Hicks Body Company v. Ward Body Works

• Decision Date: 11 May 1956
• Docket Number: No. 15316.,15316.
• Citation: 233 F.2d 481
• Parties: HICKS BODY COMPANY, Inc., a corporation, Appellant, v. WARD BODY WORKS, Inc., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

233 F.2d 481 (1956)

HICKS BODY COMPANY, Inc., a corporation, Appellant, v. WARD BODY WORKS, Inc., Appellee.

No. 15316.

United States Court of Appeals Eighth Circuit.

May 11, 1956.

Wendell J. Brown, Chicago, Ill. (Edward L. Wright, Little Rock, Ark., Russell I. Richardson, Stewart & Richardson, Lebanon, Ind., MacLeish, Spray, Price & Underwood, Chicago, Ill., and Wright, Harrison, Lindsey & Upton, Little Rock, Ark., with him on the brief), for appellant.

J. G. Williamson and J. W. Barron, Little Rock, Ark. (Rose, Meek, House, Barron & Nash, Little Rock, Ark., with them on the brief), for appellee.

Before WOODROUGH, JOHNSEN and VOGEL, Circuit Judges.

JOHNSEN, Circuit Judge.

Appellant, an Indiana corporation, brought suit against appellee, an Arkansas corporation, in the federal court in Arkansas, on diversity jurisdiction, to recover damages for breach of a contract. The court, on motion of appellee, dismissed the action, upon the grounds that the contract was one which had been made in Arkansas; that appellant had not qualified as a foreign corporation to do business in the State; and that under the Arkansas statutes it therefore was without right or capacity to sue upon such a contract in the State.

Ark.Stats.Ann.1947, § 64-1201, requires a foreign corporation doing business in the State to make certain filings in the office of the Secretary of State, including a copy of its charter, articles, or certificate of incorporation, the name of an agent upon whom process against it can be served, and a resolution by its Board of Directors consenting that service upon any agent which it may have in the State, or upon the Secretary of State (provision being made in the statute for the immediate forwarding by such officer to the corporation's principal office of any process served upon him), shall constitute valid service upon it.

Section 64-1202 provides that "Any foreign corporation which shall fail to comply with the provisions of this act * * *, and shall do any business in this State, shall be subject to a fine of not less than $1,000, * * * and as an additional penalty, any foreign corporation which shall fail or refuse to file its articles of incorporation or certificate as aforesaid, can not make any contract in this State which can be enforced by it either in law or in equity, and the complying with the provisions of this act after the date of any such contract, or after any suit is instituted thereon, shall in no way validate said contract." (Emphasis supplied.)

Appellant contends that § 64-1202, which originally was Act 687 of Arkansas Acts of 1919, was repealed by implication, in the enactment of Act 131 of the Acts of 1947, now §§ 64-1204 to 64-1209, Ark. Stats.Ann.1947. The 1947 Act was in form an independent act, without any specific expression of amendment or repeal of § 64-1202. It made a foreign corporation doing business in the State, "which fails to file in the office of the Secretary of State a copy of its charter or Articles of Incorporation as now provided by law", subject to a "penalty" of $5,000 — for which failure § 64-1202 had provided a $1,000 "fine". Nothing was, however, said in the 1947 Act about any lack of capacity on the part of such a non-complying corporation to enforce a contract made in the State, which disability § 64-1202 had, as previously indicated, imposed upon the corporation "as an additional penalty". It is argued here that, although the 1947 Act did not expressly repeal § 64-1202, the Legislature must have intended that the new, increased, monetary penalty, for which the Act provided, should take the place of all previous penalties in the statute, and that thus, not only had the $1,000 fine under § 64-1202 been superseded, but equally had the disability of a non-complying foreign corporation to enforce in the courts of Arkansas its contracts made in that State been terminated.

