Ford, Bacon & Davis, Inc. v. Terminal Warehouse Co.

• Decision Date: 09 February 1932
• Citation: 207 Wis. 467,240 N.W. 796
• Court: Wisconsin Supreme Court
• Parties: FORD, BACON & DAVIS, INC., v. TERMINAL WAREHOUSE CO.

207 Wis. 467

240 N.W. 796

FORD, BACON & DAVIS, INC.,

v.TERMINAL WAREHOUSE CO.^a1

Supreme Court of Wisconsin.

Feb. 9, 1932.

Appeal from a judgment of the Circuit Court for Milwaukee County; John J. Gregory, Circuit Judge. Reversed.

Action by Ford, Bacon & Davis, Inc., a foreign corporation, plaintiff, against the Terminal Warehouse Company, defendant, commenced on the 22d day of July, 1929. From a judgment in favor of the defendant rendered on the 28th day of July, 1931, the plaintiff appeals.

FOWLER, J., dissenting.Miller, Mack & Fairchild, of Milwaukee, for appellant.

Saltzstein & Scheinfeld, of Milwaukee (Olwell & Brady, of Milwaukee, of counsel), for respondent.

OWEN, J.

The plaintiff is a foreign corporation, of New York, with a branch office in Chicago and several other cities. Its business is furnishing engineering and business reports and consulting service and appraising the property and earning capacity of business concerns, to serve as a basis for financing and other purposes. Defendant, a Wisconsin corporation, with headquarters at Milwaukee, contemplated an expansion of its plant, and consulted the plaintiff concerning its business advisability. The plaintiff and defendant thereupon entered into a contract whereby the plaintiff was to furnish a report to the defendant at a cost not to exceed $3,500. This contract was consummated at Chicago.

In order to enable the plaintiff to arrive at a determination of the question of whether the business prospects justified the investment, it was necessary to make a survey of business conditions and prospects in Milwaukee, and to the data thus acquired apply its business knowledge and experience. To acquire the information necessary, it sent its representatives to Milwaukee, who appraised the present warehouse of the defendant, secured traffic data from the Milwaukee Harbor Commission, United States engineer's office, and from traffic officers of the railroad companies serving Milwaukee, as well as the present customers of the defendant company. In other words, these representatives went to Milwaukee and made a general survey of the business conditions there, so far as they had a bearing upon the proposed venture. This data was sent to New York, where it was analyzed by the officers of the company and resulted, eventually, in the mailing of a report which was received through the mails by the defendant at Milwaukee.

This action is brought to recover for the services thus rendered under and pursuant to the contract entered into by the parties at Chicago. The defense is that the plaintiff is a foreign corporation, and at the time of the rendition of such services had not been licensed to transact business in the state of Wisconsin pursuant to the provisions of section 226.02, Stats. At the conclusion of the plaintiff's testimony, the court granted a nonsuit, and judgment dismissing plaintiff's complaint was entered. From this judgment the plaintiff appeals.

Section 226.02, Stats., provides that no foreign corporation shall transact business, or acquire, hold, or dispose of property in this state until such corporation shall have caused to be filed in the office of the secretary of state a copy of its charter, articles of associations or incorporation, etc., together with other information therein specified. Failure to comply with the provisions of said section subjects the corporation or any agent, officer, or person acting for it in this state, to a penalty of $500. Subsection (10) of the section also provides that “Every contract made by or on behalf of any such foreign corporation, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions of this section, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them.”

