Goodwin Bros. Leasing, Inc. v. Nousis

• Decision Date: 29 July 1977
• Parties: GOODWIN BROTHERS LEASING, INC. v. Katherine NOUSIS. Supreme Judicial Court of Massachusetts, Middlesex
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 38

366 N.E.2d 38

373 Mass. 169

GOODWIN BROTHERS LEASING, INC. v. Katherine NOUSIS.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued April 6, 1977.

Decided July 29, 1977.

John Gazourian, Clinton, for defendant.

Frank R. Sherman, Waltham, for plaintiff.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, WILKINS and ABRAMS, JJ.

ABRAMS, Justice.

The plaintiff Goodwin Brothers Leasing, Inc. (Goodwin), a Kentucky corporation, brought an action of contract to recover money allegedly due for the leasing of a Ballantyne pressure fryer under an agreement entered into with the defendant Katherine Nousis on March 18, 1970. The defendant answered by general denial, denial of the genuineness of the defendant's signature, and by pleading specially that Goodwin failed to comply with the provisions of G.L. c. 181 relating to the registration of foreign corporations.

At the close of trial the defendant made four requests for rulings of which three were granted. The judge's denial of a request concerning the effect of the failure of Goodwin to register as a foreign corporation is the principal subject of this appeal. The judge found for the plaintiff and awarded $4,917.44 in damages. The defendant's motion for a new trial was denied.

The defendant claimed a report to the Appellate Division of the District Courts, Northern District. The case was reported and, after finding no prejudicial error, the Appellate Division ordered the report dismissed. The defendant appealed to this court. We affirm the order of the Appellate Division dismissing the report.

We summarize the relevant facts. The defendant was the proprietress of a pizza business managed by her son-in-law. She arranged to acquire the Ballantyne pressure fryer from a company which then sold the machine to Goodwin. Goodwin, in turn, leased it to the defendant. The lease contract, dated March 18, 1970, was duly recorded with the town clerk of Ayer.

By the terms of the contract Goodwin retained legal title to the apparatus and reserved the right to remove it on default. It called for sixty monthly payments of $88, amounting to a total of $5,280. In April, 1970, the defendant sold the business to her son-in-law, and he accepted delivery of the equipment in May, 1970. Sixteen monthly payments were made, but in August, 1971, the son-in-law discontinued the business and requested Goodwin to remove the fryer. Goodwin removed the machine and sued for the balance due under the contract.

Goodwin is a foreign corporation duly licensed under the laws of Kentucky. It has never filed any certificate as specified in G.L. c. 181, § 4, for foreign corporations doing business in the Commonwealth.

Chapter 181, § 3, as appearing in St.1973, c. 1209, § 1, effective January 1, 1974, provides that every foreign corporation having no usual place of business in the Commonwealth which "owns or leases . . . tangible personal property" in Massachusetts "shall be considered to be doing business in the Commonwealth." ¹ Such a corporation is required to file a certificate pursuant to the provisions of G.L. c. 181, § 4. Chapter 181, § 9, as appearing in St.1973, c. 844, § 1, provides that, if a corporation does not file such a certificate, "no action shall be maintained or recovery had in any of the courts of the commonwealth by the foreign corporation as long as such failure continues." The defendant urges that Goodwin's failure to file its certificate bars it from bringing or maintaining suit on the contract in question. She argues that the failure to file requires us to reverse the judgment entered below.

1. Sufficiency of the Defendant's Request for Rulings. The defendant's first request for ruling, the denial of which forms the basis of this appeal, stated: "Every foreign corporation which does business or which leases tangible personal property shall be considered to be doing business in the Commonwealth for the purposes of Chapter 181, Massachusetts General Laws. M.G.L.A. 181, Section 3 (sic )." The plaintiff urges that the request is fatally defective as it is an obvious misstatement of applicable law. We disagree with the Appellate Division's view that the request for ruling was so insufficient as to foreclose on procedural grounds its consideration. Although the text of the request was a patent overstatement of law, the statutory reference which followed sufficiently apprised the District Court judge of the substance of the request. Additionally, three of the eight requests submitted by the plaintiff related to the identical subject matter. While we do not indorse the submission of requests similar to that presented by the plaintiff, we conclude that the parties and the judge understood the substance of the request, ² and we therefore proceed to examine the merits of its denial by the judge.

2. Retroactivity. The contract in issue was entered into in March, 1970; the breach was alleged to have occurred in October, 1971; the action was commenced by writ dated September 21, 1973; and the judge found that the breach took place in August, 1971. However, St.1973, c. 844, amending G.L. c. 181, § 9, was approved on September 28, 1973, and it did not take effect until January 1, 1974. Thus, Goodwin urges that, even were its provisions otherwise applicable, it should not be applied retroactively to defeat the award granted by the judge.

