Ray v. Oklahoma Furniture Mfg. Co.

• Decision Date: 25 September 1934
• Docket Number: 23574.
• Citation: 40 P.2d 663,170 Okla. 414,96 A.L.R. 1118,1934 OK 476
• Parties: RAY v. OKLAHOMA FURNITURE MFG. CO.
• Court: Oklahoma Supreme Court

40 P.2d 663

170 Okla. 414, 96 A.L.R. 1118, 1934 OK 476

RAY v. OKLAHOMA FURNITURE MFG. CO.

No. 23574.

Supreme Court of Oklahoma

September 25, 1934

Rehearing Denied Jan. 29, 1935.

Syllabus by the Court.

1. The plaintiff in an action upon a negotiable promissory note, by introducing in evidence the note and indorsement of the payee thereon in blank, prima facie establishes a case.

2. A provision in a note providing: "This note shall at the option of the holder, become at once due and payable if any change takes place in the ownership of the business of the maker * * * or if any stock of goods or fixtures be damaged by fire, or if maker * * * or either of them become insolvent, or if I fail to pay any other indebtedness to the payee hereof at maturity, or if I be sued by any other creditor, or if a chattel mortgage be placed on his stock of goods or fixtures," is not void as being contrary to public policy or in restraint of trade.

3. The contracts of a domestic corporation which has failed to pay the statutory license tax are not void, nor is its rights to enforce them in the courts of this state to be denied, where the charter of said corporation has not been forfeited by the state.

Appeal from District Court, Lincoln County; Hal Johnson, Judge.

Action by the Oklahoma Furniture Manufacturing Company against T. H Ray. Judgment for plaintiff, and defendant appeals.

Affirmed.

WELCH J., dissenting on rehearing.

Where plaintiff makes prima facie case on note, defendant has burden of establishing affirmative defense of limitations.

Erwin & Erwin, of Wellston, for plaintiff in error.

T. G Chambers, Jr., of Oklahoma City, for defendant in error.

BAYLESS Justice.

This is an appeal from the district court of Lincoln county, Okl., wherein the Oklahoma Furniture Manufacturing Company, a corporation, recovered judgment against the defendant, T. H. Ray, on two promissory notes. The defendant brings this appeal.

The plaintiff in its petition alleges in substance: That it is a corporation licensed to do business in this state. That on the 8th day of February, 1923, the defendant became indebted to plaintiff, as evidenced by promissory notes, whereby he promised to pay the plaintiff on November 27, 1923, the sum of $832.93 with interest; that there was paid on said note on October 10, 1928, the sum of $250; that there remained due the sum of $1,247.78, with interest. The second cause of action is the same as the first, except that the note matured October 23, 1923, which said notes together with indorsements thereon were attached to the petition and made a part thereof.

To the petition of the plaintiff the defendant filed answer denying generally all of the allegations contained in plaintiff's petition, and further by way of answer stated: That the debt was barred by the statute of limitations, and that plaintiff has no right to maintain the action by reason of its having failed to pay the state license tax for the years of 1929-1930, 1930-1931, and 1931-1932.

At the trial the plaintiff offered in evidence the two notes sued upon, which were received in evidence over the objection of the defendant. Plaintiff then offered testimony of its attorney showing the principal place of business of the plaintiff was in Oklahoma City, Okl.; thereupon the defendant demurred to the evidence which was overruled. It was agreed in open court that the plaintiff had not paid the license tax to the Corporation Commission of the State of Oklahoma for the years 1929-1930, 1930-1931, and 1931-1932. Judgment was rendered for the plaintiff.

Only three of defendant's assignments of error are urged, which will be treated separately:

"Fourth Assignment: And the Court erred in overruling defendant's demurrer to the evidence of plaintiff."

We have held that where a written instrument is relied upon and is attached as an exhibit its wording controls over a variance therefrom in the allegations relating thereto in the pleadings. Mason v. Slonecker, 92 Okl. 227, 219 P. 357. The note and the indorsements thereon are attached and made a part of the petition; therefore, they are the controlling part of the pleading.

