Yarbrough v. W. A. Gage & Co.

• Citation: 70 S.W.2d 1055,334 Mo. 1145
• Parties: J. W. Yarbrough, Appellant, v. W. A. Gage & Company, Incorporated, a Corporation, and R. L. Ward, Trustee
• Decision Date: 19 April 1934
• Court: United States State Supreme Court of Missouri

70 S.W.2d 1055

334 Mo. 1145

J. W. Yarbrough, Appellant, v. W. A. Gage & Company, Incorporated, a Corporation, and R. L. Ward, Trustee

Supreme Court of Missouri

April 19, 1934

Appeal from Pemiscot Circuit Court; Hon. John E. Duncan Judge.

Reversed and remanded (with directions).

Sharon J. Pate and Von Mayes for appellant.

(1) The notes and mortgage in question were prepared by the local attorney of the defendant and the same were executed acknowledged and delivered to such attorney in this State the property mortgaged was situate in this State; there were two notes, one for $ 8000, and the other for $ 10,000; it was understood between the parties the loan covered by the $ 8000 note was to be used by plaintiff in paying for the construction of a brick building in Steele, Missouri, on the part of the mortgaged property, while the other note ($ 10,000) represented a loan to be used by plaintiff in buying cotton in this State for himself, said mortgage not covering any of the cotton to be purchased by plaintiff, nor provided it was subject to approval of defendant at its home office said notes being dated at Steele, Missouri, and not made payable at any place outside of this State; the mortgage provides, "This conveyance and the indebtedness hereby secured are to be construed according to the laws of the State of Missouri;" defendant was a foreign corporation, never having been licensed or qualified to do business in this State; numerous other mortgages and notes were made in like manner in this State between citizens of this State and defendant, and defendant transacted other business in this State, and owned real estate and personal property in this State. Under such facts said mortgage and notes are void and cannot be enforced in this State and the court should have canceled the same and permanently enjoined the foreclosure sale. Flinn v. Gillen, 10 S.W.2d 926; Chicago Mill & Lumber Co. v. Simms, 197 Mo. 507; Chattanooga Building Assn. v. Denson, 189 U.S. 415; Dunn v. Utah Serum Co., 238 P. 245; J. H. Palmer Co. v. Mallamo, 253 N.Y.S. 37. The courts make a distinction in those cases where the mortgage and notes are executed and delivered outside of the State, though the mortgaged property is situate in the State. Trower Bros. Co. v. Hamilton, 179 Mo. 207; Largillier Co. v. McConkie, 210 P. 207; Scruggs v. Scotish Mort. Co., 54 Ark. 566. When the notes and mortgages are delivered in Missouri and contain no provision they are subject to approval of the mortgagee outside the State if it is a Missouri transaction. Holder v. Aultman, Miller Co., 169 U.S. 81, 18 S.Ct. 269. But where they are delivered to the attorney or agent of the foreign corporation mortgagee in the State where executed and the mortgaged premises are situate, they are void. Duluth Log Co. v. Pulpwood Co., 137 Minn. 312, 163 N.W. 520; Interstate Amusement Co. v. Albert, 128 Tenn. 417, 161 S.W. 488. A corporation acts by its agents and a delivery of a contract to the agent or attorney of a foreign corporation in the State, is a delivery of the contract to such corporation in the State. The mortgage and notes in question were not only solicited, prepared, executed and acknowledged in Missouri, but were delivered to the agent (attorney) of defendant in this State. 41 C. J., sec. 294, p. 426. (2) An unqualified foreign corporation doing both interstate and intrastate business in the State, the intrastate business is prohibited. Where a substantial part of the consideration of a mortgage and notes is intrastate business the whole contract is void. Parke-Davis & Co. v. Mullett, 149 S.W. 461; Sawyer v. Sanderson, 113 Mo.App. 233; Gutta Percha Rubber Co. v. Lehrack, 214 S.W. 285; Browning v. City of Waycross, 233 U.S. 16. There could be no question but what the $ 8000 note, given for a loan to be used by plaintiff to erect a building in the State, as alleged in the answer of defendant and shown by the evidence, was intrastate business, and being a substantial part of the entire consideration of the mortgage, said mortgage was void. (3) When a contract is made within this State and by its terms it is to be interpreted according to the laws of this State, the contract is a Missouri contract and the Federal law cannot be invoked. Brotherhood v. Adams, 5 S.W.2d 96; East Coast Oil Co. v. Hollins, 183 A.D. 67; 170 N.Y.S. 802; Morris v. Oranmore, 24 F. 922; Case v. Tomlin, 174 Mo.App. 512. (4) Since the mortgage and notes were delivered to the agent (attorney) of the defendant in this State, the delivery was made to defendant in this State. It was not subject to approval at Memphis, Tennessee. State v. Bank, 18 So. 533; Amusement Co. v. Albert, 128 Tenn. 417, 161 S.W. 488. (5) When a note, secured by a mortgage, is dated in this State, and specifies no place of payment, it is governed by the laws of the State where dated, unless delivered in another State. Potter v. Tallman, 35 Barb. 182; 18 C. J., sec. 35, p. 158; 8 C. J., sec. 157, p. 93. Commercial paper is not an article of commerce, nor is money an article of commerce. Hall v. Jones Co., 242 U.S. 539; Republic Acceptance Corp. v. Bennett, 220 Mich. 249; 12 C. J., sec. 18, p. 21. A loan, being neither a sale or purchase, cannot be an interstate transaction. Standard Home Co. v. Davis, 217 F. 904. (6) Estoppel is no defense in this case. It is no defense to an act in violation of express law. The statute made the mortgage and notes in question void, which statute was enacted for the protection of the public in general, and its effect cannot be bargained away. The fact the contract is executed on one side makes no difference. Sec. 4599, R. S. 1929; Parke-Davis Co. v. Mullett, 149 S.W. 461; Warren v. Interstate, 192 Ill.App. 438; Tri-State v. Amusement Co., 192 Mo. 404; State v. Haid, 30 S.W.2d 100; 13 C. J., sec. 453, p. 506.

