Oakland Sugar Mill Co. v. Fred W. Wolf Co.

• Decision Date: 07 October 1902
• Docket Number: 1,060,1,061.
• Citation: 118 F. 239
• Parties: OAKLAND SUGAR MILL CO. v. FRED W. WOLF CO. DETROIT SUGAR CO. v. SAME.
• Court: U.S. Court of Appeals — Sixth Circuit

118 F. 239

OAKLAND SUGAR MILL CO. v. FRED W. WOLF CO.

DETROIT SUGAR CO. v. SAME.

Nos. 1,060, 1,061.

United States Court of Appeals, Sixth Circuit.

October 7, 1902

H. H Hatch, for plaintiffs in error.

George W. Moore and Frank H. Scott, for defendant in error.

This is an action of assumpsit brought by the Fred W. Wolf Company an Illinois corporation, against the Oakland Sugar Mill Company, a Michigan corporation. The cause of action arose upon a written contract dated January 27, 1899. The contract is of great length. In substance its provisions were as follows:

(1) The contractor, the Wolf Company, undertook, at its own expense to furnish all the engines, boilers, machinery, tools, implements, appliances, and appurtenances, and the materials therefor, and perform all the work necessary to fully equip a beet sugar factory upon lands of the owner, of a sufficient power and capacity to manufacture sugar from 500 tons of beets each 24 hours, and to set up and install the same and put the same in operation. The plans and specifications are to be furnished by the contractor, and shall be subject to acceptance and approval of owner. 'The owner shall have the right to employ competent men to inspect said material, machinery, etc., and to inspect the installation and operation thereof during the progress of the work, and all reasonable facilities for such inspection shall be furnished by the contractor to the owner.'

(2) The contractor to furnish the owner with four sets of blue prints, complete building plans, and specifications for the buildings required for said factory.

(3) The contractor guaranties that the cost of the granulated sugar produced by the factory for a period during the campaign of 1899, or about 100 days, shall not exceed an average of 3 1/4 cents per pound. During this campaign the contractor for the purpose of testing the operativeness of the mill, and to carry out this guaranty as to cost and quality of sugar produced,

contracted to take entire and absolute control of the mill and all its operations, and make selection of all skilled operatives, the owner to furnish all other help and materials. The test to continue through the season for delivery of beets, and to be at expense of the sugar company. Certain conditions in respect to cost of beets and coal and other materials were also specified.

(4) 'All materials, and all workmanship used and furnished by the contractor in the construction of said machinery and appliances and equipments, shall be first class in every respect, and said machinery, appliances, and equipment shall be of the latest and best approved designs and patterns.'

(5) The work is to be completed on or before the 1st day of October, 1899.

(6) The owner is to provide the land and buildings required for the factory, to perform the masonry, iron, and carpenter work pertaining to such work, on or before the 1st day of June, 1899. The owner is to perform all masonry and carpenter work in and about the machinery, and is to furnish a railroad switch and the water supply.

(7) The owner shall pay the contractor for machinery, materials, and work the sum of $293,000. The terms of payment are prescribed.

(8) All the property rights in the machinery, etc., are to remain in the contractor until payment is made.

(9) The plant is to be accepted at the close of the campaign of 1899, if it complies with the contract.

(10) The contractor is to protect the owner against liens.

(11) The owner is to maintain insurance against fire.

(12) The contractor is to protect the owner against claims under patents.

(13) The contractor is to furnish a bond, guarantying performance.

(14) Provides that modifications of the contract shall be in writing.

(15) The right of the owner to become purchaser of the machinery, etc., attaches to each article as it is procured.

The plaintiff's declaration avers performance, and charges that defendants did not perform. The bill of particulars credits the defendant with payment of $265,000, but claims a balance due of $28,000, with interest. The defendant pleaded the general issue with notice of special defenses. This notice avers performance by the defendant, and denies performance by plaintiff. It denies that the work done on the machinery and appliances furnished were first class or the mechanism of the latest and best pattern. A large number of defects in the articles and appliances furnished are specifically pointed out. Damages were claimed in a large sum owing to such alleged defective construction. The contract of the Oakland Sugar Company was guarantied by the Detroit Sugar Company. The plaintiff contemporaneously brought suit against the Detroit Sugar Company upon this guaranty. The two suits were tried together, the defenses to the latter being identical with those to the former. There was a jury, and verdict for the plaintiff for $29,627.19, and judgment accordingly in both cases.

