Linograph Company v. Logan

• Decision Date: 31 October 1927
• Docket Number: 273
• Citation: 299 S.W. 609,175 Ark. 194
• Parties: LINOGRAPH COMPANY v. LOGAN
• Court: Arkansas Supreme Court

299 S.W. 609

175 Ark. 194

LINOGRAPH COMPANY v. LOGAN

No. 273

Supreme Court of Arkansas

October 31, 1927

Appeal from Johnson Chancery Court; W. E. Atkinson, Chancellor reversed.

Judgment reversed and cause remanded.

Hugh Basham, for appellant.

Paul McKennon, for appellee.

SMITH J. HART, C. J., and HUMPHREYS and MEHAFFY, JJ., dissent.

OPINION

SMITH J.

The appellant, the Linograph Company, a foreign corporation, hereinafter referred to as the "company," brought this suit in the Johnson Chancery Court to recover $ 2,149.50, the balance of the purchase money due on a type- setting machine, and to foreclose the chattel mortgage given to secure the debt. The complaint alleged that the purchase money was evidenced by one note for $ 30 and the balance in notes for $ 40 each, all dated December 3, 1923.

Appellees, who were defendants below, defended upon the ground that appellant was a foreign corporation, and had not complied with the laws of this State permitting it to transact business in this State, which contention was sustained by the court below, and the complaint was dismissed for that reason, and this appeal is from that decree.

The negotiations which led to the sale of the machine were conducted by letters and telegrams. The first of these was a letter dated Clarksville, Arkansas, December 1, 1923, written by S. H. Logan to the company at its office in Davenport, Iowa, in which he advised the company that he was in the market for a type-setting machine. On December 4 the company replied to this letter, advising that it had a second- hand machine at Cambridge Springs, Pa., which it would like to sell at what it said was a bargain price. Logan made several offers, all evidenced by letters, which were offered in evidence. After these letters were written several telegrams were exchanged, and on December 13, 1923, the company wired Logan as follows:

"Price Pennsylvania machine three magazines and eight-point, ten- point and twelve-point matrices and motor, twenty-five hundred dollars F. O. B. Cambridge Springs, Pa., complete as quoted our letter December 4, terms one hundred fifty cash balance forty monthly as stated our wire December 12th. Installation charges thirty-five dollars for railroad fare plus hotel and living expenses. Man will stay five days. Request remittance of cash payment as evidence of good faith. Otherwise if you should change your mind after shipment we would have to return and pay charges. Machines will be overhauled and guaranteed in good condition. Our guaranty is good. Have delayed removal one day. Wire cash Friday or we must ship elsewhere. Same equipment new would cost over thirty-seven hundred fifty."

On December 14 Logan wired the company as follows:

"Am wiring you one hundred fifty dollars with the understanding that the machine is to be shipped immediately and that I am to get a man with Linograph experience to install it. He can install it I am sure and save me the expense of a man from your factory. Machine must be shipped at once."

In reply to this telegram Logan wired the company, on the date of its receipt, to the effect that he was ready to pay the $ 150 if the company would make a concession in regard to the number and time of payments of the notes which would evidence the unpaid balance.

On the same date the company wired Logan the following reply to the last mentioned telegram: "Price and terms previously stated twenty-five hundred dollars, terms $ 150 cash, forty monthly installation by our man to insure you get proper start. Wire cash or refusal today."

Logan wired the $ 150 to the company on the following day (December 15, 1923), to which the company replied, as follows: "Cash received. Expert now overhauling machine. Shipment next week. Forwarding contract for your signature."

In other correspondence Logan advised he wished the contract closed through the Farmers' National Bank of Clarksville, Arkansas, and in response to this request the company wrote the following letter:

"Davenport, Iowa, January 4, 1924.

"Farmers' National Bank,

Clarksville, Arkansas.

"Gentlemen: We inclose herewith the following papers in connection with the sale of a linograph to Mr. S. H. Logan of your city:

"Chattel mortgage in duplicate, fifty-nine promissory notes, bill of lading, bill of sale, copy of invoice, landlord's waiver of lien, loss payable insurance clause.

"Please notify Mr. Logan when these papers arrive and request that he call and execute them.

