Camaro Trading Co., Ltd. v. Nissei Sangyo America, Ltd.

• Decision Date: 03 September 1993
• Parties: CAMARO TRADING COMPANY, LTD. v. NISSEI SANGYO AMERICA, LTD. 1920710.
• Court: Alabama Supreme Court

Page 463

628 So.2d 463

CAMARO TRADING COMPANY, LTD. v. NISSEI SANGYO AMERICA, LTD.

1920710.

Supreme Court of Alabama.

Sept. 3, 1993.

William W. Sanderson, Jr. and Jeffrey T. Kelly of Lanier Ford Shaver & Payne, P.C., Huntsville, for appellant.

Gary C. Huckaby and Stuart M. Maples of Bradly, Arant, Rose & White, Huntsville, and Stephen A. Gorman of Foran & Schultz, Chicago, IL, for appellee.

KENNEDY, Justice.

Nissei Sangyo America, Ltd. ("Nissei"), filed this declaratory judgment action against Camaro Trading Company, Ltd. ("Camaro"), seeking a declaration that a contract entered into by Nissei and Camaro was void on the basis that Camaro, a Hong Kong corporation, was doing business in Alabama without being qualified to do so.

The procedural history of this case is somewhat complicated. Camaro removed the case to the United States District Court for the Northern District of Alabama on diversity grounds. That court remanded the case to the state courts for lack of federal jurisdiction, specifically finding that Camaro had failed to prove that its principal place of business was somewhere other than Alabama. (C.R.Supp. 56-64.)

On remand to the state court, Camaro filed a motion to compel arbitration pursuant to an arbitration clause in the contract. The trial court denied the motion, and Camaro appealed. Nissei cross-appealed the trial court's denial of its motion for summary judgment. In Camaro Trading Co., Ltd. v. Nissei Sangyo America, Ltd., 577 So.2d 1274 (Ala.1991), this Court held that the trial court did not err in denying Camaro's motion to compel arbitration and dismissed Nissei's cross-appeal.

After a nonjury trial in the declaratory judgment action, the trial court declared that the agreement between Nissei and Camaro was void and unenforceable because of Camaro's failure to qualify to do business in Alabama before doing business in this state. Camaro appeals.

The only issue is whether the trial court erred in finding that Camaro was a foreign corporation that was not qualified to do business in Alabama. Therefore, we will discuss the facts relevant to that issue.

On September 1, 1987, Nissei and Camaro executed a "Sales Representative Agreement." According to the agreement, Camaro was to act as Nissei's exclusive sales agent for sales of "Shinwa cassette mechanisms" to the Chrysler Acustar Corporation, located in Huntsville, Alabama. Camaro's obligation under the agreement was to use its "best efforts and skills to sell, promote and generally create a demand" by Chrysler in Huntsville for Shinwa cassette mechanisms. Camaro was to receive a 5% commission on Nissei's sales of the mechanisms to Chrysler. It is undisputed that the agreement was limited to Camaro's representation of Nissei in the sale of cassette mechanisms to Chrysler in Huntsville.

The agreement listed Camaro's address as 1805 University Drive, Huntsville, Alabama 35801. (C.R.Supp. 92-98.) Camaro's letterhead contained an address in Hong Kong and an address in Huntsville. Domer Ishler, who signed the agreement on behalf of Camaro, testified that 90% of the daily operations of the project occurred in Huntsville. (R.T. 56.) Ishler, an Alabama resident, had a power of attorney on Camaro's brokerage account in Alabama and was the signing authority on Camaro's corporate accounts. Chrysler's plant manager testified that Ishler directed and controlled Camaro in Huntsville. ¹

From September 1987 until March 1989, when the agreement was terminated, Nissei issued 20 checks to Camaro at the Huntsville address. It is undisputed that Camaro did not pay tax on its commissions from the agreement. Additionally, Camaro owned and maintained a yacht in Huntsville that it used for entertaining Chrysler executives.

When a trial court, without a jury, hears ore tenus evidence, its findings are presumed to be correct and its judgment based on those findings will not be reversed on appeal unless the appellate court finds it to be not supported by the evidence or to be plainly and palpably wrong, after considering all the evidence and after making all reasonable inferences from that evidence. Spruiell v. Robinson, 582 So.2d 508 (Ala.1991).

Section 10-2A-247, Ala.Code 1975, provides in pertinent part:

"(a) All contracts or agreements made or entered into in this state by foreign corporations which have not obtained a certificate of authority to transact business in this state shall be held void at the action of such foreign corporation or any person claiming through or under such foreign corporation by virtue of said void contract or agreement; but nothing in this section shall abrogate the equitable rule that he who seeks equity must do equity...."

This Court has interpreted § 10-2A-247 as follows:

"The purpose of this section is to provide some power for the State to protect Alabama residents from possible abuse by uncontrolled foreign corporations. This section of the Code is part of a statutory scheme that requires foreign corporations to receive a certificate of authority to do business in this State before transacting business here. See § 10-2A-226 et seq. Failure to secure such a certificate means that the foreign corporation cannot enforce a contract entered into in this State.

§ 10-2A-247(a)."

Green Tree Acceptance, Inc. v. Blalock, 525 So.2d 1366, 1370 (Ala.1988).

The initial determination in applying § 10-2A-247(a), is whether the company is engaged in inter state...