The general rule as to the retroactivity of civil statutes is well expressed in Hanscom v. Malden & Melrose Gas Light Co., 220 Mass. 1, 3, 107 N.E. 426, 427 (1914): "(A)ll statutes are prospective in their operation, unless an intention that they shall be retrospective appears by necessary implication from their words, context or objects when considered in the light of the subject matter, the pre-existing state of the law and the effect upon existent rights, remedies and obligations" (emphasis added). Where, however, the statute regulates practice, procedure or evidence, as distinguished from substantive rights, it will commonly be applied to actions already pending. American Locomotive Co. v. Hamblen, 217 Mass. 513, 515, 105 N.E. 371 (1914). Mulvey v. Boston, 197 Mass. 178, 181, 83 N.E. 402 (1908).

We think that the words "no action shall be maintained" indicate an implicit legislative intent that the statute apply to the instant case. The Legislature, in placing other limitations on the bringing of suit, has utilized the words "shall be brought," see, e. g., G.L. c. 260, § 3A, or "shall be commenced," see, e. g., G.L. c. 260, § 5. We find the choice of these particular words instructive.

Moreover, the statute purports not to affect substantive rights ("(n)o such failure (to file) shall affect the validity of any contract involving the foreign corporation"). We believe that it is properly characterized as remedial in nature. The statute "relate(s) only to the remedy, and . . . (it) control(s) future procedure in reference to previously existing causes of action." Mulvey v. Boston, supra at 181, 83 N.E. at 403. The statute in question does not extinguish what is otherwise a valid cause of action; it merely requires the filing of a certificate as a condition precedent to seeking relief in the courts of the Commonwealth. Cf. Kagan v. United Vacuum Appliance Corp., 357 Mass. 680, 260 N.E.2d 208 (1970).

We do not think that Goodwin's difficulties in obtaining personal jurisdiction over the defendant in any other jurisdiction is a factor which renders inaccurate our characterization of the statute as remedial. Goodwin retains its substantive right to sue for the breach of contract, subject only to the requirement if otherwise applicable, see part 3 infra that it file the certificate. Cf. Bernhardt v. Atlantic Fin. Corp., 311 Mass. 183, 190-191, 40 N.E.2d 713 (1942). "The legislative interdiction in the statute is not against the legitimacy of the contract made by a foreign corporation not licensed to do business in this State, but is against the maintenance of an action upon such a contract made by such a foreign corporation. The contract itself is valid, but a foreign corporation is prohibited from maintaining an action thereon." Admiral Discount Corp. v. Bovadikov, 46 N.J.Super. 522, 525, 135 A.2d 56, 58 (1957).

3. Applicability of the Statute. The Legislature has directed that "(e)very foreign corporation which . . . owns or leases . . . tangible personal property . . . (in the Commonwealth) shall be considered to be doing business in the commonwealth for purposes of this chapter." G.L. c. 181, § 3. The defendant urges that the Legislature's insertion of this particular clause, see St.1973, c. 1209, § 1, evidences a clear intention that corporations engaged in activities such as those conducted by Goodwin be made subject to the provisions of c. 181.

However, a State cannot constitutionally require a foreign corporation to obtain a certificate of authority to do business in the State if its participation in the trade is limited to wholly interstate business. Eli Lilly & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276, 278, 81 S.Ct. 1316, 6 L.Ed.2d 288 (1961); Allenberg Cotton Co. v. Pittman, 419 U.S. 20, 95 S.Ct. 260, 42 L.Ed.2d 195 (1974). See Shulton, Inc. v. Consumer Value Stores, Inc., 352 Mass. 605, 227 N.E.2d 482 (1967); Remington Arms Co. v. Lechmere Tire & Sales Co., 339 Mass. 131, 158 N.E.2d 134 (1959). Moreover a State cannot properly bar a foreign corporation's access to its courts where that corporation is engaged solely in interstate commerce. Sioux Remedy Co. v. Cope, 235 U.S. 197, 204, 35 S.Ct. 57, 59 L.Ed. 193 (1914). International Textbook Co. v. Pigg, 217 U.S. 91, 95, 30 S.Ct. 481, 54 L.Ed. 678 (1910). "(I)t is a rule of law that a statute which would be unconstitutional as applied to a certain class of cases, and is constitutional as applied to another class, may be held to have been intended to apply only to the latter class" (emphasis added). Attorney Gen. v. Electric Storage Battery Co., 188 Mass. 239, 241, 74...