Hawkinson Tire Co. v. Paul E. Hawkinson Co.

• Decision Date: 19 November 1970
• Docket Number: CA-CIV,No. 1,1
• Citation: 13 Ariz.App. 343,476 P.2d 864
• Parties: HAWKINSON TIRE COMPANY of Arizona, an Arizona corporation, Appellant, v. PAUL E. HAWKINSON COMPANY, a Minnesota corporation, Appellee. 1264.
• Court: Arizona Court of Appeals

Page 864

476 P.2d 864

13 Ariz.App. 343

HAWKINSON TIRE COMPANY of Arizona, an Arizona corporation, Appellant, v. PAUL E. HAWKINSON COMPANY, a Minnesota corporation, Appellee.

No. 1 CA-CIV 1264.

Court of Appeals of Arizona, Division 1.

Nov. 19, 1970.

Rehearing Denied Dec. 21, 1970.

Marks & Marks, by Philip J. Shea, Phoenix, for appellant.

Snell & Wilmer, by George C. Wallach, Phoenix, for appellee.

HOWARD, Chief Judge.

The appellee, plaintiff below, filed suit against the appellant, defendant below, seeking to recover certain personal property and damages by virtue of the defendant's alleged breach of contract. (We shall hereinafter refer to the parties as they appeared below.) The defendant filed a counterclaim seeking damages for plaintiff's alleged breach of contract. Plaintiff moved for judgment on the pleadings with respect to the counterclaim on the ground that it was barred by the statute of limitations. The motion was granted and judgment entered accordingly.

Plaintiff's claim was tried to the court sitting without a jury and judgment was entered decreeding that plaintiff was entitled to possession of certain personal property and defendant was ordered to ship it forthwith to the plaintiff's place of business in Minneapolis, Minnesota. ¹

DID THE TRIAL COURT ERR AS TO THE COUNTERCLAIM?

The essence of defendant's counterclaim was, as alleged in its pleading, that in April, 1959, the plaintiff breached the license agreement between the parties ² by granting another license to defendant's competitor in Phoenix, Arizona. The pleading alleges one breach, to-wit in 1959, but the counterclaim was not filed until 1966, more than six years after the alleged breach. Assuming arguendo that the six-year limitations period prescribed in A.R.S. § 12--548 applies rather than the four-year period of A.R.S. § 12--550, the defendant's counterclaim was barred since the statute of limitations commenced to run in 1959, the date of the breach. Waddell v. White, 51 Ariz. 526, 78 P.2d 490 (1938); Hollin v. Libby, McNeill and Libby, Or., 452 P.2d 555 (1969); 51 Am.Jur.2d Limitation of Actions § 126; 54 C.J.S. Limitation of Actions § 125(a).

Defendant contends, however, that even if the statute commenced to run in 1959, it was tolled pursuant to A.R.S. § 12--501 because plaintiff was absent from the state 'in that it was a foreign corporation without a license to do business here.' For a foreign corporation to be 'absent' within the meaning of A.R.S. § 12--501, it must be out of the state in the sense that it could not be served with process. Phillips v. Anchor Hocking Glass Corporation, 100 Ariz. 251, 413 P.2d 732 (1966). Defendant argues that since plaintiff could not be served within the borders of Arizona, no In personam jurisdiction could have been acquired over it. This argument is clearly without merit as service of process could have been effected by constructive service. D. W. Onan & Sons v. Superior Court, 65 Ariz. 255, 179 P.2d 243 (1947); see Rule 4(e)(1), Rules of Civil Procedure, 16 A.R.S. Since the limitations bar was manifested on the face of defendant's pleading, the trial court did not err in its summary disposition of the counterclaim.

DID THE TRIAL COURT ERR IN GRANTING JUDGMENT TO THE PLAINTIFF?

