Hirschfeld v. McCullagh
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Summary
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Opinion of the Court
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Mr. Justice Burnett
delivered the opinion of the court.
It appears from the records that the circuit court entered two orders in this case on July 31, 1911, one dismissing the plea in abatement, so called, and the other rendering final judgment against the defendant as for want of an answer for the sum of money demanded in the complaint.
1. The defendant gave notice of appeal from the final judgment. The plaintiff argues that, not having in terms appealed from the order dismissing the plea in abatement, the defendant is in no position here to have this court *509 determine the questions arising on the plea. Something was also said in the debate at the hearing about the matter contained in the plea being really in bar and not in abatement, so that for all purposes, although there were two orders as mentioned, there was in effect but one judgment, and that a final one upon the merits from which the appeal was properly taken. It is not necessary to decide whether the initial pleading of the defendant was in bar or in abatement. If it was in abatement, the decision of the circuit court dismissing it was an interlocutory order, the merits of which are properly reviewable on appeal from the final judgment. La Grande v. Portland Public Market Co., 58 Or. 126 ( 118 Pac. 25 ). If in bar, its dismissal was properly part of the final judgment, the splitting of which into two journal entries does not affect the case.
As to the right of the plaintiff to sue on the note in question, he alleges “that heretofore for value and in due course” the corporation transferred and assigned the note to him, and he is now the owner and holder thereof. It may well be doubted if the quoted words here mentioned constitute anything else than a conclusion of law, or whether the pleader should not have set out the time and consideration of the transfer, so that the court might have the data from which to reach the conclusion desired by the plaintiff that the note came to him in due course so as to cut off defenses applicable to dishonored commercial paper. Be that is it may, however, the only testimony on that point is that of Carl Laemmle, the president of the corporation, who testifies that the note was indorsed to the plaintiff October 29, 1910. Bearing in mind that an installment of $500 was due on the note on the 1st day of that month, that, as alleged in the complaint, no payment has been made since September 14, 1910, that by its terms the whole principal of the note became immediately due on such a default in payment and that plaintiff so con *510 strues it in his complaint, the conclusion is plain that the paper was dishonored to his knowledge when the plaintiff took it, and that as against him it is open to any defense which could have been urged against the corporation payee.
It.is required substantially by Section 6726, L. O. L., that every foreign corporation transacting business within this State shall file the declaration, and pay the entrance fees provided by law, and execute and acknowledge an irrevocable power of attorney, constituting some person residing within this State attorney in fact for such corporation, authorized to accept service of all writs, processes, and summons, requisite or necessary to give complete jurisdiction of any such corporation to any of the courts of this State, in default of which the corporation shall not be entitled to transact any business within the State or maintain any suit or action or proceedings in its courts. Section 6727, L. O. L., provides, in substance, that every foreign corporation, formed for the purpose of gain, shall, before transacting business in this State, file with the Secretary of State a written declaration of its desire and purpose to engage in the same within the State. It is required that the declaration shall contain certain particulars not necessary to be mentioned, upon filing which declaration and paying to the Secretary of State the sum of $50 for filing and recording the same, together with the annual license fee due for the succeeding fraction of the fiscal year, the Secretary shall issue his certificate which is prima facie evidence of a legal existence of the corporation and of its right to do business in the State of Oregon. It is practically conceded, and the court so finds, that the corporation did none of these things required by law before engaging in business in this State. The court also found that, for about two years prior to March 28. 1910, the corporation carried on business and conducted the *511 same through an agent and office in the City of Portland, Multnomah County, State of Oregon. This finding 'is supported by testimony, to the effect that during this period the company maintained an office in the Marquam building in that city, and engaged in the business of renting and selling films, slides, and general moving picture traffic, and that the amount of the business for the first year was about $36,000, and for the second year about $37,000.
The plaintiff would avoid the effect of the defendant’s plea in abatement by contending that the note sued upon is an Illinois contract, and that, being lawful there, it can be enforced here. The circuit court made findings of fact numbered 5, 6, and 7, which are here set out; che fifth and seventh being excepted to by the defendant, as follows:
“(5) That on said 28th day of March, 1910, the defendant herein made and executed a promissory note, as in plaintiff’s complaint set forth, and forwarded same by mail to the Laemmle Film Service of Illinois to Chicago, Illinois. (6) That said promissory note was given as part of the payment price for the stock of merchandise and good will which the said Laemmle Film Service had at that time in Portland, Oregon. (7) That the'contract for the sale of same was made in Chicago, Ill'ncis, and the delivery of said note was in Chicago, Illinois, and that all payments on said note were made in Chicago, Illinois, and that contract for the sale of the property, evidenced " by the promissory note in controversy, was an Illinois contract, and valid under the laws of the State of Illinois.”
