Mergenthaler L. Co. v. Spokesman Pub. Co. , 127 Or. 196 ( 1928 )

Plaintiff appeals from an order sustaining a plea in abatement. Judgment was entered against plaintiff dismissing his suit. The suit was based upon a number of promissory notes given for the purchase of one of plaintiff's type-casting machines. Plaintiff is a foreign corporation. Defendant is a domestic corporation having its office at Redmonds, Oregon. The plea in abatement is to the effect that plaintiff has not complied with the law of this state requiring foreign corporations to pay certain fees and for an annual license in order to do business. There is no substantial dispute in the testimony. The machine was purchased by defendant through a traveling salesman. The order was forwarded to plaintiff at its head office in Brooklyn, New York, and also approved by its office in San Francisco. The promissory notes given for the purchase price were secured by a chattel mortgage which is recorded in the records of Deschutes County. Said notes were executed in the office of defendant and were payable at Redmond National Bank, Redmond, Oregon. One of the notes was for the principal sum of $1,000 and a part of the agreement of the sale of said linotype was to the effect that said $1,000 note could be paid by the delivery of a used type-casting machine then in possession of defendant. All of the allegations of the complaint were admitted by defendant. Its sole defense is the averment that plaintiff has not complied with the law required of foreign corporations in order to do business in the State of Oregon. It is stipulated by the parties to the suit that in case this court holds that the plea in abatement was not sufficient nor sustained by proof decree might be entered in favor of plaintiff as prayed for in its complaint. The sole question presented by the pleadings and the record is: Is the plaintiff amenable to the laws requiring foreign corporations to file the required certificate and pay certain fees in order to do business in the State of Oregon? That question involves this question: Can the defendant maintain its plea in abatement when its transaction with plaintiff was interstate commerce, if plaintiff on other occasions and times engaged in intrastate commerce?

REVERSED. REHEARING DENIED. The law is well settled that a foreign corporation must comply with the regulatory laws of a state in order to do intrastate business in that state: Rashford Lumber Co. v.Dolan, 122 Or. 572, and cases cited in 579 (260 P. 224);Browning v. Waycross, 233 U.S. 16 (58 L. Ed. 828, 34 Sup. Ct. Rep. 578); General Railway Signal Co. v. Virginia,246 U.S. 500 (62 L. Ed. 854, 38 Sup. Ct. Rep. 360); International TextbookCo. v. Pigg, 217 U.S. 91, 105, 106 (54 L. Ed. 678, 30 Sup. Ct. Rep. 481, 18 Ann. Cas. 1103, 27 L.R.A. (N.S.) 493);International Trust Co. v. A. Leschen Sons Rope Co.,41 Colo. 290 (92 P. 727, 14 Ann. Cas. 861); In re Kinyon,9 Idaho 642 (75 P. 268, 2 Ann. Cas. 699); Hirschfeld v.McCullagh, 64 Or. 502 (127 P. 541, 130 P. 1131); State v.Robertson, 271 Mo. 475 (196 S.W. 1132).

"The commerce clause of the Constitution (article 1, § 8, cl. 3) expressly commits to Congress and impliedly withholds from the several states the power to regulate commerce among the latter. Such commerce is not confined to transportation from one state to another, but comprehends all commercial intercourse between different states and all the component parts of that intercourse." Dahnke-Walker Milling Co. v. Bondurant,257 U.S. 282 (66 L. Ed. 239, 42 Sup. Ct. Rep. 106, 108); Spaulding v. McNary, 64 Or. 491 (130 P. 391, 1128); York Mfg. Co. v.Colley, 247 U.S. 21 (62 L. Ed. 963, 28 Sup. Ct. Rep. 430, 11 A.L.R. 611); Chambers v. Baltimore Ohio R.R., 207 U.S. 142 (52 L. Ed. 143, 28 Sup. Ct. Rep. 34); Commercial Bank v.Sherman, 28 Or. 573 (43 P. 658, 52 Am. St. Rep. 811).

There is a distinction between the construction placed upon the words "doing business" in the state as it applies to the protection of the courts and the same words as applied to the right of a state to exact a fee and enforce other regulations upon foreign corporations: Winslow Lbr. Co. v. Hines Lbr. Co., 125 Or. 63 (266 P. 248); 14a C.J. 1270, § 3976, notes 79, 80; 12 R.C.L. 69, § 47; International Harv. Co. v. Commonwealth of Kentucky, 234 U.S. 579 (58 L. Ed. 1479,34 Sup. Ct. Rep. 944).

We are convinced that the transaction which is the basis of this suit constitutes interstate commerce. The order was solicited by a traveling salesman and forwarded to the head office of plaintiff in New York. It was also submitted to plaintiff's San Francisco office for confirmation. The notes in payment were given in Redmond, Oregon, but are a part of and incident to the original sale. The states are not permitted to interfere with interstate commerce. Interstate commerce in order to be effective must be unhampered. We cannot conceive of anything that would more successfully interfere with interstate commerce than to deny an interstate seller access to the courts to enforce payment for goods sold. Taking notes is simply an incident to the collection of the purchase price. Many things may be done incidental to the effective consummation of interstate commerce without depriving the transaction of that nature: YorkMfg. Co. v. Colley, above; Cooper Mfg. Co. v. Ferguson,113 U.S. 727, 728, 734 (28 L. Ed. 1137, 5 Sup. Ct. Rep. 739);Crutcher v. Kentucky, 141 U.S. 47, 56, 57 (35 L. Ed. 649,11 Sup. Ct. Rep. 851).

