Flour City Ornamental Iron Co. v. General Bronze Corp.

• Decision Date: 05 November 1937
• Docket Number: No. 3786.,3786.
• Citation: 21 F. Supp. 112
• Parties: FLOUR CITY ORNAMENTAL IRON CO. v. GENERAL BRONZE CORPORATION.
• Court: U.S. District Court — District of Minnesota

21 F. Supp. 112

FLOUR CITY ORNAMENTAL IRON CO. v. GENERAL BRONZE CORPORATION.

No. 3786.

District Court, D. Minnesota, Fourth Division.

November 5, 1937.

Melrin, Brown & Sherman, of Minneapolis, Minn., for the plaintiff.

Francis D. Butler and Edgar G. Vaughan, both of St. Paul, Minn., for defendant.

SULLIVAN, District Judge.

The plaintiff is a Minnesota corporation located at Minneapolis, Minn. The general nature of its business was and is the fabrication of metal work for installation in buildings. The work was fabricated in its Minneapolis plant and then shipped to the location of the building wherein it was to be installed.

The defendant is a New York corporation, and prior to March 28, 1933, maintained and operated the plant which plaintiff now owns, and carried on at Minneapolis, Minn., the same type of business which the plaintiff now carries on.

As appears from the contract involved in this action, and the complaint herein, the defendant on March 27, 1933, had a number of contracts for the fabrication of certain products, and for the erection of these metal products in certain buildings then in the process of construction in various parts of the United States. A portion of the fabrication of such products was to be done by the defendant in its Minneapolis plant, and other of certain work in the fabrication of products on certain contracts had been allocated to other of defendant's plants located without the state of Minnesota.

On March 27, 1933, the defendant corporation sold and assigned certain of its assets, including certain assignments of contracts for the fabrication and installation of certain metal products in the construction of certain buildings, some of which of such buildings were located in the state of Minnesota, and others being located without the state. The defendant in other regards obligated itself to plaintiff — to give the plaintiff purchase orders for the completion of certain sublet jobs, to pay the plaintiff the net amount of the purchase orders less certain deductions, and to pay real estate taxes on certain real property in the state of Minnesota.

As appears from the contract attached to the complaint, defendant, on March 27, 1933, had performed a substantial portion of the work involved in the fabrication and erection of these metal products in various buildings; that a portion of the work had been performed by it in its plant in Minneapolis, Minn. Pursuant to the terms of the contract the plaintiff company agreed to complete the fabrication and installation of the metals in these various buildings referred to in the contract. In other words, the plaintiff, on October 28, 1933, began to operate the defendant's plant in Minneapolis, Minn., which up to March 27, 1933, had been operated by the defendant.

This action is brought for the purpose of recovering from the defendant amounts claimed to be due on account of plaintiff's performance of the contract dated March 27, 1933.

At the time of the execution of the contract involved in this action the defendant company was licensed to do business in the state of Minnesota. It withdrew from the state of Minnesota pursuant to section 7494, Mason's Minnesota Statutes 1927, early in the year 1934. At the time of its withdrawal it complied with said section 7494 by filing with the secretary of state of the state of Minnesota a power of attorney appointing the secretary of state, or his successor, its agent "for service of legal process and other notices upon it in any action or proceeding of any nature or kind arising out of or involving anything done or omitted by said corporation in the State of Minnesota while licensed to do business therein." This power of attorney was duly filed in the office of the Minnesota Secretary of State.

The summons herein was served upon the defendant by handing to and leaving a true and correct copy thereof with W. N. Brown, chief clerk in charge of the office of the secretary of state of the state of Minnesota.

The defendant has made a motion to quash the service on the theory that chapter 200, Session Laws 1935, effectively repealed said section 7494, and therefore vitiated the power of attorney. The motion of the defendant is supported by an affidavit of one of its officers to the effect that no business was done in the state of Minnesota by the defendant corporation pursuant to the contract attached to the complaint.

The foreign corporation law of Minnesota prior to the 1935 act was contained in three sections of the statute.

Section 7494 provided for the withdrawal of foreign corporations from doing business in the state, and, upon their so doing, filing with the secretary of state a power of attorney duly passed by unanimous vote of the board of directors directing such withdrawal, and irrevocably appointing the secretary of state of Minnesota, and his successors in authority, the agent of said withdrawing corporation, for service of legal process and other notices upon it in any action or proceeding of any nature or kind arising out of or involving anything done or omitted by said foreign corporation in the state while licensed to do business here, and that such appointment of said agent should continue in force as long as any cause of action, right, or claim against said corporation survived in this state, and service upon such agent should be deemed personal service upon the foreign corporation so appointing him.

Section 7493 provided for the appoint-failure of a foreign corporation to qualify in the state of Minnesota upon its doing business in said state.

Section 7495 provided for penalties for ment by a foreign corporation, before being authorized or permitted to transact any business in this state, of an agent duly authorized to accept service of process in any action to which said corporation is a party.

In 1935 the Legislature of Minnesota enacted a new and comprehensive corporation code, commonly known as the Minnesota Foreign Corporation Act (chapter 200, Laws 1935, Minnesota). Section 22 of that act provided that all licenses theretofore granted to foreign corporations doing business in the state should continue to March 1, 1936, and that after that date, if there was no compliance with the new Corporation Act, authority of such corporations would automatically be revoked.

The Minnesota Legislature, in enacting this new Corporation Act, set up certain prerequisites and conditions for the admission and qualifying of a foreign corporation to do business in Minnesota. It enlarged the scope of its regulation of foreign corporations over and above that set out in the old Corporation Act. Sections 7493, 7494, and 7495 are expressly repealed by the new act, but the new legislation made no reference to the powers of attorney theretofore filed by foreign corporations which had withdrawn from the state.

1. The first question which claims attention is the effect the repeal of said section 7494 has upon the power of attorney filed by the defendant corporation.

Upon the defendant corporation withdrawing from its business in the state it, in accordance with section 7494, filed a power of attorney appointing the secretary of state as its agent to accept service.

Powers of attorney given under statutes similar in context to section 7494 have been held to be irrevocable in so far as any ex parte action, directly or indirectly, on the part of the corporation is had. Minnesota courts have stated that it is a substantial right which the corporation cannot upon its own action directly or indirectly destroy, take away, or...