Contel Credit Corp. v. Tiger, Inc., 12717

• Decision Date: 04 March 1987
• Docket Number: No. 12717,12717
• Citation: 520 N.E.2d 1385,36 Ohio App.3d 71
• Parties: CONTEL CREDIT CORPORATION, Appellee, v. TIGER, INC., Appellant.
• Court: Ohio Court of Appeals

Page 71

36 Ohio App.3d 71

520 N.E.2d 1385

CONTEL CREDIT CORPORATION, Appellee, v. TIGER, INC., Appellant.

No. 12717.

Court of Appeals of Ohio, Ninth District, Summit County.

March 4, 1987.

Syllabus by the Court

1. The determination of whether a foreign corporation is engaging solely in interstate commerce and is thus exempt, pursuant to R.C. 1703.02, from the licensing requirements of R.C. 1703.03 is largely factual, dependent upon the totality of the relevant circumstances surrounding the corporation's business operations.

2. The loaning of money by a foreign corporation engaged in that business to a corporation in Ohio is not a matter of interstate commerce, and the foreign corporation, if not licensed to do business in Ohio pursuant to R.C. 1703.03, lacks standing to maintain a cause of action on its contract in any Ohio court. (R.C. 1703.29, applied.)

Harry W. Greenfield, Cleveland, for appellee.

Charles J. Lally, Cleveland, for appellant.

MAHONEY, Presiding Judge.

Appellant, Tiger Inc. ("Tiger"), appeals the judgment of the Akron Municipal Court, following a trial to the court, in favor of appellee, Contel Credit Corporation ("Contel"), in the amount of $4,341.06 plus interest, representing the unpaid balance on Contel's lease of telephone equipment to Tiger. We reverse.

Facts

On May 29, 1981, Tiger agreed to lease telephone equipment from Contel for a period of sixty months. In a June 10, 1981 addendum to the lease agreement, the parties agreed that, upon expiration of the lease term, Tiger could purchase the equipment for $1. Tiger made its monthly payments until November 1984 when it stopped making such payments.

On October 23, 1985, Contel filed suit against Tiger in Akron Municipal Court. In its complaint, Contel alleged that Tiger had breached its obligations under the terms of the lease and had failed to make the remaining nineteen monthly payments. In response, Tiger asserted the affirmative defense that Contel was not licensed to do business in Ohio and was thereby precluded from maintaining a cause of action in Ohio courts by virtue of R.C. 1703.29.

Following a trial to the court on May 20, 1986, the trial court rendered judgment in favor of Contel. In its findings of facts and conclusions of law, the trial court determined that although Contel is not licensed to do business in Ohio, it is "covered by the exemption of R.C. 1703.02" and, accordingly, has standing to maintain a cause of action in Ohio.

Assignments of Error

"I. The trial court erred in finding, contrary to the manifest weight of the evidence, that plaintiff-appellee, a foreign corporation engaged in the business of leasing and financing the sale of telephone equipment within the state of Ohio, was exempted by R.C. 1703.02 from complying with the licensing requirements of R.C. 1703.29[, which is a] prerequisite to plaintiff-appellee maintaining its cause of action before the trial court.

"II. The trial court erred in holding, as a conclusion of law, that the plaintiff-appellee, a foreign corporation engaged in the business of leasing and financing the sale of telephone equipment within the state of Ohio, was exempted by R.C. 1703.02 from complying with the licensing requirements of R.C. 1703.29[, which is a] prerequisite to plaintiff-appellee maintaining its cause of action before the trial court."

In its assignments of error, Tiger contends that the trial court erred in finding that Contel is covered by R.C. 1703.02's exemption to R.C. 1703.03's licensing requirements. Tiger contends that the trial court should have found instead that, by virtue of the parties' lease agreement, Contel is engaged in intrastate commerce and is therefore not entitled to R.C. 1703.02's exemption. Consequently, Tiger contends Contel has no standing to maintain a cause of action in Ohio.

R.C. 1703.03 provides that a foreign corporation, that is, a corporation incorporated under the laws of another state, shall not transact business in Ohio until it obtains a license to do so. R.C. 1703.02 exempts from such licensing statute a corporation "engaged in this state solely in interstate commerce." As a penalty for transacting business in this state without a license, foreign corporations, not exempt under R.C. 1703.02, are precluded, under R.C. 1703.29, from maintaining a cause of action in any court in Ohio.

The determination of whether a corporation engages solely in interstate commerce and is thus exempt from a state's licensing requirements is largely factual, dependent upon the totality of the relevant circumstances surrounding the corporation's business operations. Golden Dawn Foods, Inc. v. Cekuta (1964), 1 Ohio App.2d 464, 466, 30 O.O.2d 452, 453, 205 N.E.2d 121, 123; Selama-Dindings Plantations, Ltd. v. Durham (S.D.Ohio 1963), 216 F.Supp. 104, 113, 24 O.O.2d 80, 88, affirmed...