Milan Milling, etc., Co. v. Gorten

93 Tenn. 590 | Tenn. | 1894

McAlister, J.

The original bill in this cause-was filed in the Chancery Court of Gibson County by the Milan Milling and Manufacturing Company against W. E. Gorten et cd., for the purpose of enjoining the collection of four notes, and the foreclosure of a deed of trust made to secure them..

In the year 1892, the Milan Milling and Manufacturing Company entered into a written contract with the Maish & Gorten Manufacturing Company, a foreign corporation, having its office and principal place of business at "Warsaw, in the State of Indiana, whereby the latter company stipulated tO' manufacture, deliver, and put in position for the-former company, at Milan, in the State of Tennessee, certain milling machinery. The price agreed to be paid by the Milan Milling and Manufacturing Company was $5,334 — viz,, $1,897 in cash, upon the arrival of the machinery at the mill, $486 in sixty days, $750 in six months, $750 in twelve mouths, and $750 in eighteen months from April 15, 1892, all evidenced by promissory notes.

The Milan Milling and Manufacturing Company further agreed to execute a first mortgage upon the milling property and lot to secure said deferred payments. In compliance with their agreement, the-Maish & Gorten Manufacturing Company furnished said machinery, and adjusted it in the mill building at Milan, and the same was accepted by the-Milan Milling and Manufacturing Company. The cash payment was made, and notes executed for the deferred payments, which wrere secured by a first mortgage on the milling property. Shortly after the execution of the notes, they were indorsed by the Maish & Gorten Manufacturing Company- to the State Bank of Warsaw, Indiana. Default having been made by the Milan Milling and Manufacturing Company in the payment of the first note, the trustee advertised the property to be sold in accordance with the provisions of the deed of trust. Thereupon, the Milan Milling and Manufacturing Company filed their original bill to enjoin the sale, alleging that the Maish & Gorten Manufacturing Company had breached their contract in the manufacture and delivery of said machinery, in consequence "whereof, the Milan Milling and Manufacturing Company had been greatly damaged, and, in accordance with the prayer of the bill, an injunction issued, restraining the trustee from selling the property.

The State Bank of Warsaw, in its answer, denied all the material allegations of the bill, claiming to be an innocent purchaser of said notes for value before maturity, in due course of trade, and by cross-bill prayed a foreclosure of the deed of trust.

It appeared in proof that the Maish & Gorten Manufacturing Company and the State Bank of Warsaw are both foreign corporations, chartered under the laws of the State of Indiana, and that neither company has ever complied with the laws of the State of Tennessee requiring foreign corporations, before doing business in this State, to register their charters.

Upon final hearing, the Chancellor was of opinion, and so decreed, tliat both the State Bank of Warsaw and the Maish & G-orten Manufacturing -Company, being foreign corporations, and not having complied with the laws of Tennessee, the said contract to furnish machinery was non-enforcible, and that the deed of trust having been executed in violation of said statute, complainant in the cross-bill, the said State Bank of Warsaw, was not entitled to have same foreclosed.

The Chancellor, however, was of opinion that the State Bank of Warsaw was a bona fide purchaser for value, before maturity, of the notes in ■question, and, as such, was entitled to a decree .against the Milan Milling and Manufacturing Company on the two notes which had matured at the date of filing the cross-bill. The Chancellor further decreed that the complainants in the original bill, to wit, the Milan Milling and Manufacturing Company, acquired no such jurisdiction over the Maish & Gorten Manufacturing Company as would entitle them to a decree against the latter for a breach of the contract, but the Court decreed that the injunction be made perpetual so far as it sought to enjoin the sale of said milling property by the trustee.

The Milan Milling and Manufacturing Company appealed from so much of said decree as adjudged it liable upon said notes. The State Bank of Warsaw appealed from so much of said decree as refused a foreclosure of the deed of trust on the milling property for the satisfaction of said notes.

