Rose's Mobile Homes, Inc. v. Rex Financial Corp.
| Decision Date | 06 November 1974 |
| Docket Number | No. FS-74-61-C.,FS-74-61-C. |
| Citation | 383 F. Supp. 937 |
| Parties | ROSE'S MOBILE HOMES, INC., Plaintiff, v. REX FINANCIAL CORPORATION and Rex-Noreco, Inc., Defendants, v. John P. and Dorothy L. ROSE, Third-Party Defendants. |
| Court | U.S. District Court — Western District of Arkansas |
Willard Crane Smith, Jr., Ft. Smith, Ark., for plaintiff.
J. H. Evans of Warner & Smith, Ft. Smith, Ark., for defendants.
The pleadings in this case are rather extensive but it is not necessary to set them out in extenso. A brief summary of the pleadings is sufficient to outline the issues in the case.
On May 17, 1974, plaintiff, Rose's Mobile Homes, Inc., filed its complaint against Rex Financial Corporation and Rex-Noreco, Inc., in which it alleged:
A. Plaintiff (Rose) is an Arkansas corporation with its principal place of business in Fort Smith, Arkansas.
B. Defendant Rex Financial Corporation (Rex) is a foreign corporation with its principal place of business in Englewood Cliffs, New Jersey, doing business in Arkansas by virtue of lending money and engaging in other financial activities in the State. It is not authorized to do business in Arkansas.
C. On June 13, 1973, plaintiff and Rex entered into two written agreements in the State of Arkansas, copies of which were attached to the complaint as Exhibits A and B. Exhibit A is a floor plan security agreement and Exhibit B is a recourse agreement, both executed in the State of Arkansas.
D. Plaintiff executed promissory notes payable to the order of Rex for the financing of mobile home inventories and executed assignments of retail contracts to Rex, all of which occurred in the State of Arkansas.
E. Rex solicited loans, took orders, maintained accounts, delivered funds, and caused to be delivered merchandise and has done other acts with the plaintiff and others in Arkansas, which constituted doing business within the State.
The relief sought is a declaratory judgment that defendants are foreign corporations not qualified to do business in the State of Arkansas; that the transactions between the parties constituted doing business in the State of Arkansas by the defendants in violation of Ark.Stat.Ann., § 64-1201 et seq.; that all the notes, security agreements, and other instruments executed by plaintiff to defendants are void and unenforceable and plaintiff is entitled to a cancellation of all its obligations to the defendants under said instruments, and that plaintiff is entitled to the absolute title and ownership of all property involved free and clear of all liens and other rights claimed by defendants.
On June 13, 1974, the time for filing answer was extended to June 24 and on that date defendants filed their answer, together with counterclaim by Rex.
In the answer the defendants admit that plaintiff is an Arkansas corporation with its principal place of business in Fort Smith, Arkansas, and that defendants are foreign corporations not qualified to do business in Arkansas; that the floor plan, security agreement, and the recourse agreement between plaintiff and Rex were executed, but it is denied that the same were entered into or executed in the State of Arkansas. All other allegations of the complaint are denied.
As an affirmative defense, defendant Rex-Noreco, Inc., alleged that it has never entered into any agreements or had any contracts or dealings with the plaintiff.
In the counterclaim of Rex it is alleged that pursuant to the floor plan security agreement it has an inventory of seven mobile homes financed for plaintiff as evidenced by four combination demand promissory notes and security agreements. Attached to the counterclaim are copies of the notes and security agreements. Rex has demanded payment of the principal balance of $48,629.00, plus interest, but plaintiff has failed and refused to pay same, and Rex is therefore entitled to the possession of those seven units.
It is further alleged in the counterclaim that pursuant to the recourse agreement Rex purchased a number of retail contracts from plaintiff. The purchasers on 22 of these contracts are delinquent on their payments, and demand has been made that plaintiff repurchase same, but plaintiff has failed and refused to do so. The repurchase price due Rex is $164,691.47.
That Rex is entitled to a declaratory judgment that the recourse agreement is a valid and subsisting agreement, and that the plaintiff has a continuing duty to repurchase retail contracts from Rex under the terms and provisions of the agreement.
Rex also seeks a judgment of possession of the seven mobile home units, in each of which Rex has a security interest, and for judgment against plaintiff for $164,691.47, plus interest at ten percent per annum.
Rex filed an affidavit for immediate delivery of possession of the seven mobile homes on which it holds a security interest.
The defendants further asked that the complaint of plaintiff be dismissed, for their costs and all proper relief.
In its answer to the counterclaim of Rex, the plaintiff denied that Rex is entitled to any of the relief sought under the allegations of plaintiff's complaint that Rex is doing business in the State without having qualified to do so.
On June 25, 1974, Rex filed a third-party complaint against John P. Rose and Dorothy L. Rose, in which it was alleged that they had executed and delivered to Rex a guaranty agreement wherein they guaranteed payment and performance of all obligations of the plaintiff, Rose's Mobile Homes, Inc. A copy of that agreement was attached as an exhibit. The relief sought by Rex against the third-party defendants is for joint and several judgment against them for $164,691.47.
In due time the third-party defendants filed their answer to the third-party complaint, in which they alleged that the third-party complaint failed to state a claim against them and that the third-party plaintiff was barred from any recovery because it is a foreign corporation not qualified to do business in the State, but has actually been doing business therein. Also, the third-party defendants filed a counterclaim against both defendants in which they alleged that the defendants had ruined their reputation and had undertaken to prohibit them from engaging in any business activity, and that they had been damaged in the sum of $180,000.00 because the conduct of the two defendants was wilful and wanton.
On August 6, 1974, Rex filed an amendment to its original counterclaim and an amendment to its complaint against the third-party defendants reviewing and extending its claim for interest.
Other miscellaneous pleadings were filed and orders entered thereon, such as petition for temporary restraining order and petition for preliminary injunction against plaintiffs and third-party defendants. The pleadings resulted in the court entering various orders on July 26, 1974, directing the plaintiff to deliver possession to Rex of the five mobile homes then in its possession, along with five other mobile homes which had been repossessed by plaintiff and on which Rex was the holder of the contracts of sale by assignment from plaintiffs. The order further provided that Rex should have authority to sell those ten homes under the provisions of the uniform Commercial Code of Arkansas, Ark. Stat.Ann., § 85-9-501 et seq., (1961 Repl.).
The case was tried to the court without a jury on August 22, 1974, upon the ore tenus testimony of six witnesses introduced by plaintiff together with plaintiff's 20 exhibits. The defendants introduced the ore tenus testimony of three witnesses, including the President and Vice President and an accountant, together with 39 exhibits which included the deposition of Mr. and Mrs. Rose.
Thorough and extensive briefs were filed by the parties, in which the various contentions of the parties were argued.
On its original brief the plaintiff stated:
On brief of Rex it contends that it is entitled to all of the following relief:
On its reply brief plaintiff states that it and the third-party defendants are entitled to the following relief:
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