It must be conceded that the evidence introduced by defendant is sufficient to establish that plaintiff is doing business within the state. The evidence was uncontradicted. It was objectionable on several grounds, but no objection was made and it must be accepted for what it is worth:Derrick v. Portland Eye, Ear, Nose Throat Hospital, 105 Or. 90,100 (209 P. 344), and authorities there cited.

Defendant says in its brief:

"A transaction is either interstate or intrastate commerce, and the sale, delivery and erection of the new linotype machine constituted interstate commerce, but the purchase and acceptance of delivery of the secondhand machine in Oregon and the sale of parts for the new machine in Oregon constituted intrastate commerce."

With this we cannot agree. When the sale of the linotype was completed defendant gave to plaintiff promissory notes to cover the entire purchase price. One of those notes was for the sum of $1,000 in payment of which plaintiff agreed to accept a linotype machine then in possession of defendant. Defendant could have canceled the $1,000 note by paying cash as it was required to do on all the other notes. The mere fact that plaintiff agreed as a part of the sale to accept in part payment the linotype machine did not change the transaction from interstate to intrastate commerce: Puffer Mfg. Co. v. Kelly, 198 Ala. 131 (72 So. 403,405); Empire Clothing Co. v. Roberts, Johnson Rand ShoeCo., 16 Ala. App. 86 (75 So. 634, 635, point 2); Major CreekLum. Co. v. Johnson, 99 Or. 172 (195 P. 177).

We are of the opinion that plaintiff is not deprived of the right of access to our courts because it transacted other business in the state without having paid the required license fee and otherwise qualifying to do intrastate business in this state. States are not permitted, under all the authorities that have considered the question, to interfere with interstate commerce. Let it be conceded that the plaintiff at other times and under other occasions did business within the state or has engaged in intrastate commerce. Even so the transaction here involved is none the less interstate commerce. No transaction immediately connected with the sale of the linotype machine to defendant is intrastate. That consideration differentiates it from the case ofVermont Farm Mach. Co. v. Hall, 80 Or. 308 (156 P. 1073);Deardorf v. Idaho Nat. Harvester Co., 90 Or. 425 (177 P. 33); Ex parte Case, 70 Or. 291 (135 P. 881, 141 P. 746, Ann. Cas. 1916B, 490); York Mfg. Co. v. Colley, 247 U.S. 21 (62 L. Ed. 963, 38 Sup. Ct. Rep. 430, 11 A.L.R. 611); Hirschfeld v. McCullagh, above. In the case last cited it will be noted that the very transaction involved was held to be intrastate. The entire contract was made in Oregon. In the instant case the defendant concedes that the main transaction was interstate. Foreign corporations are entitled to the aid of our courts and are amenable to the process of our courts if and when they engage in business in our state, even though all their transactions are interstate: International Harv. Co. v. Commonwealth ofKentucky, 234 U.S. 579, 589 (58 L. Ed. 1479,34 Sup. Ct. Rep. 944), where we find this language:

"We are satisfied that the presence of a corporation within a State necessary to the service of process is shown when it appears that the corporation is there carrying on business in such sense as to manifest its presence within the State, although the business transacted may be entirely interstate in its character. In other words, this fact alone does not render the corporation immune from the ordinary process of the courts of the State." Winslow Lumber Co. v. Hines Lumber Co., 125 Or. 63 (266 P. 248); Harris v. American Ry. Exp. Co., 56 App. D.C. 264,12 F.2d 487. But in order to be subject to our laws requiring a certificate to be filed, and fees to be paid, such corporations must engage in interstate business: Rashford LumberCo. v. Doan, and other authorities cited above. A foreign corporation cannot be refused the benefit of our courts in the collection of debts arising from purely interstate transactions without an unlawful interference with interstate commerce. The state has provided other remedies for violation of its laws regulating foreign corporations: Or. L., §§ 6912-6915. If a foreign corporation should incur the penalty prescribed in Or. L., Section 6915, we believe it could not for that reason be prevented from engaging in interstate commerce within our state, nor denied the aid of our courts to collect debts owing it and contracted in such commerce.

In order for plaintiff to be liable to the penalty prescribed in Section 6885, Or. L., it must have done some substantial part of its business in the transaction involved in this litigation. Where the local business transacted is incidental to the principal transaction the corporation is not "doing business" in the meaning of "that term" as used in Or. L., Section 6884: 14a C.J. 1287, 1288, note 11. Defendant insists that the interstate clause of the federal Constitution does not control the instant case, but all the authorities examined by us apply that clause. The case at bar does not come within the section of our federal Constitution granting to citizens of other states the same immunities, privileges and rights granted to our citizens. Corporations are not citizens as there used: 14a C.J. 1251, § 3950 (2).

We think the Circuit Court erred in sustaining the plea in abatement. The judgment dismissing plaintiff's complaint is reversed and a decree will be entered here foreclosing the chattel mortgage and awarding to plaintiff judgment in accordance with the prayer of its complaint.

REVERSED. REHEARING DENIED.

RAND, C.J., and BEAN and ROSSMAN, JJ., concur.