Richmond Screw Anchor Co. v. E. W. Minter Co.

• Decision Date: 21 November 1927
• Citation: 300 S.W. 574
• Parties: RICHMOND SCREW ANCHOR CO. et al. v. E. W. MINTER CO., Inc., et al.
• Court: Tennessee Supreme Court

300 S.W. 574

RICHMOND SCREW ANCHOR CO. et al. v. E. W. MINTER CO., Inc., et al.

Supreme Court of Tennessee.

November 21, 1927.

COPYRIGHT MATERIAL OMITTED

Certiorari to Court of Appeals.

Consolidated suits by the Richmond Screw Anchor Company and others against E. W. Minter Company, Incorporated, and others, in each of which causes the Massachusetts Bonding & Insurance Company was made a party defendant. After decree in the chancery court, cases were appealed to the Court of Appeals, and after judgment therein the Richmond Screw Anchor Company, the Patent Scaffolding Company, Elwyn E. Seelye, the Johnson City Hotel Company, and the Massachusetts Bonding & Insurance Company bring certiorari. Decree of Court of Appeals in favor of the Johnson City Hotel Company and against the Massachusetts Bonding & Insurance Company reversed and modified as to plaintiff Roanoke Vitrolite & Marble Works, but otherwise affirmed.

Cox & Taylor, Sells, Simmonds & Bowman, Miller & Winston, and S. E. Miller, all of Johnson City, and O. L. White, of Knoxville, for plaintiffs.

Miller, Depew & Lee and Jas. J. McLaughlin, all of Johnson City, for defendants.

SWIGGART, J.

The Johnson City Hotel Company made a contract with E. W. Minter Company, Incorporated, for the construction of a hotel building at Johnson City, known as the John Sevier Hotel. The original contract price was approximately $450,000, to which extras were added, making the total in excess of $500,000.

Upon the completion of the hotel a number of suits were filed by subcontractors of the E. W. Minter Company, including furnishers of both materials and labor, seeking to perfect liens upon the hotel property for the materials and labor furnished. Other suits were filed by unsecured creditors of the E. W. Minter Company, seeking to attach, in the hands of the hotel company, the retained percentage of the contract price. In all there were 17 suits, which were consolidated in the chancery court.

As the consolidated causes are presented to this court, the principal contest is made by certain unsecured creditors against the lien claimants, the purpose of which is to defeat the lien claims in order that the retained percentage may be available for the payment of the unsecured debts. In each of the causes which are involved here, the Massachusetts Bonding & Insurance Company was made a party defendant, as the surety on the building contract of the E. W. Minter Company with the hotel company, the complainants, claiming liens, seeking to have the bonding company respond to the extent that the lien recoveries exceed the amount of the retained percentage of the contract price in the hands of the hotel company.

Petition for certiorari was filed in this court by unsecured creditors, the Richmond Screw Anchor Company, the Patent Scaffolding Company, and Elwyn E. Seelye, to review the decree of the Court of Appeals sustaining the claims of the lien creditors.

Petition for certiorari was filed in this court by the hotel company to review the decree of the Court of Appeals in holding it liable to the lien creditors for any sum in excess of the retained percentage.

Petition for certiorari was filed by the Massachusetts Bonding & Insurance Company to review the decree of the Court of Appeals in sustaining the several liens. This petition also contends that the chancellor and Court of Appeals were in error in rendering any decree against it in the present causes, regardless of the merits of the lien claims against the hotel company.

Each of these petitions has heretofore been granted, and oral argument has been heard at the bar of the court by counsel for all parties.

The foregoing is a general statement of the causes, without reference to certain minor contentions of the several parties, all of which will more particularly appear hereinbelow.

The petition of the unsecured creditors is directed at the decree of the Court of Appeals sustaining the lien claims of three foreign corporations, the Cornell Company, W. A. Burkard Company, and the Roanoke Vitrolite & Marble Works, on the ground that their several claims arose out of business transacted in Tennessee while each of them was doing business in Tennessee as a foreign corporation without complying with the laws of Tennessee providing for the domestication of foreign corporations.

