Jones v. Americar, Inc.

• Decision Date: 20 February 1969
• Docket Number: 6 Div. 547
• Citation: 283 Ala. 638,219 So.2d 893
• Parties: Robert E. JONES v. AMERICAR, INC.
• Court: Alabama Supreme Court

Page 893

219 So.2d 893

283 Ala. 638

Robert E. JONES v. AMERICAR, INC.

6 Div. 547.

Supreme Court of Alabama.

Feb. 20, 1969.

Rehearing Denied March 20, 1969.

W. J. Sullivan Jr., of Sadler, Sadler, Sullivan & Sharp, Birmingham, for appellant.

S. P. Keith, Jr., Birmingham, for appellee.

BLOODWORTH, Justice.

Appellant, Jones (defendant below), appeals from a judgment for appellee, Americar (plaintiff below), for $10,682 under court one, $10,000 under court two, $1.00 under count three, $1.00 under count four, and $1.00 under count five, a total of $20,685.00.

Americar, Inc., a Florida Corporation, and Robert E. Jones entered into a franchise contract wherein Jones was granted the right to operate automobile rent-a-car agencies in the State of Alabama, excepting Madison County, using the trade name 'Americar.' Americar leased to Jones various automobiles for use in the rental business.

Controversy between the parties to the contract occurred several months later. Americar claimed Jones was delinquent in his payments under the franchise agreement. He contended that Americar was not complying with the terms of the agreement in failing to furnish current model automobiles, to establish a credit-card system, to give his operation proper supervision, and in not supplying national advertising.

After Americar made efforts to cancel the contract, Jones cancelled it, and Americar demanded the return of its automobiles. They were not returned.

Americar brought an action against Jones, the complaint containing five counts. Count one sought damages for conversion of the twenty-nine automobiles. Count two claimed damages for wrongfully taking the same automobiles. Count three was a claim on account. Count four sought damages for breach of contract. Count five sought damages for breach of a non-competition clause.

Jones filed a plea in abatement, and subsequently filed amended pleas in abatement.

The trial court sustained Americar's demurrers to Jones' amended plea in abatement number one, and overruled the demurrers to pleas two and three.

Jones filed seven pleas of recoupment. The trial court sustained demurrers to pleas of recoupment two and five, and overruled demurrers to pleas of recoupment one, three, four, six and seven.

Trial of the case commenced before a jury March 29, 1967, and ended April 1, 1967 at 3:30 a.m. The jury returned a verdict in favor of Americar, Inc., in the amount of $10,682 on count one; $10,000 on count two, and $1.00 each on counts three, four and five. The verdict was against Jones on his pleas of recoupment.

On April 4, 1967, Jones filed a 'Motion for an Election of Counts,' alleging that the jury had rendered a verdict for $10,682 under count one, and for $10,000 under count two of the complaint, and that both counts were for trover or conversion of the same cars, and both claim damages for the same tort. This motion was overruled on June 29, 1967.

Jones' motion for a new trial was also overruled.

Assignments of error Nos. 1 and 2 claim the trial court erred in sustaining demurrers to defendant Jones' plea in abatement 1, and as amended. Although they were argued separately, the argument under assignment of error No. 1 was adopted in assignment of error No. 2. Therefore, we will consider them together.

In substance, the pleas allege that plaintiff is a foreign corporation, has not qualified to do business in Alabama; that the tort upon which suit is brought arose out of contract entered into between plaintiff and defendant in the State of Alabama; and, that by virtue of the provisions of Code of Alabama 1940, Title 10, § 21(89), as last amended, and Title 51, § 342, the contract is void and cannot be enforced by plaintiff.

Title 10, § 21(89), Code of Alabama 1940, as last amended, reads as follows:

'All contracts or agreements made or entered into in this state by foreign corporations which have not qualified to do business in this state shall be held to be void at the suit of such foreign corporation or any person claiming through or under such foreign corporation by virtue of said void contract or agreement; * * *.'

Title 51, § 342, Code of Alabama, 1940, is as follows:

'All contracts made in this state by any foreign corporation which has not first complied with the provisions of the three preceding sections shall, at the option of the other party to the contract, be wholly void.'

Plaintiff, Americar, argues that failure to comply with state law regarding qualification by a foreign corporation does not preclude its maintaining an action to recover possession of property when the action does not require enforcement of the contract. (We do not here decide whether the contract in question was entered into in this State by a foreign corporation within the meaning of the above quoted sections because this issue was not raised on this appeal.)

