Mergenthaler Linotype Co. v. Spokesman Pub. Co.

• Decision Date: 25 September 1928
• Citation: 127 Or. 196,270 P. 519
• Parties: MERGENTHALER LINOTYPE CO. v. SPOKESMAN PUB. CO. [*]
• Court: Oregon Supreme Court

270 P. 519

127 Or. 196

MERGENTHALER LINOTYPE CO. v. SPOKESMAN PUB. CO. ^[*]

Supreme Court of Oregon

September 25, 1928

Department 1.

Appeal from Circuit Court, Deschutes County; T. E. J. Duffy, Judge.

Action by the Mergenthaler Linotype Company against the Spokesman Publishing Company. From an order sustaining a plea in abatement, plaintiff appeals. Reversed and rendered.

Plaintiff appeals from an order sustaining a plea in abatement. Judgment was entered against plaintiff dismissing his suit. The suit was based upon a number of promissory notes given for the purchase of one of plaintiff's type-casting machines. Plaintiff is a foreign corporation. Defendant is a domestic corporation having its office at Redmond, Or. The plea in abatement is to the effect that plaintiff has not complied with the law of this state requiring foreign corporations to pay certain fees and for an annual license in order to do business. There is no substantial dispute in the testimony. The machine was purchased by defendant through a traveling salesman. The order was forwarded to plaintiff at its head office in Brooklyn, N. Y., and also approved by its office in San Francisco. The promissory notes given for the purchase price were secured by a chattel mortgage which is recorded in the records of Deschutes county. Said notes were executed in the office of defendant and were payable at Redmond National Bank, Redmond, Or. One of the notes was for the principal sum of $1,000, and a part of the agreement of the sale of said linotype was to the effect that said $1,000 note could be paid by the delivery of a used type-casting machine then in possession of defendant. All of the allegations of the complaint were admitted by defendant. Its sole defense is the averment that plaintiff has not complied with the law required of foreign corporations in order to do business in the state of Oregon. It is stipulated by the parties to the suit that in case this court holds that the plea in abatement was not sufficient nor sustained by proof decree might be entered in favor of plaintiff as prayed for in its complaint. The sole question presented by the pleadings and the record is: Is the plaintiff amenable to the laws requiring foreign corporations to file the required certificate and pay certain fees in order to do business in the state of Oregon? That question involves this question Can the defendant maintain its plea in abatement when its transaction with plaintiff was interstate commerce, if plaintiff on other occasions and times engaged in intrastate commerce?

Ross Farnham, of Bend, for appellant.

George H. Brewster, of Redmond (Cunning & Brewster, of Redmond, on the brief), for respondent.

COSHOW, J. (after stating the facts as above).

The law is well settled that a foreign corporation must comply with the regulatory laws of a state in order to do intrastate business in that state. Rashford Lumber Co. v Dolan, 122 Or. 572 and cases cited in 579, 260 P. 224; Browning v. Waycross, 233 U.S. 16, 34 S.Ct. 578, 58 L.Ed. 828; General Railway Signal Co. v. Virginia, 246 U.S. 500, 38 S.Ct. 360, 62 L.Ed. 854; International Textbook Co. v. Pigg, 217 U.S. 91, 105, 106, 30 S.Ct 481, 54 L.Ed. 678, 27 L. R. A. (N. S.) 493, 18 Ann. Cas 1103; International Trust Co. v. A. Leschen & Sons Rope Co., 41 Colo. 290, 92 P. 727, 14 Ann. Cas. 861; In re Kinyon, 9 Idaho, 642, 75 P. 268, 2 Ann. Cas. 699; Hirschfeld v. McCullagh, 64 Or. 502, 127 P. 541, 130 P. 1131; State v. Robertson, 271 Mo 475, 196 S.W. 1132. "The commerce clause of the Constitution (article 1, § 8, cl. 3) expressly commits to Congress and impliedly withholds from the several states the power to regulate commerce among the latter. Such commerce is not confined to transportation from one state to another, but comprehends all commercial intercourse between different states and all the component parts of that intercourse." Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 290, 42 S.Ct. 106, 108, 66 L.Ed. 239; Spaulding v. McNary, 64 Or. 491, 130 P. 391, 1128; York Mfg. Co. v. Colley, 247 U.S. 21, 28 S.Ct. 430, 62 L.Ed. 963, 11 A. L. R. 611; Chambers v. Baltimore & Ohio R. R., 207 U.S. 142, 28 S.Ct. 34, 52 L.Ed. 143; Commercial Bank v. Sherman, 28 Or. 573, 43 P. 658, 52 Am. St. Rep. 811.

There is a distinction between the construction placed upon the words "doing business" in the state as it applies to the protection of the courts, and the same words as applied to the right of a state to exact a fee and enforce other regulations upon foreign corporations. Winslow Lbr. Co. v. Edw. Hines Lbr. Co. (Or.) 266 P. 248; 14a C.J. 1270, § 3976, notes 79, 80; 12 R. C. L. 69, § 47; International Harv. Co. v. Com. of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479.

We are convinced that the transaction which is the basis of this suit constitutes interstate commerce. The order was solicited by a traveling salesman and forwarded to the head office of plaintiff in New York. It was also submitted to plaintiff's San Francisco office for confirmation. The notes in payment were given in Redmond, Or., but are a part of and incident to the original sale. The states are not permitted to interfere with interstate commerce. Interstate commerce in order to be effective must be unhampered. We cannot conceive of anything that would more successfully interfere with interstate commerce than to deny an interstate seller access to the courts to enforce payment for goods sold. Taking notes is simply an incident to the collection of the purchase price. Many things may be done incidental to the effective consummation of interstate commerce without depriving the transaction of that nature. York Mfg. Co. v. Colley, above; Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 728, 734, 5 S.Ct. 739, 28 L.Ed. 1137; Crutcher v. Kentucky, 141 U.S. 47, 56, 57, 11 S.Ct. 851, 35 L.Ed. 649.

It must be conceded that the evidence introduced by defendant is sufficient to establish that plaintiff is doing business within the state. The evidence was uncontradicted. It was objectionable on several grounds, but no objection was made and it must be accepted for what it is worth. Derrick v. Portland Eye, Ear, Nose & Throat Hospital, 105 Or. 90, 100, 209 P. 344; and authorities there cited.

Defendant says in its brief:

"A transaction is either interstate or intrastate commerce, and the sale, delivery, and erection of the new linotype machine constituted interstate commerce, but the purchase and acceptance of delivery of the secondhand machine in Oregon and the sale of parts for the new machine in Oregon constituted intrastate commerce."

With this we cannot agree. When the sale of the linotype was completed, defendant gave to plaintiff promissory notes to cover the entire purchase price. One of those notes was for the sum of $1,000, in payment of which plaintiff agreed to accept a linotype machine then in possession of defendant. Defendant could have canceled the $1,000 note by paying cash, as it was required to do on all the other notes. The mere fact that plaintiff agreed as a part of the sale to accept in part payment the linotype machine did not change the transaction from interstate to intrastate commerce. Puffer Mfg. Co. v. Kelly, 198 Ala. 131, 73 So. 403, 405; Empire Clothing Co. v. Roberts, Johnson & Rand Shoe Co., 16 Ala. App. 86, 75 So. 634, 635, point 2; Major Creek Lum. Co. v. Johnson, 99 Or. 172, 195 P. 177.

We are of the opinion that plaintiff is not deprived of the right of access to our courts because it transacted other business in the state without...