Tennis Bros. Co. v. Wetzel & T. Ry. Co.

• Citation: 140 F. 193
• Decision Date: 22 August 1905
• Docket Number: 630.
• Parties: TENNIS BROS. CO. v. WETZEL & T. RY. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

140 F. 193

TENNIS BROS. CO. v. WETZEL & T. RY. CO.

No. 630.

United States Circuit Court, N.D. West Virginia.

August 22, 1905

H. P Camden, for plaintiff.

V. B Archer, Geo. R. Wallace, and Benjamin L. Hirschfield, for defendant.

DAYTON District Judge.

On the 15th day of April, 1903, a contract was entered into between Tennis Bros. Company, a corporation under the laws of Delaware, and the Wetzel & Tyler Railway Company, a corporation under the laws of West Virginia, whereby the first party agreed to supervise the construction of an electric railway for the second party, furnishing its own service and that of its engineers and office force to an extent necessary to efficiently and promptly construct the same; to obtain proposals for supplies and material, and submit them for approval to the railway company's supervising engineers' to supply all tools necessary except locomotive and electric construction car; to employ and pay for all necessary labor in said construction rendering biweekly bills at cost for such labor; not to order any materials without written authority from the second party; to follow certain general conditions made part of the contract, especially the general and specific directions of the second party's supervising engineers; and, finally, to obtain and furnish indemnity insurance in approved company, saving harmless the second party from suits for damages occasioned by accidents during the construction aforesaid. The second party, the railway company, on its part, agreed to furnish all materials and supplies, excepting tools; to reimburse the first party for money's expended for labor upon submission of biweekly bills, with pay rolls attached, approved by the supervising engineer; to pay to first party in full for its services the sum of 10 per cent. on actual net cost of all necessary materials and labor expended upon grading and drainage, bridges, culverts and trestles, paving and ballast, girder and T-rails, special work, bolts and spikes, poles, ties, fences and cattle guards, trolley and feeder wires, overhead line work, but not to include rolling stock, electric car equipment, power house and contents, real estate, or buildings. One-half of this 10 per cent. compensation was made payable in 5 per cent. 30-year gold bonds at 90 cents on the dollar, to be a part of a $300,000 issue secured as a first lien upon the property. Under this contract the plaintiff company proceeded to work until September 11, 1903, when the defendant company by written notice repudiated the contract and required the plaintiff to cease all work. Thereupon, on September 18, 1903, the plaintiff company filed in the offices of the county courts of Wetzel and Tyler counties, W.Va., where defendant company's property was situate, its verified account, aggregating $12,101, and declaration of a lien upon said railway property, which was on that day duly admitted to record, and on September 28, 1903, instituted this suit to enforce said lien, against said defendant railway company's property, and for the further purpose of securing a decree against the defendant for its damages incurred by reason of said defendant's repudiation of the contract. On January 19, 1904, the defendant filed its demurrer on this bill, which, on January 28, 1904, was overruled; and on June 15, 1904, defendant filed answer, to which plaintiff filed general replication, and on June 23, 1904, by leave of the court, filed a cross-bill in the cause, upon which process was awarded, demurrer entered and overruled, answer made, and general replication thereto filed. It should be added that plaintiff in the original bill alleged that the contract was modified or added to by a subsequent agreement, whereby it was to superintend and receive the 10 per cent. on cost of cars, power house, wells and equipment, and material used in construction therewith.

The defenses set up by the original demurrer, by the answer to the original bill, and by the cross-bill, may be summarized as follows: First. Tennis Bros. Company, a foreign corporation, not having complied with the provisions of section 31, c. 35, p. 108, of the Acts of 1901 of West Virginia, requiring all corporations to accept in writing the provisions of that act and file such acceptance, was by the express terms of the act prohibited from bringing this suit. Second. Tennis Bros. Company under the contract were not laborers or materialmen, but solely superintendents of construction-- at the outside, contractors-- and therefore not entitled to a lien under section 7, c. 75, of the Code of West Virginia of 1899. Third. That in no event can such lien attach for material ordered but not used during the continuance of the contract. Fourth. That the whole claim of Tennis Bros. Company, even if a lien attached, was defeated by the manner in which the work of superintendence in construction was performed. Fifth. That by reason of the gross, willful, negligent, extravagant, and unskillful manner in which this work was done the defendant railway company has been damaged to the extent of $50,000, and a decree for this amount, and for the removal of the cloud on title by reason of the recordation of said lien, is asked for in said cross-bill. Sixth. A positive denial that the original contract was ever modified.

