Houston Canning Co. v. Virginia Can Co.

• Decision Date: 14 February 1924
• Docket Number: 4 Div. 59.
• Parties: HOUSTON CANNING CO. ET AL. v. VIRGINIA CAN CO.
• Court: Alabama Supreme Court

100 So. 104

211 Ala. 232

HOUSTON CANNING CO. ET AL. v. VIRGINIA CAN CO.

4 Div. 59.

Supreme Court of Alabama

February 14, 1924

Rehearing Withdrawn May 13, 1924.

Appeal from Circuit Court, Houston County; H. A. Pearce, Judge.

Bill in equity by the Virginia Can Company against the Houston Canning Company and others, to have an equitable lien declared in its favor. From a decree overruling demurrer to the bill, respondents appeal. Affirmed.

Farmer Merrill & Farmer, of Dothan, for appellants.

Harry K. Martin, of Dothan, for appellee.

MILLER J.

This is a bill in equity filed by the Virginia Can Company, a corporation organized under the laws of the state of Virginia, against the Houston Canning Company, a corporation organized under the laws of Alabama, the officers and directors of this corporation, the Firemen's Insurance Company, a foreign corporation qualified to do business in Alabama, and J. D. Flowers.

The complainant by the bill as amended seeks to have an equitable lien declared in its favor for its pro rata share of the proceeds collected under two insurance policies on its property (two automatic closing can machines) held by the Houston Canning Company as lessee, which with the property of this defendant were covered by the insurance policies, all of which was destroyed by fire. The Firemen's Insurance Company admitted an indebtedness under the policies aggregating $3,666.67. It filed an interpleader, and was allowed by the court to pay this sum to the register and be discharged from further liability. The Houston Canning Company was allowed by the court pending this proceeding to receive the proceeds of this insurance, by executing bond for its return to answer the final decree of the court.

The respondents, separately and severally, demurred to the bill as amended and parts thereof, which demurrers were by decree of the court overruled. This appeal is prosecuted by the defendants from such decree, and it is the error assigned.

The defendants insist the bill as amended is demurrable because it affirmatively appears therein that the complainant is a foreign corporation, and it was engaged in or transacting business in this state as shown by its two lease contracts upon which the relief is predicated, and it fails to aver before making these contracts and engaging in that business evidenced by them, that it had complied with the Constitution and statutes of this state. Sections 3642-3644, 3651, and 3653, Code 1907.

This bill alleges the complainant is a corporation organized under the laws of the state of Virginia, and its principal place of business is in the city of Roanoke, Va. It should also aver compliance with the Constitution and statutes of this state before entering into these lease contracts, if it appears from the face of the complaint that the relief sought is predicated on these contracts, and they, under the facts averred, constitute engaging in or transacting business in this state by the complainant. Ashurst v. Arnold, etc., Co., 201 Ala. 480, 78 So. 386; Christian v. Am., etc., Mtg. Co., 89 Ala. 198, 7 So. 427; Farrior v. New Eng. Mfg. Co., 88 Ala. 275, 7 So. 200; Muller Mfg. Co. v. First Nat. Bank, 176 Ala. 229, 57 So. 762.

The relief of complainant rests primarily on two contracts entered into by it with the Houston Canning Company. They are not sale contracts, but are lease contracts. One is attached to and made part of the bill by exhibit, and the bill avers the other contained the same terms and conditions. One contract is dated June 8, 1918, and the other July 25, 1919. The complainant by the former leased for three years from June 8, 1918, to this defendant a can-closing machine for No. 3 cans; and by the latter complainant leased for three years, from July 25, 1919, to this defendant a can-closing machine for No. 2 1/2 cans. In the contract the complainant is called the lessor and the Houston Canning Company is called the lessee. In these contracts the "lessee agrees to pay the lessor an annual rental of $50 per annum for each machine and rental to be paid in cash at time of delivery." The bill avers this defendant is indebted to the complainant now in the sum of $100 for rent, and the value of each machine was $1,300. The machines were shipped from Roanoke, Va., to this defendant at Dothan, Ala., and the defendant was to pay the freight and the defendant after the termination of the lease contracts, was to return the machines, carefully crated, freight prepaid, to complainant at Roanoke, Va. The lessee contracted to keep the machines fully insured for the benefit of the lessor, forwarding the policies to it. This the lessee failed to do. The lessee was to buy cans from the lessor to be used in the machines. The lessor agreed that after the machines are set up and ready for operation by lessee-

"where it is necessary for further adjustment by lessor, it will furnish a mechanic to adjust the machine and give all necessary instructions for proper operation; and, if for any reason or cause lessee requires further attention to said machine by lessor's mechanic, lessee agrees to pay lessor the entire expense for this additional attention to machine."

It does not appear where the contracts were executed. It appears the last lease was sent to complainant as an order by the lessee. These machines were shipped by the lessor from Virginia to the lessee at Dothan, Ala.; they were installed in the factory soon after the execution of the leases; and they were destroyed by fire with the building, including other goods and machinery therein on January 2, 1921.

In 12 Corpus Juris, 37, § 36, head note 33, we find the following: "Under some circumstances the business of leasing chattels may constitute commerce." In these contracts the machines are leased by the foreign corporation to the domestic corporation to be used by the lessee for three years in its factory in this state. The machines are shipped by the lessor from Virginia to the lessee in Alabama, the lessee is to pay the freight, and the annual rental is to be paid when the machines are delivered. After the termination of the leases the machines are to be returned to the lessor in Virginia by the lessee, freight prepaid, by the lessee. The lessee is to keep the machines during the lease fully insured in favor of the lessor against loss by fire. The leasing of these machines under the contract and the facts constitute interstate commerce. Similar contracts of leasing chattels by a resident of one state to a resident of another state have been held to constitute interstate commerce, and the lessor was not thereby engaging in business or transacting business in the state of the lessee, which made the lessor subject to the conditions imposed by the statutes of the state of the lessee. 12 Corpus Juris, 37, head note 33; U.S. v. U.S. Mach. Co. (D. C.) 234 F. 127; Mergenthaler Co. v. Hays (Mo. App.) 181 S.W. 1183; Bogata Merc. Co. v. Outcoult Adv. Co. (Tex. Civ. App.) 184 S.W. 333.

The only business to be performed by the lessor in this state...