These corporations replied that their several claims arose from transactions amounting to interstate commerce, within the protection of the interstate commerce clause of the Constitution of the United States, and also that each of them came to Tennessee to execute a contract entered into elsewhere, with no intention to carry on its business in Tennessee; that the business done by it in Tennessee was an isolated transaction, to perform which the laws of Tennessee did not require it to domesticate.

The Court of Appeals sustained the contention of these corporations that they were not doing business in Tennessee to the extent that they were required to domesticate, but held that their several transactions in Tennessee were not interstate commerce nor within the protection of the interstate commerce powers of the federal government.

No petition for certiorari was filed by the three foreign corporations, and we are therefore without jurisdiction to review the action of the Court of Appeals in overruling their several claims that they were engaged solely in an interstate commerce transaction. Brown v. Brown, 155 Tenn. ___, 296 S. W. 356, 360, and cases there cited.

The chancellor made a reference to the clerk and master for a report as to whether these corporations, and others, had transacted business in Tennessee in violation of the domestication laws. The clerk and master reported in the negative, and his report was concurred in by the chancellor. The Court of Appeals held that this was a concurrent finding binding upon it if supported by any material evidence. This holding is attacked on the ground that whether the foreign corporations involved were transacting business, which the statutes of Tennessee made unlawful because the several corporations have not domesticated, was a question of law and not a question of fact.

We do not think the determination of this contention is material or necessary in the present cause, for the reason that the evidence presents no controversy of fact as to the nature or extent of the business transacted in Tennessee by each of the three foreign corporations; and the effect of the action of the Court of Appeals is that, in its opinion, the business transacted by the several foreign corporations in Tennessee, as shown by the undisputed evidence, was not in violation of the statutes of Tennessee.

The contention of the unsecured creditors relied upon to defeat the lien claimants is not a defense in which they have a property interest. They invoke the public policy of the state to repel the lien claimants from the courts of the state on the ground that their several claims arose out of their own violation of the laws of the state. The proposition is stated in Cary-Lombard Lumber Co. v. Thomas, 92 Tenn. 587, 594, 22 S. W. 743, 745, as follows:

"The courts will deny any relief upon any illegal contract or transaction, whenever the illegality is made to appear, whether in the pleadings or proof, and will repel the party guilty of the illegality from the court whenever the fact appears."

Before undertaking to set out in detail the evidence as to the business transacted by each of the corporations, we deem it proper to determine what business transacted in Tennessee by noncomplying foreign corporations is made unlawful.

Acts 1877, c. 31, was the original statute of Tennessee on this subject. It authorized foreign corporations organized for the purpose of mining, quarrying, or manufacturing, and similar purposes, to "carry on" the business of their respective charters in Tennessee, upon filing a copy of such charters with the secretary of state and otherwise complying with the terms of the statute.

Section 7 of that statute required any such corporation entering the state to "in good faith continue" its corporate business in the state, and declared the chief purpose of the statute to be "to secure the opening and development of the mineral resources of the state, and to facilitate the introduction of foreign capital."

Section 2 of this statute of 1877 required that each such foreign corporation "desiring to carry on its business in this state must first file in the office of the secretary of state, a copy of its charter or articles of association," etc.

The Acts of 1891, c. 122, amended the Acts of 1877, c. 31, by extending its provisions to include all corporations organized under the laws of another state or country "which may desire to do any kind of business in this state."

Section 2 of this statute provided that any such corporation "desiring to own property or carry on business in this state of any kind or character shall first file in the office of the secretary of the state a copy of its charter," etc.

Section 3 of this amendatory statute is as follows:

"That it shall be unlawful for any foreign corporation to do or attempt to do any business or to own or to acquire any property in this state without having first complied with the provisions of this Act, and a violation of this statute shall subject the offender to a fine of not less than $100 nor more than $500, at the discretion of the jury trying the case."

The third and last enactment of the Legislature is Acts 1895, c. 81, amending Acts 1891, c. 122.

By section 1 of this statute the previous statute is made to provide that any foreign corporation "desiring to own property, or carry on business in this state of any kind or character," shall first file a copy of its charter in the office of the secretary of state; and section 3 of the Acts of 1891, above quoted, was amended so as to read as follows:

"That it shall be unlawful for any foreign...