Filmakers Releasing Organization v. Realart Pictures of St. Louis, Inc.

• Court: Missouri Court of Appeals
• Writing for the Court: RUDDY
• Citation: Filmakers Releasing Organization v. Realart Pictures of St. Louis, Inc., 374 S.W.2d 535 (Mo. App. 1964)
• Decision Date: 21 January 1964
• Docket Number: No. 31192,31192
• Parties: FILMAKERS RELEASING ORGANIZATION, a corporation, (Plaintiff) Respondent, v. REALART PICTURES OF ST. LOUIS, INC., a Corporation, George Phillips and Herman Gorelick, Individuals, (Defendants) Appellants.

Page 535

374 S.W.2d 535

FILMAKERS RELEASING ORGANIZATION, a corporation, (Plaintiff) Respondent, v. REALART PICTURES OF ST. LOUIS, INC., a Corporation, George Phillips and Herman Gorelick, Individuals (Defendants) Appellants.

No. 31192.

St. Louis Court of Appeals, Missouri.

Jan. 21, 1964.

Shifrin, Treiman, Agatstein & Schermer, Sylvan Agatstein, St. Louis, for appellants.

Morris J. Levin and S. Sheldon Weinhaus, St. Louis, for respondent.

RUDDY, Presiding Judge.

This suit was instituted by plaintiff, a California corporation, against Realart Pictures of St. Louis, Inc., a corporation, George Phillips and Herman Gorelick, individuals, to recover the sum of $1758.36 due plaintiff by virtue of the terms of a franchise agreement between plaintiff and defendants. The cause was tried by the court without a jury on a stipulation titled 'Stipulation of Facts and Submission of Questions of Law.'

The trial court found in favor of plaintiff and entered judgment accordingly. Defendants appealed from the judgment entered.

The sole issue presented, as set out in the 'Stipulation of Facts and Submission of Questions of Law,' is as follows:

'The sole issue in dispute is whether by reason of the contract entered into between plaintiff and defendants, the plaintiff, a foreign corporation, was required to register as a foreign corporation with the office of the Secretary of State of the State of Missouri and obtain a license to do business in the State of Missouri, and it not having so qualified, is prohibited from maintaining this action pursuant to Section 351.635, Revised Statutes Missouri 1949.'

Put more succinctly, the question before us is whether plaintiff, a foreign corporation, is 'doing business' in this state so as to require it to qualify with the Secretary of State.

The parties in their Stipulation of Facts and Submission of Questions of Law agreed in the trial court that the following are the facts in this case. We summarize the facts so stipulated.

Plaintiff is a corporation organized under the laws of the State of California and is engaged in the business of distributing in interstate commerce throughout the United States motion pictures which it owns, and its method of doing business is to contract for a specifically defined territory, covering a multi-state area, for the exclusive distribution of its motion pictures, in consideration of which the other party to the agreement agrees to pay plaintiff for each picture so distributed an agreed specified share of the gross proceeds taken in at the showings of each motion picture referred to and covered by the contract between the parties, with guaranteed minimum.

It was further stipulated that defendant Realart Pictures of St. Louis, Inc., is a Missouri corporation and that the individual defendants are the principal officers, directors and stockholders of said corporate defendant and control said corporation's activities.

On or about December 1, 1953, the plaintiff and defendants entered into a written contract, a copy of which was attached to the stipulation and incorporated therein by reference. Thereafter, the guaranteed minimum, as set out in said agreement, was amended and modified on May 5, 1954 by a supplemental agreement which was attached to the stipulation and incorporated therein by reference.

It was further agreed that a deficiency existed in the guaranteed minimum as provided by said agreement, in the amount of $1758.36 for two motion pictures delivered and that said amount with interest thereon was and is due and owing to plaintiff by the defendants. It was further stipulated that plaintiff maintains its principal and only office in California and that its officers and stockholders reside in that state and that it has no office for the transaction of business in the State of Missouri; that all transactions between plaintiff and defendants pursuant to the agreements were conducted by mail.

It was further stipulated that plaintiff exercised no control over any of the defendants' employees, did not hire or discharge any of them, nor did it determine their wages, hours or other terms or conditions of their employment, and that plaintiff has never paid salaries to anyone in the State of Missouri.

It was stipulated that plaintiff has not registered as a foreign corporation with the Office of the Secretary of State of the State of Missouri so as to qualify it to do business in the State of Missouri.

