Clark v. J. R. Watkins Medical Co.

Smith, J., (after stating the facts). iSection 2 of the Wingo Act prescribes a fine against any foreign corporation doing business in this State ■which shall fail and refuse to file its articles of incorporation, together with a statement of its assets and liabilities and its capital employed in this State, and a designation of its principal place of business in this State, or which shall fail to file the certificate of its board of directors consenting that service of process upon any agent of such corporation in this State, or upon the Secretary of State of this State, in any action brought or pending in this State, shall be a valid service, and, as an additional penalty, provides that such corporation can not make any contract in this State which can be enforced by it either in law or in equity. Notwithstanding the fact that the third section of the Wingo Act, which attempts to impose upon foreign corporations, as a prerequisite to doing interstate business, the payment of certain fees, based upon the amount of -their capital stock, has been held invalid, the first -section of this act has been held valid. This first section provides for the filing -of the certificates above mentioned. Roberts v. Chatwin, 108 Ark. 562, 158 S. W. 497. Appellee ladmi-ts that it ha,s not -complied with the terms of the Wingo Act, but -says that it was not required to do so in order to maintain this suit, its position being that the -contract exhibited constituted a sale of goods and that the character of the transaction as a sale is not altered by the fact that it imposed certain conditions upon purchasers -of its goods, -as -a prerequisite to the sale of the goods, and it says that the -correspondence and the literature -emanating from it, which will be later referred to, concerning the conduct of appellant Clark’s sales to consumers were mere suggestions which -from experience it -had found would be helpful to its vendees in -disposing of -their wares. (1) In -executing the contracts sued on, appellant -signed printed contracts, which had been prepared for that purpose by appellee, and th-e rule is that such contracts are to be construed most strongly against the party preparing them. In -construing a contract we may consider the construction which the parties themselves have placed upon it and the action they have taken in executing its provisions. These rules of construction, however, are not available where the terms of the contract are unambiguous. Where the terms of the contract are unambiguous, it is the province of the court to construe the contract and to declare its purport; and appellee insists that that duty here 'devolved upon the trial court, and that that court correctly construed the contract as one of sale, and not as a mere appointment of an agent. Counsel have cited and reviewed a great many cases; but there .appears to be no necessity to review these cases in this opinion. It is clear that, if the contract between the parties constitutes a sale of the commodities there mentioned, there can be no doubt that the court correctly directed a verdict in favor of appellee. But the evidence upon that question is not so undisputed that it may be said, as a matter of law, that the contract constituted a sale of goods, and not an agency.. (2) The verdict having been directed in favor of appellee, it is our duty to take that view of the evidence which is most favorable to appellants and if, when it has been viewed in the light most favorable to them, it would justify a reasonable mind to fairly draw the inference from the evidence that the relationship between the parties was that of principal and agent, then the sufficiency of the evidence to sustain that view should have been submitted to the jury for its consideration. Numerous letters, both personal and circular, together with various advertisements, sent out by appellee, have been offered in evidence and, without setting out all of this matter, it is sufficient to say that from it, in connection with the contracts themselves, the jury might have found the following state of facts: That the first contract executed by the parties appointed Joe Clark to an agency until March 1, 1910, and the second continued him in that capacity for another year. That these contracts required Joe Clark to devote all his time and attention to selling Watkins’ products; to canvass every farm house in his territory at least twice a year; to sell these products at retail prices fixed by the company; to confine his canvassing to bis own territory; to observe such instructions in regard to the conduct of the business as the company might give; to have no other occupation whatever and to sell or handle no other goods whatsoever; to work continuously at the agency so far as weather and health will permit; to furnish team, wagon and outfit for the business; to pay freight on the goods; and to make regular and satisfactory weekly reports to the company; to pay for the goods in one or the other of the ways provided therein; to return all goods by prepaid freight to the company when he quits the business, for credit on his account; to make written reports to the company of all sales, collections, goods on hand; and outstanding accounts; to sell only to actual consumers ; and to keep a complete record of all goods disposed of in said territory. That the company agreed to let him pay for the goods by giving it half of the cash the agency produced each week, or by paying cash for goods within ten days, with 3 per