The only testimony as to making the contract is contained in the correspondence between the parties. Some previous communications by mail had passed between them, when on March 24, 1910, the president of the corporation addressed to the defendant at Portland, Oregon, a letter in which occurs the following language:
“Now I will make you one more proposition and if that is satisfactory to you I think we can get together. I will *512 sell you the Portland Branch for $12,000, you to pay $3,000 down and $500 a month until we are square, I to take a chattel mortgage on the entire office as it stands. * * I am going to New York the early part of next week, and, if agreeable, you can wire me whether this proposition is acceptable or not.”
On March 28, 1910, in response to this letter from the president of the corporation, the defendant sent to him the following telegram, dated at Portland, Oregon:
“Carl Laemmle, President Laemmle Film service, 111 E. 14th Street, New York City. Personal. Bought your Portland business to day on terms of your last letter. Mailing to day to your Chicago Office, $3,000 also promissory note for $9,000. [Signed] J. S. McCullagh.”
On the same day the defendant addressed a letter to the president of the corporation at Chicago, Illinois, saying:
“Your favor of the 24th inst. received yesterday. I slept on it all night. To day I wired you the following message: [Quoting message already set out above.] I consent to the $12,000 because there is no interest to be charged. In jumping uu the price to $12,000 you get the top price and tip top value. * * Enclosed please find my check for $3,000 together with my promissory note for $9,000 payable in 18 monthly installments of $500 each. [Signed] J. S. McCullagh.”
There are numerous authorities like Commercial Bank v. Sherman, 28 Or. 573 ( 43 Pac. 658 : 52 Am. St. Rep. 811 ), which hold that doing a single act of trade in the State by a foreign corporation is not transacting business within the meaning of the statute, provided there is no intention shown to do anything further of the kind in the State. There are also many other authorities which hold that a foreign corporation may send its soliciting agents into a state to procure orders to the approval of the corporation at its home office for goods to be shipped from there into the state, all of which does not constitute the *513 transaction of business in the state as described in our laws because such traffic is protected by the interstate commerce clause of the Constitution of the United States. On the other hand, when, as in this case, a corporation formed under the laws of another state comes into the state, there open up an office or store in which it keeps its goods, sells them, or rents them like other concerns engaged in such traffic and continues the same for a period of years, it is unquestionably transacting business within the State. The following authorities are illustrative of this matter: Elliott v. Parlin & Orendorff Co., 71 Kan. 665 ( 81 Pac. 500 ) ; John Deere Plow Co. v. Wyland, 69 Kan. 255 ( 76 Pac. 863 : 2 Ann. Cas. 304) ; U. S. Rubber Co. v. Butler & Co. (C. C.), 132 Fed. 398 ; Thomas Mfg. Co. v. Knapp, 101 Minn. 432 ( 112 N. W. 989 ) ; Wilson-Moline Buggy Co. v. Priebe, 123 Mo. App. 521 ( 100 S. W. 558 ) ; Neyens v. Worthington, 150 Mich. 580 ( 114 N. W. 404 : 18 L. R. A. [N. S.] 142) ; International Text-Book Co. v. Lynch, 81 Vt. 101 ( 69 Atl. 541 ) ; Ulmer v. First National Bank, 61 Fla. 460 ( 55 South. 405 ) ; Diamond Glue Co. v. U. S. Glue Co., 187 U. S. 611 (23 Sup. Ct. 206: 47 L. Ed. 328 ); Swing v. Marion Pulp Co., 47 Ind. App. 199 ( 93 N. E. 1004 ) ; Swing v. Wellington, 44 Ind. App. 455 ( 89 N. E. 514 ).
