Haughton Elevator & Machine Co. v. Detroit Candy Co.

Foreign Corporations — Nonpayment of Franchise Fee — Effect —Contracts. A contract by a foreign corporation for the sale and installation of an elevator and the making of repairs upon another elevator, construed as a whole, is a contract for the transaction of business within the State; and plaintiff not having paid the franchise fee required by Act No. 34, Pub. Acts 1903, is precluded from maintaining an action for a breach thereof.1

Error to Wayne; Bohnert, J. Case by the Haughton Elevator & Machine Company against the Detroit Candy Company, Limited, for breach of a contract for the installation and repair of certain elevators. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error. Plaintiff is a foreign corporation, with its plant and offices at Toledo, Ohio. Its business is the manufacture, construction, and installation of freight and passenger elevators. It maintains no office in this State. The defendant is a partnership association, limited, under the laws of Michigan, and doing business in Detroit. On March 27, 1907, defendant accepted a proposition made to it by plaintiff on March 7th. The acceptance made a complete and binding contract. By it plaintiff agreed “to furnish and erect in deféndant’s building in Detroit, one belt-connected electric freight elevator in accordance with the following specifications.” It is unnecessary to state the specifications any further than to say that defendant agreed to furnish in place all necessary supports, guide posts, and sheave beams, to do all cutting of floors, walls, and masonry, to provide clear and unobstructed room for the placing of elevator with belongings and attachments, and to allow plaintiff the unobstructed use of space while installing elevator. The contract also provided: “For the old elevator, we are to furnish and erect parts as follows: Guide posts, weight guides, guide strips, overhead sheave beams. To cut platform to fit hatch 5 ft. 6 in. wide by 4 ft. 2 in. deep, with wire wainscoting 6 ft. high on three sides. Repair and install three automatic gates; using your motor, controller and reversing switch and erect elevator ready for your wires and cut out switch, all in good working order. You to prepare hatchways and do other work same as specified for new elevator in this contract.” The day following the making of this contract, defendant telegraphed plaintiff canceling it. This suit is brought to recover damages for breach of contract. The court directed a verdict for the defendant, for the reason that the plaintiff, a foreign corporation, was doing business in Michigan contrary to Act No. 34 of the Public Acts of 1903, which forbids any foreign corporation to do business in Michigan “unless it shall first have filed and recorded in the office of the secretary of State a certified copy of its charter or articles of incorporation.” The defendant rested its case without producing any testimony. It appears from the evidence on the part of the plaintiff that it has a capital stock of $25,000; that it does not manufacture the motor and the controller, or the ornamental parts, or the cables or the leather belts, but buys them. It does its assembling and shipping in and from Toledo, and sends its elevator to the place ordered. It would have taken about two weeks to put in the elevator, and about a week to do the repair work. The men employed would have been a millwright and two helpers. Its manager further testified that plaintiff might hire labor in Detroit if it needed more than it could send from Toledo; that it had done so occasionally; and that it might be compelled to buy a few things in Detroit, such as nails, bolts, hinges, and lumber. “We were to do the repair work here in Detroit on the Gardner elevator. We were not connected with that elevator company. We were perfectly willing to make the changes in that elevator, whatever changes were necessary, not whatever they required. We should make such changes as were necessary. We were to do that work in Detroit and with the labor here. Also to make use of any stuff that they might have, and take back or buy of them or credit them for it.”