Unlaub Co., Inc. v. Sexton

• Decision Date: 11 March 1977
• Docket Number: No. FS-76-69-C.,FS-76-69-C.
• Citation: 427 F. Supp. 1360
• Parties: The UNLAUB COMPANY, INC., Plaintiff, v. Sam SEXTON, Jr., Defendant.
• Court: U.S. District Court — Western District of Arkansas

427 F. Supp. 1360

The UNLAUB COMPANY, INC., Plaintiff, v. Sam SEXTON, Jr., Defendant.

No. FS-76-69-C.

United States District Court, W. D. Arkansas, Fort Smith Division.

March 11, 1977.

Tom Harper, of Harper, Young & Smith, Fort Smith, Ark., for plaintiff.

Josef V. Hobson, of Sam Sexton, Jr., Fort Smith, Ark., for defendant.

JOHN E. MILLER, Senior District Judge.

PLEADINGS

On April 22, 1976, plaintiff, The Unlaub Company, Inc., commenced this action to recover the sum of $54,177.00 with interest from July 22, 1975, at the rate of 6 percent per annum from the defendant, Sam Sexton, Jr., together with costs. It is alleged in the complaint that plaintiff entered into an agreement with Paul Rees Coal Co., a corporation organized and existing under the law of Oklahoma, with its principal place of business at Bokoshe, Oklahoma, in which the said coal company agreed to purchase from plaintiff four Simplicity Coal Mining Screen Units to be manufactured by Simplicity Engineering Company at Durand, Michigan, for a total purchase price of $67,721.00, of which the said coal company or the defendant paid the sum of $13,544.00 as a down payment and agreed to pay the remaining $54,177.00 of the purchase price, plus applicable sales or use taxes, upon receipt of notice that the screen units were available to be picked up at Durand, Michigan, f.o.b. Said agreement was executed for Paul Rees Coal Company by the defendant as its President and duly authorized representative, and the performance of said agreement by the coal company was guaranteed personally by the defendant, Sam Sexton, Jr., and Robert Lane, in writing. Lane is believed and alleged by plaintiff to be a resident of Madisonville, Kentucky. A copy of the confirmation of the purchase order executed by the coal company, incorporating the aforesaid guarantees, is attached as Exhibit 1 to the complaint. Pursuant to the agreement the plaintiff at its expense caused said screens to be manufactured according to the agreement and order by Simplicity Engineering Co., and prior to July 22, 1975, plaintiff notified the Paul Rees Coal Company and the defendant by telephone that the coal mining screens were ready and available at the factory of Simplicity Engineering Co. at Durand, Michigan.

The coal company failed to take delivery of said screens and on July 22, 1975, plaintiff notified the defendant by letter, U. S. registered mail, to accept delivery of the screens and make payment of the balance due.

Neither the coal company nor the defendant Sexton have complied with the terms of the said agreement, although the plaintiff has made repeated demands upon them to do so. Said screens are still available for delivery in accordance with the terms of the agreement, but the coal company and the defendant Sexton have refused to accept the same and have breached the agreement, and are now liable for the balance on the purchase price.

On May 11, 1976, the court granted the motion of the defendant Sexton, in which he requested an additional period of 45 days beyond the date of answer to certain interrogatories propounded by defendant Sexton to plaintiff on May 11, 1976.

On May 25, 1976, all interrogatories were answered by plaintiff except interrogatory No. 8 to which objection was made by plaintiff and was sustained by the court.

On July 8, 1976, the defendant Sexton filed his answer in which it is admitted that plaintiff is a corporation incorporated under the laws of the State of Oklahoma and that he is a citizen and resident of Fort Smith, Arkansas. He further denied that the court has jurisdiction of this cause by reason of diversity of citizenship. Mr. Sexton also denied that he had paid the sum of $13,544.00 as down payment, and alleged that the coal company made such payment. He denied that the plaintiff has tendered delivery of the coal screens to the Paul Rees Coal Company. He further pleads affirmatively that the plaintiff is in violation of Ark.Stat.Ann., § 64-1201 (Supp.1975),¹ and that such violation of Arkansas Statutes subjects plaintiff to the penalty set forth in Ark.Stat.Ann. § 64-1202,² and that such contracts are not merely voidable but void ab initio. The defendant further alleges that the contract was executed within the State of Arkansas, and that the court is without jurisdiction over this entire matter since the contract cannot be enforced either in law or in equity.