"Do not hand over the bill of lading before the following instructions have been carried out:

"(1). Have both copies of mortgage signed and acknowledged before a notary public, and two witnesses. (2). Have all blanks for dates and other blanks in mortgage filled in. (3). Have all the notes signed. (4). Have a two-cent revenue stamp placed upon each note, canceling same, the cost of which is to be paid by our customer. (5). Have the machine insured for $ 2,400. Have the loss payable clause in our favor attached to the policy. Send the policy to us with the other papers. The premium is to be paid by Mr. Logan. (6). Have the landlord's waiver of lien signed by the owner of the building, if our customer is not the owner. (7). When all papers have been properly executed, turn the bill of lading and bill of sale over to our customer. (8). Have the mortgage recorded at the office of the county recorder. Request that evidence of recording be placed on both copies. (9). When the mortgage is returned from the county recorder's office, with evidence of recording on copies, return all papers to us. (10). Bill us for your services.

"Thanking you for giving this matter your prompt attention, we are,

"Yours very truly,

"The Linograph Company

"E. S. Larson, Accounting Dept."

It will be observed that the date of this letter is January 4, 1924, but, before it was written, Logan had signed an order dated 12-19-23 for the machine, which was submitted to and accepted by the company at its office in Davenport, Iowa, under date 12-24-1923, in which he agreed to do, as part of the contract of sale, all the things set out above. All the requirements of this letter were met, and the bank delivered to Logan the bill of lading for the machine, which had been shipped by the company to its own order, and, upon surrender of the bill of lading by Logan to the carrier having custody of the machine, it was delivered to him. The bank returned the papers to the company, as directed in the letter set out above, and advised that its charges for this service was $ 1.50, and check to cover was sent by the company to the bank.

Logan testified he put the machine up and used it from the "jump go," and that it later proved defective, and the company sent a mechanic to make adjustments. The testimony in regard to the defects which developed need not be considered here, as the decision of the court below was based solely upon the theory that the appellant had made the sale in violation of the laws of this State by doing business in this State without having complied with the laws of the State permitting it to do business here, and was not entitled to recover on that account.

Logan assigned the contract to Hunter and Bost, who assumed payment of the unpaid notes, with the consent of the company, but they defaulted in the payments, and this suit was brought against them and Logan for the balance due on the notes and to foreclose the mortgage securing their payment.

This court has had occasion frequently and recently to determine when and under what circumstances a foreign corporation would be held to be engaged in business in this State, but we think it unnecessary to review these cases. Among others are the following: Scruggs v. Scottish Mortgage Co., 54 Ark. 566, 16 S.W. 563; Gunn v. White Sewing Machine Co., 57 Ark. 24, 20 S.W. 591, 18 L. R. A. 206, 38 Am. St. Rep. 223; Florsheim Bros. D. G. Co. v. Lester, 60 Ark. 120, 29 S.W. 34, 27 L. R. A. 505, 46 Am. St. Rep. 162; Sunny South Lumber Co. v. Neimeyer Lbr. Co., 63 Ark. 268, 38 S.W. 902; Simmons-Burk Clothing Co. v. Linton, 90 Ark. 73, 117 S.W. 775; Clark v. J. R. Watkins Medical Co., 115 Ark. 166, 171 S.W. 136; Hogan v. Intertype Corporation, 136 Ark. 52, 206 S.W. 58; Coblentz & Logsdon v. L. D. Powell Co., 148 Ark. 151, 229 S.W. 25; Rose City Bottling Co. v. Godchaux, 151 Ark. 269, 236 S.W. 825; L. D. Powell Co. v. Rountree, 157 Ark. 121, 247 S.W. 389, 30 A. L. R. 414; Kansas City Steel Co. v. State, 161 Ark. 483, 256 S.W. 845.

In support of the decree of the court below, appellee cites and relies upon the cases of Kansas City Structural Steel Co. v. State, use of Ashley County, 161 Ark. 483, 256 S.W. 845, and the case of Hogan v. Intertype Co., 136 Ark. 52, 206 S.W. 58, and it is argued that the latter case is practically identical with the instant case.

We think, however, that the cases relied upon are clearly distinguishable on the facts from the instant case. In the Hogan case the facts were that the type-setting machine was shipped into this State by the foreign corporation to itself, and that it remained the corporation's property after its arrival in this State until, by demonstration, it was found to be suitable to the purpose of the purchaser and was accepted, after which, and not until then, was the sale completed and the machine delivered. This important fact was emphasized by the statement in the opinion of the court that "one test laid down by the Arkansas cases differentiating an interstate transaction from an intrastate transaction is the ownership of the property after it arrives within the State" (citing cases), * * * and that "an interstate transaction contemplates a consignor without and a consignee within a State, or vice versa."

Under both these tests...