Palmer v. Aeolian Co.

• Decision Date: 18 February 1931
• Docket Number: No. 8978.,8978.
• Citation: 46 F.2d 746
• Parties: PALMER v. AEOLIAN CO.
• Court: U.S. Court of Appeals — Eighth Circuit

46 F.2d 746 (1931)

PALMER v. AEOLIAN CO.

No. 8978.

Circuit Court of Appeals, Eighth Circuit.

January 12, 1931.

Rehearing Denied February 18, 1931.

A. G. Bush, of Davenport, Iowa (Curtis Bush, of Davenport, Iowa, on the brief), for appellant.

Wayne G. Cook, of Davenport, Iowa (Messrs. Lane & Waterman, of Davenport, Iowa, on the brief), for appellee.

Before KENYON and GARDNER, Circuit Judges, and MUNGER, District Judge.

MUNGER, District Judge.

Appellant, as the plaintiff below, brought suit against the appellee, as the defendant, to recover a sum of money which the plaintiff had paid to the defendant. From a judgment in favor of the defendant this appeal is prosecuted.

The plaintiff and defendant had made a written contract, by whose terms the defendant was to build a pipe organ for plaintiff, to deliver it on board cars in New Jersey, and to install it in a designated theater at Davenport, Iowa. The plaintiff agreed to pay $150,000 for the organ, and paid one-tenth of the purchase price when the contract was signed. Some months afterwards the plaintiff notified the defendant that he would not accept the organ and afterwards brought this suit to recover from the defendant the money which he had paid. In his petition he claimed that the contract was void because it was made in Iowa and the defendant, a foreign corporation, had not complied with the laws of Iowa requiring a permit for such a corporation to do business in the state and because the contract was indefinite. The defendant's answer, in addition to denials, admitted the making of the written contract and admitted that it had not obtained a permit to do business in Iowa, but alleged that the contract covered a lawful transaction in interstate commerce and denied that it transacted business in Iowa in violation of the laws of the state. The answer admitted that the defendant had received the $15,000 in pursuance of the contract, and that the organ was not constructed or erected, but alleged that the defendant had always been ready to perform its contract and was prevented from doing so only by the acts and omissions of the plaintiff and that the plaintiff had abandoned his plans for the erection of the building in which the organ was to be installed. The case was tried to the court, a jury trial having been waived by a stipulation in writing. The court filed a memorandum opinion and dismissal of the plaintiff's petition, but later, and at the same term, made specific findings of fact. These findings may be considered on this appeal (South Utah Mines v. Beaver County, 262 U. S. 325, 43 S. Ct. 577, 67 L. Ed. 1004), but under the provisions of sections 649 and 700 of the Revised Statutes (28 U. S. Code, § 773, 875 28 USCA § 773, 875) the only questions properly presented for review are the sufficiency of the pleadings and of the special findings to support the judgment, and rulings as to the offer of testimony of a witness, made during the trial. Lewellyn v. Elec. Reduction Co., 275 U. S. 243, 48 S. Ct. 63, 72 L. Ed. 262; Fleischmann Co. v. United States, 270 U. S. 349, 46 S. Ct. 284, 70 L. Ed. 624; Tyre & Spring Works Co. v. Spalding, 116 U. S. 541, 6 S. Ct. 498, 29 L. Ed. 720; The City of New York, 147 U. S. 72, 13 S. Ct. 211, 37 L. Ed. 84; Tatum v. Davis (C. C. A.) 283 F. 948; Randle v. Barnard (C. C. A.) 81 F. 682; City of Mankato v. Barber Asphalt Paving Co. (C. C. A.) 142 F. 329.

The court found that the defendant, a corporation organized under the laws of Connecticut, made a written contract on November 3, 1924, at Davenport, Iowa, with the plaintiff, a resident of Iowa. By the terms of the contract the defendant agreed to build and to deliver f. o. b. cars at Garwood, N. J., an Aeolian pipe organ, according to written specifications and general details of construction made a part of the contract, "of the highest attainable standard in both workmanship and material, and to erect the same" in the Kindt theater at Davenport, Iowa, on or before August 1, 1926. The court found that the plaintiff was then planning to build such a theater, but that it was never built. The court found that it was supposed that this pipe organ would be the largest in the world and would require a year for its manufacture and four to six months for its installation. The plaintiff notified the defendant on April 24, 1925, to do no work on the organ. The court found that there had been no abandonment of the contract and no inability of the defendant to manufacture and install the organ according to the contract. The specifications, made a part of the contract, began with this recital: "Specifications for an Aeolian Pipe-Organ prepared for the Kindt Theater, Davenport, Iowa. Grand six-manual symphonic Duo-Art Aeolian Pipe-Organ containing open diapason pedal stop of 64' pitch. Compass of Manuals CC to C4 61 keys. Compass of Pedals CCC to G 32 keys." The specifications then number and list 303 items. The general details of construction, included in the contract, provided for the location of the organ and a console, with accessories, the furnishing, by the defendant, of an electric blowing plant, and a low voltage generator. The plaintiff agreed to prepare the organ chamber and blower room and to furnish some accessories for the use of the organ.

