S. R. Smythe Co. v. Ft. Worth Glass & Sand Co.

• Decision Date: 17 January 1912
• Parties: S. R. SMYTHE CO. v. FT. WORTH GLASS & SAND CO.
• Court: Texas Supreme Court

Page 1157

142 S.W. 1157

S. R. SMYTHE CO. v. FT. WORTH GLASS & SAND CO.

Supreme Court of Texas.

January 17, 1912.

Error to Court of Civil Appeals of Sixth Supreme Judicial District.

Action by the S. R. Smythe Company against the Ft. Worth Glass & Sand Company. A judgment in favor of plaintiff was reversed by the Court of Civil Appeals (128 S. W. 1136), and plaintiff brings error. Reversed in part and in part affirmed.

Flournoy, Smith & Storer, for plaintiff in error. R. M. Rowland, for defendant in error.

DIBRELL, J.

This suit was brought in the district court of Tarrant county on October 16, 1907, by the S. R. Smythe Company, a Pennsylvania corporation, against the Ft. Worth Glass & Sand Company, a domestic corporation, to recover the sum of $2,597.38, alleged to be the balance due plaintiff for furnishing the material and building certain gas producers and downtakes in the glass factory of the defendant situated near the city of Ft. Worth, Tex. The cause of action was founded upon a written contract with Dave Woolverton, who had the contract with the defendant to build its glass factory for the agreed sum of $38,000; the plaintiff being a subcontractor. Plaintiff sought to recover a personal judgment against the defendant Ft. Worth Glass & Sand Company for such unpaid balance due upon the contract entered into with Woolverton and to foreclose a mechanic's lien on defendant's factory and 10 acres of land upon which the factory is situated. It is not material to set forth the grounds upon which defendant was sought to be made responsible for the balance due on the contract with Woolverton, as the case must be disposed of without going into its merits. The other defendants made themselves parties to this suit after the litigation had progressed for some time; the defendant corporation having been dissolved by the stockholders, and such other defendants being trustees for the dissolved corporation. Among a number of other pleas the defendants pleaded that plaintiff was a foreign corporation, and in violation of the laws of Texas had transacted business in this state, without first having filed with the Secretary of State a duly certified copy of its articles of incorporation, and obtaining a permit from the Secretary of State to transact business in this state. Relying upon this plea, defendants challenged plaintiff's right to sue in the courts of Texas upon any cause of action growing out of such alleged illegal transaction of business. The issues being submitted to the court without a jury, a personal judgment was denied plaintiff, but the amount of its debt was ascertained and declared a charge against the factory and 10 acres of land upon which it was situated, with foreclosure of the mechanic's lien. Upon appeal, the judgment of the trial court was by the Court of Civil Appeals reversed and rendered. Ft. Worth Glass & Sand Co. v. S. R. Smythe Co., 128 S. W. 1136.

The sole question for decision is whether under the facts and circumstances presented, which are practically uncontroverted, the plaintiff transacted business in this state illegally, upon which its cause of action is based. If it did so transact business in this state, it cannot maintain its suit to recover upon any cause of action growing out of such transaction.

The important question, then, is, admitting the facts and circumstances, do they show plaintiff transacted business in this state within the purpose and meaning of articles 745 and 746 of the Revised Statutes of Texas?

So much of the articles of the Revised Statutes as bear upon the question under consideration will be here quoted, as follows:

"Art. 745. Hereafter any corporation for pecuniary profit, except as herein provided, organized or created under the laws of any other state, * * * desiring to transact business in this state, or solicit business in this state, or establish a general or special office in this state, shall be and the same is hereby required to file with the Secretary of State a duly certified copy of its articles of incorporation, and thereupon the Secretary of State shall issue to such corporation a permit to transact business in this state.

"Art. 746. No such corporation can maintain any suit or action either legal or equitable, in any of the courts of this state, upon any demand, whether arriving out of contract or tort, unless at the time such contract was made or tort committed the corporation had filed its articles of incorporation under the provisions of this chapter in the office of the Secretary of State for the purpose of procuring its permit."