cent discount; and when he quit work, the company agreed to receive all goods on hand (to be returned by prepaid freight) and give him credit on his account at the original price paid for them; and, when a balance was struck, the party who owed the other should pay, on demand, such balance due. The record contains letters in which appellee expressed its dissatisfaction with appellant Joe Clark’s success in selling the goods, and he was urged in these letters to press his credit sales, and was advised to make sales at every house, and the assurance was contained in these letters that this was the plan through which other agents had succeeded in making money. And on November 1, 1909, appellee wrote a letter containing the following statements: “We regret that your business is not satisfactory to us, and the next few weeks are going to decide whether we retain you as an agent or not. Therefore you will have to show us very soon that you can do business that will be satisfactory to us, otherwise we shall notify your bondsmen and demand a settlement of your account in full by tbe time of expiration of your contract on March 1, 1910.” On February 3, 1910, a letter was written in which it was stated: “It is time now to be building up accounts with your customers and getting ready for the big collection season that comes in the fall. We want you to get around and supply the needs of everyone in your county. See that no one puts you off without a sale.” Other letters were written in which they asked appellant Joe 'Clark to assist in securing agents for certain counties in this State where no agents were operating. It appears that the indebtedness for which this suit was brought grew out of these credit sales which appellant Clark had made, as he appears to have acted upon appellee’s advice to press his credit sales, but to have been unable to make collections covering such sales. (3) There can be no question but that appellant Clark was doing business in this State. Simmons-Burks Clo. Co. v. Linton, 90 Ark. 73. It is undisputed that he went about from house to house and sold his wares and delivered them to the purchasers at the time the sales were made. But was this a business conducted by Clark for himself, or was it a business which he was conducting for appellee? We think the evidence raises this question of fact and that it should have been submitted to the jury. We are cited to the case of J. R. Watkins Medical Co. v. Holloway (Mo.), 168 S. W. 290, which was a suit upon a contract identical in every respect with the second contract set out in the statement of facts. In that case the court recites the facts to be that the goods were sold by a citizen of Minnesota, who was the plaintiff, to a citizen of the State of Missouri, who wais the defendant, and that the sale was complete upon the delivery of the goods f. o. b. Winona, Minnesota, and that nothing remained to be done under the contract after the goods were placed on cars in Winona, except to pay for them, and that these payments were remitted to Winona; that payment was to "be in money in case the goods were sold, or by allowing credit for the value of any goods returned, but that all of the goods were, in fact, sold and none were ever returned. That no office of any kind was ever maintained in Missouri by the plaintiff, nor did it retain any lien on or attempt to reserve any title to the goods from the moment they went aboard oars in Winona; that the goods became the property of the defendant as soon as they were delivered to the carrier, and that the defendant paid the freight and, so far as the evidence showed, exercised complete control and ownership over the merchandise as soon as delivered by the plaintiff. In the suit for the goods there furnished it was contended that no recovery could be had because the defendant had acquired the goods in violation of certain sections of an act of the General Assembly of that State concerning pools, trusts, conspiracies, and discriminations, found in chapter 98 of the Revised Statutes of Missouri of 1909, and that the contract there set out should be construed as a contract of agency as between the parties and that the plaintiff, therefore, could not maintain this suit, as it had never taken out a license to do business in Missouri as a foreign corporation. The court reviewed a great many cases and its conclusion, 'as stated in the syllabus of that ease, was as follows: “Plaintiff, a Minnesota corporation, entered into a contract with defendant, a resident of Missouri, whereby it agreed to sell and deliver in Minnesota, or any of its regular places of shipment, certain medicines and extracts, to be paid for at the usual wholesale prices, and to be delivered when required by defendant. The contract further required defendant to make regular can- , vasses in a specified county for the sale of :such medicines and extracts, and forbade him to sell any others. All deliveries of medicines and extracts were made without the State of Missouri. Held, that as plaintiff reserved no title to the property sold, and merely gave defendant the option of returning it, the contract constituted ‘interstate commerce, ’ and hence was not governed by the Missouri anti-trust laws, and plaintiff’s right to sue can not be defeated, because, though a foreign corporation, it had not procured license to do business in Missouri, as required by Rev. St. 1909, § 3040. ’ ’ ' The court there found that the evidence did not establish the existence of an agency, but that the relationship of the parties