Defendant says he does not contend 'that a mrer tort against a non-qualified corporation may not be sued upon by that corporation in the State of Alabama. What we do contend is that when the tort arises out of a contract that is void because a foreign corporation has not complied with the qualification law * * * then that corporation likewise should not be accorded the right and privilege of suing on a tort claim that is necessarily granted in that contract.'

We have read the authorities cited by defendant but find none of them to be applicable to this case, either because of a statute distinctly different from ours or because the case did not involve the conversion of property as in the instant case.

Other courts have specifically upheld the right of a non-qualified corporation to maintain actions for conversion, trover, and ejectment. See: Good Roads Machinery Co. v. Broadway Bank (Mo.) 267 S.W. 40; Bouldin v. Taylor, 152 Tenn. 97, 275 S.W. 340; Farrand Co. v. Walker, 169 Mo.App. 602, 155 S.W. 68; Jennings v. Supreme Photoplay Co., 289 Pa. 240, 137 A. 230; National Match Co. v. Empire Storage & Ice Co., 227 Mo.App. 1115, 58 S.W.2d 797; Sayers & Muir Service Station v. Indian Refining Co., 266 Ky. 779, 100 S.W.2d 687.

We think that which is prohibited in the Alabama statutes are suits on contracts by unqualified corporations. As expressed in Gutta Percha Mfg. & Rubber Co. v. Lehrack, 201 Mo.App. 550, 214 S.W. 285:

'* * * The right to sue is not taken away by the state statute for failure to have a license, but only the right to enforce contracts made in the doing of business subject and contrary to state regulation. * * *' And, as stated in the Kentucky case of Sayers & Muir Service Station v. Indian Refining Co., supra:

'* * * '(T)he statute being penal in its nature and in derogation of the common law it should not be construed so as to include within its purview cases which do not clearly come within it. * * *' * * *'

We are, therefore, persuaded that the cases cited are sound authority for our holding that a non-qualifying foreign corporation may maintain an action for conversion of its property under the facts of this case. (As stated in brief, plea 1 and plea 1, as amended, were only addressed to the ex delicto counts. The trial court allowed similar pleas to the ex contractu counts 3, 4 and 5.)

In assignment of error No. 8, defendant insists that the trial court should have overruled plaintiff's demurrers to his plea of recoupment No. 2. It alleges that plaintiff and defendant entered into a franchise agreement whereby defendant was to operate an automobile renting and leasing business; that plaintiff was to keep defendant supplied with current model automobiles, and certain other items; that plaintiff devoted its efforts to the Econo Car System in competition with the Americar System; that plaintiff had no intention of complying with the terms of the contract; and, that 'therefore the defendant was induced by fraud to enter into the contract.'

Defendant says this plea states a good fraud claim. Plaintiff contends it does not, that defendant failed to allege the statements were false or that he was induced to part with money or that there was any misrepresentation of any material matter upon which he relied to his detriment.

The cases cited in defendant's brief are inapt. In fact, the case of Lonnie Russell Ford, Inc. v. Mitchell, 279 Ala. 340, 185 So.2d 132, supports plaintiff's contention. In that case, the allegations were that certain statements were false and were made for the purpose of deceiving and inducing the plaintiff to purchase an automobile, and that the plaintiff therein, relying on said false statement, purchased the automobile. This court held such a count in that case states a cause of action.

We think the plea here was demurrable for failure to aver in what the alleged fraud consisted so as to advise plaintiff of that which it is called upon to defend against. Nelson Realty Co. v. Darling Shop of Birmingham, Inc., 267 Ala. 301, 101 So.2d 78.

Assignment of error No. 9 charges error on the part of the trial court in sustaining plaintiff's demurrers to defendant's plea of recoupment No. 5. The gist of the plea of recoupment is that plaintiff and defendant entered into a franchise agreement whereby defendant was allowed to operate an automobile rental and leasing agency affiliated with Americar System; that the franchise was to be exclusive; that plaintiff breached said agreement by permitting Birmingham Car and Leasing, Inc., to operate under a franchise agreement in the City of Birmingham in a location two blocks away from defendant's place of business in direct competition with him; and, that plaintiff thereby misrepresented to defendant a material fact, that he would have an exclusive franchise for the territory, upon which representation he relied to his great detriment. The plea further alleges that the said competing corporation was already operating under the terms of its franchise agreement prior to the date of defendant's franchise agreement.

It seems to us that the demurrers were...