Waxahachie Medicine Co. v. Daly

183 S.W. 741, 122 Ark. 451, 1916 Ark. LEXIS 354

• Court: Supreme Court of Arkansas
• Decided: February 28, 1916
• Status: Published

Opinion

Kirby, J.

(after stating the facts.) It is contended that the court erred in giving said instruction numbered one because there was no testimony upon which to base it so far as the substitution of the second contract for the first is concerned, nor any showing that the parties regarded it of no further force and effect and that it was in effect a direction to the jury to find against appellant because it had not complied with the requirements of the laws of the State for foreign corporations entering to do business before its execution.

It is undisputed that the medicine company in April, 1913, complied with our laws and was issued a certificate authorizing it to do business in the State and also that the appellee continued selling medicines supplied to him ¡under the first contract until the second was entered into, the 15th day of April, 1913.

Our court has held that the failure of a foreign corporation to comply with the requirements, of the statutes prescribing conditions upon which foreign corporations may enter and do business within the State did not render its contracts void, but only prevented the enforcement of same by such corporation until compliance with the terms of the statute. State Mutual Fire Ins. Assn. v. Brinkley Stave Co., 61 Ark. 1; Buffalo Zinc etc. Co. v. Crump, 70 Ark. 525; Sutherland-Innes Co. v. Chaney, 72 Ark. 327; Woolfort v. Dixie Cotton Oil Co., 77 Ark. 203.

In Buffalo Zinc etc. Co. v. Crump, supra, the court said. “The penalties of the Act in question are, doubtless, intended to compel an observance of its terms. When that is done, its purpose is accomplished; the condition upon which the right to maintain an action depends is performed, and the plaintiff can in the future prosecute it to final judgment.”

In Woolfort v. Dixie Cotton Oil Co., supra, the court held that the foreign corporation could comply with the law after institution of suit upon a contract made before compliance therewith, and in answer to the .contention that the statute rendered the contract absolutely void and unenforceable said: “The statute does plainly prohibit the maintenance of a suit until its terms are complied with, and in the absence of a provision expressly declaring the contract to be void, we do not feel at liberty to say that the Legislature intended to fix the latter penalty. If it 'had been intended to declare the contract absolutely void and of no effect, the further provision that no suit should be maintained thereon, was superfluous.”

It is true the terms of the statute now in force are different from those construed in said opinions. The present statute

* after prescribing a penalty of a fine of not less than $1,000 for failure to comply with its provisions provides: “As an additional penalty any foreign corporation which shall fail or refuse to file its articles of corporation or certificate as aforesaid, can not make any contract in this State which can ibe enforced by it either in law or in equity and the complying with the provisions of this act after suit is instituted shall in no way validate said contract.”

This provision does not expressly declare the contract void although it does say it shall be unenforceable either in law or in equity by the delinquent corporation, and that a compliance with it after .suit is instituted shall in no way validate the contract. The use of this language as to the validation of the contract was made doubtless because of the court’s decision holding in the construction of the other statute that a compliance with the terms of the law by the foreign corporation after suit brought would enable it to prosecute the suit, but if the Legislature had intended that compliance with the terms of this act iby a delinquent foreign corporation, after the entry into a contract and before suit brought, on its part, would not enable it to enforce such contract, then there was no use to add anything after the words “which can be enforced by it either in law or equity.”

Since the statute does not expressly declare the contracts void, we do not think in view of the language used that the lawmakers intended to fix such additional penalty for the failure to comply with the terms of the statute.

Appellee does not contend that the contracts were not fairly entered into upon his part nor faithfully performed on the part of the medicine company and admits that he

Eeceived goods to the amount of................ $775.13

Paid under the first contract............$ 92.50

Paid under the second contract..........122.41

Should be credited with medicine on hand in the sum of.................... 57.41

And with 25 per cent of $671.16 of uncollectible accounts.................. 167.78

Which makes total of credits claimed of.. 440.10

And leaves an undisputed balance due of $335.03”

The court erred in the giving of said instruction, and the verdict of the jury was contrary to the testimony. The court also erred in refusing appellant’s requested instruction for a verdict directed in its favor and the judgment is reversed, and the testimony feeing undisputed as to said amount due under the terms of the contracts, a judgment will fee entered here in appellant’s favor for said sum, except that Kennedy, surety, is not liable for any amount under the first contract, not having signed same as surety.

It is so ordered.

Note — Act 313, rage 744, Acts 1907. — (¡Rep.)