Dot Systems, Inc. v. Adams Robinson Ent., Inc.
| Citation | 587 N.E.2d 844,67 Ohio App.3d 475 |
| Decision Date | 27 April 1990 |
| Docket Number | No. 1897,1897 |
| Parties | DOT SYSTEMS, INC., Appellant, v. ADAMS ROBINSON ENTERPRISES, INC. et al., Appellees. |
| Court | United States Court of Appeals (Ohio) |
Allen & Payne and Craig A. Allen, Ironton, for appellant.
Pickrel, Schaeffer & Ebeling, John W. Slagle and Andrew C. Storar, Dayton, for appellee Adams Robinson Enterprises, Inc.
This is an appeal from a judgment entered by the Lawrence County Court of Common Pleas granting the motion for summary judgment of Adams Robinson Enterprises, Inc., defendant-appellee, and dismissing the complaint of Dot Systems, Inc., plaintiff-appellant, which had alleged, inter alia, that appellee had been guilty of breach of contract.
Appellant assigns the following errors:
On December 5, 1985, appellant filed a complaint which named appellee as defendant and which averred, in pertinent part, as follows. Appellant is a corporation duly organized under the laws of the Commonwealth of Kentucky and is authorized to do business in Ohio. On June 17, 1985, appellant entered into a subcontract to perform certain concrete work upon the Union-Rome Township Sewer District in Lawrence County, Ohio, wherein Adams-Robinson Construction Company was the general contractor. Appellee failed to pay appellant $227,243, i.e., the agreed-upon contract price.
Appellant's complaint further averred that appellee had engaged in an intentional plan to interfere with the successful operation of appellant's business, that it had a prevailing wage claim against appellee, and, finally, that appellee had given appellant a bad check. On March 7, 1986, appellee filed an answer which generally denied the allegations of appellant's complaint. Appellee subsequently filed third-party complaints against several other parties as well as a counterclaim against appellant.
On November 1, 1988, appellant filed answers to interrogatories wherein it stated that it was incorporated in Kentucky on July 16, 1973, that it was not incorporated in Ohio, and that it was not licensed to do business in Ohio as a foreign corporation. On January 9, 1989, appellee filed a motion for summary judgment with regard to appellant's complaint. On January 12, 1989, the parties herein stipulated to the accuracy of the June 17, 1985 subcontract agreement. This subcontract agreement specified that appellee, as general contractor, had entered into a contract with Lawrence County, Ohio, for the construction of a wastewater treatment plant to be constructed in Chesapeake, Ohio. Pursuant to the subcontract agreement, appellant agreed to perform a portion of the contracted job. Additionally, the subcontract agreement provided, in pertinent part, as follows:
On February 1, 1989, the trial court issued a decision which granted appellee's motion for summary judgment on the basis that appellant lacked standing to bring an action in an Ohio court and that a contract provision allowed appellee to unilaterally terminate the subcontractor's agreement. On February 16, 1989, the trial court filed an entry which reflected its February 1, 1989 decision. The trial court's entry included the express finding that there was "no just reason for delay in granting Summary Judgment unto Adams-Robinson Enterprises, Inc. and that this is a final appealable Order." 1
Appellant's first assignment of error asserts that the trial court erred when it determined that appellant did not have standing to bring an action in an Ohio court. Civ.R. 56(C) provides, in pertinent part, as follows:
Summary judgment is appropriate when the following have been established: (1) that there is no genuine issue as to any material fact; (2) that the moving party is entitled to judgment as a matter of law; and (3) that reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor. Bostic v. Connor (1988), 37 Ohio St.3d 144, 146, 524 N.E.2d 881, 883-884; Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66, 8 O.O.3d 73, 74-75, 375 N.E.2d 46, 47-48.
The burden of showing that no genuine issue exists as to any material fact falls upon the moving party in requesting a summary judgment. Harless, supra, at 66, 8 O.O.3d at 74-75, 375 N.E.2d at 47-48. Accordingly, the moving party must state specifically which areas of the opponent's claim raise no genuine issue of material fact and such assertion may be supported by affidavits or otherwise as allowed by Civ.R. 56(C). Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115, 526 N.E.2d 798, 801-802. As noted previously, one of the two grounds for the trial court's entry of summary judgment in favor of appellee herein was that appellant lacked standing to bring an action in Ohio pursuant to R.C. 1703.29(A). Appellee supported its motion for summary judgment in this respect with the answers by Carolyn Gibbons, the sole shareholder, director, and officer of appellant, to appellee's interrogatories wherein appellant admitted that it was a Kentucky corporation that was not licensed to do business in Ohio as a foreign corporation.
R.C. 1703.29 provides, in pertinent part, as follows:
"(A) The failure of any corporation to obtain a license under sections 1703.01 to 1703.31, inclusive, of the Revised Code, does not affect the validity of any contract with such corporation, but no foreign corporation which should have obtained such license shall maintain any action in any court until it has obtained such license * * *." (Emphasis added.)
In that appellee supported its motion for summary judgment with appropriate Civ.R. 56(C) evidentiary material, appellant was not entitled to rest upon the mere allegation in its complaint that it was "authorized to do business" in Ohio Civ.R. 56(E); Mitseff, supra, at 115, 526 N.E.2d at 801-802. In the case at bar, the pertinent evidence was uncontroverted that appellant had failed to obtain a license required by R.C. 1703.03, and, therefore, unless an exception applied to R.C. 1703.29(A), appellant did not have standing to bring the instant action.
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. Contel Credit Corp. v. Tiger, Inc. (1987), 36 Ohio App.3d 71, 73, 520 N.E.2d 1385, 1386-1387. As a penalty for transacting business in Ohio without a license, foreign corporations are precluded under R.C. 1703.29 from maintaining a cause of action in any court in Ohio. Colegrove v. Handler (1986), 34 Ohio App.3d 142, 145, 517 N.E.2d 979, 982-983. However, R.C. 1703.02 exempts from the licensing requirements of R.C. 1703.03 foreign corporations "engaged in this state solely in interstate commerce." Appellant contends that there remains a genuine issue of material fact as to whether it is engaged in Ohio "solely in interstate commerce," which would allow it to bring the action herein despite its failure to obtain a license to do business in Ohio.
The term "interstate commerce" is not defined in R.C. Chapter 1703. Words and phrases which are undefined in the Revised Code shall be read in context and construed according to the rules of grammar and common usage. R.C. 1.42; Radcliffe v. Artromick Internatl., Inc. (1987), 31 Ohio St.3d 40, 42, 31 OBR 148, 150-151, 508 N.E.2d 953, 954-955. "Interstate commerce" is broadly defined as commerce between a point in one state and a point in another state, between points in the same state through another state or through a foreign country, between points in a foreign country or countries through the United States, and commerce between a point in the United States and a point in a foreign country or in a territory or possession of the United States, but only insofar as such commerce takes place in the United States. Black's Law Dictionary (5 Ed.1979) 735.
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. Contel, supra, at 73, 520 N.E.2d at 1386-1387; Golden Dawn Foods, Inc. v. Cekuta (1964), 1 Ohio App.2d 464, 466, 30 O.O.2d 452, 453-454, 205 N.E.2d 121, 123-124. A foreign corporation engages solely in interstate commerce when its business within Ohio consists merely of selling and delivering through traveling agents, goods manufactured...
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