Dec. 17, 1914.) cantile Company, Limited, is not a building and loan association. It is possible that it is not a building association, but it is clearly a savings and loan association, and has all the features of what is commonly known as a building and loan association. The contracts offered in evidence make this clear. This is not a question of law. It is one entirely of fact. The contract issued by the appellant in this case is of a savings and loan character. It is needless to set out the record showing that fact. [6] It is lastly argued that there is no proof of the crime. The concessions of the 1. JUDGES (§ 22*)-COMPENSATION-APPROPRIATIONS-STATUTORY PROVISIONS-PURPOSE"STATE OFFICER." Under Const. art. 4, § 1, vesting the judicial power in the Supreme Court, superior courts, etc.; section 5, providing for a superior court in each county, for which at least one judge shall be elected by the electors of the county; section 6, defining the jurisdiction of the superior courts, and giving them appellate jurisdiction in their respective counties in certain cases, and providing that their process shall extend to all parts of the state; section 13, providing that such judges shall receive salaries prescribed by law, one-half of which shall be paid by the state and the other one-half by the county for which the particular judge is elected; and section 14, fixing such salaries For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes 144 P.-59 at $3,000 a year and providing that the Legislature may increase such salary-though superior courts to a certain extent perform state functions and to that extent are state courts and their judges "state officers," such courts also perform county functions, especially as they are by the Constitution given all the jurisdiction that pertained to county courts prior to the Constitution and much of the jurisdiction then pertaining to courts of the justices of the peace, their equipment is furnished wholly by the counties and their salaries paid in part by the counties, and hence Rem. & Bal. Code, 9052, providing that the salary of the judges of the superior court may be increased by the board of county commissioners to an amount not exceeding $4,000, and that the amount of the increase shall be paid by the county, does not violate Const. art. 11, § 12, providing that the Legislature shall have no power to impose a tax upon counties for county purposes, but that it may by general laws vest in the corporate authorities thereof the power to assess and collect taxes for such purposes, on the theory that it authorizes an appropriation by counties for state rather than for county purposes. [Ed. Note.-For other cases, see Judges, Cent. Dig. 88 75-88, 179; Dec. Dig. § 22.* crease and leaving it to the board to determine 5. CONSTITUTIONAL LAW (§ 208*)-JUDGES (§ 22*)-CLASS LEGISLATION-SALARIES. Rem. & Bal. Code, § 9052, authorizing boards of county commissioners to increase the salary of superior court judges, is not void as class legislation, though it authorizes such increase only in counties of the first class, especially as superior court judges are not, as claimed, wholly state officers, but also perform county functions and may, the same as other county officers, receive a higher salary in one county than in another where the duties and responsibilities are less burdensome. [Ed. Note. For other cases, see Constitutional Law, Cent. Dig. §§ 649-677; Dec. Dig. § 208;* Judges, Cent. Dig. §§ 75-88, 179; Dec. Dig. § 22.*] Department 2. Appeal from Superior Court, Pierce County; John R. Mitchell, Judge. Affirmed. Lorenzo Dow and W. W. Keyes, both of Tacoma, for appellant. F. G. Remann, F. D. Oakley, and A. O. Burmeister, all of Tacoma, for respondent. Proceeding to compel the County Auditor For other definitions, see Words and Phrases, of Pierce County to draw warrants for the First and Second Series, State Officer.] amount of an increase in the salary of the 2. JUDGES (§ 22*) SALARIES STATUTORY Superior Court Judges of such county. From PROVISIONS. Rem. & Bal. Code, § 9052, authorizing a judgment against the auditor he appeals. boards of county commissioners to increase the salary of superior court judges, is not rendered invalid by the provision that the amount of the increase shall be paid by the county, since, though under Const. art. 4, § 13, providing that one-half of the salaries of superior court judges shall be paid by the state and one-half by the county, the Legislature could not itself increase the salaries of such judges and require counFULLERTON, J. The Legislature of the ties to wholly pay the amount of the increase, state of Washington, at the biennial session it had power under article 11, § 12, providing of 1907, passed an act relating to the salathat the Legislature may vest in the corporate ries of the judges of the Supreme and supeauthorities of counties the power to assess and collect taxes for county purposes, to authorize counties to increase such salaries and pay the amount of the increase. [Ed. Note.-For other cases, see Judges, Cent. Dig. 88 75-88, 179; Dec. Dig. § 22.*] 3. CONSTITUTIONAL LAW (§ 52*) - JUDGES rior courts, increasing outright the salaries of the one and making the following provision with relation to the other: "Each judge of the superior court shall receive an annual salary of three thousand dollars: Provided, that in counties of the first PROVISIONS-LEGIS- class said salary may be increased by order of the board of county commissioners to an amount not exceeding four thousand dollars. Whenever the salary of any judge shall be increased as herein provided the amount of such increase shall be paid by the county and not otherwise." Rem. & Bal. Code, § 9052. Whether the amount of the salaries of superior court judges is so remotely connected with any real purpose of the county as to make it improper to authorize counties to increase such salaries and pay the amount of the increase is an administrative or legislative rather than a Prior to the general quadrennial election of judicial question, and Rem. & Bal. Code, § 9052, providing that in counties of the first superior court judges held in the year 1912, class the salary may be increased by the board the board of county commissioners of Pierce of county commissioners to an amount not ex-county, acting pursuant to this provision of ceeding $4,000, the amount of the increase to the statute, entered an order increasing the be paid by the county, does not constitute an salaries of the judges to be elected at the abuse of the legislative power. [Ed. Note.-For other cases, see Constitutional Law, Cent. Dig. $$ 50, 52-54, 70, 72-80, 82, 84, 85; Dec. Dig. § 52.*] - ensuing election in that county to the full extent permitted by the act. When the salaries of the judges so elected became payable the county auditor, acting on the advice of his duly constituted legal advisers, refused to draw warrants for the amount of the increase, and this proceeding was instituted in the superior court to compel him so to do. Judgment went against the auditor in that court, and he appeals. 4. CONSTITUTIONAL LAW (§ 63*) LEGISLATIVE POWER DELEGATION SALARIES OF JUDGES-STATUTORY PROVISIONS. Rem. & Bal. Code, § 9052, authorizing boards of county commissioners to increase the salary of superior court judges to an amount not exceeding $4,000, is not void as a delegation of legislative power to the board of county commissioners, because it leaves the amount of the increase within a definite limit to be fixed The controversy was presented to the trial by the board, instead of itself fixing the in-court upon an agreed statement of facts. |