The principal question to be determined is whether or not the contract of which the note constituted a part was made in the State of Oregon or in the State of Illinois, or, in other words, whether the note in question was part of business transacted within the State of Oregon or not. The offer to sell the stock and good will, had no effect until it reached the defendant in Portland, Oregon, where it was addressed to him and where he and the goods were at the time. On the other hand, when acceptance of the same was intrusted to the telegraph company or to the mails, this completed the contract, and it became binding from the moment it was so promulgated. Williams v. Burdick, *514 63 Or. 41 ( 125 Pac. 844 ); Price v. Atkinson, 117 Mo. App. 52 ( 94 S. W. 816 ) ; Busher v. N. Y. Life Ins. Co., 72 N. H. 551 ( 58 Atl. 41 ) ; Swing v. Marion Pulp Co., 47 Ind. App. 199 ( 93 N. E. 1004 ) ; Burton v. U. S., 202 U. S. 344 (26 Sup. Ct. 688: 50 L. Ed. 1057 : 6 Ann. Cas. 362). In the latter case the defendant, a United States Senator, was indicted in the United States Court for the Eastern District of Missouri, charged with the crime of having agreed to receive and having received compensation for his services while such Senator, in representing a corporate suitor before the Post Office Department in a matter in which the government of the United States was interested. The testimony indicated that, while he was traveling in company with the suitor’s counsel in Illinois, he proposed to act as attorney for the company in the matters named for a compensation of $500 per month for five months. He was informed by the counsel that his offer could not be accepted at the time, but that it must be referred to the home office of the corporation at St. Louis. On arriving at St. Louis, the counsel took up the Senator’s offer with the suitor, and it immediately wired acceptance of the same to Washington where he received it. On the trial the point was made on behalf of the defendant Senator that, never having been in St. Louis, he could not have committed the crime there, as the agreement was not made there, but in Washington. The Supreme Court of the United States, however, in an opinion by Justice Harlan, overruled this contention, and held that, although he was never in St. Louis, his Sending the offer to the company there and the acceptance sent from there by it constituted an agreement consummated in St. Louis; and that the crime was committed there, although the defendant Senator was never in that city.
In the light of the authorities noted above, it is our judgment that the incidents delineated in the testimony *515 culminating in the giving of this note constituted the transaction of business within the State of Oregon by the corporation named, and as such is within the inhabition of the statute of this state relating to foreign corporations. Although the acceptance of the offer of the corporation to sell and giving the note in part payment of the purchase price of the property were the last acts of a two years course of business transacted in the State, yet they are none the less obnoxious to the statute than the first or any other act of that course.
3. It is argued that, because it does not appear that the defendant gave a chattel mortgage to secure the indebtedness evidenced by the note as suggested in the offer, the transaction was not completed in Oregon by mailing the note with the letter of acceptance; but the corporation has negotiated the note after receiving payments on it, and we cannot now avoid the conclusion that the company accepted the paper as cloture of the sale.
4. In any event, the note was part of a business transaction in Oregon carried out in contravention of its laws, and contrary to the public policy of this State as expressed in its legislation upon this subject. On this account the courts here will not lend their aid towards enforcing the contract. Commercial Nat. Bank of Ogden v. Davidson, 18 Or. 57, 70 ( 22 Pac. 517 ) ; Bartlett v. Collins, 109 Wis. 477 ( 85 N. W. 703 : 83 Am. St. Rep. 928 ) ; Emery v. Burbank, 163 Mass. 326 ( 39 N. E. 1026 : 28 L. R. A. 57: 47 Am. St. Rep. 456 ) ; Union Locomotive Co. v. Erie Ry. Co., 37 N. J. Law, 23; Clark v. Tanner, 100 Ky. 275 ( 38 S. W. 11 ) ; Rogers v. Rains, 100 Ky. 295 ( 38 S.W. 484 ) ; Hallman v. Telleren, 55 Neb. 255 ( 75 N. W. 560 ) ; Varnum v. Camp, 13 N. J. Law, 326 ( 25 Am. Dec. 476 ) ; Thurston v. Rosenfield, 42 Mo. 474 ( 97 Am. Dec. 351 ) ; Stricker v. Tinkham, 35 Ga. 176 ( 89 Am. Dec. 280 ) ; Minzesheimer v. Doolittle, 60 N. J. Eq. 394 ( 45 *516 Atl. 611 ); Rose v. Kimberly Co., 89 Wis. 545 ( 62 N. W. 526 : 27 L. R. A. 556: 46 Am. St. Rep. 855 ).
Decided April 1, 1913. ( 130 Pac. 1131 .)
5. The law of the forum governs the remedy which will not be applied by the courts, if the contract, although valid elsewhere, is contrary to the public policy of this State as declared by its laws. The circuit court erred in finding either as a fact or as a conclusion of law that the note in question was a Chicago or Illinois contract, or that it was an obligation enforceable against the defendant in the courts of Oregon under the circumstances disclosed by the pleadings and testimony.
