Model Heating Company v. Magarity
| Decision Date | 16 October 1911 |
| Citation | 25 Del. 459,81 A. 394 |
| Court | Supreme Court of Delaware |
| Parties | MODEL HEATING COMPANY, plaintiff below, plaintiff in error, v. THOMAS MAGARITY, defendant below, defendant in error |
Supreme Court, June Term, 1911.
WRIT OF ERROR (No. 3, January Term, 1911) to Superior Court for New Castle County. Action by the Model Heating Company against Thomas Magarity (No. 43, June Term, 1908). Judgment for defendant (1 Boyce 240, 75 A. 614), and plaintiff brings error. Reversed and demurrer to special plea in abatement sustained.
The demurrer of the plaintiff to the special plea in abatement is sustained and the judgment is reversed.
Christopher L. Ward and John P. Nields for plaintiff in error.
Artemas Smith and Alexander M. Daly for defendant in error.
OPINION
CURTIS, Ch., delivering the opinion of the court:
The writ of error is taken by the plaintiff below to a judgment of the Superior Court overruling a demurrer of the plaintiff to a special plea in abatement to the declaration. The action was in assumpsit to recover for goods sold and delivered. By a special plea the defendant alleged that the plaintiff was a corporation under the laws of Pennsylvania; that at the time the contract was made the corporation was doing business in Delaware through and by branch offices, agents, or representatives located here, without having complied with the provisions of law, constitutional and statutory hereinafter mentioned respecting foreign corporations, and that the contract was made by the agent of the plaintiff located in this state.
It is provided by Section 5 of Article 9 of the Constitution, adopted June 4th, 1897, as follows:
"No foreign corporation shall do any business in this state through or by branch offices, agents or representatives located in this state, without having an authorized agent or agents in the state upon whom legal process may be served."
At the time the contract was made and the suit brought there was and still is a statute, approved March 23rd, 1903 (22 Del Laws, c. 395, [81 A. 395] p. 824), referred to in the declaration, which contained the following provision:
By section 2 it is made the duty of the Secretary of State to deliver to the prothonotary of each county a certificate of the name of the agent, and by section 3 it is made the duty of each prothonotary to record the certificate. By section 4 it is enacted that service of process may be made on such agent and that it shall be as effectual as if served on the corporation. It is enacted in section 6 that any corporation doing business here without having first complied shall be guilty of a misdemeanor and be subject to a fine for each and every offense, and also that any agent of such foreign corporation who shall transact any business here for any foreign corporation, before it has complied, shall be guilty of a misdemeanor and fined for each and every offense.
At the time of the adoption of the present Constitution on June 4th, 1897, there were in force two statutes relating to this same subject-matter. These two statutes taken together contain in substance the same requirements of foreign corporations as are contained in the act of 1903, above referred to, and impose fines for violation thereof, and make service on the agent good, the only substantial difference being the requirement that the certificate naming an agent be filed in each county by the corporation, and not in the office of the Secretary of State, to be by him filed with the prothonotary of each county. These statutes are Chapter 703, Vol. 19, Laws of Delaware, p. 900, passed April 28th, 1893, and Chapter 513, Vol. 20, Laws of Delaware, p. 544, passed May 12th, 1897.
It appears, therefore, that at the time of the adoption of the Constitution there were in force laws of substantially the same import as now exist respecting foreign corporations doing business here. In substance this legislation forbids foreign corporations to do business here by branch offices, or agents located here, without having filed a certificate naming an authorized agent in the state upon whom process may be served, and also a copy of its charter and a sworn statement of its assets and liabilities, and imposes penalties for each and every offense by fine upon both the corporation and the agent, violating the laws, and makes service of process on the designated agent equivalent to service upon the corporation.
In this case, then, is presented in this court for the first time the question whether by such legislation a contract made here by an agent in this state of a foreign corporation which had not complied with the laws of Delaware, whereby goods were sold and delivered to a citizen of Delaware, can be enforced here so that the vendor may collect payment for the property so parted with by it and received and retained by the vendee. As rightly held in the case of Sewing Machine Co. v. Frame, 18 Del. 430, 2 Penne. 430, 48 A. 188, the question is properly raised by a plea in abatement, and the vendee can take advantage of the noncompliance of the vendor in this way only, if at all.
In its opinion, reported in 24 Del. 240, 1 Boyce 240, 75 A. 614, the court below stated that it felt bound by the decision of the Superior Court, rendered in the case of Beeber v. Walton, 12 Del. 471, 7 Houst. 471, 32 A. 777, and expressly based its conclusion thereon; but as herein indicated this court does not consider that the principles applicable to that case apply to the case now before it, and hold that other and different rules are applicable. With the view of following any well established, pertinent and controlling doctrine, or even policy, of the law of this state, as evidenced by the Constitution, statutes or decisions, a careful examination has been made of the laws and reported decisions, and as a conclusion it is found that there is no such pertinent doctrine or policy established here, and, therefore, that this court must reach conclusions independent of any decision of the courts of Delaware. The case of Gregory v. Bailey, 4 Del. 256, 4 Harr. 256, seems to be pertinent, and, if so, as a decision of the Court of Errors and Appeals, is controlling, in its influence at least. Without careful reading it seems to hold "that a seller of lottery tickets, having no license to sell them, may recover the price of tickets sold, though the sale be prohibited by statute." But in reality the court did not so hold, and it was not necessary to do so, because there the sale was not of lottery tickets in retail, but by wholesale and as part of a sale of the whole lottery scheme including tickets, and the court held that the statute regulating the sale of lottery tickets did not apply. In Cook v. Pierce, 7 Del. 499, 2 Houst. 499, a usurious contract was declared unenforceable because prohibited and therefore invalid and void. By statute the rate of interest for the use of money lent was fixed, and money loaned at a greater rate of interest was forfeited to any one who would sue for it, though the statute did not expressly render the contract void or unenforceable. The court considered that both by the words and policy of the law a contract for a greater rate of interest was a forbidden one, and being made unlawful was void. But obviously there is a difference in the effect of statutes which expressly, or by necessary implication, and as part of a commercial policy of the state, made a particular kind of contract unlawful and one which prohibits under penalty a foreign corporation from carrying on business generally, without reference to a particular kind of business, until one carrying on business maintains an agent on whom process against it may be served. In Cook v. Pierce, a well-established principle was applied correctly. Prohibited contracts are unenforceable because rendered void by the prohibition to make them, whether the statute so declares or not and whether the act be malum in se or malum prohibitum. A legislative intent to make the contracts unenforceable is evident in such cases. A usurious contract is a typical instance. So contracts for the sale of intoxicating liquors are unenforceable when the sale of such article is prohibited. But this principle is not applicable where there is no prohibition to carry on the particular business in which the plaintiff is engaged, in the course of which the contract in question was made.
In Johnson v. Mason, etc., Lodge, 106 Ky. 838 51 S.W. 620, the court distinguished between statutes regulating corporations in general and those intended to protect the public against sellers of worthless fertilizers, and those which prohibited the sale of intoxicating liquors without license, and also statutes to regulate insurance corporations. Concerning such prohibited...
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