Ward & Reeves for respondents.

(1) The chancellor found for defendant on every question raised except found that in the account between plaintiff and defendant, the defendant during the years of 1925, 1926, 1927, 1928 and 1929, wherein it handled as cotton factor for plaintiff 3002 bales of cotton shipped to it by plaintiff, and 458 bales of cotton it purchased and sold for plaintiff, at a total charge for commission of $ 7,859.12, the court found this was excessive and a reasonable sum for such commission should have been $ 3550, or $ 1 per bale, and deducted the difference, or $ 4309.12, from the amount plaintiff owed defendant on the two notes and mortgage sought to be canceled. In this the court erred because there was no issue of pleading upon which to make this deduction and finding. In equity suits the relief afforded by the decree must conform to the case made out by the pleadings, as well as to the proof. McKnight v. Bright, 2 Mo. 510; Evans v. Gibson, 29 Mo. 223; Miltenberger v. Morrison, 39 Mo. 71; Cox v. Esteb, 68 Mo. 110; Newham v. Kenton, 79 Mo. 382; Spindle v. Hyde, 247 Mo. 48. Even though the prayer in the bill is for general relief, still the judgment must be limited to the facts stated in the bill and not such as may be proven in the hearing. Newham v. Kenton, 79 Mo. 382; Grafeman Dairy Co. v. Bank, 315 Mo. 859; McQuitty v. Steckbaut, 190 S.W. 590. Courts of equity have no more right than courts of law to act upon crude notions of what is right in a particular case without reference to established rules and precedence. Sell v. West, 125 Mo. 621. (2) The finding and judgment as to this commission is not based upon the testimony in this case; if there was any proof tending to establish $ 1 per bale commission as the reasonable rate, such testimony was completely overthrown and destroyed by showing its inapplicability of handling cotton as this was handled. The proof showed that there were two methods of selling cotton on commission; first, where the cotton is shipped to the commission merchant and by him placed in the warehouse, where he looks after the weighing, freight charges and rebates, taking out insurance, sampling the cotton, keeping expert cotton graders, expert cotton salesmen, carrying the cotton indefinitely, exhibiting it for sale weeks and months, and keeping books thereon, etc., then the commission merchant gets two and a half per cent of the gross sales as commission; and second, where the owner of cotton merely sends to the commission merchant a sample of the cotton, which he puts on his sales table for one or two days and is at no expense or trouble save exhibiting it at that time, and for which there is a charge of $ 1 per bale sold. He has nothing to do with the weighing, nothing to do with the freight charges or rebates, insurance, sampling, bookkeeping or advancing money, but merely exhibits a sample once or twice. Now plaintiff knew nothing about the reasonable charge, except he had been doing business with Gage & Company for fifteen years and had always paid two and a half per cent commission. His witness, Helm, Peck and Green, knew nothing about the reasonable price commission merchants charged, except by the second, or the f. o. b. plan. The above two methods of selling by commission is undisputed. In equity cases the appellate court will examine all the evidence and determine what decree should be entered. Derry v. Fielder, 216 Mo. 195; Shelton v. Franklin, 224 Mo. 368; Jackson v. Phailen, 237 Mo. 153. The Supreme Court will examine the evidence and determine for itself as to the truth of the matters involved, giving due weight to the opinion of the chancellor. Meller v. Bartlett, 106 Mo. 381; Warren v. Richie, 128 Mo. 311; Campbell v. Hoff, 129 Mo. 317; Hardwood v. Toms, 130 Mo. 225. It is the duty of the appellate court to review the entire evidence in equity cases and pass on the merits of the case. Price v. Morrison, 236 S.W. 297; Estes v. Frye, 94 Mo. 267; ...