Summary
In Marx Bensdorf v. Land Bank, etc., 178 Miss. 345, 173 So. 297, it is said: "One test of whether foreign corporation is `doing business' within state within statute barring suit by foreign corporation doing business in state which does not file power of attorney to receive service is whether it is doing such acts as are within the function of its corporate powers."
Summary of this case from Morrison v. Guar. Mortg. Trust Co.Opinion
No. 32660.
March 29, 1937.
1. CORPORATIONS.
Foreign corporation which, through agent, who was nonresident, maintained headquarters at hotel within state large part of agent's time, advertised for realty brokerage business and realized $19,102.95 in commissions in three years for selling thirty-three tracts of land held "doing business" within state within statute barring suit by foreign corporation doing business in state which does not file power of attorney to receive service Code 1930, sec. 4140).
2. CORPORATIONS.
One test of whether foreign corporation is "doing business" within state within statute barring suit by foreign corporation doing business in state which does not file power of attorney to receive service is whether it is doing such acts as are within the function of its corporate powers (Code 1930, sec. 4140).
APPEAL from chancery court of Calhoun county. HON. L.A. SMITH, SR., Chancellor.
Julian C. Wilson and Bertrand W. Cohn, both of Memphis, Tenn., for appellant.
As to liability for commission, this listing was without specified terms of sale, and the actual sale was made by the owner at a price satisfactory to it. As complainant's agent was the procuring cause of the sale and first interested the purchaser, and as both defendant and all its agents knew it, the case is controlled by the following authorities:
Roell v. Offutt, 138 Miss. 509; Skermetti Realty Co. v. Devitt, 145 Miss. 815; Ferguson v. Quick, 117 Miss. 692; Kelly v. Peacock, 115 Miss. 555; Sullivan v. Turner, 120 Miss. 503; Sunflower Bank v. Pitts, 108 Miss. 380; Delta Pine Land Co. v. Wallace, 83 Miss. 656.
The broker is entitled to his commission where he is the procuring cause of the transaction or of bringing the parties together.
9 C.J., page 611, sec. 95, page 613, sec. 96, page 616, sec. 98.
If the broker has found a customer, his right cannot be defeated by concluding the transaction without his aid.
9 C.J., page 619, sec. 99.
Even though the principal is ignorant of the broker's services, he is still liable for the commission unless the broker had an opportunity to inform the principal and fails to do so.
9 C.J., page 621, sec. 100.
The complainant admitted that it had neither filed its charter nor appointed a resident agent in Mississippi, because it claimed it was not doing business in Mississippi. If it was doing business in Mississippi in the sense of the statute, it could not maintain its suit. If it was doing business in Memphis, Tennessee, and not engaged in business in the state of Mississippi, it was not required to file charter and appoint an agent, and, therefore, may maintain the suit.
Complainant claims that it was engaged in the business of a real estate broker, which was to find buyers anywhere and put them in touch with owners who wanted to sell, and that business is conducted where it has its place of business and not where the buyer is found nor where the lands are located. The broker does not sell the land; the broker finds a purchaser to whom the owner sells the land. The fact that complainant is a corporation does not change the inherent sense of the matter. An individual would be engaged in the same way. The privilege license statute throws much light on the legislative intention. Section 195 of chapter 118 of the Laws of 1934, page 133, levies a privilege tax upon each person offering for sale or negotiating the sale or purchase of real estate. It makes it clear that it is not the individual sales that it mentions but the place where the agent conducts his business, because it provides for no license of those who are not in municipalities and levies the tax on those engaged in that business "in municipalities of classes 1 and 2 $25.00" etc.
It, therefore, seems clear that the legislative intent was that the business was conducted where the place of business was and not where the land offered was located. If this were not so, an agent (really a broker) would be liable for a privilege tax in every county at least where he offered land for sale. The court below evidently was of opinion that the thing dealt in was land, and, therefore, that the business engaged in was selling land located in Mississippi. The business is that of finding a purchaser for lands to whom the owner may sell. In this the brokerage business differs from other businesses.
The case here does not involve interstate commerce only because finding a purchaser is not a subject of interstate commerce, but the nearest to that question may afford some light in its determination.
Item Co., Ltd. v. Shipp, 140 Miss. 710; Longbeach Canning Co. v. Clark, 141 Miss. 184.
In Harleston v. West Louisiana Bank, 129 Miss. 111, this court held that where a bank had loaned money in the state and had to purchase a plant to protect its debt and then sold the plant, this was an isolated or sporadic piece of business rendered necessary to protect its business, and that such bank was not engaged in "doing business" within the state in the sense of the statute.
The complainant, of course, does not particularly object to the payment of a privilege license, to which it would only be subject had it an agency in a municipality. The serious thing is that the complainant, if it be construed to be doing business wherever it attempts to find a purchaser for lands or in aid of that has an employee show the lands to a proposed purchaser, would be compelled to file its charter and appoint an agent in so many states that it would be prohibitive. It would subject itself to local suits in every state where it offered to find a purchaser for lands. Such a construction is so impractical that it should not be adopted.
It is submitted that a broker who merely finds purchasers for lands in Mississippi is not required, if corporate, to file its charter and appoint agents for service of process in that state.
Brewer Montgomery, of Clarksdale, for appellee.
Complainant was doing business in the state of Mississippi during the time in question, and has no standing in the courts of this state because of its failure to qualify as required by the statute laws of this state.
