Hattiesburg Mfg. Co. v. Pepe

• Decision Date: 09 April 1962
• Docket Number: No. 5517,5517
• Citation: 140 So.2d 449
• Parties: HATTIESBURG MANUFACTURING CO., Inc. v. Sam PEPE.
• Court: Court of Appeal of Louisiana — District of US

Page 449

140 So.2d 449

HATTIESBURG MANUFACTURING CO., Inc. v. Sam PEPE.

No. 5517.

Court of Appeal of Louisiana, First Circuit.

April 9, 1962.

Jim W. Richardson, Jr., Bogalusa, for appellant.

Robert T. Rester, Bogalusa, for appellee.

Before LOTTINGER, LANDRY and REID, JJ.

LANDRY, Judge.

Plaintiff, Hattiesburg Manufacturing Co., Inc., instituted this personal action against defendant Sam Pepe for judgment on a material lien filed against the property of defendant as the result of the failure to defendant's contractor to pay for certain materials supplied by plaintiff and incorporated into defendant's residence. The contractor who built defendant's home and to whom the sales were made by plaintiff, is not a party to this suit.

With ramifications in some instances the following five basic contentions are tendered by defendant in defense of plaintiff's suit: (1) Plaintiff's lack of procedural capacity; (2) Estoppel; (3) Plaintiff's untimely filing of the lien in question; (4) The failure of plaintiff to prove that the materials sold defendant's contractor were used on defendant's home; and (5) Failure of plaintiff to afford defendant credit for materials improperly charged to construction of defendant's home. The trial court rendered judgment in favor of plaintiff for the full sum used for, namely, $1,529.09 and defendant has appealed.

Defendant's exception of lack of procedural capacity is predicated upon the ground the plaintiff, a foreign corporation, has not qualified to do business within the State, and therefore, under the provisions of LSA-R.S. 12:211, is denied access to and may not sue in the courts of this state. Before trial on the merits the lower court heard and overruled defendant's said exception and defendant strenuously reurges same on this appeal.

The pertinent portion of LSA-R.S. 12:211 reads as follows:

' § 211. Compliance with law as prerequisite to right to sue.

'A. No corporation doing business in this state shall be permitted to present any judicial demand before any court of this state, unless it has complied with the laws of this state for doing business herein, and has paid all taxes, excises, and licenses due to the state. This Section shall not be construed to prevent the bringing of a cause of action against any corporation. * * *'

Plaintiff readily concedes that it has not complied with the laws of this state governing registration of foreign corporations doing business within the state. Instead, plaintiff contends that it is engaged purely in interstate commerce and is, therefore, entitled to access to the courts of this state without the necessity of complying with the statutory provision invoked by defendant. Since plaintiff does not contend that it is doing business in this state within the meaning of the phrase 'doing business in this state' as used in the statute alluded to, the burden of proof otherwise imposed upon plaintiff under the provisions of LSA-R.S. 12:211, subd. B is inapplicable to the instant case.

It is too well established to require citation of authority in support thereof that a State cannot require a foreign corporation to qualify to do business within its boundaries if the business of the corporation is limited wholly and entirely to interstate sales. On the other hand, however, a foreign corporation engaged in intrastate as well as interstate commerce or business can be required to so qualify by the state. Eli Lilly & Co. v. Sav-On-Drugs, 366 U.S. 276, 81 S.Ct. 1316, 6 L.Ed.2d 288, and cases cited therein.

The question of whether a foreign corporation is doing business in a state (engaged in intrastate as distinguished from interstate commerce) involves a mixed question of law and fact which must be determined in the light of the circumstances pertaining to each individual case. Lake Superior Piling Co. v. Stevens, La.App., 25 So.2d 120.

The phrase 'doing business in this state' as used in the statute in question has previously been interpreted to mean that in order to constitute doing business in this state the business concerned must be of an intrastate rather than interstate nature, R. J. Brown Co. v. Grosjean, 189 La. 778, 180 So. 634. It is equally well settled that an exception of want of procedural capacity is an affirmative defense casting the burden of proof upon the pleader to prove same by a preponderance of the evidence. Equitable Discount Corporation v. Dickinson, La.App., 106 So.2d 800; Quaker Hill, Inc. v. Guin, La.App., 95 So.2d 370.