The contract provided that if the organ chamber or theater was not in condition to receive the organ four months prior to the installation date, the purchaser should accept shipment of the organ, that the organ should be at the risk of the purchaser against damage by fire or water after its arrival on the premises, and that the title ownership of the organ should remain in the seller until it was fully paid for. The court found that the defendant at the time the contract was made had not applied for or obtained a permit in Iowa to do business as a corporation nor had it complied with the laws of Iowa relating to that subject.

The statutes of Iowa required that a foreign corporation desiring to do business in Iowa shall file a copy of its articles of incorporation with the secretary of state, and shall authorize services of process to be made on certain persons within the state. It is further provided that no corporation shall exercise any of the rights or privileges conferred on corporations unless it has complied with these requirements. There are also provisions denying a right to maintain suits, and providing for penalties and punishments. Code of Iowa (1924) § 8420, 8427, 8429, 8430, 8431.

Appellant claims that the contract was void, because of the making of the contract in Iowa, when the defendant was unqualified to do so, under the statutes. If the making of the contract was an act by which the parties were engaging in interstate commerce, these statutes of Iowa could have no application. Butler Bros. Shoe Co. v. United States Rubber Co. (C. C. A.) 156 F. 1. The first question, therefore, is the nature of the contract which was made. In Sioux Remedy Co. v. Cope, 235 U. S. 197, 35 S. Ct. 57, 59, 59 L. Ed 193, the court, in an error proceeding to a state court, considered a written contract, made in South Dakota, for the sale of merchandise, and providing for the shipment of the merchandise by the plaintiff from its place of business in Iowa to the defendants at their place of business and residence in South Dakota. A statute of South Dakota, in substance, prohibited any foreign corporation from transacting business in South Dakota until it had filed a copy of its articles of incorporation with the secretary of state, and further provided that no action by such a corporation could be maintained in the courts of the state on any contract made in the state unless it had appointed a resident agent upon whom process could be served, and unless copies of such appointment had been filed in certain public offices. The Supreme Court upheld the contract, saying:

"The contract and sale out of which the action arose were transactions in interstate commerce, and entirely legitimate notwithstanding the plaintiff's noncompliance with the state statute. International Text Book Co. v. Pigg, 217 U. S. 91, 30 S. Ct. 481, 54 L. Ed. 678, 27 L. R. A. (N. S.) 493, 18 Ann. Cas. 1103; Buck Stove Co. v. Vickers, 226 U. S. 205, 33 S. Ct. 41, 57 L. Ed. 189; Flint & Walling Mfg. Co. v. McDonald, 21 S. D. 526, 114 N. W. 684, 14 L. R. A. (N. S.) 673, 130 Am. St. Rep. 735."

In Buck Stove Co. v. Vickers, 226 U. S. 205, 33 S. Ct. 41, 57 L. Ed. 189, a statute of Kansas required foreign corporations to file statements as a prerequisite to doing business in that state. The statute was held to be invalid as to transactions in interstate commerce. In deciding the questions involved, the court quoted from a prior decision in International Text-Book Co. v. Pigg, 217 U. S. 91, 30 S. Ct. 481, 486, 54 L. Ed. 678, 27 L. R. A. (N. S.) 493, 18 Ann. Cas. 1103, as follows:

"To carry on interstate commerce is not a franchise or a privilege granted by the state; it is a right which every citizen of the United States is entitled to exercise under the Constitution and laws of the United States; and the accession of mere corporate facilities, as a matter of convenience in carrying on their business, cannot have the effect of depriving them of such right, unless Congress should see fit to interpose some contrary regulation on the subject. * * *

"How far a corporation of one state is entitled to claim in another state, where it is doing business, equality of treatment with individual citizens in respect of the right to sue and defend in the courts, is a question which the exigencies of this case do not require to be definitely decided. It is sufficient to say that the requirement of the statement mentioned in § 1283 section 1358, Gen. Stat. 1905 of the statute imposes a direct burden on the plaintiff's right to engage in interstate business, and therefore is in violation of its constitutional rights. It is the established doctrine of this court that a state may not,...