Thomas Mfg. Co. v. Knapp

• Decision Date: 05 July 1907
• Citation: Thomas Mfg. Co. v. Knapp, 101 Minn. 432, 112 N. W. 989 (Minn. 1907)
• Parties: THOMAS MFG. CO. v. KNAPP.
• Court: Minnesota Supreme Court

101 Minn. 432

112 N.W. 989

THOMAS MFG. CO.

v.KNAPP.

Supreme Court of Minnesota.

July 5, 1907.

Appeal from District Court, Hennepin County; P. W. Morrison, Judge.

Action by the Thomas Manufacturing Company against Stephen Knapp. Judgment for defendant. From an order denying a new trial, plaintiff appeals. Affirmed.

Syllabus by the Court

A foreign corporation, which ships its goods to a distributing warehouse within the state, where they are received and forwarded by a distributing agent under a special contract, on the order of the corporation, to parties within the state, who receive the goods under contracts which contemplate their sale at retail within defined territory, and which provide that the title of the goods and the proceeds of the sales thereof shall remain in the corporation until it receives the full amount of the contract price and that the corporation under certain conditions may revoke the contract, and contain numerous other provisions inconsistent with a sale, and consistent only with an agency, is doing business in the state through local agents established therein.

In an action by a foreign corporation against its agent to recover money received by the agent for its use, the agent is not estopped to show that the corporation has not complied with chapters 69, 70, pp. 68, 71, Gen. Laws 1899.

In an action by a foreign corporation upon a promissory note the maker may show as a defense that he was the local agent of the corporation, engaged in selling its goods in the state under the terms of a written contract, and that the note represents the proceeds of sales of such goods, for which he was liable under the contract, and that the corporation has not complied with chapters 69, 70, pp. 68, 71, Gen. Laws 1899. Kerr & Fowler, for appellant.

John Moonan, for respondent.

ELLIOTT, J.

In an action on a promissory note the defendant interposed the defense that the plaintiff, a foreign corporation, had not complied with chapters 69, 70, pp. 68, 71, Gen. Laws 1899. The trial court ordered judgment in favor of the defendant, and the plaintiff appealed from an order denying its motion for a new trial. The appellant, under proper assignments of error, contends that the order of the trial court should be reversed, because it was not doing business within the state, and that the transaction in question constituted interstate commerce.

The evidence sustains the finding ‘that said plaintiff as such corporation was doing business in Minnesota, and that it had agencies established during the year 1903, and during all the time mentioned in the pleadings in said above cause, in various towns and cities in the state of Minnesota, and stored therein large quantities of its goods, farming implements, and machinery, with the warehouse company in Minneapolis, without reference to contracts previously entered into for their sale.’ The appellant is an Ohio corporation, and has not complied with the provisions of chapters 69, 70, pp. 68, 71, Gen. Laws 1899. The evidence shows that its traveling men solicited orders in Minnesota, which were forwarded to Springfield, ohio, and the goods were shipped from that point to a distributing depot in Minneapolis, from whence they were shipped to other parties at various points within the state as ordered. The appellant claims that all goods thus shipped in Minnesota were tagged and marked with the name of the persons by whom they had been ordered and to whom they were to be forwarded. The respondent claims, and the court found, that goods in substantial amounts were also shipped to this warehouse or depot in Minneapolis wityout being marked for any particular persons, and that as orders were taken by traveling men they were filled out of this general stock of goods. It appears that the particular goods which are claimed to have been sold to respondent, and for the purchase price of which the promissory note upon which this action was brought was given, were ordered by respondent from a traveling agent, the order approved at Springfield, Ohio, and the goods shipped to a distributing depot at Winona, marked for shipment therefrom to the respondent. There is ample evidence to sustain the finding that the appellant had shipped into the state of Minnesota, and there stored in a warehouse, large quantities of its goods, without reference to contracts previously entered into for their sale. This depot or warehouse was in charge of the International Harvester Company, which acted as distributing agent. The witness Simmons, who during the time in question was bookkeeper and shipper for that company, testified that during the year 1903 the harvester company had a line of machines on hand owned by the Thomas Manufacturing Company, and that there were more goods received from the appellant at the Minneapolis warehouse that were not consigned or sold to any person than there were goods that had been sold prior to their shipment into the state.

The evidence does not sustain the appellant's contention that the particular transaction out of which this action arose was an act of interstate commerce. It is conceded that sales of goods by a foreign corporation, even through a traveling salesman sent into the state, to a resident of the state, to the shipped to him in the state, belong to the operations of interstate commerce, and are consequently not subject to the prohibitions of the statute. 19 Cyc. 1230. But the interstate commerce clause does not apply when the foreign corporation maintains a resident agent in the state whose business it is to solicit orders for and deliver the goods of the corporation to the purchaser. Diamond Glue Company v. U. S. Glue Company, 187 U. S. 611, 23 Sup. Ct. 206, 47 L. Ed. 328. A distinction must also be made between the acts of a foreign corporation in shipping its goods to a commission merchant or other agent within a state, to be sold by him and the proceeds accounted for to the corporation, the title of the goods to remain in the corporation until paid for, and the case where a local commission merchant solicits orders for the goods of a foreign corporation and forwards them directly to the corporation. In the latter case the orders are filled by the corporation with the same effect as though they were received direct from the customer. But, if the commission merchant or other agent to whom the goods are consigned acts as the agent of a foreign corporation under an agreement that all the goods, so long as unsold, remain the property of the corporation, and the proceeds of the sales belong also to the corporation, the corporation has established an agency in the state for the sale of its goods and is doing business within the state. This is illustrated by the case of Com. v. Parlin, 118 Ky. 168, 80 S. W. 791. A corporation engaged in the business of manufacturing farm machinery appointed certain residents of Kentucky having an established place of business, as its agents to sell implements, to be shipped to and stored by them for delivery as sales were made. The contract provided that the title to the goods should remain in the corporation. The manner in which the sales were to be made, the securities which were to be taken, and the manner of rendering accounts were minutely provided for. The contract was held to be one of agency merely, and not a selling by the owners as wholesalers to the alleged agents as retailers. See, also, U. S. Rubber Co. v. Butler Shoe Co. (C. C.) 132 Fed. 398. A contract very similar to the one under which respondent received...