WHITAKER v. MITCHELL MANUFACTURING COMPANY
4-9641
Supreme Court of Arkansas
January 7, 1952
244 S. W. 2d 965
“I am in sincere belief that this equipment is in the best possible journals for its disposal and I will do all in my power to help you in every way possible.”
It appears undisputed that appellant did not advertise in any foreign (overseas) newspaper, but in fact advertised in two three-page foreign language papers (Finnish and Arabic) published in New York City.
We think, in the circumstances, considering the written and oral evidence, that the parties entered into a contract which required appellant to advertise in two foreign (overseas) newspapers, where the demand was heavy and that appellant‘s failure to so advertise constituted a breach of the contract by appellant.
While appellant‘s testimony tends to contradict appellees’ version of the contract, we are unable, after carefully considering all of the evidence, to say that the Chancellor‘s findings were against the preponderance thereof.
Accordingly, the decree must be, and is affirmed.
Norton & Norton, for appellee.
WARD, J. This is an appeal from a judgment of the lower court in the sum of $492.89 in favor of appellee against appellant. A jury was waived, the facts stipulated, and only one question is raised in the motion for a new trial.
Suit was filed February 12, 1951, by appellees for recovery on merchandise sold in July and August of 1950 to appellant, Frank E. Doggrell, Jr., and W. B. Konz who were engaged in business in St. Francis County under the firm name of Forrest City Wood Products, Inc. The complaint alleged that the named defendants were partners and asked for judgment against each as individuals and against the partnership. Since only appellant was served with summons judgment was against him and against Forrest City Wood Products, Inc., a partnership, and the cause was continued as to the other partners.
The only defense interposed by appellant, on motion and by answer, was that the Forrest City Wood Products, Inc., was a corporation and not a partnership, and that, therefore, appellant was not liable as an individual.
It is stipulated that Articles of Incorporation of Forrest City Wood Products, Inc., were filed with the Secretary of State on April 30, 1948, showing the above named defendants as the only shareholders, and that said Articles were filed with the County Clerk of St. Francis County on March 19, 1951. The latter date is also the date on which the cause was heard and judgment rendered.
It is frankly admitted by appellant that his only hope for relief in this court is to distinguish this case on the facts from the case of Gazette Publishing Company v. Brady, 204 Ark. 396, 162 S. W. 2d 494, or for us to overrule the Gazette case. The only factual difference be
Appellant ably argues that we should overrule the Gazette case, supra, and the reasons assigned therefore will not be discussed.
His contentions may conveniently be considered from two standpoints: first, the court [in the Gazette case] incorrectly construed the applicable statute; and second, its holding was not in harmony with prior decisions of this court.
The Gazette case construed § 3 of Act 255 of 1931 [
In view of the above it must be conceded there is some foundation for appellant‘s contention that, in the instant case, the corporate existence began when the Articles were filed with the Secretary of State on April 30, 1948. This contention, however, was considered in
The Garnett case, supra, decided in 1879, is short and simply holds that where a purported corporation had not filed its Articles with both the Secretary of State and the County Clerk the individuals [attempting to form the corporation] were liable for a contracted debt. In the last paragraph it was stated that “Appellants could not do business as a corporation until the articles of association were filed in the office of the secretary of state . . . .” This language gives rise to appellant‘s contention that the Garnett case held the attempted incorporation did not constitute even a de facto corporation and therefore could be no authority for the decision in the Gazette case, since, in the latter case, it was expressly stated that the organization was a de facto corporation. Our answer to this contention is that the above quote was not essential to the decision reached in the Garnett case and therefore may be treated as dictum, and also it must be treated in the light of later opinions which will be referred to hereinafter.
In Whipple v. Tuxworth, 81 Ark. 391, 99 S. W. 86, decided in 1907, where an improvement district had not fully complied with the organization statute it was held that it was, never the less, a de facto corporation and that a de facto corporation could sue and be sued and, as a general rule, do whatever a de jure corporation can do.
