Loomis v. People's Const. Co.

• Decision Date: 03 March 1914
• Docket Number: 2407.
• Citation: 211 F. 453
• Parties: LOOMIS v. PEOPLE'S CONST. CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

211 F. 453

LOOMIS v. PEOPLE'S CONST. CO. et al.

No. 2407.

United States Court of Appeals, Sixth Circuit.

March 3, 1914

G. A Miller, of Detroit, Mich., and Miner & Reece (Alex. J Groesbeck, of Detroit, Mich., of counsel), for plaintiff in error.

L. W Goodenough, of Detroit, Mich. (Wilson & Cobb, of Jackson Mich., of counsel), for defendants in error.

Before KNAPPEN and DENISON, Circuit Judges, and COCHRAN, District judge.

KNAPPEN Circuit Judge.

In the year 1908, the People's Construction Company, an Iowa corporation (which we shall hereafter call the Construction Company), was awarded the contract for certain sewer construction in the city of Janesville, Wis. Following the award, the Reinforced Concrete Pipe Company (hereafter called the Pipe Company), a West Virginia corporation, having its 'central office' at Jackson, Mich., entered into a written agreement (made at Janesville) with the Construction Company for the manufacture for the latter company of upwards of 10,000 lineal feet of reinforced concrete pipe of different sizes, at an aggregate price of more than $11,000; the Pipe Company furnishing all the forms required for the construction, the steel reinforcement (which was both longitudinal and lateral), the derrick for lowering the pipe into the trench, and a saddle (presumably for use in so lowering the pipe), as well as the superintendent; the Construction Company furnishing the cement and gravel required for the concrete, as well as the labor required in making the pipe, which was to be manufactured in Janesville 'along the line of sewer construction of said city'; the Pipe Company agreeing to use in the manufacture of the concrete given proportions of specified cement and gravel, and to reinforce the same 'in keeping with the standard of reinforcement in use by' the Pipe Company; also to provide openings for house and catch basin connections as 'shown by the plans of said sewer construction.' The Pipe Company had thus nothing to do with opening or filling the trenches or with laying the pipe therein, aside from furnishing the derrick and saddle therefor; and the Construction Company had nothing to do with the actual manufacture of the pipe itself previous to putting it into the trench except furnishing the labor, cement, and gravel, and perhaps the mixer. The pipe joint was patented, and the contract price was apparently intended to cover any royalty charge. The Pipe Company's forms, derrick, and saddle were, for the purposes of this work, shipped to Janesville from outside the state; the reinforcing material was shipped to Janesville from Chicago. The pipe manufacture continued from August to November. The Pipe Company had no office or general place of business in Wisconsin; whether it had an actual factory anywhere does not appear. To secure the performance of the contract between the city and the Construction Company, the latter gave a bond to the city with the Title Guaranty & Surety Company (a Pennsylvania corporation) as surety, conditioned, among other things, to 'pay for all work and labor performed and materials furnished to complete' the sewer construction.

The Wisconsin statute (section 1770b) provides that:

'No corporation, incorporated or organized otherwise than under the laws of this state * * * shall transact business or acquire, hold, or dispose of property in this state until such corporation shall have caused to be filed in the office of the Secretary of State a copy of its charter, articles of association or incorporation'

-- the officer named being made the corporation's attorney for the service of process. Failure to comply with the statute makes the corporation and those acting for it in the state liable to fine. It further provides that:

'Every contract made by or on behalf of any such foreign corporation, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions of this section, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them.'

A fee of $25, with an added percentage on capital employed in the state above a stated amount, is required. The Pipe Company never complied with this statute. The Construction Company paid the Pipe Company about $4,800 under the contract, failing to make further payments by reason of certain claims not important here. The Pipe Company assigned its right of action to the plaintiff, who brought suit upon the contract in a state court of Michigan, against the Construction Company and the Surety Company, on the theory that the bond inured to the benefit of the Pipe Company, as a furnisher of labor and materials for a public work. The suit was removed to the United States Circuit Court by reason of diversity of citizenship of the parties. The Construction Company was not served with process, and did not appear; the Surety Company defended. At the conclusion of the trial the court directed verdict for defendant, upon the grounds, first, that the action, if it lay at all, must be brought in the name of the city of Janesville; second, that the Pipe Company was not a materialman or laborer, but was a subcontractor; and, third, that the Pipe Company had not qualified itself to transact business in Wisconsin.

Turning to the last-stated ground of the trial court's action: It was entirely competent for the state to prescribe the terms upon which a foreign corporation might enter and do business in the state, provided its action did not directly restrain or interfere with the free exercise of interstate or foreign commerce. Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 732, 5 Sup.Ct. 739, 28 L.Ed. 1137; New York State v. Roberts, 171 U.S. 658, 665, 19 Sup.Ct. 58, 43 L.Ed. 323; Oakland Sugar Mill Co. v. Fred W. Wolf Co. (C.C.A. 6th Cir.) 118 F. 239, 244, 55 C.C.A. 93. Of course, a statute imposing such restraint would be void, and, whether or not so intended, could not be made to effect such restraint.

The question then arises whether what was done by the Pipe Company amounted to a transacting of business within the state of Wisconsin, or whether its contract sought to be enforced here was one 'affecting the personal liability' of that company, within the meaning of the Wisconsin statute. Statutes requiring a foreign corporation to maintain an office within the state for the transaction of business have been generally held not to relate to isolated transactions such as the one in question is said to be. Cooper Mfg. Co. v. Ferguson, supra; Natural Carbon Paint Co. v. Fred Bredel Co. (C.C.A. 7th Cir.) 193 F. 897, 114 C.C.A. 111. But see Chattanooga Bldg. & Loan Ass'n v. Denson, 189 U.S. 408, 414, 23 Sup.Ct. 630, 47 L.Ed. 870.

But the Wisconsin statute makes no requirement of the maintaining of office within the state; and it has been expressly held by the Supreme Court of that state, not only that the act in question does not relieve foreign corporations not having a portion of their capital invested in Wisconsin from complying with the act, if such corporations actually transact business within the state or make contracts therein upon which they assume a personal liability (Southwestern Slate Co. v. Stephens, 139 Wis. 616, 626, 120 N.W. 408, 29 L.R.A. (N.S.) 92, 131 Am.St.Rep. 1074), but that 'a single contract falls within the ban of the statute. ' Southwestern Slate Co. v. Stephens, supra; citing Allen v. Milwaukee, 128 Wis. 678, 106 N.W. 1099, 5 L.R.A. (N.S.) 680, 116 Am.St.Rep. 54, 8 Ann.Cas. 392. The case of Southwestern Slate Co. v. Stephens was an action by a foreign corporation to collect a stock subscription under contract made in Wisconsin. The corporation had offices in at least two other states; it does not appear by the opinion that it had an office in Wisconsin, or that it was doing business there except the sale of the stock. It was said (139 Wis., page 623, 120 N.W., page 410, 29 L.R.A. (N.S.) 92, 13 Am.St.Rep. 1074):

'The trial court found as matter of fact that the subscription contract was made in Wisconsin, and that it affected the personal liability of the plaintiff. If there is sufficient evidence in the record to sustain this finding, the judgment must be affirmed. This result must follow regardless of whether the plaintiff was or was not transacting business in this state within the meaning of subdivision 2, Sec. 1, of the 1905 law.' This construction of the statute so made by the highest court of Wisconsin will be respected by the federal

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