Dalton Adding Mach. Sales Co. v. Lindquist

• Decision Date: 20 January 1926
• Docket Number: 19520.
• Citation: 137 Wash. 375,242 P. 643
• Parties: DALTON ADDING MACH. SALES CO. v. LINDQUIST et al.
• Court: Washington Supreme Court

242 P. 643

137 Wash. 375

DALTON ADDING MACH. SALES CO. v. LINDQUIST et al.

No. 19520.

Supreme Court of Washington

January 20, 1926

Department 1.

Appeal from Superior Court, King County; Gilliam, Judge.

Action by the Dalton Adding Machine Sales Company, a corporation against H. W. and H. R. Lindquist, doing business as Lindquist Bros. & Runland. From a judgment dismissing the action, plaintiff appeals. Affirmed.

Leopold M. Stern, Clarence L. Gere, and John S. Jurey, all of Seattle, for appellant.

W. E Heidinger, of Enumclaw, for respondents.

FULLERTON J.

The appellant, a corporation organized under the laws of the state of Ohio, brought this action against the respondents H. W. and H. R. Lindquist, alleging that they were copartners doing business under the name of Lindquist Bros. & Runland to recover a balance claimed to be due as a part of the purchase price of an adding machine sold by it to the partnership. The contract sued upon is in writing, and is set out as an exhibit to the complaint. It is in the form of an order, directing the corporation to deliver to the partnership an adding machine f. o. b. at Enumclaw, Wash., and is made subject to the approval of the corporation. The contract price of the machine was $400, on which there were credited certain sums, the balance being payable in monthly installments. On the back of the contract were printed some nine conditions made 'a part of this order'; those urged as material to the questions presented by the present controversy being the following:

'(6) This instrument may not be varied by any oral understanding or agreement, contemporaneous or otherwise, all previous negotiations, either oral or written, being hereby abrogated or merged herein; and this printed and written document, when approved by an executive office of your company at Cincinnati, Ohio, is to constitute the entire agreement and understanding between the parties hereto.

'(7) It is expressly agreed that this order shall not be countermanded, that the original hereof has been unconditionally released and delivered for transmission to the Dalton Adding Machine Sales Company, and that any notice or communication relating hereto or contemplated hereby shall be made in writing to said company at Cincinnati, Ohio, and not otherwise.

'(8) The within signer hereby expressly agrees that all checks will be drawn to the order of the Dalton Adding Machine Sales Company, and consents that credit shall not be given or claimed hereon except and until payment be actually received by you in Cincinnati, Ohio.

'(9) The within signer has retained an exact duplicate hereof.'

The respondents set up three distinct defenses: First, that the appellant had no legal capacity to sue; second, that there was a defect of parties defendant; and, third, that the contract of purchase was, prior to the commencement of the action, rescinded by the mutual agreement of the parties.

The trial was by the court sitting without a jury, and resulted in findings sustaining each of the several defenses, and a judgment dismissing the action with costs to the respondents.

The first of the defenses set out is founded on the statutes prescribing the terms and conditions on which foreign corporations may do business in this state. These statutes, as originally enacted (Rem. Comp. Stat. §§ 3852, 3853, 3854), authorize and empower any corporation incorporated under the laws of any state or territory of the United States, or any foreign country, state, or colony, for which domestic corporations are authorized to be so formed under the laws of this state (except as to certain restrictions on alien corporations with respect to the acquisition of real property), to sue and be sued, and to transact and perform such business within the state as local corporations, organized for like purposes, may transact and perform. The rights and powers were, however, granted subject to certain conditions to be complied with by the corporation desiring to enter the state for the transaction of business. It was required to file in the office of a secretary of state a certified copy of its articles of incorporation, and to designate and appoint in writing an agent who should reside at the principal place of business of the corporation within the state, and who should be authorized to accept service of process in any action or suit pertaining to the property, business, or transactions of the corporation within the state in which such corporation may be a party. The penalty fixed by the statute ( Id. § 3855) for the doing of business by any such foreign corporation without a compliance with the statute was a penalty in a named sum of money to be recovered in a civil action at the suit of the Attorney General in the name of the state.