The assignment most earnestly pressed and elaborately argued by counsel • for the State Bank of Warsaw is, that the Chancellor erred in finding-that the Maish & G-orten Manufacturing Company was doing business as a foreign corporation in violation of the statutes of this State. It is insisted that the said Maish & Gorten Manufacturing Company do not come within the purview of these laws, for the reason that this company has no office or agency in the . State, and is not engaged in carrying on business in the State of Tennessee.. It is insisted on behalf of appellants that this corporation is engaged in interstate commerce — that is, manufacturing mills and milling machinery in the State of Indiana, and in selling the same by their agents or upon orders in the different States of the Union; that all its transactions with the Milan Milling and Manufacturing Company were acts of interstate commerce, the regulation of which belongs exclusively to the domain of the Congress of the United States, and that the construction of the statute contended for would render it void, because it would thereby involve an interference with interstate commerce.

In the case of the Cooper Manufacturing Co. v. Ferguson, 113 U. S., 727, it appeared that the Constitution of Colorado provided that no foreign corporation should do any business within the State without having one or more known places of business, and an authorized agent or agents in the same, upon whom process might be served. The Legislature of the State enacted that foreign corporations, befoi’e being authorized to do business in the State, should file a certificate with the Secretary of State and the Recorder of the county in which the principal business was carried on, designating the principal place of business, and the agent there, on whom process might be served. These provisions of the Constitution and statute law of the State of Colorado being in force, the Cooper Manufacturing Company, a corporation organized and existing under the laws of the State of Ohio, and having its principal place of business at Mount Vernon, Ohio, sent an agent into the State of Colorado, and entered into a contract, in writing, with the defendants, who were citizens of Colorado, by which it was agreed that the Ohio corporation should sell aud deliver to the defendants, citizens of Colorado, a s’team-engine and other machinery. Default having been made by defendants in- payment, the plaintiff brought suit to i’ecover of the defendants damages for their breach of the contract. It was held by the State Court of Colorado that plaintiff could not' recover, because it appeared that said foreign corporation had not complied with the law of the State in respect to filing a certificate with Secretary of State and the' Recorder of the county in which the principal business was carried on.

"Upon writ of error to the United States Supreme Court, it was held that the facts of the case did not constitute a carrying on of business in Colorado, and was not forbidden by its constitution and law. Mr. Justice Matthews, in delivering a concurring opinion, stated, we think, the correct basis of the judgment of the Court. He said, viz.: “Whatever power may be conceded to a State to prescribe conditions on which foreign corporations may transact business within its limits, it cannot be admitted to extend so far as to prohibit or regulate commerce among the States; for that would be to invade the jmúsdiction which, by the terms of the Constitution of the United States, is conferred exclusively upon Congress. In the present case,” he continued, “ the construction claimed for the constitution of Colorado, and the statute of that State, cannot be extended to prevent the plaintiff in error, a corporation of another State, from transacting any business in Colorado which, of itself, is commerce. The transaction “in question was clearly of that character. It was the making of a contract in Colorado to manufacture certain machinery in Ohio, to be there delivered for transpoi’tation to the purchasers in Colorado. That was commerce, and to prohibit' it, except on conditions, is to regulate commerce between Colorado and Ohio, which is within the exclusive province of Congress.” The Judge continues: “It is quite competent, no doubt, for Colorado to prohibit a foreign corporation from acquiring a domicile in that State, and to prohibit it from carrying on within that State its business of manufacturing machinery. But it cannot prohibit it from selling in Colorado by contraéis made there, its machinery manufactured elsewhere, for that would be to regulate commerce among the States.”

It has been suggested that the case of Gary Lombard Lumber Company v. Thomas, 8 Pickle, is in conflict with this view. Such supposition is erroneous, and is based upon an entire misconception of that case. The Court, in the Cary Lombard case, was not dealing with interstate commerce. hfo such question was presented by the record in that case. On the contrary, it distinctly appeared in evidence that the Cary Lombard Lumber Company had an oflice and lumber yards in the city of Memphis, and was actually engaged in carrying on business in this State. It had acquired a situs and domicile in the State, and was, of course, subject to the regulations of. our statute.

In the case at bar, the Maish & G-orten Manufacturing Company, a foreign corporation, had simply contracted with citizens of Tennessee to furnish certain milling machinery, and to adjust it in position in the mill. This company was in no sense engaged in carrying on its business in this state, but was engaged in an act of interstate commerce. In this respect the decree of the Chancellor is reversed, and a decree will be entered in favor of the State Bank of Warsaw on all of the notes, which in the meantime have matured, and for a foreclosure 6f the deed of trust made to secure them.