Major Creek Lumber Co. v. Johnson

• Decision Date: 01 February 1921
• Parties: MAJOR CREEK LUMBER CO. v. JOHNSON ET AL.
• Court: Oregon Supreme Court

195 P. 177

99 Or. 172

MAJOR CREEK LUMBER CO. v. JOHNSON ET AL.

Supreme Court of Oregon

February 1, 1921

In Banc.

Appeal from Circuit Court, Multnomah County; W. N. Gatens, Judge.

Action by the Major Creek Lumber Company against E. T. Johnson and H. M. Johnson, copartners doing business under the firm name and style of E. T. Johnson & Son. Judgment for defendants and plaintiff appeals. Reversed and remanded.

This is an action to recover damages for breach of a contract to deliver logs to plaintiff, a Washington corporation, at Dorr Klickitat county, Wash. Defendants interposed a plea in abatement, alleging that plaintiff was transacting business in the state of Oregon without first complying with the statutory requirements regulating foreign corporations. Before any testimony was taken in support of this plea plaintiff objected to the introduction of any evidence, on the ground that the plea did not state facts sufficient to constitute matter in abatement. This motion was overruled by the court. Plaintiff's objection to this plea is directed to the allegation that plaintiff "was and still is engaged in the transacting of business in the state of Oregon." After this motion was overruled the defendants offered evidence in support of their plea. The court made its findings of fact, concluding therefrom that plaintiff was during the time mentioned in the pleadings engaged in the transaction of business in Oregon, and that it was not entitled to maintain this action. The court rendered judgment dismissing the action without prejudice. Plaintiff appeals.

Huston & Meacham, of Portland, for appellant.

B. G. Skulason and W. E. Critchlow, both of Portland, for respondents.

BEAN J. (after stating the facts as above).

Plaintiff's first assignment of error relates to the overruling of the motion to reject the evidence on account of the insufficiency of the plea in abatement. The facts set forth in the plea in abatement are very general and might be termed a conclusion of fact. It is not indicated in any way what kind of business the plaintiff was transacting in the state of Oregon, so that plaintiff could prepare a defense. Neither could the court determine therefrom whether the business alleged to have been transacted was interstate or intrastate commerce. All of the facts relating to the transactions of plaintiff within the state are set forth in the findings of the court. In view of the fact that no demurrer or motion was directed to the plea in abatement, we are inclined to notice the facts without deciding as to the sufficiency of the plea, as sooner or later such question may come before the court in any event. The other assignments of error challenge the correctness of the court's conclusions from the facts found and the consequent judgment dismissing the action.

It appears that the business in which the plaintiff corporation proposed to engage and did engage in was the cutting of timber and manufacturing the same into lumber at its mill and selling and shipping it for sale, all to be done in the state of Washington, except that the major part of the products of the mill was shipped and sold in states other than Washington and Oregon. None of the lumber was sold in the state of Oregon. The first transaction on the part of plaintiff was the execution and delivery of a trust deed on February 1, 1916, at Portland, Or., to the Portland Trust Company of Oregon, of all of the assets of plaintiff in the state of Washington, as security for a bond issue of $50,000, in order to obtain credit or funds to carry on plaintiff's business of manufacturing, selling, and shipping lumber in the state of Washington.

