Hough v. Continental Leasing Corp., 81-253

• Court: Arkansas Supreme Court
• Writing for the Court: DUDLEY
• Citation: Hough v. Continental Leasing Corp., 275 Ark. 340, 630 S.W.2d 19 (Ark. 1982)
• Decision Date: 22 March 1982
• Docket Number: No. 81-253,81-253
• Parties: Cass S. HOUGH, et al., Appellants, v. CONTINENTAL LEASING CORPORATION, et al., Appellees.

Page 19

630 S.W.2d 19

275 Ark. 340

Cass S. HOUGH, et al., Appellants, v. CONTINENTAL LEASING CORPORATION, et al., Appellees.

No. 81-253.

Supreme Court of Arkansas.

March 22, 1982.

Slinkard & Lingle, P.A., by James G. Lingle, Rogers, for appellants.

Smith & Smith by Raymond C. Smith, Fayetteville, for appellees.

DUDLEY, Justice.

Appellant Best Western Town and Country Motel in Rogers contacted Acme Typewriter Exchange in Fayetteville about acquiring two electronic cash registers. Both thought Victor brand machines should be installed and Acme contacted appellee Continental Leasing of Hattiesburg, Mississippi and asked if Continental would purchase the machines from Acme and then lease them to appellant. Continental Leasing, which had previously done no business in Arkansas and had no agents or employees in the state, sent Acme a credit application. Acme then forwarded the application to appellant. On the application appellant stated that it was a partnership composed of Cass S. Hough, R. A. Lile and Arnold L. Mayersohn. Continental Leasing investigated the partners and found that they had reputations as substantial businessmen. Continental then notified Acme that it would purchase the machines and lease them to appellant. Continental prepared an instrument with the following style:

Cass S. Hough executed the instrument for appellant and it was mailed back to Hattiesburg where it was accepted by Continental. Hough testified that he did not read the instrument and thought he signed a conditional sales agreement. He admitted, however, that he had his attorney examine the lease before executing it. The machines had been installed only a short period of time when appellant claimed they were not functioning properly and ceased to make the monthly rental payments. Continental filed suit for the entire unpaid balance, attorney's fees and possession of the property which, under terms of the lease, could be sold with the proceeds to be applied to the judgment. Appellant contended that appellee was in violation of the Wingo Act and could not enforce its contract and, alternatively, the instrument was a usurious conditional sales agreement, rather than a true lease, and was void. A jury trial resulted in a judgment for appellee Continental but no attorney's fees were awarded. Both parties appeal and we affirm on appeal and on cross-appeal.

The Wingo Act, Ark.Stat.Ann. § 64-1202 (Repl.1980), provides that a foreign corporation which does not file its articles of incorporation in this state cannot maintain a cause of action in this state. The act is not applicable to contracts in which the transaction is wholly in interstate commerce. The W. T. Rawleigh Medical Co. v. Rose, 133 Ark. 505, 202 S.W. 849 (1918); Crenshaw v. Arkansas, 227 U.S. 389, 33 S.Ct. 294, 57 L.Ed. 565 (1913). The trial court was correct in finding that the contract was made in Mississippi, where final acceptance occurred. As stated in Goode v. Universal Plastics, Inc., 247 Ark. 442, 445 S.W.2d 893 (1969):

... The rule is stated in Leflar's American Conflicts Law (1969), § 144 at page 353:

The authorities are reasonably clear that, in this event, the contract is made at the time and place "where the last act necessary to the completion of the contract was done-that is, where the contract first creates a legal obligation."

The contract was therefore a Mississippi contract in interstate commerce and Continental may enforce it in the courts of Arkansas despite its status as a nonqualifying corporation. Brown Broadcast, Inc. v. Pepper Sound Studio, Inc., 242 Ark. 701, 416 S.W.2d 284 (1967).

The jury upheld the contract as a lease and appellant contends that the trial court erred in not granting the motion for a directed verdict on the issue of usury. A directed verdict is proper only when no fact issue exists and, on appeal, we determine whether a fact issue existed by examining the evidence in the light most favorable to the appellee and affirm if there is any substantial evidence to support the verdict. Midwest Bus Lines, Inc. v. Williams, 243 Ark. 854, 422 S.W.2d 869 (1968); Rule 52, A.R.Civ.P. Here, there was substantial evidence that the instrument was a lease and not a disguised conditional sales contract and, accordingly, we affirm.

Appellant validly contends that the contract in issue, a five year lease, is in many respects similar to the ostensible leases found to be usurious in Standard Leasing Corp. v. Schmidt Aviation, 264 Ark. 851, 576 S.W.2d 181 (1979) and Bell v. Itek Leasing Corp., 262 Ark. 22, 555 S.W.2d 1 (1977). There are, however, significant differences upon which the jury could base its verdict. The lessee acquired no equity in the property as the lease expressly provided for the return of the equipment to the lessor at the end of the term, or that it be sold and the proceeds go to...