On July 16, 1976, the plaintiff, The Unlaub Company, Inc., filed its reply to the answer of the defendant and motion to strike, in which it reaffirmed all the allegations of its complaint and incorporated the same in its reply by reference. The plaintiff denied that it is in violation of Ark. Stat.Ann., § 64-1201 and that it is not subject to the penalty of Sec. 64-1202 as asserted by defendant. The plaintiff further alleged that the execution of the contract herein sued upon was for the purchase by the Paul Rees Coal Company as alleged in the complaint of mining equipment, which machinery was to be manufactured in the State of Michigan and delivered to the Paul Rees Coal Company in the State of Michigan; that the execution of said contract by plaintiff did not constitute the doing or transacting of business in Arkansas. The plaintiff further alleged in its reply to the answer and motion to strike the alleged statutory defenses of the defendant Sexton that the said machinery was to be manufactured and held for delivery to the coal company in accordance with said contract for the use of the coal company in coal mining operations in the State of Oklahoma; that the contract was to be performed in the State of Michigan and the screens were manufactured for use by the coal company in the State of Oklahoma, and therefore "the execution of the said contract and the subject matter performance thereof was a transaction wholly in interstate commerce and, as a result thereof, plaintiff is not prohibited by Ark.Stat. § 64-1202 from maintaining this action against the defendant in this court, and that the said contract is neither voidable nor void on its face." That the court has jurisdiction over the subject matter of plaintiff's complaint and that the contract sued upon is enforceable in this court against defendant. Plaintiff prays that the affirmative defenses alleged by defendant be dismissed as failing to state a defense to the complaint, and that the same be stricken from defendant's answer and that plaintiff have relief as against the defendant as prayed for in its complaint therein.

On January 10, 1977, the defendant Sexton filed a motion for permission to amend the answer filed by him and heretofore referred to. In the motion to amend the answer he states that the knowledge required to assert some of the matters set forth in the amended answer was not acquired by defendant until after December 27, the date that the motion for summary judgment was filed. Attached to the motion is the proposed amendment to the answer and affidavit of Mr. Sexton. In the affidavit he states that he specifically authorized someone in his office to sign the purchase order or the guaranty letter. He further alleges that the screens are of standard type and could be used in any coal mining operation, and that therefore the plaintiff should be required to resell or otherwise dispose of the screens.

In the response to defendant's motion for leave to amend his answer the plaintiff has alleged that said motion is dilatory and that the alleged defenses are not available to defendant "in the light of the undenied allegations of the complaint and undisputed facts shown in the affidavits supporting plaintiff's motion for summary judgment," and that the court, in the exercise of its sound discretion, should deny defendant's motion.

OPINION

In view of the questions raised and attempted to be raised by the parties and the length of the pleadings, the exhibits thereto, the affidavits and briefs, the court believes it should set forth a resume of the pleadings and motion in its consideration of the motion for summary judgment.

The defendant in his answer of July 8, 1976, alleged that plaintiff was in violation of Sec. 64-1201, Ark.Stat.Ann. (Supp.1975), since plaintiff, an Oklahoma corporation, has not complied with provisions of the above statute and as a result plaintiff could not "make any contract in the State which can be enforced by it either in law or in equity."

The plaintiff filed its reply and motion to strike on July 16, 1976, in which it denied that it is in violation of Ark.Stat.Ann., § 64-1201; that it has not in the past transacted and is not transacting any business in Arkansas which would require it as a foreign corporation to qualify to do business in Arkansas.

"4.

"Further answering, plaintiff states that the said machinery to be manufactured and sold to Paul Rees Coal Company in accordance with the said contract was sold and manufactured for use by Paul Rees Coal Company in coal mining operations in the State of Oklahoma; that the contract was to be performed in the State of Michigan and was manufactured for use by Paul Rees Coal Company in the State of Oklahoma and, therefore, the execution by plaintiff of the said contract and the subject matter performance thereof was a transaxtion wholly in interstate commerce and, as a result thereof, plaintiff is not prohibited by Ark.Stats. Ann. Section 64-1202 from maintaining this action against defendant in this court, and the said contract is neither voidable nor void on its face.

"5.

"Replying further, plaintiff states this court has jurisdiction over the subject matter of plaintiff's complaint and that the contract herein sued upon is enforceable in this court against the defendant, and that the alleged affirmative defenses of defendant are insufficient to constitute a defense to the complaint."

On January 10, 1977, the defendant Sexton executed and filed an affidavit in which he stated that he is now and has been President of the Paul Rees Coal...