Phillips Co. v. Everett

• Decision Date: 12 December 1919
• Docket Number: 3338.
• Citation: 262 F. 341
• Parties: PHILLIPS CO. v. EVERETT. [1] In re SPRINGFIELD REALTY CO.
• Court: U.S. Court of Appeals — Sixth Circuit

262 F. 341

PHILLIPS CO. v. EVERETT. ^[1]

In re SPRINGFIELD REALTY CO.

No. 3338.

United States Court of Appeals, Sixth Circuit.

December 12, 1919

Thomas G. Long, of Detroit, Mich., for appellant.

Walter E. Oxtoby, of Detroit, Mich., and Stewart Hanley, of Detroit Mich., for appellee.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

DONAHUE Circuit Judge.

The Phillips Company, a corporation organized under the laws of the state of Wisconsin, with its principal place of business in Chicago, Ill., entered into a contract with the Springfield Realty Company, a corporation organized under the laws of Michigan, to equip its manufacturing plant in the city of Detroit, Mich., with a system of automatic fire sprinklers, for which it was to receive the sum of $31,776. Later additional equipment was ordered, making in the aggregate $32,224, for which amount the Phillips Company filed a mechanic's lien on the property equipped by it with such sprinkler system.

The Springfield Realty Company having gone into bankruptcy, an order was made staying proceedings for the enforcement of this lien in the state courts of Michigan, and requiring the same to be enforced in the bankruptcy proceedings against the fund derived from the sale of the plant and property. In accordance with this order, a petition was filed by the Phillips Company in the bankruptcy proceedings, seeking to have its mechanic's lien transferred to the fund arising from the sale of the bankrupt's property. The trustee in bankruptcy filed an answer to this petition, averring, among other things, that at the time the Phillips Company entered into the contract with the Springfield Realty Company, and at the time it equipped the plant of that company with an automatic fire sprinkler system, the Phillips Company had not complied with the provisions of the laws of Michigan with reference to foreign corporations, in that it had not procured from the secretary of state of the state of Michigan a certificate of authority to carry on business in that state, and that for this reason its contract with the Realty Company was in violation of the laws of Michigan, and its pretended mechanic's lien invalid and not enforceable in the courts of that state. Upon this issue the referee found from the evidence in favor of the trustee, and made an order denying the claimant's petition and lien, and this finding of the referee was affirmed by the court below.

The Michigan statute provides, among other things, that it shall be unlawful for any corporation organized under the laws of any state of the United States, except the state of Michigan or of any foreign country, to carry on its business in that state, until it shall have procured from the secretary of state a certificate of authority for that purpose, and that no foreign corporation subject to this provision shall be capable of making a valid contract in Michigan, until it shall have fully complied with this requirement, and at the time of making such contract holds an unrevoked certificate to that effect from the secretary of state.

It is contended upon the behalf of the appellant that there is no evidence in this record tending to prove where the contract was executed; that the presumption obtains that it was lawfully executed in the state of Wisconsin, in which state the appellant was authorized to transact business, and that therefore it was not doing business in Michigan; that the installation of the automatic fire sprinkler system in the plant of the Springfield Realty Company at Detroit, Mich was merely incidental to the contract; that a large portion of the material used in the construction of this system, either in the raw state or finished product, was shipped from other states into Michigan, and that for this reason the entire contract involved an interstate transaction not within the purview of the Michigan statute; and that, even if all of the transaction was not interstate commerce, at least a portion thereof was, and for that portion the Phillips Company is entitled to an allowance of its claim as upon a quantum meruit.

It appears, from the evidence taken before the referee, that the appellant is not engaged in the manufacture of automatic sprinkler systems, either in the state of Wisconsin or elsewhere, but, on the contrary, is engaged in the business of contracting for and procuring the installation of automatic sprinkler systems manufactured by other persons and corporations. In this particular case, the appellant entered into a contract with the General Fire Extinguisher Company of Michigan, a corporation engaged in the manufacture of automatic sprinkler systems, for a system of wet pipe Grinnell automatic sprinklers, which comprehended by far the larger part of appellant's entire contract. It also entered into a contract with the Pittsburgh-Des Moines Steel Company, of Pittsburgh, Pa., for the construction of a steel tower and tank to be used in connection with and as a part of the sprinkler system to be installed by the General Fire Extinguisher Company of Michigan. These companies were required to install in the plant of the Springfield Realty Company, at Detroit, Mich., the respective portions of the equipment to be furnished by each in accordance with the plans and specifications, and subject to the inspection of the Michigan inspection bureau. It further appears that the Phillips Company exercised some general supervision over the installation of this system, but that the subcontractors furnished all the material, labor, and immediate supervision necessary to the installation of the portion of the entire system to be furnished by each.

The determination of the questions presented by this record involves no new principles, but...