Summary
In Watson v. J. R. Watkins Co., 188 Miss. 435, 193 So. 913, an agreement was executed in Minnesota to furnish the purchaser, a resident of Mississippi, the products of the foreign corporation from without the state, at wholesale for resale.
Summary of this case from Putnam v. PublicationsOpinion
No. 34059.
February 26, 1940.
CORPORATIONS.
A foreign corporation which, by contract executed in Minnesota, agreed to furnish purchaser with its products at wholesale prices for purpose of resale was not "doing business" in Mississippi so as to be precluded from bringing action against purchaser and surety for balance due under the contract, by reason of failure to file a copy of charter with secretary of state and to appoint a process agent, since contract was a "contract of sale" rather than a "contract of agency," notwithstanding that sales were required to be reported to corporation by purchaser, or that contract allowed purchaser to return unsold goods or that designation of sales territory was made (Code 1930, secs. 4140, 4164).
APPEAL from the circuit court of Sunflower county; HON. S.F. DAVIS, Judge.
Everett Everett, of Indianola, for appellants.
By the demurrer, the plaintiff admitted the truth of the allegations of the plea. The facts stated in the plea present questions when proved which should be passed upon by a jury. If the facts alleged in the plea constitute no defense when proved, then Sections 4140 and 4146, Code of 1930, should be repealed, for they are wholly worthless and meaningless.
We contend that the contract here involved is purely a contract of agency and not one of sale and purchase, and in order to get a clear view of the situation and the distinction, as well as the method of judging to which class it belongs, we quote from 22 Am. Jur. 309: "A consignment of goods to a factor is not a sale. In a sale, title passes to the buyer, while in a consignment to a factor the possession passes to the factor but the title remains in the consignor, and the factor is liable, not to pay a price, but to account for the proceeds of the goods when sold."
The contract here fixes no price that the so-called purchaser is to pay for the goods, but as set out in the plea, he only accounts to the Watkins Company for the "proceeds of the goods when sold."
The contract under consideration here does not exact a price for the goods delivered to Watson, but requires him to account for sixty per cent of the price for which they are sold.
11 R.C.L. 755.
When we analyze the contract under consideration here and apply the above authorities to its meaning we find purely a contract of agency.
In a sales contract the purchase price is fixed and a definite time for payment is fixed whether the goods be sold or not, and it does not require the purchaser to make any accounting to the sellor. But the contract before us fixes no price, no time of payment, and requires of the agent a weekly accounting to the company of his entire transactions on blank form furnished the so-called purchaser by the company, and if he does not sell them he may return the whole to the company, and his account there is wiped out without the payment of a single dime.
It matters not what they may call this contract, for its name is immaterial. It is the intention of the parties, to be gathered from the acts of the parties and the whole of the agreement that determines its character.
22 Am. Jur. 309-310; 11 R.C.L. 755.
It is perfectly clear from the terms of the contract here under consideration that it was the intention of the parties that the J.R. Watkins Company was to supply Watson with its products and Watson was to undertake the sale thereof in a particular territory, to keep a strict account of his cash sales and his credit sales, to make weekly reports to the company showing separately his cash sales, his credit sales, and his collections from former sales on blank report forms furnished him by the company for that purpose, and to remit to the company with each report 60% of his cash sales and 60% of his collections from former sales, and then to return whatever goods he had on hand at the termination of the contract, and when that was done, neither party owed the other anything whatsoever. That being the clear intention of the contract, it can be nothing but a contract of agency. Then to carry on that character of business in this state, the J.R. Watkins Company, being a foreign corporation, must comply with Secs. 4140-4146, Code of 1930 before it can maintain a suit in the courts of Mississippi.
Quintette Music Co. v. Haygood, 108 Miss. 755, 67 So. 211.
Cooper Thomas, of Indianola, for appellee.
A simple reading of the contract shows that it is merely a contract of sale and purchase and that the title of the merchandise passed to the purchaser.
The fact that Watson had the right to return unsold merchandise and receive credit therefor at the current wholesale price did not make it a contract of consignment but merely as one of the ways by which he might pay in part for the merchandise.
These identical contracts have been before the courts of the country in a good many cases, and as we have found them the courts have uniformly held this contract to be a contract of purchase and sale and not a contract of agency.
J.R. Watkins Co. v. Coleman et al., 110 So. 449; McConnon v. Meadows, 138 Miss. 342, 103 So. 7; J.R. Watkins Co. v. Poag et al., 122 So. 473.