The facts show that Dave Woolverton entered into a contract with the defendant, Ft. Worth Glass & Sand Company, to construct, complete, and equip a factory for it to manufacture glass on its property, and afterwards entered into the following written contract with the plaintiff, the greater portion of the context of which is quoted as being essential to show the exact and complete transaction had by plaintiff:

                "Dave Woolverton, Esq., R. R. 5
                     Box 87, Fort Worth, Texas
                

"Proposal.

"Three (3) Gas Producers with Downtakes.

"Dear Sir: We propose to build for you at the plant of the Ft. Worth Glass Company, Ft. Worth, Texas, in close proximity to railroad siding for the convenient unloading of cars containing our materials three (3) center blower water seal gas producers with downtake and cut-off for each, which will consist of the following parts: water seals complete, blowers, blast pipes, blast distributors, lower ash hoppers, shells, top plates, upper and lower poke holes, hoppers, bells, rigging for operating bells, all complete in every respect, the shells proper being lined with 9" thick of No. 2 fire brick, the backing being red brick, and the bosh castings will be lined with 4½" of No. 2 fire brick.

"The downtakes will be made of steel plates, each provided with two doors and frames, sand damper frame and sand damper, all complete, and lined with 2½" of No. 2 fire brick, and will furnish all material, do all work and build the same complete for the sum of fifty-four hundred dollars ($5400.00) for the three, all of which will be subject to the exceptions and conditions hereinafter enumerated.

"Time of Building: We can build the hereinafter gas producers with their downtakes in from six to eight weeks from the date of order based upon the present promises of delivery of materials entering into the construction thereof, but in all cases the time for completion is based contingent upon strikes, accidents, delays, or causes beyond our control.

"Guarantee: We guarantee the hereinbefore specified three gas producers with their downtakes will be constructed in a durable, substantial and proper manner, and nothing but the best of materials will be used in the construction throughout.

"Material Left Over: After completing our contract we shall possibly have a moderate amount of brick, clay and cement left over, which is customary, and which we will kindly ask you to take off our hands, we invoicing the same to you at our cost price, plus the cost of unloading.

                    "Yours truly
                             "S. R. Smythe Company
                        "[Signed] H. E. Smythe, President
                

"We hereby accept the above proposal and agree to all the terms and conditions therein set forth, this 19th day of January, 1907.

                               "[Signed] Dave Woolverton."
                

In addition to the above contract, the Court of Civil Appeals found the following facts, which are stated to be without contradiction: "The defendant is a Texas corporation, and has its domicile in the state of Texas. Dave Woolverton is a resident of Texas. The plaintiff is a corporation chartered under the laws of the state of Pennsylvania, having its place of business in the city of Pittsburg, in said state. The contract involved in this suit was solicited entirely by Woolverton by correspondence from him in Texas addressed to plaintiff at its office in Pittsburg, Pa., and all the negotiations leading up to the contract were conducted by the United States mail between Woolverton in Texas and plaintiff in Pennsylvania, except a part of the negotiations which took place over telephone between Woolverton while in St. Louis and plaintiff in Pennsylvania. The contract was made in the state of Pennsylvania. The work performed by appellee in Texas, in compliance with the contract, consisted of the building and erection of three gas producers with downtakes into the plant of defendant. It required five weeks time to do this, and appellee in doing the work employed labor in Texas, paying therefor the sum of $917, and purchased in Texas certain material such as red brick, sand, lime, and cement of the value of $155 and paying therefor. The three gas producers with downtakes were manufactured in states other than Texas and were shipped into Texas by plaintiff, and all other material except that stated above was shipped from other states into Texas by plaintiff. The work performed by plaintiff in Texas was done by it through an agent in charge, who during the entire time remained in the state of Texas. It was admitted that plaintiff had never complied with article 745, R. S., and had never obtained a permit from the Secretary of State to transact business in the state of Texas."

The errors assigned in this court and relied on by plaintiff are, in substance, that "the services shown by the evidence to have been performed in this case and under the circumstances did not constitute transacting business within the meaning of articles 745 and 746, Revised Statutes." The contract declared on was made in the state of Pennsylvania and merely performed in Texas. Plaintiff having no office or agency in Texas, and never having solicited business in Texas, it was not necessary for it to have secured a permit from the Secretary of State in order to entitle it to sue, and that the transaction forming the basis of this suit was commerce between the states and not subject to regulation by the...