In re Springfield Realty Co.

• Decision Date: 23 April 1919
• Docket Number: 3739.
• Citation: 257 F. 785
• Parties: In re SPRINGFIELD REALTY CO.
• Court: U.S. District Court — Eastern District of Michigan

257 F. 785

In re SPRINGFIELD REALTY CO.

No. 3739.

United States District Court, E.D. Michigan, Southern Division.

April 23, 1919

McNamara & Scallen, of Detroit, Mich., for petitioner.

Keena Lightner, Oxtoby & Hanley, of Detroit, Mich., for trustee.

TUTTLE District Judge.

This is a petition filed by the Phillips Company, a Wisconsin corporation (hereinafter called the claimant), one of the creditors of the bankrupt herein, a Michigan corporation, to review an order of the referee in bankruptcy for this division, dismissing the claim of such petitioner for work and labor furnished in installing a certain automatic fire sprinkler system on premises owned by the bankrupt in the state of Michigan. Prior to the filing of the bankruptcy petition herein, claimant had filed a mechanic's lien under the laws of Michigan. The real estate of the bankrupt including these premises, was sold at a bankruptcy sale under an order of this court, free and clear from all liens such as this mechanic's lien; the latter being, so far as it might be valid and enforceable, transferred to the proceeds of such sale. Claimant now seeks to enforce this lien herein.

It is undisputed that the claimant is, and at the time of making the contract in question was, a Wisconsin corporation, and that it did not comply with the statutes of Michigan governing the right of such a corporation to do business here. The defense here urged is that the contract on which such lien depends was void, because it called for the doing of business in Michigan by a foreign corporation which had not obtained the necessary authority from the state of Michigan to do business therein.

By the terms of the contract in question the claimant agreed 'to equip the property of the second party, located at Detroit, county of Wayne, state of Michigan,' such property being therein specifically described, 'with a system of automatic fire sprinklers as described and enumerated in the annexed specifications, with the exceptions noted, all material to be of the first class, and all work done in a workmanlike manner under the rules and regulations of, and in accordance with the plans approved by, Michigan inspection bureau, whose approval shall be conclusive and final as to the proper completion of the contract.'

Claimant seeks to meet this defense by three different contentions as follows: (1) That the contract in question did not provide for the doing of intrastate business, but related to and constituted interstate commerce, and that, therefore, it was not within the prohibition of the Michigan statute invoked. (2) That this contract was not made in Michigan, but in Illinois, and that, therefore, it is not void under such statute. (3) That as the bankrupt and ultimately its trustee received the benefit of the full performance of this contract by claimant, this court should, in equity, require payment to be made therefor. These contentions will be considered in the order named.

1. The provisions of the Michigan statute referred to are as follows: Section 1 of Act 206 of the Michigan Public Acts of 1901, as amended, being section 9063 of the Michigan Compiled Laws of 1915, provides:

'It shall be unlawful for any corporation organized under the laws of any state of the United States, except the state of Michigan, or of any foreign country, to carry on its business in this state, until it shall have procured from the secretary of state of this state a certificate of authority for that purpose.'

Section 6 of the same act (section 9068 of the Michigan Compiled Laws of 1915), provides as follows:

'No foreign corporation, subject to the provisions of this act, shall be capable of making a valid contract in this state until it shall have fully complied with the requirements of this act, and at the time holds an unrevoked certificate to that effect from the secretary of state.'

Section 8 of the act (section 9070, Compiled Laws of 1915) concludes thus:

'Nor shall this act be construed to prohibit any sale of goods or merchandise which would be protected by the rights of interstate commerce.'

The meritorious question here involved is whether this contract provided essentially for the carrying on of business by claimant in Michigan (that is, the doing of intrastate business in Michigan), and hence falls within the prohibition of section 1 of the statute, or whether, on the other hand, this contract so related to interstate commerce as to be a part thereof, and therefore not within this statutory prohibition.

What then, was the character of this contract? By its terms the claimant agreed 'to equip the property' of the bankrupt in Detroit 'with a system of automatic fire sprinklers' in accordance with certain plans and specifications...