The judgment of the circuit court is reversed, with directions to sustain the plea in abatement, and dismiss the action. Reversed.
On Rehearing
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On Rehearing.
Opinion by Mr. Chief Justice McBride.
1. The petition for rehearing challenges the constitutionality of Section 6707, L. O. L., being Section 5, p. 43, Session Laws of 1903, on the ground that it imposes a tax upon the whole capital stock of a foreign corporation, irrespective of whether it is employed in this State. That the imposition of such tax is unconstitutional is clearly held in the following cases: W. U. Telegraph Co. v. Kansas, 216 U. S. 1 (30 Sup. Ct. 190: 54 L. Ed. 355 ) ; Pullman Co. v. Kansas, 216 U. S. 56 (30 Sup. Ct. 232: 54 L. Ed. 378 ); Ludwig v. W. U. T. Co., 216 U. S. 146 (30 Sup. Ct. 280: 54 L. Ed. 423 ) ; Atchison, Topeka & Santa Fee R. Co. v. O’Connor, 223 U. S. 280 (32 Sup. Ct. 216: 56 L. Ed. 436 ) ; Mulford Co. v. Curry, 163 Cal. 276 ( 125 Pac. 236 ).
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2. Whatever might be our own opinion, the contention presents a federal question in regard to which the holding of the Supreme Court is controlling; and we therefore acquiesce in the conclusion reached in the cases above cited, and hold that, in so far as the section in question requires the payment of a license fee based upon the whole amount of the capital stock of a foreign corporation, whether employed within the State or not, it is void. But it does not follow that because this part of the section is void that the whole section is void. Its provisions are not so interdependent that other requirements cannot be separated from the single invalid provision. A corporation is required to file with the Secretary of State a statement, showing, among other things, the location of the principal office, the names and post office addresses of its president, secretary, treasurer, managing agent, and attorney in fact in this State; and a failure or refusal to file such report or to pay the license fee subjects it to a fine of $100. It will be noticed that this penalty may be incurred (1) by failure to file the report; or (2) by failure to pay the license fee. If the corporation pays the license fee, but fails to make a report complying with the provisions of the section, it is amenable to the prescribed penalty; or, if it makes the report, but fails to pay the fee, it is also held liable. The fact that the requirement to pay the license fee is void because of a conflict with the Federal Constitution does not render void other requirements not so in conflict.
3. No penalty is expressly denounced by the succeeding sections for failure to appoint a resident attorney; and, following the rule announced in Bank of British Columbia v. Page, 6 Or. 431 , we would be compelled to hold that a contract made by a corporation before appointing an attorney in fact is absolutely void. But the law abhors forfeitures, and we are disposed to construe Section 6707, L. O. L., and Section 6726, L. O. L., together. The section last cited requires the appointment of such attorney, and *518 the preceding section requires a report to the Secretary of State, giving the name of such attorney. Taking the act by its four corners and construing the sections together, we think it may reasonably be deduced that the corporation must appoint the attorney, and report that fact to the Secretary of State in its annual statement. If it has neglected to appoint the attorney, it cannot, of course, make the report required by law, and is liable to a penalty for its failure so to do. The law having prescribed the penalty by way of fine, the courts should not impose an additional penalty by way of forfeiture; the omission not being malum in se.
A, 5. The entrance fee of $50 required by the statute is not in conflict with any provision of the Federal Constitution, and is a reasonable requirement. The corporation has not paid nor offered to pay this fee, and its right to maintain an action in the courts of this State is suspended until such fee is paid. Section 6708, L. O. L. And this objection must be raised by plea in abatement. Section 6709, L. O. L.
6. The assignment of the note after maturity and especially an assignment made as in this case merely for the purposes of collection cannot confer on the assignee any better right than that of the payee at the time of the assignment. Plaintiff took the paper subject to all defenses which existed as against the original payee. The petition for rehearing seems to assume that we have held that the contract between plaintiff’s assignor and defendant is absolutely void, and the note also void; but such was not our holding. Plaintiff can enforce payment in our courts whenever his assignor or principal complies with our laws and pays the $50 entrance fee which the statute requires.
The suit should abate without prejudice to another action upon plaintiff’s assignor complying with the statute in so far as held valid herein.
Former Opinion Approved.
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