SGB Const. Services, Inc. v. Ray Sumlin Const. Co., Inc.

• Decision Date: 06 May 1994
• Parties: SGB CONSTRUCTION SERVICES, INC., and Shore/Form Systems, Inc. v. RAY SUMLIN CONSTRUCTION COMPANY, INC., et al. 1930417.
• Court: Alabama Supreme Court

Page 892

644 So.2d 892

SGB CONSTRUCTION SERVICES, INC., and Shore/Form Systems, Inc. v. RAY SUMLIN CONSTRUCTION COMPANY, INC., et al.

1930417.

Supreme Court of Alabama.

May 6, 1994.

Rehearing Denied July 15, 1994.

Donald F. Pierce and John Chas. S. Pierce of Pierce, Carr & Alford, P.C., Mobile, for appellants.

E.B. Peebles III and James E. Robertson, Jr. of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, for appellees.

HOUSTON, Justice.

The plaintiffs, SGB Construction Services, Inc. ("SGB"), and Shore/Form Systems, Inc. ("Shore/Form"), appeal from a summary judgment for the defendants, Ray Sumlin Construction Company, Inc. ("Ray Sumlin"), Hartford Fire Insurance Company ("Hartford"), Mobile Infirmary Medical Center ("the Infirmary"), and Port City Medical Clinic Board of Mobile, Alabama ("the Board"), in this action seeking damages for an alleged failure to pay for leased construction equipment. We affirm in part, reverse in part, and remand.

SGB, a foreign corporation licensed to do business in Alabama, leases concrete forming and shoring equipment. Shore/Form, a foreign corporation not licensed to do business in Alabama, is a distributor of SGB equipment operating out of Florida. The Infirmary and the Board contracted with Ray Sumlin to build a parking deck at the Infirmary; Hartford was the surety on Ray Sumlin's payment bond. Shore/Form shipped equipment by common carrier from its plant in Florida to the construction site in Mobile, pursuant to a "purchase order" signed by representatives of the Infirmary and the Board. This "purchase order" was actually the culmination of a leasing arrangement negotiated by Shore/Form and Ray Sumlin. After a dispute arose as to the amount of rent due for the use of the equipment, Shore/Form and SGB filed this action seeking payment on the bond, pursuant to Ala.Code 1975, § 39-1-1(b), and damages for breach of contract. The trial court held that, because it was not qualified to do business in Alabama, Shore/Form was precluded, as a matter of law, from suing in an Alabama court. The trial court also held that the defendants were entitled to a judgment as a matter of law with respect to SGB's claims, on the ground that SGB had provided no equipment to, and had no contractual relationship with, any of the defendants.

Our standard of review of a summary judgment is well settled. The summary judgment was proper if there was no genuine issue of material fact and the defendants were entitled to a judgment as a matter of law. Rule 56, Ala.R.Civ.P. The burden was on the defendants to make a prima facie showing that no genuine issue of material fact existed and that they were entitled to a judgment as a matter of law. If they made that showing, then the burden shifted to SGB and Shore/Form to present evidence creating a genuine issue of material fact, so as to avoid the entry of a judgment against them. In determining whether there was a genuine issue of material fact, we must view the evidence in a light most favorable to SGB and Shore/Form and must resolve all reasonable doubts against the defendants. Because this case was not pending on June 11, 1987, we must apply the "substantial evidence" rule. Ala.Code 1975, § 12-21-12. Mixon v. Houston County, 598 So.2d 1317 (Ala.1992).

Shore/Form

Article XII, § 232, of the Alabama Constitution of 1901, and Ala.Code 1975, §§ 10-2A-247 and 40-14-4, bar a foreign corporation not qualified to do business in Alabama from enforcing its contracts in the courts of this state. These laws apply, however only when the business conducted in this state by the nonqualified corporation is intrastate in nature. A nonqualified foreign corporation is not barred from enforcing its contracts in Alabama when its activities within this state are incidental to the transaction of interstate business. Wallace Construction Co. v. Industrial Boiler Co., 470 So.2d 1151 (Ala.1985). When the activities of a foreign corporation are interstate in nature, then its doing business here is protected by the Commerce Clause of the United States Constitution, and Alabama's nonqualifying laws, which otherwise might interfere with or prohibit the business, are inapplicable. Joison Ltd. v. Taylor, 567 So.2d 862 (Ala.1990).

The defendants contend that the summary judgment was proper, relying primarily on the fact that the equipment was to be used on a construction site in Alabama pursuant to a lease solicited in Alabama. Shore/Form insists, however, that its solicitation of business in Alabama and its shipment of equipment into this state pursuant to an equipment lease was not intrastate business activity, and therefore did not preclude it from suing in an Alabama court. We agree with Shore/Form and reverse the summary judgment with respect to its claims.

The undisputed evidence in this case shows that Shore/Form actively sought to lease SGB equipment for use in the construction of the Infirmary's parking deck and that it was eventually successful in that endeavor. Shore/Form shipped the equipment by common carrier from its Florida plant to the Mobile construction site. Shore/Form had no offices or plants in Alabama, kept no employees here on a permanent basis, and was not involved in any respect with the actual construction of the parking deck in Mobile. These facts are not sufficient under Alabama law to support the trial court's conclusion that Shore/Form was engaged in the transaction of intrastate business. This Court has consistently held that the mere solicitation of business in Alabama and business contacts incidental thereto do not constitute the transaction of intrastate business. Furthermore, where a transaction requires only the sale or lease of goods and a delivery of those goods into Alabama, we have held it to be within the scope of interstate commerce. See Wise v. Grumman Credit Corp., 603 So.2d 952 (Ala.1992); Joison Ltd. v. Taylor, supra; North Alabama Marine, Inc. v. Sea Ray Boats, Inc., 533 So.2d 598 (Ala.1988); Wallace Construction Co. v. Industrial Boiler Co., supra; Johnson v. MPL Leasing Corp., 441 So.2d 904 (Ala.1983); Kentucky Galvanizing Co. v. Continental Casualty Co., 335 So.2d 649 (Ala.1976); Houston Canning Co. v. Virginia Can Co., 211 Ala. 232, 100 So. 104 (1924).

Based on the aforementioned cases, particularly Johnson v. MPL Leasing Corp. and Houston Canning Co. v. Virginia Can Co., we hold that Shore/Form was not engaged in the transaction of intrastate business when it leased the equipment. Thus, its activities did not implicate the "door closing" provisions of § 232 of the Alabama Constitution and §§ 10-2A-247 and 40-14-4, Ala.Code 1975.

SGB

The trial court ruled, as a matter of law, that SGB had no contract with any of the defendants (specifically, it held that there was no evidence of mutual assent to contract between SGB and any of the defendants); it held, therefore, that SGB could not go forward with its contract claim. SGB contends, however, that there is at least a fact question as to whether it had an agreement with one or more of the defendants on which it could base a legal claim. Specifically, SGB points to the delivery tickets that accompanied the shipment of the equipment from Shore/Form to the construction site and the invoices that SGB later sent to the Board. Each of the delivery tickets was addressed to Ray Sumlin and carried in bold print at the top: "SGB" and "SGB Construction Services, Inc."...