The trial court was of the view, in effect, that, in its adoption of the 1947 Act, the Legislature was primarily acting to stop, by emergency measure, the substantial revenue loss, which it believed had been occurring, from the disregard by foreign corporations of the requirement of qualifying to do business in the State, and was not assuming to examine or canvass generally the field of existing, consistent penalties; that the prescribing of a $5,000 penalty, in order to force foreign corporations to qualify to do business in the State, did not realistically tend to persuade of any legislative intent to deal more leniently with such an offending corporation than formerly in other respects, such as a relenting upon and a lifting of the additional, long-established, important and non-conflicting penalty, under § 64-1202, of lack of capacity to enforce any contract made by it in the State; that the previous imposing of this suit disability in relaton to such contracts involved an aspect of public policy going beyond revenue concern alone, in that it also served the purpose of protecting the citizens of Arkansas from being subject to being sued on such contracts in the State, when the corporation had not seen fit to make it equally as possible and convenient for them to sue it there, through the means which qualification under the statute would provide; that this policy of required, assured, enforcement opportunity in favor of Arkansas citizens on all contracts of foreign corporations made in the State, through statutory qualification, was one which had had continuous legislative existence in the State and been accorded general recognition by its courts, ever since 1887; and that it thus did not seem either convincing or probable that the Legislature had intended to wipe out such a distinct, long-established and important public policy, without any direct expression in relation to it or even mention of the statute containing it, and especially when the remaining-in-effect of the policy could in no possible way be thwartive or affective of the provisions or operation of the adopted, emergency Act.

We do not feel able to say, on any demonstrable legal basis, or as a matter of general judicial conviction otherwise, that this considered appraisal and application by the trial judge of Arkansas law is an erroneous one in the situation. To the contrary, it seems to us that the court's conclusion is here even more than an allowable one; it is a fully persuasive one as well. Support for the court's concept of the intent and scope of the 1947 Act is contained in the recitation of its emergency clause that "many foreign corporations are now doing business in this State without filing their Articles of Incorporation with the Secretary of State; and * * * much revenue is being lost to the State due to the tax evasion of these corporations", and that "an emergency is hereby declared to exist". It may be noted too that, in furtherance of its purpose to prevent this revenue loss from continuing, the Act sought to effect greater enforcement certainty against violation than in the past, by giving the Attorney General of the State authority to collect the penalty — a power which had previously existed only in the Prosecuting Attorneys of the local Districts — and by further granting the right to make compromises of the penalty, apparently as an aid and as an encouragement to collection efforts, and presumably also as a lever to induce on the part of such corporations a willingness to engage in immediate qualification.

The general principles by which the trial court legally was entitled to evaluate the situation may briefly be recounted. Courts will not unnecessarily regard a statute as repealing another by implication; "whether a new act works an implied repeal of an existing statute is one of legislative intention in the enactment of the alleged repealing act"; "a repeal by implication will be carried no further than is required to gratify the legislative intent manifested in the later act"; "except where an act covers the entire subject matter of earlier legislation, is complete in itself, and is evidently intended to supersede the prior legislation on the subject, a later act does not by implication repeal an earlier act unless there is such a * * * manifest * * * and irreconcilable inconsistency and repugnancy, that the two acts cannot, by a fair and reasonable construction, be reconciled * * * and be given effect or enforced together"; "a statute is only repealed by the repugnancy of matter in a subsequent statute to the extent of such repugnancy, and if any part of the earlier act can stand as not superseded or affected by the later act, it is not repealed"; and "the principle that the law does not favor repeal by implication is of special application in the case of an important public policy statute of long standing * * *." 50 Am.Jur., Statutes, §§ 535, 543, 546. These principles appear to have been duly recognized by the Arkansas Supreme Court in such cases as Moncus v. Raines, 210 Ark. 30, 194 S.W.2d 1, and others which need not here be enumerated.

Appellant makes the further contention, however, that even if the disability of a non-complying foreign corporation to sue in Arkansas upon a contract made in the State still exists under § 64-1202, the contract here involved could not properly be held to be one which in spirit was or could have been intended by the Legislature to fall within the operation of the statute. The argument made in support of the contention is that the negotiations for the contract were all conducted in Indiana and the meeting of the parties' minds subjectively occurred in that State; that the instrument reflective of the understanding so reached was itself drawn up in Indiana and the parties sufficiently executed it there to give it legal operativeness as an obligation on the part of appellee; and that beyond all this appellant could not in any event be said, even if the execution must be regarded as having been completed formally in Arkansas, to have at the time been or...