Hart v. Livermore Foundry & Machine Co.

• Decision Date: 03 June 1895
• Citation: 72 Miss. 809,17 So. 769
• Parties: E. R. HART ET AL. v. LIVERMORE FOUNDRY & MACHINE CO. AND CHEMICAL NATIONAL BANK ET AL. v. E. R. HART ET AL
• Court: Mississippi Supreme Court

17 So. 769

72 Miss. 809

E. R. HART ET AL. v. LIVERMORE FOUNDRY & MACHINE CO. AND CHEMICAL NATIONAL BANK ET AL. v. E. R. HART ET AL

Supreme Court of Mississippi

June 3, 1895

APPEAL and cross appeal from the chancery court of Tunica county HON. W. R. TRIGG, Chancellor.

The opinion states the case.

Reversed.

W. A Percy, for appellants, Chemical National Bank and Livermore Foundry & Machine Company.

1. The contract of March 14, 1892, passed no title. It was purely executory, and referred to uncut lumber, and is identical in character with ordinary farming contracts for advances to make a crop thereafter to be shipped in payment for the advances. Allen v. Poole, 54 Miss. 323.

2. The contract was void, being made in Tennessee by the Cairo Lumber Company, which was unlawfully doing business in that state. See Cary-Lombard Lumber Company v. Thomas, 92 Tenn. 587; Williams v. Bank, 71 Miss. 858.

Nothing was thereafter done to invest the lumber company with title. There was never any delivery of possession. The sale tickets did not purport to show the sale of any specific lumber. They were merely in aid of that part of the contract providing for an agreed estimate by which to regulate advances.

3. Both the contract of March, 1892, and the sale tickets, were void being contracts made in Tennessee in violation of the foreign corporation law.

4. Hart retained possession, and had the right of retention until the lumber was paid for and delivered. The very drafts which had been given as advances on this lumber were protested at maturity, and there was a total failure of consideration.

5. The injunction sued out by Hart did not prohibit the attaching creditors from proceeding to judgment, and, therefore, Hart is concluded by the judgment in favor of the Chemical National Bank and the Foundry & Machine Company. Besides, the Chemical National Bank is the holder of commercial paper for value without notice of any defect therein.

6. After Hart had taken possession of the paper under his forthcoming bond, it was no longer in custodia legis, and was subject to attachment by his creditors. It is only where successive attachments are sued out against the same defendant that the property bonded is exempt from a second seizure under § 149, code 1892. On this subject, see Wells on Replevin, § 460; 3 Porter, 138; 4 Metc., 444; 16 Mass. 465; 10 Pet., 400; 11 Wis. 380.

The letter to the First National Bank, signed by E. R. Hart agreeing to hold the lumber until the bills indorsed by him were paid, did not confer on the bank any interest or lien. Jones on Chattel Mortgages, § 8. See Allen, v. Montgomery, 48 Miss. 101; Newman v. Bank, 66 Ib., 323; Weathersby v. Sleeper, 42 Ib., 732; Jones on Liens, § 48; Alexander v. Berry, 54 Miss. 422; 105 Mass. 417.

The notes and drafts in the hands of the Chemical National Bank are valid for the following reasons: (1) Because the Tennessee statute does not make negotiable paper given by delinquent corporations void when in the hands of an innocent holder who has acquired it in the due course of business. See Daniel on Neg. Insts., 85; 9 Wend., 170; 147 U.S. 59; 45 N.Y. 762; 2 Allen, 266; Randolph on Com. Paper, § 559; Byles on Bills, 145; 70 N.C. 191; 1 Heisk., 170; 9 Gray, 329. I find no case where negotiable paper was held invalid because of its being in violation of a statute except in usurious and gaming transactions, and these were under peculiar statutes. (2) The transactions between Hart and the Cairo Lumber Company did not constitute a "doing of business" in the state of Tennessee. The whole business of the company was to make contracts in Memphis for the operation of sawmills in Mississippi, and for the shipment of their output to Chicago. In Cary-Lombard Lumber Company v. Thomas, supra, the lumber was in the state of Tennessee, and shipped from the yards there. A farmer, lawyer or doctor engaged in business entirely in Mississippi can hardly be said to be doing business in Tennessee because he makes a contract there for work to be done in this state. See 4 Col. 369; 2 S. Dak., 596; 33 W.Va. 566; 21 Am. & Eng. Corp. Cas., 650; 8 Ib., 178; 32 Ib., 201. (3) The contracts between Hart and the lumber company were interstate commerce, and the Tennessee statute cannot be applied. Milling Company v. Gorten, 93 Tenn. 590; 113 U.S. 727; Rorer on Interstate Law, 381. See also First National Bank v. Duncan, a recent Tennessee case not yet reported, which holds that a Kentucky coal company could acquire real estate in Tennessee for a branch office for carrying on interstate commerce.