The other transactions which are claimed to constitute doing business in the state of Oregon can better be stated in a narrative form. In February, 1918, Bryan R. Dorr, the president of the plaintiff corporation, came from Dorr, Wash., to Portland, Or., and engaged rooms at the Multnomah Hotel, for the purpose of facilitating negotiations relative to securing three interdependent contracts with the object of cutting and delivering logs in the mill pond of the plaintiff at Dorr, Wash., and the execution of contracts for the purchase of necessary timber adjacent to plaintiff's mill and the operation of the sawmill, by manufacturing lumber, and the sale of the lumber through a broker, on a commission basis. Pursuant to such negotiations, at Portland, Or., on March 3, 1918, plaintiff entered into a contract with defendants whereby defendants agreed to cut and deliver logs at plaintiff's mill at Dorr, Wash. On March 30, 1918, plaintiff contracted with G. W. Gates & Co., lumber brokers, to handle the output of plaintiff's mill at Dorr, Wash., on a commission basis, G. W. Gates & Co. to advance such funds as might be necessary for the purchase of timber, and the manufacture of logs into merchantable lumber, and to distribute the funds received from the proceeds of such sales to the parties who performed the labor, less a commission to G. W. Gates & Co. On April 3, 1918, in the state of Oregon, plaintiff contracted with John Peterson to manufacture the logs into lumber at plaintiff's sawmill in Dorr, Wash., and to load and ship the lumber upon orders provided by G. W. Gates & Co. In order to authorize the execution of the contracts, the board of trustees of plaintiff, which was comprised of three members of the Dorr family, passed resolutions of the corporation in Portland, Or. The president also wrote letters from Portland, Or., to different places relating to the lumber business at Dorr, Wash. Soon after the contracts were signed the plaintiff abandoned its office in the state of Washington, which was maintained in a dwelling house near the mill, in order that one of the contractors might live in the house, and shipped all of its books and records, except the minute book and one book of stock certificates, to New York City, with the intention of thereafter carrying on business from New York City through a firm of brokers. The court found the facts in detail substantially as stated above.

Section 6908, Or. L., provides:

"Every foreign corporation, and every foreign joint-stock company or association, before transacting business within this state, shall file the declaration and pay the entrance fees [here-inafter] provided, and shall duly execute and acknowledge a power of attorney and cause the same to be recorded in the office of the corporation commissioner, which power of attorney shall be irrevocable, except by the substitution of another qualified person for the one mentioned therein as attorney in fact. * * * It shall be the duty of every such foreign corporation, joint-stock company or association to maintain at all times within this state some qualified person as its attorney in fact, as herein provided, and in default thereof, it shall not be entitled to transact any business within this state or maintain any suit, action or proceeding in its courts."

It is contended by counsel for plaintiff that the transactions of plaintiff within this state do not constitute "doing business" within the state of Oregon, within the meaning of the statute.

Foreign corporations not complying with the prescribed statutory prerequisites for doing business and maintaining suits or actions in the state of Oregon will not be permitted to sue in this state to enforce a contract, or for the breach thereof, made with the view of conducting business in this state, or while transacting such business therein. This is practically unquestioned. Cyclone Mining Co. v. Baker Light & Power Co. (C. C.) 165 F. 996. However, it is not every transaction of business consummated within the state of Oregon that constitutes doing business in the state, according to the purport of the statute.

We first notice the execution of the trust deed. In considering the matter, the usual and ordinary business of the corporation should be kept in mind. It was an isolated act of business by the Washington corporation, and did not indicate a purpose on the part of the corporation to carry on its ordinary business in the state of Oregon. It was an incidental transaction for the purpose of obtaining credit or funds, with the object of carrying on its avowed and ordinary business of manufacturing lumber in the state of Washington, and did not come within the pale of the statute in regard to "doing business" within this state. La Moine Lumber & Trading Co. v. Kesterson (C. C.) 171 F. 980; Commercial Bank v. Sherman, 28 Or. 573, 43 P. 658, 52 Am. St. Rep. 811; Simmons-Burke Clothing Co. v. Linton, 90 Ark. 73, 76, 117 S.W. 776; Union Trust Co. v. Sickels, 125 A.D. 105, 109 N.Y.S. 262; Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 5 S.Ct. 739, 28 L.Ed. 1139; 12 R. C. L. pp. 69, 72, §§ 48, 49; 2 Ann. Cas. 307, note; 11 Ann. Cas. 321, note. The physical presence of Mr. Dorr, an officer of the Washington corporation, in this state, though about the business of the corporation, was not doing business in this state. Ladd Metals Co. v. Am. Mining Co. (C. C.) 152 F. 1012. Our statute does not prohibit the bringing of an action by a foreign corporation not complying with the statutory requirements upon all contracts, but only upon such contracts as are made with the view to the conduct of, and while transacting, business in Oregon. Section 6908, Or. L.; La Moine, etc., v. Kesterson, supra. It has been held that a visit to the state by the president of a foreign corporation for the purpose of settling a claim for damages was not doing business within the state, so as to validate process served upon him: Hoyt v. Ogden Portland Cement Co. (C. C.) 185 F. 899.

Apparently it was not the purpose for which the plaintiff corporation was organized to sell bonds. It may be empowered to do...