Taking up these defenses in their order, it is to be noted as to the first that the Legislature of West Virginia on the 18th day of February, 1901, passed the act known as chapter 35 of the Acts of that year, and in section 31 thereof amended section 30 of chapter 54 of the Code of 1899. The original Code section in full was as follows:

'Any corporation duly incorporated by the laws of any state, or territory of the United States, or of the District of Columbia, or of any foreign country, may, unless it be otherwise expressly provided, hold property and transact business in this state, upon complying with the requirements of this section, and not otherwise. Such corporation so complying shall have the same rights, powers and privileges, and be subject to the same regulations, restrictions and liabilities, that are conferred and imposed by this and the fifty-second and fifty-third chapters of this Code, and by chapter twenty of the Acts of 1885, on corporations chartered under the laws of this state. Every such corporation shall file with the secretary of state a copy of its articles of association and of the law and authority under which it is incorporated. The secretary of state shall issue to every such corporation complying with the provisions of this section a certificate of the fact of its having done so, which certificate shall be filed and recorded in the office of the clerk of the county court of the county, or one of the counties in which its business is conducted. Such corporation shall also file, in the said clerk's office, a copy of its charter, to be kept and preserved therein. Every railroad corporation doing business in this state under the provisions of this section, or under charters granted or laws passed by the state of Virginia, or this State, is hereby declared to be, as to its works, property, operations, transactions and business in this state, a domestic corporation, and shall be so held and treated in all suits and legal proceedings which may be commenced or carried on by or against any such railroad corporation, as well as in all other matters relating to such corporation. No railroad corporation which has a charter, or any corporate authority, from any other state, shall do business in this state as the lessee of the works, property or franchises of any other corporation or person, or otherwise; or bring or maintain any action, suit or proceeding in this state, until it shall, in addition to what is hereinbefore required, file in the office of the secretary of state a writing, duly executed under its corporate seal, accepting the provisions of this section and agreeing to be governed thereby, and its failure so to do, may be pleaded in abatement of any such action, suit or proceeding; but nothing herein contained shall be construed to lessen the liability of any corporation, which may have complied with the requirements of this section, upon any contract or for any wrong. Every such corporation which shall do business in this state, without having complied with the provisions of this section, shall be guilty of a misdemeanor, and upon conviction thereof, shall be fined not less than five hundred dollars nor more than one thousand dollars for each month its failure so to comply shall continue. Prosecutions under this section shall be in the county in which the seat of government is. For every certificate issued under this section the secretary of state shall be paid by the corporation a fee of five dollars.'

The legislative act of 1901 amended the railroad clause of this section, so as to make it applicable to all corporations, and not alone to railroads. The acts required to be done were the usual ones of filing charter with the Secretary of State, obtaining his certificate, recording same in some county where doing business, appointing attorney in fact to accept process, etc.

Reasonable requirements by state laws of foreign corporations, as conditions precedent to doing business in such states, have been upheld by federal courts in such cases as: Diamond Glue Co. v. U.S. Glue Co. (C.C.) 103 F. 838; Empire Milling Co. v. Tombstone M. & M. Co. (C.C.) 100 F. 910; Hooper v. State of California, 155 U.S. 648, 652, 15 Sup.Ct. 207, 39 L.Ed. 297, and cases cited. The federal courts, however, in construing these statutes, will be governed by the constructions given by the local courts of last resort. This statute, before amended (and the amendment is substantially the same as the...