Gen. Motors Ac. Corp. v. Huron Fin. Corp.

• Decision Date: 05 August 1935
• Docket Number: 7716
• Parties: GENERAL MOTORS ACCEPTANCE CORP., Appellant, v. HURON FINANCE CORP., Respondent.
• Court: South Dakota Supreme Court

63 S.D. 597

262 N.W. 195

GENERAL MOTORS ACCEPTANCE CORP., Appellant, v. HURON FINANCE CORP.,

Respondent.

South Dakota Supreme Court

Appeal from Circuit Court, Beadle County, SD

Hon. Alva E. Taylor, Judge

#7716—Reversed

Stinchfield, Mackall, Crounse,

McNally & Moore, Minneapolis, Minn.,

Churchill & Benson, Huron, SD

Attorneys for Appellant.

Longstaff & Gardner, Huron, SD

Attorneys for Respondent.

Opinion filed Aug 5, 1935

WARREN, P. J.

The plaintiff, General Motors Acceptance Corporation, a foreign corporation, brought a claim and delivery action against one Turgeon and the Huron Finance Corporation for the recovery of a used 1930 model Chevrolet coach which had been sold by Ben Mogck, an automobile dealer at Alpena, SD, to Turgeon. The sale was made April 15, 1931, the sales price being $543. Turgeon paid cash in the sum of $145, and the balance was evidenced by a conditional sale contract executed by the Mogck Chevrolet Company, by Ben Mogck, as seller, and Turgeon as buyer. The conditional sale contract was filed on April 17, 1931, in the office of the register of deeds of Sanborn county, SD, where the purchaser lived and where the car was used. A duplicate copy of this contract was mailed to the General Motors Acceptance Corporation at Minneapolis, Minn., with an assignment attached executed by the seller to the General Motors Acceptance Corporation offering the conditional sale contract to it for sale. Later the plaintiff bought the contract and sent Mogck the money. This conditional sale contract provided that the title to the car so sold should remain in the seller until the payments had been fully made and that in case, of default, either in payments or in other respects, such as violation of any other provision of the contract, then the unpaid balance became due at the option of the holder of the contract, and further it contained provisions for repossessing the car and disposing of it as provided by the contract and by statute. Turgeon paid the monthly installments up to and including the September payment. He then defaulted on the other payments. Thereafter plaintiff brought suit. Defendant Turgeon did not answer. The Huron Finance Corporation answered by plea in bar alleging that the plaintiff was a foreign corporation and had not complied with the foreign corporation laws of this state and at no time had it filed with the secretary of this state any copies, certified or otherwise, of its charter, articles of incorporation, or articles of association, or any amendments, and further by the way of counterclaim alleged that on the 14th day of April, 1931, the Mogck Chevrolet Company by Ben Mogck, made a conditional sale contract covering the automobile in question and another automobile to the Huron Finance Corporation for a consideration of $500 advanced to the Mogck Chevrolet Company; that the said conditional sale contract was thereafter filed in the office of the register of deeds of Jerauld county, S.D., on the 20th day of April, 1931; and that by virtue thereof the Huron Finance Corporation claims to be entitled to the immediate possession of said Chevrolet coach. At the conclusion of the trial the court entered findings of fact, conclusions of law, and a judgment in favor of the defendant, the Huron Finance Corporation. Plaintiff moved for a new trial. The motion for new trial having been denied, plaintiff perfected an appeal to this court from the judgment and from the order overruling the motion for new trial.

The principal question before us appears to be: Did the appellant transact business within the state of South Dakota and is it subject to our foreign corporation qualifications law, it being admitted that it has not complied therewith, and may it maintain its contract through this action of claim and delivery in the courts of this state? The statutes of this state require that foreign corporations, with the exception of certain enumerated classes which are not here material, before engaging in business in this state shall file copies of their articles of incorporation with the secretary of state and a foreign corporation failing to comply with such statutory requirements is subject to certain penalties. Sections 8902 to 8909, both inclusive, of the 1919 S.D. Revised Code (as amended), are quite specific as to the requirements. Section 8909 provides as follows:

“Every contract made by or on behalf of any foreign corporation, subject to the provisions of this chapter, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions of this chapter shall be wholly void, on its behalf and on behalf of its assigns, but shall be enforcible against it or them.”