The record reveals that plaintiff maintains but one office, namely, its home office situated in Hattiesburg, Mississippi. Plaintiff conducts its business (that of selling building supplies) in several southern states including this state in which approximately 12 per cent of its annual sales are made. Two of plaintiff's salesmen make regular weekly trips to Louisiana, where they take orders for materials principally from contractors but occasionally from individuals engaged in construction projects on their own account. The orders thusly received are transmitted to the home office in Mississippi where they are duly processed and either accepted or rejected by the president of plaintiff corporation. If an order is approved by the president, the materials are then delivered by plaintiff's trucks to the purchaser in Louisiana. The vast majority of plaintiff's sales are for credit although the record shows that infrequently sales of sample items are made to customers for cash. It further appears that in most instances payments are remitted to plaintiff's home office but plaintiff's salesmen occasionally receive and receipt for payments on account made to them by customers in this state. Plaintiff maintains no warehouse or stock in this state. Although plaintiff purchases some materials in Louisiana such materials are invariably shipped to plaintiff's warehouse in Mississippi, become part of plaintiff's inventory and from there are reshipped to purchasers. The salesmen employed by plaintiff occasionally call upon delinquent customers and sometimes inquire at local banks concerning the worth of checks given by customers in payment of accounts but plaintiff maintains no account in any bank in this state. It further appears that the salesmen make inquiry regarding the credit rating of prospective customers and that plaintiff has frequently resorted to the courts of this state to enforce collection of its accounts. Defendant's contention that materials sold here but rejected upon delivery were frequently resold in Louisiana in intrastate sale without return to Mississippi is completely without substantiation in the record. The evidence in this regard consists solely of the testimony of the president of plaintiff corporation to the effect that invariably merchandise refused or rejected upon delivery is returned to the Hattiesburg warehouse.

Likewise defendant's contention that plaintiff's salesmen carry a stock of small items such as building hardware while making their rounds taking orders and sell such merchandise for cash without submitting an order to the home office for approval, is without proof in the record. It appears from the evidence that plaintiff's salesmen do carry samples of hardware such as locks, door handles and similar items which are exhibited to prospective customers. While one salesman testified he may possibly have sold such a sample or two and have received cash therefor by no means did he positively admit having engaged in such practice. Despite defendant's vigorous contention that plaintiff habitually and customarily engaged in such local sales not one witness was produced by defendant to establish such as a fact. Assuming, arguendo, such local sales of items of the nature mentioned may have taken place in one or two instances such factor constituting such an infinitesimal portion of the business transacted by plaintiff in this state would not constitute doing business in this state within the meaning of the term as envisioned by the statute under consideration herein.

Defendant's contention that plaintiff's representatives contacted potential homeowners with the view of encouraging the purchase of plaintiff's products so as to bring the instant matter within the scope of the decision in Eli Lilly & Co. v. Sav-On-Drugs, 366 U.S. 276, 81 S.Ct. 1316, 6 L.Ed.2d 288, is not substantiated by the evidence of record. In this regard the record shows that plaintiff's salesmen called upon only contractors or persons engaged in construction without the assistance of a contractor. In the Eli Lilly & Company case, supra, relied upon by defendant, it appears that 'detailmen' were employed to contact physicians, hospitals and retailers to promote and encourage the purchase of plaintiff's products from local wholesalers with whom plaintiff dealt with exclusively. Therein, plaintiff, by encouraging purely intrastate sales between local wholesalers and customers was properly held to be engaged in intrastate activities. The instant case is clearly distinguishable from the Lilly case, supra, in that plaintiff herein sells directly to its customers whether they be contractor or individual owner and does so by means of orders taken by its salesmen and filled only when approved by plaintiff's home office situated in another state. Under the circumstances shown there can be no question but that plaintiff's activities are purely interstate in character. It follows, therefore, the trial court properly overruled defendant's exception of lack of procedural capacity.

ON THE MERITS

Defendant's plea of estoppel is predicated upon the contention that plaintiff sold and delivered materials to defendant's contractor after obtaining knowledge of the contractor's insolvency and failed to inform defendant that the latter might become liable for payment of materials delivered to defendant's job.

Both parties hereto have cited and rely upon Harvey v. Richard, 200 La. 97, 7 So.2d 674, in connection with the...