East Coast Discount Corp. v. Reynolds, s. 8693

• Decision Date: 13 May 1958
• Docket Number: Nos. 8693,8841,s. 8693
• Citation: 7 Utah 2d 362,325 P.2d 853
• Parties: d 362 EAST COAST DISCOUNT CORPORATION, a corporation, Plaintiff and Respondent, v. Bryce REYNOLDS et al., Defendants and Appellants. CREDIT INDUSTRIAL COMPANY, a corporation, Plaintiff and Appellant, v. Clayton A. PARKER, Defendant and Respondent.
• Court: Utah Supreme Court

Page 853

325 P.2d 853

7 Utah 2d 362

EAST COAST DISCOUNT CORPORATION, a corporation, Plaintiff and Respondent, v. Bryce REYNOLDS et al., Defendants and Appellants.

CREDIT INDUSTRIAL COMPANY, a corporation, Plaintiff and Appellant, v. Clayton A. PARKER, Defendant and Respondent.

Nos. 8693, 8841.

Supreme Court of Utah.

May 13, 1958.

White, Arnovitz & Smith, Salt Lake City, for plaintiffs.

Benjamin Spence, Salt Lake City, for defendants.

WORTHEN, Justice.

The above two actions were consolidated for the purposes of appeal. They were heard separately by two different trial courts sitting without a jury in each case. The question involved in both cases is the same and is whether or not Carbozite, Inc., a New York Corporation, hereafter called Carbozite, was doing business in this state so as to void any contracts made by it with local distributors. Plaintiffs are holders in due course of trade acceptances signed by defendants with Carbozite. These trade acceptances were given for property purchased from Carbozite under a dealer franchise contract which the defendants claim Carbozite breached. Defendants contend that the trade acceptances are void under Section 16-8-3, U.C.A.1953, which provides in part:

'Any foreign corporation doing business within this state and failing to comply with the provisions of sections 16-8-1 and 16-8-2 shall not be entitled to the benefit of the laws of this state relating to corporations * * *; and every contract, agreement and transaction whatsoever made or entered into by or on behalf of any such corporation within this state or to be executed or performed within this state shall be wholly void on behalf of such corporation and its assignees and every person deriving any interest or title therefrom. * * *'

It is admitted by all parties that Carbozite had not complied with the provisions of 16-8-1 and 16-8-2 and had not qualified to do business within this state at the time the contracts were entered into and the only question is whether or not Carbozite was doing business within the state.

The two judges in the separate actions reached opposite conclusions on this question. In No. 8841 the trial court found that Carbozite was doing business within the state and gave judgment to the defendant. In No. 8693 the trial court found that Carbozite was not doing business in the state within the meaning of the statute and gave judgment to the plaintiff.

The contracts in question were made in Utah between Carbozite and Utah dealers. The contracts granted to each dealer an exclusive franchise in a particular area of the state. The contracts were negotiated on behalf of Carbozite by an agent of Carbozite sent into Utah to solicit and execute these dealer's contracts. The contracts also provided for the sale of products of Carbozite to the dealer and provided that title to these products was to pass to the dealer upon delivery by Carbozite to an interstate carrier at the place of shipment, Chicago, Illinois. The contracts as negotiated between the various dealers and Carbozite, while differing in minor detail, provided terms which are sufficiently identical in their material aspects on the question of doing business within the state that they do not require separate treatment in this opinion. Some twenty-two of these contracts were negotiated by Carbozite.

Insofar as material to the point in question, Carbozite under the contracts agreed to perform certain acts as follows:

(a) send guaranties to consumers in Utah when requested by the dealer,

(b) advertise through circulars sent directly to the individual addresses of 200 persons whose names were to be submitted by the dealer,

(c) share one-half the expense of newspaper advertising,

(d) furnish literature and advertising matter to the dealer gratis, and

(e) send an agent into the state when requested by the dealer to make calls with the dealer on prospects in order that the dealer might sell Carbozite products to ultimate consumers.

Few, if any, of the acts were actually performed by Carbozite and we are of the opinion that even if they had been performed by the company none of them individually would be sufficient to...