It being admitted that appellant has not complied with the statutory requirements we inquire if this was, as contended for by appellant, a transaction of interstate commerce. This court in re cent decisions dealt at length upon contracts concerning interstate commerce, and much of what was said in the decisions in Dakota Photo Engraving Co. v. Woodland, Charles Friend & Son v. Schmidt, and Lawyers’ Co-op. Pub. Co. v. Batter, is applicable to the facts in the case at bar. Considerable stress has been placed by the respondent in an attempt to show that the appellant has, by and through agents, conducted and transacted business within the state of South Dakota. In this connection our attention is called to the evidence as to the activities of appellant. The record discloses that solicitors were in the state undoubtedly for the purpose of securing business. The appellant’s activities through such representatives are somewhat similar to the activities delineated in the case, of Dowe v. Debus Mfg. Co., 49, Ga. App. 412, 175 S.E. 676. In defining the status of the solicitors for the corporation in that case, the court said: “The character of the activities engaged in by the foreign corporation, which are essential to give the courts of this state such jurisdiction over it, do not consist in the mere solicitation of business within this state by persons seeking and taking orders on commissions and transmitting them to the home office for acceptance and shipment, even though the foreign corporation may lend its assistance to the local salesmen by advertising its product within the state, and may aid, train, and assist them, in increasing their efficiency in the discharge of their own activities as local salesmen, with the result that such increased efficiency may indirectly have the effect of increasing or expanding the business of the foreign corporation. But, in order for the foreign corporation to be doing business within this state in the sense which would subject it to personal judgment by the courts of this state, it must either maintain an office or place of business within the state, or else there must be a local performance on its part of its own contractual obligations to customers, otherwise than by the mere interstate shipment of goads sold by local solicitors. Southeastern Distributing Co. v. Nordyke & Marmon Co., 159 Ga. 150, 157-161, 125 S.E. 171; Smith v. Nolting First Mortgage Corp., 45 Ga. App. 253, 254, 164 S.E. 219; People’s Tobacco Co. v. American Tobacco Co., 38 SCt 233, 62 LEd 587, Ann. Cas. 1918C, 537.”

Clearly it cannot be said that the appellant in the case, at bar was engaged in selling personal property on the installment plan, but it was engaged in the purchasing of commercial paper, and from time to time certain individuals representing the appellant solicited certain classes of automobile dealers for the purpose of buying commercial paper. It is also conceded that certain blank forms were left with local dealers upon which to make applications, and it would seem from the record that there applications were filled out and mailed to the appellant at its office at Minneapolis, Minn., where appellant exercised its judgment as to the purchase thereof. Considerable has been said in the briefs of both parties as to the different plans for financing dealers, one known as the “floor plan,” wherein dealers purchased automobiles and other equipment from manufacturers and were financed by the appellant, and the other plan whereby appellant purchased paper by and through assignments from the automobile dealers. To pursue the facts before us and to delineate the different steps and terms of these plans would require the expanding of this opinion t0 great length. Certain appellate courts in other jurisdictions where such questions have been presented for determination, and where foreign finance corporations transacted business in the same manner as did the General Motors Acceptance Corporation in South Dakota, have attempted to explain these plans, and as they have covered substantially all the facts in the case at bar, it is pertinent to quote from some of them. In Jones v. General Motors Acceptance Corp., 205 Ky. 227, the Court of Appeals of Kentucky, in discussing the question of doing business in the state so as to require compliance with the Kentucky Statutes, said:

“It appears that appellee is incorporated under the laws of the state of New York, and has no officer, agent, or place of business in Kentucky. It was organized for the sole purpose of financing automobile dealers primarily, if not exclusively, those handling the output of the General Motors Company, and all transactions with Kentucky dealers are handled through a branch office located in Detroit, Mich. It finances an automobile dealer by discounting notes received by him in the sale of automobiles, and also by discounting notes executed by him to the manufacturer in the purchase of automobiles, and in both instances the notes are secured by liens retained on the automobile involved. Appellee furnishes the dealer with a supply of forms for notes and liens or conditional sale contracts on which are printed assignments to appellee. When the dealer sells an...