Riblet Tramway Company v. Monte Verde Corporation

• Decision Date: 02 February 1972
• Docket Number: No. 71-1129.,71-1129.
• Citation: 453 F.2d 313
• Parties: RIBLET TRAMWAY COMPANY, Incorporated, Plaintiff-Appellee, v. MONTE VERDE CORPORATION, and Angel Fire Ski Corporation, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

453 F.2d 313 (1972)

RIBLET TRAMWAY COMPANY, Incorporated, Plaintiff-Appellee, v. MONTE VERDE CORPORATION, and Angel Fire Ski Corporation, Defendants-Appellants.

No. 71-1129.

United States Court of Appeals, Tenth Circuit.

January 7, 1972.

Rehearing Denied February 2, 1972.

Riner E. Deglow, Spokane, Wash. (Thomas B. Catron, III, Santa Fe, N. M., on the brief), for plaintiff-appellee.

Arthur H. Coleman, Santa Fe, N. M., for defendants-appellants.

Before HOLLOWAY and DOYLE, Circuit Judges, and DAUGHERTY, District Judge.

WILLIAM E. DOYLE, Circuit Judge.

Essentially this case is a collection/repossession controversy involving four ski lifts located at the Angel Fire ski resort at the south end of the Moreno Valley outside of Eagle Nest in northern New Mexico. The lifts were sold by plaintiff, a Spokane, Washington corporation (Riblet), to joint New Mexico corporations (Monte Verde and Angel Fire, hereinafter called defendants) which were then owned in 1966 by the Roy LeBus family, but which were purchased in 1969 by the present owners called the Dresser group. The successive corporate owners are here referred to as the LeBus group and the Dresser group.

The ski lifts were duly installed and some payments were made, especially by the Dresser group, but payments have not been made recently and the present status is a legal stalement made possible by litigation and appellate delay.¹

The court entered two judgments. The first was an interlocutory one finding the amount of the outstanding indebtedness as of September 30, 1970. It was determined by the judge that there was an additional balance representing the accelerated remaining debt in the amount of $75,083.45. The court did not enter a money judgment on the basis of the finding. Rather, the defendants were granted a short period of time (six days) to bring the obligation into balance. They would have been required to pay $76,912.63 together with the $30,000.00, which sum had been paid into the court as a security amount in relation to the denial of the summary judgment which the plaintiff had requested. Defendants were unable to come up with the $76,912.63, and so on November 12 the court entered its final judgment granting to plaintiff immediate possession of the ski lifts. At the same time, the $30,000.00 security fund was returned to defendants and it is from this judgment that the appeal has been taken.

The record herein shows that the defendants had paid a total of $146,361.55 of a total purchase price in the amount of $278,086.80 exclusive of interest and collection costs.

The defendants seek reversal on the following grounds:

1. That the plaintiff was not authorized under the relevant New Mexico statute to do business in that state, and hence was barred from prosecuting the action in the courts of New Mexico and also in federal court since this is a diversity suit.

2. That the particular installments which were the subject of the alleged default here were paid and received by plaintiff. Thus, the action should have been dismissed (and a new action should have been filed if the plaintiff wished to continue to prosecute the action.)²

3. That the part of the judgment which allowed the repossession of the facilities by plaintiff if the defendants failed to meet the revised payment schedule was outside the scope of the pleadings and therefore void.

4. That the trial court committed clear error in construing the contract as calling for the payment of interest annually in addition to the installments provided for in the original and revised agreements with the Dresser group.

The pertinent facts are these:

Riblet prior to the contracts in suit had never transacted business in New Mexico. Its sole office and plant are located in Spokane, and it has not based salesmen in New Mexico nor has it advertised its products there. The initial contact between the parties was through the mails. Subsequently by mail the defendants submitted specifications, and the plaintiffs returned formal proposals. At defendants' request Riblet's president went to New Mexico for an on-site inspection. Thereafter, on May 3, 1966, the parties executed a contract (signed by Riblet in Spokane and then by defendants in New Mexico) for three ski lifts, and, on July 26, 1966, another contract for a fourth lift. The total purchase price was $278,086.80 which was later reduced by $3,195.62 in satisfaction of claims resulting from deficiencies in the gear reducer mechanisms. By the terms of the contracts title was to remain in Riblet until all amounts were paid.