Contracts have been expressly construed to be contracts of sale and not of agency in the following cases:
McConnon Co. v. Haskins, 182 Mo. App. 140, 180 S.W. 21; Dr. Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; Saginaw Medical Co. v. Batey (Mich.), 146 N.W. 329; J.R. Watkins Co. v. Holloway (Mo.), 168 S.W. 290; J.R. Watkins Co. v. Hague (Ark.), 210 S.W. 628; W.T. Rawleigh Co. v. Holcomb (Ark.), 191 S.W. 214; W.T. Rawleigh Co. v. Ellis (Ark.), 201 S.W. 110; E.A. Lange Co. v. Johnson (Ark.), 197 S.W. 1168; Saginaw Medicine Co. v. Dykes (Mo.), 238 S.W. 556; W.T. Rawleigh Co. v. Van Winkle (Ind. App.), 118 N.E. 834; Dodd et al. v. W.T. Rawleigh Co. (Tex.), 203 S.W. 131; Swift v. Warehouse Co. (Tenn.), 158 S.W. 480; Chicago Portrait Co. v. Maddox (Miss.), 73 So. 278; Hughes v. W.T. Rawleigh Co. (Ark.), 208 S.W. 295; J.R. Watkins Co. v. Hunt (Nebr.), 177 N.W. 462; Hogg et al. v. J.R. Watkins Co. (Ark.), 228 S.W. 730; McConnon Co. v. Holden (Idaho), 204 P. 656; W.T. Rawleigh Co. v. Van Duyn (Idaho), 188 P. 946; Shores-Mueller v. Palmer (Ark.), 216 S.W. 295; W.T. Rawleigh Co. v. Rose (Ark.), 202 S.W. 850; J.R. Watkins Co. v. Waldo (Kan.), 230 P. 1051; McConnon Co. v. Marshall (Tex.), 280 S.W. 323; Sinnett v. J.R. Watkins Co. (Ky.), 282 S.W. 769; Wright v. J.R. Watkins Co. (Ind.), 159 N.E. 761; Sager v. W.T. Rawleigh Co. (Va.), 150 S.E. 244; Furst Thomas v. Mosely (Ark.), 277 S.W. 877; J.R. Watkins Co. v. Brund (Wash.), 294 P. 1024; Hill v. H.C. Whitmer Co. (Ga.), 158 S.E. 625; W.T. Rawleigh Co. v. Atwater (Idaho), 195 P. 545; W.T. Rawleigh Co. v. Thoroughman (Ky.), 11 S.W.2d 1006; W.T. Rawleigh Co. v. Harper (Wash.), 22 P.2d 665; W.T. Rawleigh Co. v. Snider (Ind.), 194 N.E. 356; J.R. Watkins Co. v. Holloway (Mo. App.), 181 S.W. 602.
The requirement of reports of records of sales by the company from the dealer does not obstruct the passing of the title of goods to the salesman.
Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; Arbuckle v. Kirkpatrick, 98 Tenn. 221; Ex Parte White, 6 Chy. App. Cas. 397; Gindre v. Kean, 28 N.Y. Supp. 7; Sinnett v. J.R. Watkins Co. (Ky.), 282 S.W. 769.
A provision allowing dealers to return goods to the company does not affect the character of the transaction.
Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; State v. Betz (Mo.), 106 S.W. 64; Sinnett v. J.R. Watkins Co. (Ky.), 282 S.W. 769; Equitable Credit Co., Inc. v. Rogers (Ark.), 299 S.W. 747.
The designation of the dealer's territory does not affect the passing of title of the goods or the character of the contract.
Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; Granite Roofing Co. v. Casler, 82 Mich. 466; Lock et al. v. Citizens' Nat'l Bank (Tex.), 165 S.W. 536; Woods v. Amer. Brewing Assn. (Mo. App.), 183 S.W. 127; Saginaw Med. Co. v. Dykes (Mo. App.), 238 S.W. 566; W.T. Rawleigh Co. v. Walker (Ala.), 77 So. 70; W.T. Rawleigh Co. v. Fletcher (Tex.), 275 S.W. 210; Sinnett v. J.R. Watkins Co. (Ky.), 282 S.W. 769.
The U.S. Supreme Court and other courts hold that a foreign corporation need not take out registration papers as a condition to the right to sue for the collection of accounts, though the state in which suit is brought has a statute requiring registration.
