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Bob Ferguson

AGO 1951 No. 468 -
Attorney General Smith Troy


A foreign banking corporation purchasing completed mortgage loans by mail from original holders thereof within the state, is not "doing business" within the state so as to require compliance with Rem. Rev. Stat. 3247 and Rem. Rev. Stat. Supp. 3836-17.

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                                                                   March 9, 1951

Honorable Earl Coe
Secretary of State
Olympia, Washington                                                                                                 Cite as:  AGO 49-51 No. 468

Attention:  Mr. R. J. Yeoman, Assistant

Dear Sir:

            By letter of December 19, 1950, you refer to a foreign banking corporation which proposes to engage in the business of purchasing mortgage securities involving mortgage loans completed by other organizations within the State of Washington.  It is indicated that the out-of-state bank will purchase such securities by mail direct from the owner thereof who will have fully completed the loan and that the foreign corporation will have no agent or correspondent within this state.

            You ask our opinion as to whether such foreign banking corporation must comply with the provisions of Rem. Rev. Stat. 3247, relating to foreign banks and with the provisions of Rem. Rev. Stat. Supp. 3836-17, relating to foreign corporations.

            Our conclusion is:

            On the facts presented, a foreign banking corporation is not required to comply with the provisions of Rem. Rev. Stat. 3247 or with Rem. Rev. Stat. Supp. 3836-17, in order to purchase completed mortgage loans from owners within the state where such purchases are made by mail direct from the owner and the foreign bank has no agent within the state.

             [[Orig. Op. Page 2]]


            The provisions of Rem. Rev. Stat. 3247 require a foreign banking corporation to file with the Secretary of State, a certified copy of a resolution of its governing body to the effect that it will not engage in the banking or trust business in this state, before such banking corporation may "engage in the business" of loaning money on mortgage securities in the State of Washington.  This section further expressly provides that such corporation shall comply with the general corporation laws of the state relating to foreign corporations "doing business" in the state.  The term "to engage in the business" as used in this section is synonymous with the term "to do business" and it would seem clear that any banking corporation which falls within the operation of section 3247 must also comply with all other statutory provisions regulating foreign corporations doing business in the state.  Among these are Rem. Rev. Stat. Supp. 3836-17, which requires that a foreign corporation shall, as one of the steps in qualifying to transact business within the state, file with the Secretary of State, a certified copy of its articles of incorporation.

            The purchase of completed mortgage loans would, we believe, amount to loaning money on mortgage securities within the intent of the provisions of section 3247.  Consequently, a determination of the question of whether the foreign banking corporation referred to in your inquiry must comply with the foregoing statutory provisions is dependent upon the question of whether or not the proposed transactions would constitute "doing business" within the State of Washington.

            The definition of the term of "doing business" as it relates to your inquiry, is to be distinguished from the definition of the same term as used in that class of cases where the question involved is whether a foreign corporation is so doing business within the state as to make it amenable to the process of the courts of this state.  International Shoe Co. v. State, 22 Wn. (2d) 146, 154 P. (2d) 801.  A foreign corporation may be doing business in the state so as to subject it to the process of our courts, yet the same factual situation may not be sufficient to constitute business within the state so as to require the foreign corporation to file its articles of incorporation and to otherwise comply with statutes relating to the qualification of foreign corporations.  23 Am.Jur. 340, section 362, and see dissenting opinion in the International Shoe Co. case,supra.

            Regardless of how it arises, the question is one of fact to be determined by the circumstances of each particular case.  20 C.J.S. 45, section 1828; 23 Am.Jur. 334, section 360.  With respect to the question as it relates to the service of process, the Supreme Court of the United States has said:

             [[Orig. Op. Page 3]]

            "The general rule deducible from all our decisions is that the business must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction, and is by its duly authorized officers or agents present within the state or district where service is attempted."  (Emphasis supplied)

            People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 62 L.Ed. 587, 38 S.Ct. 233.

            InSmith & Co. v. Dickinson, 81 Wash. 464, 42 Pac. 1133, it was held that a foreign corporation soliciting sales which were consummated outside the state was not doing business within the state so as to require it to qualify as a foreign corporation even though its agents maintained offices within the State of Washington.

            InContinental Assur. Co. v. Ihler, 53 Id. 612, 25 P. (2d) 792, it was held that the purchase by a foreign corporation of a promissory note secured by a mortgage on Idaho land, did not constitute doing business within the state where the transaction was completed outside the State of Idaho.

            As indicated in thePeople's Tobacco Co. case, supra, it would appear that one of the essential elements is that a corporation,through its agents acting within the state, shall have brought itself into the state before it is subject to process.  The same factual element is required, we believe, with respect to the necessity for qualification as a foreign corporation.

            In the facts as presented by you, there is to be no agent or correspondent within the State of Washington.  From an examination of the authority, we are of the opinion that such foreign banking corporation is not required to comply with the statutory provisions hereinabove referred to.

            It is to be understood, however, that our conclusions herein are confined strictly to the particular factual situation presented.  Any variation in the method to be followed in conducting the proposed transactions, as for example, where there are in fact, dealings through a local agent or representative, may bring the statutory provisions into operation.  This is particularly so where the transactions are to be conducted as a part of a continuing course of dealings.

             [[Orig. Op. Page 4]]

            We may further add that responsibility for compliance with the statutory provisions rests upon the foreign corporation involved, not only in connection with the invocation of the penalties prescribed in Rem. Rev. Stat. 3236 (a) and 3287, but also with respect to the corporation's rights and liabilities as to others than the State of Washington.

Very truly yours,

Attorney General

Assistant Attorney General