The decision in Bank of Midland v. Harris, 114 Ark. 344, 170 S. W. 67, decided in 1914, referred to the Garnett case and used the following language which is quoted by appellant: “That decision seems to be against the weight of modern authority and the doctrine of it should not be extended any further.” Following the above, however, is this language: “It does not follow that the corporation itself would not also be liable as a de facto corporation, nor that statutory liability of incorporators would be unenforceable.” This was a case where the county treasurer had deposited county funds in the bank and sought to recover from the stockholders under a statute making them liable. A defense was interposed that the bank had not completed its organization in that the articles had not been filed with the Secretary of State. It was in this connection that the court, holding the stockholders liable, referred to the Garnett case and used the language first quoted. We think the decision was sound and that the Garnett case should not have been extended to relieve the stockholders of liability. Note also that this was a case where the incorporators were seeking to take advantage of their own carelessness to escape liability, and that the Garnett case was not overruled.
It is next contended that the Garnett case was circumscribed in Breitzke v. Tucker, 129 Ark. 401, 196 S. W. 462, decided in 1917. Here appellee brought suit for an injury occurring on February 18 against certain individuals who had signed articles of incorporation dated Feb
Finally it is insisted that the Garnett case was in effect overruled by Wesco Supply Co. v. Smith, 134 Ark. 23, 203 S. W. 6, decided in 1918. There appellant sought to hold Smith personally liable for merchandise sold to a purported corporation which had failed to file its articles with the Secretary of State and this court held Smith was not individually liable. In reaching this conclusion, however, the court refused to overrule the Garnett case, but distinguished it on the facts. In the opinion it was pointed out that Smith had bought stock in the corporation after the attempted organization and knew nothing of the omitted filing, and also that appellant had dealt with the corporation as such and not with any individual. We can readily understand appellant‘s assertion that the Garnett case was, in effect, overruled, but the fact remains that it was not so considered by the court. If we were free to do so we might agree with the dissenting opinion of Chief Justice McCULLOCH in which he stated it would be better to overrule the decision in the Garnett case rather than try to distinguish it.
Regardless of what our views might be were this question of first impression, the issue presented here was squarely passed on in the Gazette case, supra, and we find no compelling reasons for disturbing that decision.
Affirmed.
ED. F. McFADDIN, Justice (Concurring). I have always thought that the Court was in error in its decision in the case of Gazette Publishing Co. v. Brady, 204 Ark. 396, 162 S. W. 2d 494; and I am still of that opinion. Nevertheless I am unwilling to overrule that case at this time because of the reasons herein mentioned.
The first reason is that Gazette v. Brady, was decided in 1942; and the Arkansas Legislature has met several times since that year, and has never amended the corporation statute to overcome the holding in Gazette v. Brady. The correct way to have the law changed is by act of the Legislature, rather than by judicial overruling of previous opinions. This matter was discussed in some detail in my dissenting opinion in Ebrite v. Brookhyser, ante, p. 676, 244 S. W. 2d 625. In the case at bar, there is not involved a “rule of property,” as was involved in Ebrite v. Brookhyser; but even in the absence of a “rule of property,” decisions should not be lightly overruled. The second reason is that we have never indicated, in any opinion until now, that there was any error in Gazette v. Brady; and I maintain that the lawyers and laymen of the State are entitled to some notice or caveat by the Court before it embarks on a career of overruling previous opinions.
There is no need to engage in a discussion of the stare decisis rule and the arguments for and against it. Those interested will find lengthy discussions and many cases cited in 15 C. J. 915 et seq.; 21 C. J. S. 297 et seq.; and 14 Am. Jur. 283 et seq.1 One side will always argue that unless erroneous holdings are corrected, then wrong becomes perpetuated. The other side will always argue that unless previous holdings are followed, no protection is afforded by decided cases. These same arguments were made in the case at bar.
As an example of giving notice that former holdings were to be questioned on their merits, I call attention to the case of Cassen v. Cassen, 211 Ark. 582, 201 S. W. 2d 585. In that case we overruled the earlier case of Squire v. Squire, 186 Ark. 511, 54 S. W. 2d 281. But in Cassen v. Cassen, we pointed out a series of cases in which we had repeatedly stated that the case of Squire v. Squire should be modified, was a questionable decision, and was under reconsideration. So when we finally overruled Squire v. Squire, lawyers and litigants generally had been put on notice that such a step was in contemplation and they could have regulated their conduct and litigation in the light of such judicial caveat.
We have never, until now, indicated any intention to re-examine the holding in Gazette v. Brady, so I think we should follow it until this notice is given. Even though the holding is not a “rule of property,” nevertheless it should not be overruled without previous notice.