The plaintiff's amended complaint alleged that: On April 30, 1938 plaintiff entered into a license agreement with certain individuals, a copy of which agreement was attached thereto; on July 7, 1943, the licensees' interest in the agreement was assigned to defendant; plaintiff had furnished certain equipment to defendant, as described in an attached exhibit, which was covered by the terms of the lease; defendant had failed to comply with the terms of the agreement and had refused to so comply; on September 18, 1964, written notice had been given to defendant that the license agreement would be terminated at the expiration of 30 days; and after the expiration of said 30 days, plaintiff demanded the return of its equipment as set forth in the license agreement but defendant failed and refused to deliver possession of the equipment.

In its answer, defendant admitted execution of the license agreement and the assignment thereof to it and that plaintiff had given notice of cancellation and had demanded return of the equipment. As to plaintiff's allegation of noncompliance by defendant with the terms of the license agreement, defendant responded:

'In answer to paragraph V of the Amended Complaint, defendant admits that it has failed to comply with all the terms of the license agreement since December 31, 1960, but alleges:

(1) that said agreement expired and became of no further force and effect on December 30, 1953;

(2) that said agreement is and at all times material hereto has been illegal under the laws of the United States.'

Pertinent portions of the license agreement which form the basis of plaintiff's claim are:

'THIS AGREEMENT IN WRITING made and entered into this 30th day of April, 1938, by and between Paul E. Hawkinson Company, a Minnesota corporation, * * * hereinafter referred to as 'Licensor,' and (defendant's assignor) hereinafter referred to as 'Licensee';

WITNESSETH THAT:

WHEREAS, Licensor is assignee and owner of the entire right, title and interest, legal and equitable, in and to those certain inventions of Paul E. Hawkinson relating to the method of an apparatus for treading tire casings, and disclosed and claimed in Letters Patent of the United States, to-wit: Numbers 1,917, 261--1, 917, 262--2, 034, 618--2, 065, 697; and

WHEREAS, Licensee is desirous of acquiring an exclusive right to practice the Hawkinson method and to use the Hawkinson apparatus within a limited territory hereinafter defined.

NOW THEREFORE, In consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties have agreed and do hereby agree as follows:

1. The Licensor hereby grants to the Licensee subject to conditions and for considerations hereinafter further expressed, the exclusive right and license to practice the Hawkinson method and to use the Hawkinson apparatus disclosed and claimed in said Hawkinson applications above identified, within the following territory, to-wit: All of Gila, Yavapai, Then the North half of Pinal Counties and all of Maricopa County, Arizona. but at no place outside of said territory; and which right or license, unless revoked for cause or as hereinafter provided shall extend throughout the life of Letters Patent issued on said applications or either thereof or the invention therein disclosed, and which Letters Patent is the last to expire.

2. The considerations moving from Licensee to Licensor for the grant made under Section I, shall consist of and be divided into three parts, to-wit:

(a) A cash consideration;

(b) Deferred monthly rental payments; and

(c) The purchase of rubber from Licensor or a royalty based on the quantity of rubber employed in practicing the same Hawkinson method and/or use of said Hawkinson apparatus, all as hereinafter more fully explained.

3. The Licensor agrees to furnish the Licensee, for initial delivery, the following equipment for use by Licensee in the practice of the herein license method (such equipment to remain the property of Licensor), in accordance with the following itemized list which expresses the above considerations (a) and (b), and in accordance with consideration (c) which will later be more fully defined.

(list of equipment)

In accordance with the above itemized list, the total cash consideration (a) will amount to $1,173.00 and the total rent per month (b) for the equipment will amount to $8.25.

* * *

* * *

15. In case Licensee fails to do any of the things herein agreed to be done, then Licensor may revoke the license herein given and terminate this contract by first serving notice upon Licensee specifying the thing or things in default and requesting that they be performed or made good within thirty (30) days from date of such written notice; and thereupon, if the said thing in default be not performed or made good within thirty (30) days, then, at the termination of said thirty (30) days, the license herein given shall be ipso facto revoked and this contract terminated; but such termination, however, shall not relieve the Licensee from his or its obligation to pay to Licensor any and all money that may be due at the date of such...