Sections 4140 and 4164, Code of 1930; Peterman v. Blumenfeld, 156 Miss. 55; Music Co. v. Haygood, 108 Miss. 755, 67 So. 211; Sections 914 and 935, Code of 1906; Wiley Electric Co. v. Electric Storage Battery Co., 167 Miss. 842, 147 So. 773; Friedlander Bros. v. Deal, 118 So. 508.
It is undeniable that the activities of H.H. Marks, agent and employee of complainant, in rendering the service and doing the works shown by the testimony in connection with complainant's business, was exercising a function for which the complainant was incorporated. The location of these activities was within the state of Mississippi. The business was transacted within this state. Not having qualified as the law directs, the special defense contained in the answer was properly sustained. The action of the chancellor in dismissing the bill followed the law.
The practice adopted by the chancellor in hearing case on special defense was in accord with the law.
Section 379, Code of 1930; Griffith's Chancery Practice, sec. 342, page 347.
Counsel for appellant cites numerous authorities and submits arguments on the question of liability of defendant for the commissions sued for. We submit this question is not before the court for decision. The case was disposed of on special defense set up by defendant in the nature of a plea in abatement. If defendant had developed its proof and made a defense on the merits, such action on its part might properly have been construed as a waiver of the matter pleaded in abatement. Section 379 was clearly enacted to expedite trials on separate issues, and obviate the necessity of defendant's making defense to the whole case, when his plea in abatement is sustained. The practice is similar to that of the law courts, where a defendant may move to exclude the evidence of plaintiff at the close of plaintiff's case, and direct a verdict for the defendant, on the ground of the insufficiency of plaintiff's proof, or the inability of the plaintiff for any reason to maintain his action.
Argued orally by Julian C. Wilson, for appellant, and by Fred Montgomery, for appellee.
Appellant, a Tennessee corporation, instituted this suit in Calhoun county by a foreign attachment in chancery against appellee, a Louisiana corporation, to recover the sum of $1,250 claimed to be due it as a real estate brokerage commission. There was a trial on bill, answer, and exhibits, resulting in a decree dismissing the bill. From that decree, appellant prosecutes this appeal.
One ground of defense was that if appellee was due appellant any brokerage commission it grew out of the fact that it was earned by appellant, a foreign corporation, in the prosecution of its real estate brokerage business in this state, and appellant was not entitled to maintain the suit because it had failed to comply with sections 4140 and 4164, Code 1930. Appellant admitted it had not complied with those provisions of the chapter on corporations. The chancellor dismissed the bill on that ground. The facts upon which the defense was founded were undisputed.
Appellee owned 696 acres of land in Bolivar county, in this state, which it sold and conveyed to one Aderholdt in 1934 for $25,000. Appellant claimed that the sale was brought about as the result of its activities — that it was employed by appellee to find a purchaser for the land, which it did, resulting in the sale and conveyance, entitling it to a brokerage commission of 5 per cent. on the purchase price. Section 4164 of the Code requires all foreign corporations for profit, doing business in this state, to file with the secretary of state authenticated copies of their charters. The last paragraph of section 4140 is in this language:
"Every foreign corporation doing business in the state of Mississippi, whether it has been domesticated or simply authorized to do business within the state of Mississippi, shall file a written power of attorney designating the secretary of state or in lieu thereof an agent as above provided in this section, upon whom service of process may be had in the event of any suit against said corporation; and any foreign corporation doing business in the state of Mississippi shall file such written power of attorney before it shall be domesticated or authorized to do business in this state, and the secretary of state shall be allowed such fees therefor as is herein provided for designating resident agents. Any foreign corporation failing to comply with the above provisions shall not be permitted to bring or maintain any action or suit in any of the courts of this state." It will be noted that the last clause of that paragraph provides that any foreign corporation failing to comply therewith is barred from bringing and maintaining any suit in the courts of this state.
The question is whether appellant was engaged in business in this state in the meaning of the law. Appellant's home office was in the city of Memphis, Tennessee; its operations in Mississippi were principally through its agent Marx who resided in Memphis, but made frequent trips to this state in and about the business of his principal. While in this state, his headquarters were in the Alcazar Hotel in Clarksdale. He often spent three or four days at a time there and advertised that prospective sellers and purchasers of real estate would find him there. During the years 1932 to 1935, inclusive, appellant effected sales of 33 tracts of land in the delta section of this state and received for its services commissions in the sum of $19,102.95. Marx spent a large part of his time showing these lands to prospective purchasers and doing the other necessary things to consummate the sale thereof.
We are of the opinion that those facts constituted doing business in this state in the meaning of the statute. Quartette Music Co. v. Haygood, 108 Miss. 755, 67 So. 211; Peterman Const. Supply Co. v. Blumenfeld, 156 Miss. 55, 125 So. 548, 550; Wiley Electric Co. v. Electric Storage Battery Co., 167 Miss. 842, 147 So. 773. In the Blumenfeld Case the court said: "One test of whether or not a foreign corporation is `doing business' within the meaning of our statute is whether or not it is doing such acts as are within the function of its corporate powers." The business transacted by appellant in this state was not only "within the function of its corporate powers," but was considerable in amount.
Appellant refers to Hart v. Livermore Foundry Machine Co., 72 Miss. 809, 17 So. 769, as supporting its contention. In that case the court held that a foreign corporation having an office in Tennessee and engaged in business with citizens of other states with reference to property situated elsewhere, as to which persons and property Tennessee had no concern, was not engaged in business in that state within the meaning of its statute forbidding foreign corporations to do business in that state without complying with certain conditions. We do not think that case in point, for the reason that the corporation involved did no business in Tennessee.
Affirmed.