J.R. Watkins Co. v. Holloway (Mo.), 168 S.W. 290; Koch Veg. Tea Co. v. Shuman (Okla.), 139 P. 1134; Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; Buck Stove Range Co. v. Vicars, 226 U.S. 205; International Text Book Co. v. Pigg, 217 U.S. 91; Butler Bros. Shoe Co. v. U.S. Rubber Co., 156 Fed. 1; Thomas v. Remington (Kans.), 73 P. 990; Erwin v. DuPont (Tex.), 156 S.W. 1097; Sioux Remedy Co. v. Cope, 235 U.S. 197; J.R. Watkins Co. v. Horn (Ark.), 203 S.W. 24; J.R. Watkins Co. v. Martin (Ark.), 200 S.W. 283; Waxahachie Med. Co. v. Daly (Ark), 183 S.W. 741; W.T. Rawleigh Co. v. Van Duyn (Idaho), 188 P. 946; W.T. Rawleigh Co. v. Walker (Okla.), 246 P. 417; Sinnett v. J.R. Watkins Co. (Ky.), 282 S.W. 769; Heinrich Chemical Co. v. Welch (Mo.), 300 S.W. 1001; Furst Thomas v. Brewster, 282 U.S. 493.
The institution and prosecution of a suit does not constitute the doing of business within the meaning of corporation registration statutes.
J.R. Watkins Co. v. Holloway (Mo.), 168 S.W. 290; Koch Veg. Tea Co. v. Schuman (Okla.), 139 P. 1134; Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; Christian v. Mortgage Co. (Ala.), 7 So. 427; Ginn v. Mortgage Co., 92 Ala. 135; Railway v. Fire Assn., 60 Ark. 325, 28 L.R.A. 83; Cook v. Brick Co., 98 Ala. 409; 2 Morawetz on Corp., Sec. 662 and cases cited; Waxahachie Med. Co. v. Daly (Ark.), 183 S.W. 741; Larken Co. v. Commonwealth (Ky.), 189 S.W. 3; W.T. Rawleigh Co. v. Holcomb (Ark.), 191 S.W. 214; J.R. Watkins Co. v. Martin (Ark.), 200 S.W. 283; Erie Beach Amusement Co. v. Spirella Co., 173 N.Y. Supp. 626, 105 N.Y. Misc 170; J.R. Watkins Co. v. Coombs (Okla.), 166 P. 1072; J.R. Watkins Co. v. Hunt (Nebr.), 177 N.W. 462; J.R. Watkins Co. v. Waldo (Kans.), 230 P. 1051; M.E. Smith Co. v. Dickinson (Wash.), 142 P. 1133; Sinnett v. J.R. Watkins Co. (Ky.), 282 S.W. 769; W.T. Rawleigh Co. v. Walker (Okla.), 246 P. 417; Wright v. J.R. Watkins Co. (Ind.), 159 N.E. 761; Heinrich Chemical Co. v. Welch (Mo.), 300 S.W. 1001; Furst Thomas v. Brewster, 282 U.S. 493; New Idea Spreader Co. v. Satterfield (Idaho), 265 P. 664; W.T. Rawleigh Co. v. Harper (Wash.), 22 P.2d 665; Equitable Credit Co., Inc. v. Rogers (Ark.), 299 S.W. 747; J.R. Watkins Co. v. Holloway (Mo. App.), 181 S.W. 602; C I.T. Corp. v. Stuart, 187 So. 204.
In the case of North American Mortgage Company v. Hudson, 168 So. 79, our court held that a foreign corporation was not doing business in Mississippi where it purchased commercial paper secured by trust deeds in the state and collecting notes and foreclosing trust deeds by an agent in the state who leased property pending foreclosure to realize on mortgages.
Dodds v. Pyramid Securities Co., Inc. et al., 147 So. 328.
The laws of one state do not apply to the sale of goods f.o.b. another state.