Before LURTON, DAY, and SEVERENS, Circuit Judges.

LURTON Circuit Judge, after making the foregoing statement of the case, .

1. The principal question arising upon this writ of error concerns the validity of the contract under the Michigan act of 1891, entitled 'An act to provide for the payment of a franchise fee by corporations. ' Pub. Acts 1891, No. 182. The contract in question was made January 27, 1899. The act of 1891, with the amendments then in force, is found as section 8574, Comp. Laws Mich. 1897, and is in these words:

'An act to provide for the payment of a franchise fee by corporations.

'(8574). Sec. 1. The people of the state of Michigan enact, that every corporation or association hereafter incorporated or formed by consolidation or otherwise, by or under any general or special law of this state, which is required by law to file articles of association with the secretary of state, and every foreign corporation or association which shall hereafter be permitted to transact business in this state, which shall not, prior to the passage of this act, have filed or recorded its articles of association under the laws of this state and been thereby authorized to do business therein, shall pay to the secretary of state a franchise fee of one-half of one mill upon each dollar of the authorized capital stock of such corporation or association, and a proportionate fee upon any and each subsequent increase thereof; and that every corporation heretofore organized or doing business in this state which shall hereafter increase the amount of its authorized capital stock shall pay a franchise fee of one-half of one mill upon each dollar of such increase of authorized capital stock of such corporation or association, and a proportionate fee upon any and each subsequent increase thereof; provided, that the fee herein provided, except in cases of increase of capital stock, shall in no case be less than five dollars; and in case any corporation or association hereafter incorporated under the law of this state, or foreign corporation authorized to do business in this state, has no authorized capital stock, then in such case each and every corporation or association so incorporated or doing business in this state shall pay a franchise fee of five dollars. All contracts made in this state after the first day of January, eighteen hundred ninety-four, by any corporation which has not first complied with the provisions of this act, shall be wholly void.'

The Fred W. Wolf Company is confessedly a foreign corporation, which had not complied with this law, and the contract was confessedly made in the state of Michigan. The act, already set out, declares that 'all contracts made in this state after January 1, 1894, by any corporation which has not first complied with the provisions of this act, shall be wholly void. ' To determine the corporations to which this damnatory clause applies, we must look to the whole act, and construe all of its parts together. The words 'any corporation,' used in the clause, manifestly mean any of the corporations required to pay the franchise tax by the preceding parts of the act.

When we look to see what classes of corporations are required to pay this franchise tax, we find that they consist of two kinds: (a) Domestic corporations thereafter organized or created by consolidation, or who should thereafter increase their capital stock. (b) Foreign corporations thereafter 'permitted to transact business in this state,' or which should thereafter increase their capital stock.

What foreign corporations are meant by those thus described? If we turn back to the earlier legislation in respect to foreign corporations, and plainly referred to by the act here involved, under which foreign manufacturing and mercantile corporations were authorized to file and record their charters, we find that, by an amendment to the general act authorizing the incorporation of domestic manufacturing and mercantile corporations, corporations of any state or foreign country created for any of the purposes contemplated by the Michigan act might file and record their charters and appoint an agent for service of process, and thereafter 'carry on business' in the state, and 'enjoy all the rights and privileges, and be subject to all the restrictions and liabilities, of corporations existing under this act.' 3 How.Ann.St. § 4161d6, and section 7072, 2 Comp.Laws Mich 1897. This provision has been construed as simply defining the terms upon which such foreign corporations might, if they should so desire, become entitled to the benefits conferred by the act upon domestic corporations organized under that act, but as in no wise prohibiting such companies from 'doing business' in the state or making their contracts void for noncompliance. People v. Hawkins, 106...