Defendants contend that in addition to the facts contained in the stipulation we should consider various articles of the franchise agreement which they deem material as describing the acts performed by the parties and the relationship between them. Some of the provisions of the franchise agreement which they contend should be given consideration we summarize as follows:

The provision that Realart must at all times keep Filmakers advised of the exact whereabouts and location of all prints.

The provision that forbids Realart from changing or revising or altering any of the prints without Filmakers' consent.

The provision that makes it a ground for cancellation in the event that the personnel of Realart shall be changed.

The provision that relates to the method of compensation of Filmakers by Realart and provides in paragraph (D) that collection of fees from exhibitors shall be a trust fund to be shared by Filmakers and Realart.

The provision that provides in its last paragraph that the name of Filmakers shall be conspicuously displayed on Realart's building, office window or door so long as the agreement shall be in effect.

The provision that the motion pictures shall be distributed, exhibited and exploited as a release of Filmakers whose name shall be conspicuously mentioned by the franchise holder.

As pointed out by plaintiff, there is nothing in the stipulation of facts to show that the contractual obligations contained in the franchise agreement and described above, calling for affirmative acts on the part of the parties, were ever preformed under the contract and were ever exercised or executed by defendants. There was no evidence before the trial court in the stipulation of facts to show that plaintiff required Realart to advise it of the exact whereabouts and location of all prints, or that the provision with reference to the changing and revising or altering of any of the prints without plaintiff's consent was ever enforced, or that the provision for cancellation in the event that the personnel of Realart shall be changed was ever enforced, or that moneys collected by defendants were ever held in trust or put in any trust fund, or that defendants conspicuously displayed plaintiff's name on its building, office window or door or that plaintiff's name was conspicuously mentioned in the distribution, exhibition and exploitation of motion pictures. True it is that these were contractual obligations to be performed under the franchise agreement but there was no evidence before the trial court to show that they resulted in acts actually performed.

In determining whether a foreign corporation is 'doing business in' the State of Missouri, we are more concerned with what was done actually under a contract. What it 'could have done' is not sufficient to establish 'doing business in' the State of Missouri.

In the case of Hogan v. City of St. Louis, 176 Mo. 149, 75 S.W. 604, petitioner contended that at the time the contract was entered into between the City of St. Louis and the Kern Company, a foreign corporation, that the corporation had not complied with the statutory requirements of this state prerequisite to its admission into the state with authority to do business here. In other words, petitioner contended that the foreign corporation had not complied with the statutes, one of which was a predecessor statute of Sec. 351.635 RSMo 1959, 17 V.A.M.S., wherein it is provided that every foreign corporation doing business in this state which shall fail to comply with the requirements set out in the statute for doing business in this state shall subject the corporation to a fine and in addition to such penalty provides that, 'no foreign corporation, failing to comply with this chapter, can maintain any suit or action, either legal or equitable, in any of the courts of this state, upon any demand, whether arising out of the contract or tort, while the requirements of this chapter have not been complied with.'

In the Hogan case the Kern Company apparently had not performed under the contract at the time the suit was filed. In its opinion the Supreme Court said:

'Entering into a contract like the one in question undoubtedly is 'transacting business,' within the unlimited meaning of the term, but that is not the sense in which the term is used in the statute just quoted. As there used, it means carrying on the work for which the corporation was organized, and, in its application to the facts of this case, it means performing the work called for by the contract.' (75 S.W. 1. c. 605.)

While in the earlier statute the term 'transacting business' was used, whereas today the successor statute uses the term 'doing business in,' we see no real difference in meaning.

The Supreme Court of the United States in the case of Ozark Pipe Line Corporation v. Monier et al., 266 U.S. 555, 45 S.Ct. 184, 69 L.Ed. 439, when considering the powers of a foreign corporation in Missouri to do a local business, said:

'Some stress is laid upon the fact that the objects and purposes specified in appellant's articles of incorporation are not confined to the transportation of petroleum but include the doing of other business local in character. As to this, it is enough to say that none of these powers were in fact exercised in the State of Missouri; and so far as this case is concerned the power to tax depends upon what was done and not upon what might have been done.' (266 U.S. l. c. 566, 45 S.Ct. l. c. 187, 69 L.Ed. 439.)

Therefore, the contractual obligations which de...