J.R. Watkins Co. v. Holloway (Mo.), 168 S.W. 290; International Text Book Co. v. Pigg, 217 U.S. 91; Chicago Crayon Co. v. Rodgers (Okla.), 119 P. 630; Crutcher v. Ky., 141 U.S. 47; Gunn v. Sewing Machine Co., 57 Ark. 24; Keating v. Favorite Co. (Tex.), 35 S.W. 417; Kepheart v. People (Colo.), 62 P. 946; Henderson v. Edwards, 84 Mo. App. 448; Koch Veg. Tea Co. v. Malone (Tex.), 163 S.W. 663; W.T. Rawleigh Co. v. Rose (Ark.), 202 S.W. 849; Cole Motor Co. v. Hurst, 228 Fed. 280; Puffer Mfg. Co. v. Kelly (Ala.), 73 So. 403; Sioux Remedy Co. v. Cope, 235 U.S. 97; W.T. Rawleigh Co. v. Trerice (Mich.), 195 N.W. 79; Heinrich Chemical Co. v. Herman (Mo.), 251 S.W. 162; J.R. Watkins Co. Coombs (Okla.), 166 P. 1072; Koch Veg. Tea Co. v. Schuman (Okla.), 139 P. 1133; Freeman Sipes Co. v. Corticelli Silk Co. (Okla.), 124 P. 972; Droege v. Aherns Ott Mfg. Co., 163 N.Y. 466; Rock Island Plow Co. v. Peterson (Minn.), 101 N.W. 616; Toledo Com. Co. v. Glen Mfg. Co., 56 Ohio 217; Hogg v. J.R. Watkins Co. (Ark.), 228 S.W. 730; Scharnagel v. Furst Thomas (Ala.), 112 So. 102; Wright v. J.R. Watkins Co. (Ind.), 159 N.E. 761; Heinrich Chemical Co. v. Welch (Mo.), 300 S.W. 1001; Furst Thomas v. Brewster, 282 U.S. 493; J.R. Watkins Co. v. Holloway (Mo. App.), 181 S.W. 602.
The appellants admit in their brief, "If he, Watson, bought the goods at a specified price, then they were his." That is exactly what the contract provided.
The brief seems to be founded on the conclusion that Watson was merely receiving a commission on merchandise received, but the contract itself provided that he purchased the goods at a definite price and was to pay for them in definite ways. We submit there is nothing in the contract justifying the conclusion that he was working on a commission.
It being a contract of purchase and sale, then Watson was not the agent of the foreign corporation. Therefore, the foreign corporation was not legally doing business in Mississippi, and under the authorities cited has not incurred the extreme penalty of being denied the right to resort to the courts of Mississippi to enforce its rights.
Appellee, a foreign corporation, brought this action in the circuit court of Sunflower County against appellants, Watson and Campbell, suing the former as principal and the latter as his surety for the balance due under a written contract for the sale of goods. There was a trial on the pleadings and a judgment for appellee, from which judgment appellants prosecute this appeal.
The defense was that appellee had no right to maintain the action because as a foreign corporation it had failed to comply with Sections 4140 and 4164 of the Code of 1930, which provide that such corporations shall file a copy of their charter with the Secretary of State, and also a written appointment with that officer of a process agent, and upon failure to do so such corporation "shall not be permitted to bring or maintain any action or suit in any of the courts of this state." A copy of the contract follows:
"This Agreement, Made at Winona, Minnesota, this 16th day of July, 1936, between the J.R. Watkins Company, a corporation, hereinafter called `the Company,' and George E. Watson, of Belzoni, Mississippi hereinafter called `the Purchaser,' witnesseth,
"1. That in consideration of the promises and agreements of the purchases hereinafter contained, to be kept and performed by him, the Company agrees, unless prevented by fire, strikes, or other causes, to sell and deliver to the Purchaser, at its current wholesale prices, free on board cars at Winona, Minnesota, or at its option, at any of its other regular places of shipment, such goods and other articles manufactured or sold by it, as the Purchaser may reasonably require for sale, from the date hereof, until the first day of April, 1938, in the locality in which he is now engaged, or intends to engage, in business, a description of which locality he agrees to furnish and deliver to the Company in writing prior to its acceptance of this agreement; but the furnishing of such description may be waived by the Company at its election, without notice to the Purchaser or the sureties hereon.
"2. And in consideration thereof, the Purchaser agrees to buy from the Company the goods reasonably required by him as aforesaid; and agrees to furnish to it complete, regular, weekly, written reports, showing separately the amounts of his cash sales, time sales, and collections; which reports, however, or any of them, may be waived by the Company without notice to the sureties hereon, and he also agrees to furnish a complete financial statement when requested to do so.
"3. The Purchaser further agrees to pay the Company its current wholesale prices for the goods and other articles sold to him, as herein provided, and also the prepaid transportation charges thereon, if any, by remitting to the Company each week at least sixty per cent (60%) of the amount received by him from his cash sales, and from his collections on sales previously made, at the time and in the manner and in accordance with the provisions of the weekly report blanks of the Company to be furnished to him; and, at the expiration or termination of this Agreement, to pay the whole amount therefor then remaining unpaid; or the Purchaser may pay for such goods in cash, less the usual cash discount allowed for such payments; but such payments, or any of them, may be waived or extended by the Company without notice to the sureties hereon, and without prejudice to the rights or interest of the Company.
