Republic Acceptance Corp. v. Bennett

• Decision Date: 02 October 1922
• Docket Number: No. 28.,28.
• Citation: 220 Mich. 249,189 N.W. 901
• Parties: REPUBLIC ACCEPTANCE CORPORATION v. BENNETT et al.
• Court: Michigan Supreme Court

220 Mich. 249

189 N.W. 901

REPUBLIC ACCEPTANCE CORPORATION

v.BENNETT et al.

No. 28.

Supreme Court of Michigan.

Oct. 2, 1922.

Error to Circuit Court, Wayne County; Eugene F. Law, Judge.

Action by the Republic Acceptance Corporation against Glenn Bennett and another, copartners doing business as Bennett-Williamson Company. Judgment for defendants, and plaintiff brings error. Affirmed.

Argued before FELLOWS, C. J., and WIEST, McDONALD, CLARK, BIRD, SHARPE, MOORE, and STEERE, JJ. Beaumont, Smith & Harris, of Detroit, for appellant.

Monaghan, Crowley, Reilley & Kellogg, of Detroit, for appellees.

SHARPE, J.

The plaintiff, a foreign corporation, with its home office at Pittsburgh, Pa., as successor to the Republic Mortgage Company, brings this suit to recover on three contracts of guaranty of certain securities executed by defendants. The defense raised was that the failure of the mortgage company, hereafter spoken of as the plaintiff, to comply with the statutes of this state requiring such corporations to take out a state license, pay a franchise fee, etc., barred its recovery. The trial judge so found, and directed a verdict for defendants.

There is little dispute about the facts. The business conducted by plaintiff at Pittsburgh was that of purchasing or discounting securities obtained on the sale of motor vehicles. It desired to enter the Detroit field. It was apparent that in order to secure any considerable amount of business it must have a local representative. It sent one William Lininger to Detroit to investigate. On his reporting that ‘there was an excellent field in Detroit to do business' it instructed him by long distance telephone to make arrangements for the rental of offices. He secured rooms in the Free Press Building, and forwarded a lease of same to the Pittsburgh office for approval. It was approved. Plaintiff forwarded the office furniture, and caused its name to be lettered on the door with the name of Mr. Lininger as manager below it. It paid at least a part of the office expenses. The contract of employment with Lininger was in the form of a proposal to him by letter accepted in writing by him. The first paragraph reads:

‘It is hereby agreed and understood that you are to come into the Republic Mortgage organization as manager of the Detroit office, your duties will be to call on the automobile, truck and tractor trade in the interests of the Republic Mortgage Company.’

The duties he performed are thus stated by him:

‘I personally called upon dealers and distributors; gave them a schedule of the rates of the Republic Mortgage Company, and in most instances, I left a sample of the conditional sales agreement or leases, together with a blank financial statement. * * * I would call around each morning and I spent the mornings as a rule, in the beginning and half of the afternoons, in calling around on the dealers, in order to get them interested in our proposition, and the first step taken was by the dealers filling out the financial statements, which commenced to come very rapidly after soliciting there for a week or ten days, and the financial statement was then sent to Pittsburgh for their approval. They would advise me, after they had made their investigations, whether they could handle their paper. * * * That is where dealers would sell cars on time and the purchaser would sign these papers, and by paying not less than one-third of the purchase price to the dealer, the remaining balance would be financed by the Republic Mortgage Company, deducting their charges from that amount.’

He prepared circular letters, which he sent to the trade, and advertisements for insertion in the city papers, which were approved by plaintiff. Bulletins sent from Pittsburgh were transcribed by him and mailed to local dealers. The circular letter received by defendants read as follows:

‘The Republic Mortgage Company of Pittsburgh, Pennsylvania.

‘Authorized Capital, $7,000,000.

‘Executive Offices:

‘Frick Annex Building, Pittsburgh, Pa.

‘Detroit, Michigan, September 9, 1919.

‘Detroit Branch Office,

‘809-810 Free Press Building.

‘William Lininger, Manager.

‘Bennett, Williamson Company, 215 Monroe Avenue, Detroit-Gentlemen: The Republic Mortgage Company of Pittsburgh whose business it is to finance automobile manufacturers, distributors and dealers in connection with their time sales, have gone to considerable expense in establishing and operating a direct branch office in Detroit.

‘We are making this office absolutely self-sustaining in every sense of the word. We are equipping it with all the tools necessary to make it as complete an institution, in so far as service is concerned, as you can possibly find anywhere.

‘We are doing these things for the sole purpose of giving you immediate action and for the personal benefit of you dealers.

‘Now under these conditions don't you think we are entitled to at least a portion of your business inasmuch as our plan is unquestionably better in many respects than any other financial plan in existence?

‘Won't you be good enough therefore to file with us a copy of your financial statement on the inclosed blank and this will place you in a position to start in immediately and do business with us. We will send you a supply of our leases with a specimen copy, in order that you may know at a glance just how to fill them out. Our whole system is ideal in every respect and it you want the ‘best,’ associate yourself with the ‘Republic.’

‘Yours truly,

‘The Republic Mortgage Company,

‘W. Lininger, Manager, Detroit Branch.

‘Suite No. 809, Free Press Building, Detroit, Mich.

‘Telephone-Main 5340.

‘Our Service Guaranteed.’

One of the advertisements inserted read as follows:

‘Republic Mortgage Company. Capital $7,000,000. Direct Branch Office, the Free Press Building, Suite 809. Liberal advances on warehouse receipts and documentary drafts; also to distributors and dealers in motor vehicles on leases-floor plan. Time payments. Unexcelled facilities in all departments. Phone or write for plans. An interview solicited. Telephone, Main 5340.’

The negotiations with defendants and others from whom securities were purchased were conducted by Lininger as agent or manager for plaintiff. A representative of the company from Pittsburgh rendered him some assistance. The blank forms of conditional sales agreements, assignments, and guaranties were prepared by plaintiff and sent to Lininger for distribution among the dealers. When filed out and executed they were delivered to Lininger, who recorded them with the city clerk and sent them to the office at Pittsburgh for approval. On approval, checks were mailed to him for delivery to the persons from whom the securities were purchased. Payments pursuant to such assignments were to be made in Pittsburgh, but it appears that several such payments were made to and receipted by Lininger. On receipt of such moneys he deposited them to his credit in a bank in Detroit, and sent his personal check to plaintiff for the amount paid. At plaintiff's request, he engaged the services of a Detroit credit reporting agency,...