M. & R. CONSTRUCTION CO. v. National Homes Corp., 18388.

• Citation: 286 F.2d 638
• Decision Date: 12 January 1961
• Docket Number: No. 18388.,18388.
• Parties: M. & R. CONSTRUCTION COMPANY, a partnership composed of Jack A. Roberts et al. and Jack A. Roberts et al., Individually, Appellants, v. NATIONAL HOMES CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

286 F.2d 638 (1961)

M. & R. CONSTRUCTION COMPANY, a partnership composed of Jack A. Roberts et al. and Jack A. Roberts et al., Individually, Appellants, v. NATIONAL HOMES CORPORATION, Appellee.

No. 18388.

United States Court of Appeals Fifth Circuit.

January 12, 1961.

Winston B. McCall, A. W. Jones, Birmingham, Ala., William S. Pritchard, Pritchard, McCall & Jones, Birmingham, Ala., of counsel, for appellants.

George I. Case, Jr., and McGowen & McGowen, Birmingham, Ala., for appellee.

Before RIVES, BROWN and WISDOM, Circuit Judges.

RIVES, Circuit Judge.

This action sought payment for goods sold and delivered by plaintiff to defendants in accordance with a written contract between the parties. The jury returned a verdict for the plaintiff in the amount of $10,030.39, and the district court entered judgment pursuant to that verdict. The defendants, appellants, insist that the district court erred in denying their motions for a directed verdict and for judgment notwithstanding the verdict on the sole contention that the plaintiff was a foreign corporation doing business in Alabama without having so qualified and, hence, that it may not maintain this diversity action on a contract to be performed in Alabama.

The plaintiff was incorporated under the laws of Indiana and had not qualified to do business in Alabama.¹ The defendants were residents of Alabama. The written contract was signed by the defendants on August 5, 1955, and was executed by the plaintiff in Lafayette, Indiana, on August 15, 1955. The contract was captioned "Dealer Sales Agreement," and contained a grant by plaintiff to the defendants of "the non-exclusive privilege of sale of its prefabricated dwelling units" in the Birmingham, Alabama, territory. The parties did business under the contract from its effective date, August 15, 1955, until July 1957. The contract contained the following provisions:

"3. Acceptance of Privilege — The Dealer accepts such privilege of sale and agrees to maintain an adequate sales office with personnel and facilities acceptable and necessary to handle the sale, construction and servicing of National Homes and the financing arrangements therefor. The Dealer shall develop such territory for sales purposes to the satisfaction of the Company. * * * *

"4. Purchase Orders — All purchase orders to the Company shall be in writing on forms provided by the Company and shall be subject to acceptance by the Company. * * * *

* * * * * * "6. Transportation — The Company reserves the right either to undertake itself the transportation of dwelling units sold to the Dealer, or to ship such dwelling units by common carrier.

"If the Company undertakes the transportation itself, then:

"(a) The Dealer shall pay the cost of such transportation, in advance;

"(b) If for any reason the National Homes\' equipment is unable to deliver the house to the foundation, the Dealer shall provide, at his own expense, the additional assisting equipment to get the National Homes equipment from the improved street to the foundation and back to the improved street. The same provision shall apply where the job site is located on such a steep incline that National Homes\' equipment is unable to deliver the house under its own power.

"(c) The title to the specific products shipped shall not pass to the Dealer until they are paid for and delivered to the job site designated by the Dealer;

"(d) The responsibility of the Company for loss or damage shall cease upon such delivery.

* * * * * *

"7. Construction and Servicing — The Dealer shall construct and erect all dwelling units in accordance with the plans and instructions furnished by the Company without any changes, additions or omissions. * * * *

* * * * * *

"10. Company-Dealer Relationship — It is expressly understood and agreed that this agreement does not establish nor constitute the Dealer, or any officer, employee or agent thereof, as an agent or employee of the Company; nor does this agreement grant to the Dealer or any officer, employee, or agent thereof, any authority or right to transact any business for or incur any obligation against or in the name of the Company. It is expressly understood that the Dealer is and shall remain an independent contractor. This agreement is not made for the benefit of any third person or persons.

"11. Effective Period — This agreement shall become effective upon acceptance in writing, signed by an executive officer of the Company. It shall remain in effect for one year from the date of such acceptance and shall be automatically renewed thereafter for successive periods of one year each until terminated, as herein provided."

In diversity cases, the defense of failure of a foreign corporation to qualify under state laws is available in the federal courts the same as in the state courts. Woods v. Interstate Realty Co., 1949, 337 U.S. 535, 538, 69 S.Ct. 1235, 93 L.Ed. 1524.

The written "Dealer Sales Agreement" signed by the defendants in Alabama had no binding force or effect until accepted and signed by the plaintiff in Indiana. J. R. Watkins Co. v. Goggans, 1942, 242 Ala. 222, 5 So.2d 472, 474. If that contract called simply for the...