"4. If the Purchaser shall not pay cash for said goods and other articles so sold and delivered to him, and the payments at the time an in the manner hereinbefore provied are insufficient to pay therefor, the Company may, in its discretion, thereafter either limit the sales herein agreed to be made, or from time to time suspend the same, or require cash with each order, or cash upon delivery, until the Purchaser's indebtedness is paid, or reduced, as the Company may require.
"5. The Purchaser may, within thirty days after the expiration or termination of this Agreement, return, by prepaid freight, to the Company, at Winona, Minnesota, Memphis, Tennessee, Newark, New Jersey, or Oakland, California, in as good condition as when delivered to him at point of shipment, any goods purchased by him from the Company, which he may then have on hand; and the Company agrees to repurchase such goods, if in such condition when received by it, and pay or credit the Purchaser therefor at the then prevailing wholesale prices. And, if any goods returned by the Purchaser are not in a salable condition when received by the Company at any of the places above named, the Company will restore them to such condition, if that can be done, and make a reasonable charge therefor, and deduct such charge from the value of such goods, and pay or credit the Purchaser with the balance. But the Purchaser shall not return, nor the Company pay or allow any credit for, any advertising matter of any kind, or for any goods or articles which have been used, or for any goods which cannot reasonably be restored to a salable condition.
"6. The Purchaser shall have no power or authority to make any statement or representation, or to incur any debt, obligation, or liability of any kind whatsoever, in the name of, or for, or on account of the Company.
"7. The Company shall have no interest in the accounts due for goods sold by the Purchaser; and no printed, advertising or other matter of the Company, sent to, or distributed by the Purchaser, shall be construed to direct or control the sale or other disposition of said goods, or to change or modify the terms of this Agreement.
"8. It is also mutually agreed that this is the complete, entire and only Agreement between the parties, and that it shall not be varied, changed, or modified in any respect except in writing executed by the parties hereto; and that either of the parties hereto may terminate this Agreement at any time, if desired, by giving the other party notice thereof in writing by mail.
"In Witness Whereof, The Company has caused these presents to be executed in its corporate name by its proper officer, and the Purchaser has hereunto set his hand the day and year first above written."
The contract was signed by appellant and Watson, and Campbell as surety for Watson.
The question here is whether appellee was doing business in this state. We are of opinion that it was not. This same contract was before the court in J.R. Watkins Company v. J.W. Coleman et al. (Miss.), 110 So. 449, not reported in state reports; and J.R. Watkins Co. v. Poag et al., 154 Miss. 222, 122 So. 473. The court held that it was a contract of sale, not a contract of agency. In C.I.T. Corporation v. Stuart (Miss.), 187 So. 204, the court held that a foreign corporation which sent agents into this state to solicit reserve title contracts and purchased such contracts at its office outside the state, was not doing business within the state within the terms of our statute requiring the appointment of process agent as a condition precedent to maintenance of suit. To the same effect are North American Mortgage Company v. Hudson et al., 176 Miss. 266, 168 So. 79; Dodds v. Pyramid Securities Co., Inc., et al., 165 Miss. 269, 147 So. 328. The requirement that sales be reported to the seller by the purchaser does not prevent the passing of the title, nor does a provision in the contract allowing the purchaser to return unsold goods, nor does the designation of the purchaser's sale territory. Dr. Koch Tea Company v. Malone, ___ Tex. Civ. App. ___, 163 S.W. 662, 663. The recent decision in Case v. Mills Novelty Company (Miss.), 193 So. 625, not yet reported, throws light on the question.
Appellee seems to rely mainly on Wiley Electric Co. et al. v. Electric Storage Battery Company, 167 Miss. 842, 147 So. 773. That case is not in point on its facts. They were materially different from the facts in the present case. The foreign corporation involved in that case had been doing business in the state for more than ten years, over practically the entire state. Its contracts were usually executed within the state by travelling representatives "and local storeroom operators were urged if not required." Payments were regularly made by trade acceptances. The notes sued on were dated and executed and payable in this state. The retail prices at which the products were sold were controlled by the foreign corporation. The sale territory was fixed in the contract. The contract required further "such storerooms to purchase batteries at prices fixed by the appellee, and to carry in stock complete Exide batteries and parts, and to actively canvass the battery trade `within the trading area assigned by the battery company to the purchaser from time to time in conformity with the sales policies and methods prescribed by the battery company, and not to handle or sell any substitute for, or imitation of, Exide material.' It further provided that the purchaser should `handle repairs or replacements under the Exide warranty in the manner and upon the terms prescribed by the battery company,' . . ."
Affirmed.