The defendant pleaded, in an unverified answer, a general denial and the statute of limitations. This made no issue as to the execution, terms, or conditions of the note. In First State Bank v. Lock, 113 Okl. 30, 237 P. 606, we held: "Where the plaintiff pleaded the execution of a promissory note, and attached a copy of said note as an exhibit to the petition, and the defendants failed to deny the execution of said note under oath, the execution and terms of said note, as pleaded, are thereby admitted, and same was properly admitted in evidence." We have also held, in Gillespie v. First National Bank of Kingfisher, 20 Okl. 768, 95 P. 220: "The plaintiff in an action upon a negotiable promissory note by introducing in evidence the note and indorsement of the payee thereon in blank prima facie establishes his case." See, also, 8 C.J. 1015 and 1042, and Baggish v. Offengand, 97 Conn. 312, 116 A. 614.

Therefore, if the note, with indorsements thereon, was properly admissible in evidence and the admission in evidence of the note with its indorsements made a prima facie case on the part of the plaintiff, the court made no error when it overruled defendant's demurrer to the plaintiff's evidence.

The defense of the statute of limitations is a personal affirmative defense to the defendant (see Tiger v. Brown, 130 Okl. 83, 265 P. 124, and Amer. Ins. Union v. Jones, 135 Okl. 101, 274 P. 478), and when the plaintiff made a prima facie case, as aforesaid, the burden then shifted to the defendant to establish the bar of limitations, which defendant failed to do since they introduced no evidence.

The defendant's fifth assignment of error is: "That the decision and judgment are not sustained by the evidence and are contrary to law."

In support of this assignment of error, defendant contends that the conditions of the notes, i. e., "This note shall at the option of the holder, become at once due and payable if any change takes place in the ownership of the business of the maker * * * or if any stock of goods or fixtures be damaged by fire, or if maker * * * or either of them become insolvent, or if I fail to pay any other indebtedness to the payee hereof at maturity, or if I be sued by any other creditor, or if a chattel mortgage be placed on his stock of goods or fixtures," are contrary to public policy and in restraint of trade, and therefore render the obligation unenforceable. With this contention we cannot agree. In 6 R. C. L. c. 208, pp. 808, 809, it is said: "The rule invalidating contracts in restraint of trade does not include every contract of an individual by which his right to dispose of his property is limited or restrained. * * * It seems to be clear that, like agreements in restraint of trade, agreements restricting the use or sale of property must be reasonable to be valid. To such an agreement is likewise applicable the usual test of reasonableness, viz., whether the restriction imposed on one party is greater than is necessary for the protection of the other." Further, it is said in 6 R. C. L. c. 194, p. 789: "No better test can be applied to the question whether a particular contract is reasonable than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favor of whom it is given, and not so large as to interfere with the interests of the public. Whatever restraint is larger than the necessary protection of the party can be of no benefit to either; it can be only oppressive, and if oppressive it is, in the eye of the law, unreasonable. It seems that the extent of the restraint imposed by the contract would be of some importance in determining its reasonableness * * *."

We are of the opinion that the only purpose of the conditions was to accelerate the maturity of the obligation, in the event of their happening, for the protection of the plaintiff. Such conditions did not prevent the sale of the property, but merely provided for an earlier maturity of the obligation in the event of the happening of the conditions therein stated. We are unable to find anything oppressive in the conditions complained of.

Defendant's sixth assignment of error is: "That error was committed in permitting the plaintiff to prosecute its action and recover judgment therein when it was admitted that it had failed to pay the license tax and obtain certificates to do business in said state for the fiscal years of 1929-1930, 1930-1931 and 1931-1932."

In support of this contention, defendant cites section 9953, C. O. S. 1921 (now chapter 66, S. L. 1931, art. 4, § 8, as amended by chapter 155, S. L. 1933, § 7), which provides: "Every domestic corporation subject to the provisions of this article, which shall fail to file the annual statement and to pay the annual fees required by the provisions of this article for sixty days after the time provided therefor, shall forfeit its charter; and every foreign corporation failing to file its statement and pay the annual fees within the time required by the provisions of this article, shall forfeit its license and right to do business in this State; but the State shall have and retain a lien upon the assets of every kind and character in this State of every such delinquent corporation, and may enforce such lien in an action brought in the name of the State on the relation of the attorney general or the corporation commission in any court of competent jurisdiction in any county of the State where the property of such delinquent corporation may be found."

In this connection we said in Smith Rolfe Co. v. Wallace, 41 Okl. 643, 139 P. 248: ...