Later on the Legislature enacted another statute with respect to corporations both foreign and domestic. Laws 1907, p. 270. By section 6 of the act it provided:

'Every corporation incorporated under the laws of this state, and every foreign corporation having its articles of incorporation on file in the office of the secretary of state shall, on or before the first day of July of each and every year, pay to the secretary of state, for the use of the state, the following license fees. * * *'

And by section 7:

'No corporation shall be permitted to commence or maintain any suit, action or proceeding in any court of this state, without alleging and proving that it has paid its annual license fee last due. * * *'

There was no compliance by the appellant with either of these statutes, and it was because of the want of such compliance that the trial court held that the appellant had no legal capacity to sue. The appellant assails this holding upon several distinct grounds, the first of which to be noticed is that the question sought to be raised is not open to the defendants, that it 'is a matter solely and alone between the appellant and the state.' With reference to the first of the cited statutes, this court has held that a defendant could not defeat a recovery by a foreign corporation on a liability created by a contract entered into with it, on the ground that the contract arose out of business transacted by the corporation in this state without a compliance with the statutes. Dearborn Foundry Co. v. Augustine, 5 Wash. 67, 31 P. 327; Whitman Agricultural Co. v. Strand, 8 Wash. 647, 36 P. 682; Fire Engine Co. v. Town of Mt. Vernon, 9 Wash. 142, 37 P. 287, 38 P. 80, 43 Am. St. Rep. 827; Rathbone v. Frost, 9 Wash. 162, 37 P. 298; Marble Savings Bank v. Williams, 23 Wash. 766, 63 P. 511; Horrell v. California, etc., Ass'n, 40 Wash. 531, 82 P. 889. An examination of the cases, however, will show that they are rested on the principle that, where a statute creates a new offense and denounces a penalty or gives a new right and declares a remedy, the punishment or remedy can be only that which the statute prescribes, and emphasis is laid on the fact that the statute does not declare void a contract made by a foreign corporation doing business in this state without a compliance with the requirements of the statute, or declare that the corporation may not sue on the contract, pointing out that the statute prescribes a specific remedy for the noncompliance, and the specific officer who may enforce the remedy.

But the later statute, it will be observed, is not thus limited. It not only provides that every corporation, foreign or domestic, shall pay a license fee to the state, but provides that it shall not be permitted to commence or maintain any action, suit, or proceedings in any court of the state without alleging and proving that it has paid such license fee. This change in the statute, we have held, requires a change in the rule, and that now a defendant may question the capacity of a foreign corporation to sue, where it does not show a compliance with the statute. In Frye & Co. v. Merchants' Transp. Co., 118 Wash. 602, 204 P. 184, the action was by a foreign corporation. In its complaint, the corporation alleged that it was a corporation organized under the laws of the state of Nevada, with its principal place of business in this state at Seattle, and that it had paid the license fees due the state. This latter allegation was denied in the answer, and there was no proof upon the question. The trial court, however, found affirmatively that the license fee had been paid. For the failure of the proofs to substantiate the allegation and finding, we reversed the case and remanded it for a new trial, using this language:

'We long ago held, in Denver v. Spokane Falls, 7 Wash. 226, 34 P. 926, that the legal capacity of the plaintiff may be raised under the form of general denial, and that, under such denial, plaintiff was put to its proof as to every allegation material to its cause of action. See, also, Thompson-Spencer Co. v. Thompson, 61 Wash. 547, 112 P. 655, and Washington Printing Co. v. Osner, 99 Wash. 537, 169 P. 988. In the last two cases, no issue had been raised as to the corporate capacity of plaintiff, by the pleadings. In this case, the issue having been raised, and there being a total failure of proof as to the corporate capacity of respondent, it follows that there was a complete failure of proof upon which to base such finding necessary to respondent's recovery.'

Another case recognizing the rule is that of Boston Tow Boat Co. v Sesnon Co., 64 Wash. 375, 116 P. 1083. The plaintiff in that case was a corporation organized under the laws of the state of Massachusetts. The action arose out of a contract of affreightment. The defendant defended upon the merits, and also set up the fact that the corporation was doing business within this state and had not paid its annual license fee to the state, past due at the time...