Gilliland & Echols Farm Supply & Hatchery v. Credit Equipment Corp.

• Decision Date: 21 May 1959
• Docket Number: 7 Div. 433
• Citation: 269 Ala. 190,112 So.2d 331
• Parties: GILLILAND & ECHOLS FARM SUPPLY & HATCHERY v. CREDIT EQUIPMENT CORPORATION.
• Court: Alabama Supreme Court

Page 331

112 So.2d 331

269 Ala. 190

GILLILAND & ECHOLS FARM SUPPLY & HATCHERY v. CREDIT EQUIPMENT CORPORATION.

7 Div. 433.

Supreme Court of Alabama.

May 21, 1959.

W. M. Beck, Fort Payne, for appellant.

W. W. Watson and John C. Wear, Fort Payne, for appellee.

MERRILL, Justice.

This is an appeal from a final judgment in favor of the plaintiff, in the Circuit Court of DeKalb County, in a suit on two trade acceptances. A trade acceptance is a draft or bill of exchange drawn by a seller on the purchaser of goods sold, and accepted by the purchaser. Its purpose is to make the book account liquid and permit the seller to raise money on it before it is due under the terms of sale. Legal Discount Corporation v. Martin Hardware Co., 199 Wash. 476, 91 P.2d 1010, 129 A.L.R. 420; Bartoshesky v. Houston Trading Corporation, 9 W.W.Harr. 310, 39 Del. 310, 198 A. 697. When properly drawn, it is negotiable paper and its use results in advantages to both the purchaser and the seller. Properly used, it represents current merchandise transactions only, and in this respect, it is different from an ordinary promissory note which may be given for a past due account, borrowed money or for any other consideration. The principal function of a trade acceptance is to take the place of selling goods on an open account. State Trading Corporation v. Jordan, 146 Pa.Super. 166, 22 A.2d 30.

The complaint contains two counts. Count one alleges that the plaintiff is a corporation, duly organized and existing pursuant to the laws of the State of New York, with power to do business and to sue and be sued in its corporate name and capacity. It claims of the defendant $376.67 alleged to be due on a trade acceptance drawn by Carbozite Protective Coatings, Inc. on May 8, 1952, in the sum of $376.67 upon the defendant and accepted by him, payable to Carbozite Protective Coatings, Inc. on August 10, 1952, which trade acceptance, before maturity, was endorsed to the plaintiff. Count one also avers that the trade acceptance was presented for payment on the due date and that it was not paid, wherefore, the plaintiff claims interest on the sum from that date. Count two is the same as count one except the due date is September 10, 1952.

The case was submitted to the jury on both counts of the original complaint, on defendant's plea F and on plaintiff's replication number 1 to plea F. Plea F sets out that the trade acceptances were executed by the defendant and delivered to the Carbozite Protective Coatings, Inc., a foreign corporation, organized and existing under the laws of the State of Pennsylvania, and that they were delivered to this corporation within the State of Alabama in connection with an agreement entered into between the defendant and the corporation for the exclusive franchise of a product known as 'Carbozite Coatings.' Plea F further avers that this contract and the trade acceptances were executed in Fort Payne, Alabama, and that the defendant and the corporation both signed the trade acceptances and that they were delivered at the defendant's place of business in Fort Payne. It is further alleged that all these dealings were within the corporate acts of Carbozite Protective Coatings, Inc. and that they have never qualified to do business within the State of Alabama. Hence, defendant avers that the plaintiff ought not to recover on the trade acceptances since the same are void under provisions of Tit. 10, § 191, Code 1940, which provides, inter alia, that all contracts or agreements made or entered into in Alabama by foreign corporations, which have not qualified to do business in Alabama, shall be held to be void at the suit of such foreign corporation, or any one claiming through or under such foreign corporation, by virtue of the void contract or agreement. Replication number 1 to plea F is a plea of the general issue. The evidence was undisputed that the Carbozite Protective Coatings, Inc. has never qualified to do business in the State of Alabama. The jury found the issues in favor of the plaintiff and assessed its damages at $1,024.54, whereupon, the court entered a judgment for the plaintiff in this amount, plus costs. It is from this judgment that the appeal is prosecuted.

Assignment of error number 1 states that the lower court erred in giving plaintiff's charge 'X-3,' which reads:

'Gentlemen of the Jury I charge you that the laws regarding the qualifying of foreign corporations to do business within the State of Alabama do not apply to corporations engaging in or transacting business of Interstate Commerce only within the State.'

The defendant-appellant contends that the giving of this charge is error because the court below gave defendant's charge stating that the plaintiff could not recover under its replication number 2. Plaintiff's replication number 2, in answer to pleas E and F, states that the Carbozite Protective Coatings, Inc. was engaging in or transacting business of interstate commerce only within the State of Alabama at the time complained of. Appellant argues that since the court gave its requested charge charging out appellee's replication number 2, it was error to then give plaintiff's requested charge 'X-3,' supra, which was in substance the same as plaintiff's replication number 2. Appellant contends that this constituted reversible error for three reasons: (1) The court gave conflicting instructions, citing Terry v. Nelms, 256 Ala. 291, 54 So.2d 282; (2) the question of interstate commerce was not an issue and the instruction submitting it as a defense was erroneous, citing Gulfport Fertilizer Co. v. Jones, 15 Ala.App. 266, 73 So. 148; (3) an instruction not within the issues raised by the pleadings is erroneous, citing Central of Georgia Ry. Co. v. McNab, 150 Ala. 332, 43 So. 222, and other cases listed in 18A Ala. Digest, Trial, k251(1). But, we have also held that trial courts will not be reversed for refusing abstract charges or charges not covered by the pleadings, although they assert the law correctly; and neither will they be reversed for giving such charges, unless it appears that injury was sustained. Central of Georgia Ry. Co. v. Hyatt, 151 Ala. 355, 43 So. 867.

Charge X-3 does state a correct principle of law and could perhaps be considered abstract under the pleadings, but the question becomes one of whether injury was sustained by appellant in the giving of the charge. We have held that a transaction involving no more than a sale, transportation and delivery of out-of-state goods by a nonresident to a local party on orders taken in Alabama would be an act of interstate commerce to which the laws of this state are not and could not be applicable. Loudonville Milling Co. v. Davis, 251 Ala. 459, 37 So.2d 659, and cases therein cited. In the last cited case, we held that the selling of flour and other cereal products, delivered in 100 barrel lots, under a previously executed consignment contract to an Alabama distributor, constituted interstate commerce and was not the subject of state regulation even though the foreign corporation employed a full-time agent in Alabama, stored the flour in an Alabama warehouse, and had the flour consigned to it and entrusted to its agent for delivery and proper receipt of the goods. See also, Watkins Co. v. Goggans, 242 Ala. 222, 5 So.2d 472.

There was evidence from which the jury could have found the transaction between the Carbozite Protective Coatings, Inc. and the appellant to have been interstate commerce only. Both of the trade acceptances indicate prima facie that they were drawn in New York, since they were both headed 'Carbozite Protective...