[1] It is the contention of the defendant that the contract involved in this action is wholly void and unenforceable by virtue of the provision just quoted. The fact that the statute specifies the character of contracts that shall be void negatives the legislative intent that all contracts made by an unlicensed foreign corporation shall be void. If it had been the legislative purpose to render every contract void, it would not have attempted to specify the character of contracts which should be void. It would simply have declared all of its contracts void. The contention that the phrase “affecting the personal liability thereof” includes all contracts for the breach of which the corporation would be liable in damages or otherwise, was expressly negatived in Catlin & Powell Company v. Schuppert, 130 Wis. 642, 110 N. W. 818, and it was said in the opinion in that case that the phrase excluded “all unilateral contracts, like bills and notes, all contracts fully executed outside of this state upon which there remains as obligation only payment, or payment and delivery, to be made in this state, and all contracts not by their stipulations imposing duties or liabilities on such foreign corporation.” Page 649 of 130 Wis., 110 N. W. 818, 820.

It thus appears that, whenever it is contended that a contract is void by virtue of section 226.02, the first inquiry must be whether the contract under consideration falls within one of the classes of contracts made void by the provision under consideration. Before it can be held to be void it must appear either that it is a contract relating to property within this state or a contract affecting the personal liability of the unlicensed corporation.

[2] Turning now to the contract, we find no difficulty in concluding that it does not relate to property within this state, within the meaning of the statute at least. It does not affect the title to any property in this state, nor does it contemplate the construction or creation of any property in this state. It is a contract that simply calls for the advice and business judgment of the plaintiff concerning the business venture which the defendant then had in contemplation. The result of this advice might lead to the construction or creation of new property within the state, but the contract here under consideration could have no such result.

[3][4][5] As all contracts do impose obligations upon the contracting parties, it will be assumed without further discussion that this contract responds to the character of contract referred to in the statute “as affecting the personal liability” of the unlicensed corporation. But the statutes of this state have no extraterritorial effect. This contract was made in Chicago and the statutes of this state have no force in Chicago. This state must have some jurisdiction over the contract or some feature or element of it in order to make the contract void. Where the contract deals with property located in this state, the jurisdiction which the state has over the property is sufficient to enable it to declare void a contract relating to the property no matter where entered into. But this is not such a contract. This is a contract made by a citizen of this state with a foreign corporation beyond the jurisdiction of this state. Even though the state possessed the power to do so, the provisions of section 226.02 will not be construed as intending to prohibit a citizen of this state from transacting business with a foreign corporation beyond the jurisdiction of this state. First State Bank of Harvard v. Harrington, 192 Wis. 293, 212 N. W. 665. The consummation of this contract between the parties in Chicago no doubt amounted to “transacting business” between the parties. But this business was not transacted in the state of Wisconsin, and the contract was not rendered void by any of the provisions of the statutes of this state.

It is said, however, that the plaintiff should not be permitted to recover because the contract, though consummated in Chicago, contemplated the transaction of business in this state, and that business was the acquiring of information concerning the plaintiff's past business and the extent of the business reasonably available to it in and about Milwaukee. It is claimed that the survey of business conditions in Milwaukee made by the representatives of the plaintiff constituted the transaction of business in this state, and that, as its activities in this respect were induced by the contract, in fulfillment of the obligations which plaintiff assumed by the contract, it should not be permitted to recover under the contract. It would seem that this contention might be more properly made had the Legislature not specified the character of contracts which should be void and the court were left at liberty to declare any and all of its contracts void where rights were acquired under a contract in defiance of the public policy of the state.

However, the defendant's contentions are not without support in the decisions of this court, even though the Legislature has limited the class of contracts which are to be considered void. In Street Railway Advertising Company v. Lavo Company of America, 184 Wis. 395, 198 N. W. 595, it was held that the plaintiff could not recover under a contract made outside the state where the contract imposed upon the foreign corporation the duty of transacting business in the state. In that case the foreign corporation agreed to display defendant's advertising matter in certain street cars operated in this state. The displaying of the advertising matter plainly constituted the transaction of business in this state, and, it was held, rendered the contract void.

[6] We now come down to the very narrow question of whether the survey made by the plaintiff's representatives, which survey was made for the purpose of putting the plaintiff in possession of information which would enable it to form its well-considered judgment upon the advisability of the business venture which defendant had in contemplation, amounted to the transaction of business in this state. It is...