J. A. P. Campbell, on the same side.

The rights of the Chemical National Bank, as the holder of the notes and acceptances of Hart, are not affected by the statute of Tennessee forbidding foreign corporations to do business in that state without compliance with certain conditions. These accrued directly out of the transactions in regard to lumber to be produced and trees to be cut in Mississippi and to be shipped thence to Illinois, or elsewhere out of Mississippi. Besides, they are valid on another ground. The dealing between the Cairo Lumber Company and Hart was interstate commerce, and not subject to regulation by the laws of Tennessee. That state could not, if she had tried, keep foreign corporations or those representing them, out of the state, or in any way interfere with commercial intercourse among states by individuals or corporations. Her own court has so decided, for, while in Cary-Lombard Lumber Co. v. Thomas, 92 Tenn. 587, it is held that contracts made in that state by a delinquent foreign corporation for the delivery of lumber from its yard in Tennessee to a citizen in Tennessee were void, and could not be enforced by such corporation, yet in Milling Co. v. Gorten, 93 Tenn. 590, it is held that the statute has no application to a contract made in that state by an agent of a foreign corporation for delivery and erection there of machinery from another state, and that a mortgage executed in Tennessee on land there, to secure the contract price for such machinery, is valid. That court has also lately held that a Kentucky mining corporation, engaged in delivering coal from its mines in Kentucky for sale in Tennessee, did not violate the said statute by purchasing land in Tennessee for constructing a depot for the transacting of such business. See, also, Cooper v. Ferguson, 113 U.S. 727; Robbins v. Shelby, 120 Ib., 489; Overton v. Vicksburg, 70 Miss. 558; Ficklen v. Shelbey County, 145 U.S. 1; McCall v. California, 136 U.S. 104; Railroad Co. v. Pennsylvania, Ib., 114; Ware v. Shoe Co., 92 Ala. 145; 19 Col. 310.

Interstate commerce embraces all the means, instruments and places as well as the subject-matter of intercourse and traffic between states. This is the definition of Pomeroy, quoted with approval by the supreme court in McCall v. California, supra.

Apart from the above views, the dealings between the lumber company and Hart, though had in Tennessee, were not carried on there within the purview of the statute. The statute never intended to prevent a foreign corporation from securing a locus standi for dealing with subjects of another state, or from availing of the services of the citizens of Tennessee as an intermediary or conduit through whom to contract about matters or things in another state. It plainly refers to holding property in Tennessee, or doing business there of a character to give it such fixed locality as property has. It does not contemplate interference with the right conferred by comity to avail of a place in Tennessee as a convenient point to transact business of any kind with reference to persons or things in another state. The requirement is not for revenue, or a police regulation, nor is it in hostility to nondomestic corporations, but applies to only such as desire to acquire or hold property in Tennessee or carry on its business there in such a manner, or of such a character, as to constitute domestic business in Tennessee. On this subject, see Crandall v. Nevada, 6 Wall., 35; Com. v. Biddle, 139 Pa. 605; Ins. Co. v. Kinyon, 37 N. J. L., 33; 3 Comstock, 266; Ford v. Ins. Co., 6 Bush, 133; 32 Barb., 626; 2 Kernan, 258; 117 N.Y. 241; 129 Pa. 217; 42 La. Ann., 516; 71 Ala. 60; 94 Ib., 456; 44 Wis. 387; 29 F. 37; 32 Ib., 802; 41 Ib., 643; 9 Blatch., 390; 33 W.Va. 566.

The consequences of any broadening of the scope of the Tennessee statute are so far-reaching, and may be so serious, as to admonish of the propriety of the utmost caution to avoid any view or even any intimation that goes beyond the necessity of this case.

Although the notes and bills may be void by the law of Tennessee, this cannot affect an innocent holder. There seems to be a general agreement among text-writers and courts that unless the statute expressly declares a contract void, such consequences will not attach to it in the hands of a holder for value. Daniel on Neg. Inst., §§ 197, 807, 808 and notes; Story on Bills, § 189; 1 Parsons on Bills, 279; 2 Randolph on Com. Paper, §§ 517, 518; Edwards on Bills and Notes, 337; Chitty on Bills, 116; Byles on Bills, 145; 21 Wall., 221; 53 Ill. 455; 70 N.C. 191; 31 N.H. 426; 41 Ib., 32; 9 Neb. 31; 6 Wend., 616; 6 Hill, 499; 6 Hun, 384; 56 Mo. 317; Ib., 309.

No title or lien passed to the First National Bank by reason of the letter signed by Hart. It simply promised to hold a sufficient amount of the lumber. It is void for uncertainty; and, besides, being made in Tennessee by a foreign corporation illegally there, is void.

4. There is nothing in the contention that the bill of sale from the Cairo Lumber Company to the Evanston National Bank is void because of the insolvency of the lumber company. Beach v. Miller, 130 Ill. 162, only decides that an insolvent corporation cannot...