The machinery and fabricated structural steel were shipped f. o. b. manufacturers plant in Spokane, after which the ski lifts were installed by defendants' own personnel. Riblet personnel made one trip to New Mexico to assist in load tests after construction was completed and two trips to repair faulty gear boxes.

The LeBus group, after making the one percent down payment and payments of $1,914.00 in November 1967, and $35,000.00 in December 1967, was continuously in default to the time the Dresser group took control in July 1969. Two amendments to the contract, involving revised schedules for meeting payments, had been designed at different times (one in 1967 and one in 1968) to assist the LeBus group in remedying their defaults, but were unavailing.

When the Dresser group took control a new agreement was executed by Riblet and the defendants. This agreement stipulated that the balance payable as of July 5, 1969 was $120,760.24, including principal and interest, plus an additional $3,700.00 in collection costs. (This, of course, was arrearage only.) A new schedule for meeting the arrearage was also set forth. The agreement like the original contracts also contained a repossession clause in the event of default in any payment and incorporated all the provisions of the previous contracts and agreements, including the acceleration clause.

An initial $25,000.00 payment was made in July 1969. Soon thereafter defendants requested and received Riblet's concurrence in still another revised payment schedule. Defendants made the payments due in August, September and October 1969. The November and December payments were not made, and Riblet filed suit in late December asking for repossession. On January 14, 1970, defendants paid $35,000.00, which Riblet accepted. This amount brought defendants current under the revised schedule, but Riblet claimed an additional amount for interest on overdue payments and certain collection costs. The February payment was not made. In early March 1970, defendants paid an additional amount which Riblet refused to accept as a payment but rather kept as "rent," though no provision for rent appeared in any of the agreements. Neither the April 1970 payment nor the May balloon payment designed to clear all the arrearage was made. Thus, according to the revised schedule, the total amount due and unpaid as of June when the defendants filed their answer was well in excess of $64,000.00, plus interest (Riblet estimated it as $83,697.79).

I.

On the date of execution of the present contracts the obtaining of a certificate to transact business in New Mexico was a necessary prerequisite to suit by a foreign corporation upon contracts made by it in the state.³ This section was superseded in 1967 by a somewhat broader provision adopted from the Model Business Corporation Act, which bars a corporation from maintaining any action until it has obtained a certificate of authority.⁴

It is undisputed that Riblet has never been authorized to do business in New Mexico. The question then is whether its failure to do so requires dismissal of the action. In resolving this question we will assume that the contracts were made in New Mexico since Riblet's offer was accepted (signature attached) there by defendants. The contract is executed where the last act necessary to its formation is performed. Don J. Cummings Co. v. Aluminum Manufacturing Corp., 371 F.2d 118, 120 (10th Cir. 1967).

This court, in accordance with Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524 (1949), has said that state statutes of the present sort will be given effect in diversity suits when the proper facts are presented. Wilson v. Williams, 222 F.2d 692, 697 (10th Cir. 1955).

Under the New Mexico statutes at issue, contracts made by an unauthorized foreign corporation in the state are not void, rather the corporation is merely prevented from suing until it complies. Niblack v. Seaberg Hotel Co., 42 N.M. 281, 76 P.2d 1156, 1159 (1938). This court need not decide whether the current provision or its predecessor governs here since their impact is identical. It is most probable, nevertheless, that the current provision alone governs the question since suit was filed in 1969, and the statute creates only a temporary disability which can be overcome. In other words, the bar applies when the suit is brought, and can be remedied by complying with the corporate authorization provisions then in force.

Contrary to the contention of the defendants, "transacting business" under the corporate authorization statutes and the "transaction of any business" under the New Mexico long arm statute, as construed in McIntosh v. Navaro Seed Company, 81 N.M. 302, 466 P.2d 868 (1970), are not coterminous or synonymous. Thus, a foreign corporation subject to in personam jurisdiction under the long arm statute is not required by reason of that fact alone to obtain a certificate to do business. This is evident from a comparison of New Mexico cases. We need not, therefore, dwell on the fine distinctions which are applied in cases involving jurisdiction under long arm statutes. The policy, purpose and history of these statutes differ substantially from the considerations applicable to the corporate authorization provisions.

The Supreme Court of New Mexico, dealing with pleas in abatement of the present sort, has said that statutes such as those...