was that of vendor and vendee, and, .having so found the facts to be, its decision that the shipment and sales of the goods was an act of interstate commerce was, of course, correct, and it necessarily followed that this commerce was not subject to the restrictions and regulations of the statutes of that State. In the opinion in this Missouri case the court cites the case of Orr’s Admr. v. Orr, 163 S. W. 757, and distinguishes the case there decided from the Orr case and, having made this distinction between the two cases, concedes the correctness of the decision in the Orr case under the facts as stated in that opinion. The litigation in this Orr case grew out of a contract made with this J. R. Watkins Medical Company, and, while the contract is not set out in extenso in that case, it is fair to assume that it was evidenced in part by the same writing set out in this opinion and in the Missouri case. The facts there were that one Nance was the traveling salesman of the medicine company, with territory restricted to Montgomery County, in the State of Tennessee, and that, after having been engaged in the ■service of that company for some months, he tfeeame indebted to it in the sum of $668.01 on account of articles which he had sold on credit, but for which he had been unable to collect, and that in settlement of this balance he executed a note to the medical company, together with E. O. Orr and J. W. Orr ¡as joint makers, and later this note was renewed by them, and the interest paid, both the original and renewal notes being dated at Winona, Minnesota, and payable at that point. In the suit on that note it was proved that, under the statutes of Tennessee, every foreign corporation is required to file a copy of its charter with the Secretary of State, and that it is unlawful for any such corporation to do, or attempt to do, any business in the State until it had complied with that statute, and that it had been uniformly held by the Supreme Court of Tennessee that, where a foreign corporation does business in that State without complying with the statute, all contracts growing out of such business are illegal and void; and it was also shown that the medical company had not complied with the statute. In the opinion of the court there is a statement of various things which Nance did pursuant to his contract with the medicine company, together with a statement of a number of the provisions of the contract and of the recitals on its back, all of which are also found in the record in the present case. A recovery was there denied because of the failure of the medical company to comply with the statute of Tennessee permitting foreign corporations to do business there, and in that connection the court said: “'Considering these facts and others which .might be mentioned, there is no escape from the conclusion that appellant was doing business in Tennessee, and that Nance was not a mere purchaser of its products, but represented it as its agent. Nor is there any merit in appellant’s plea that the transaction out of which the debt arose was interstate commerce, and that the note was binding, although the appellant had not complied with the laws of Tennessee. These products were not ordered by mail and shipped direct to its customers. As a matter of fact, they were shipped to Memphis, and from there distributed to its agent. Nance and his brother say that he never ordered any goods except from Memphis. Appellant’s witnesses say that the goods were billed to Nance in Minnesota, and were merely sent to Memphis for distribution. Even if there be any doubt as to whether or not the interstate journey ended at Memphis, the interstate journey certainly ended when the goods were delivered to Nance. Upon their delivery to Nance their interstate character ceased. From that time on, Nance-, as appellant’s agent, proceeded to sell and deliver the goods in Tennessee. Under the facts, the defense of interstate commerce is not available. ’ ’ (5) It appears that the Supreme Court of Kentucky held, under the facts recited in its opinion, that Nance was not a mere purchaser of goods from the medicine company but that he represented it as its agent; and, from the facts stated in the Missouri opinion, that court was of opinion that the relation of the litigants there was that of vendor and vendee and we think there is no necessary conflict between these cases, as the proof was more fully developed in the Kentucky case than in the Missouri case. So in the case we now have under consideration: The facts and circumstances in evidence are not necessarily inconsistent with the view that the relationship between the medicine company and Joe Clark may have been that of vendor and vendee; neither, on the other hand, are they necessarily inconsistent with the view that Clark was the mere agent of that company, and as reasonable minds mig'ht fairly draw different conclusions from this evidence, we think this question should be passed upon by the jury as one of fact, rather than by uis, or by the trial court, ias one of law. If Joe Clark was a mere purchaser of these goods from the medicine company, that company’s right to recover can not be defeated by any failure on its part to comply with the Wingo Act, as such a requirement would impose a burden upon interstate commerce; and there can be no question, as a matter of law, that it would be an act of interstate commerce if this was a sale. Upon the other hand, if Clark was the agent of the medicine company, then this contract is within the terms of the Wingo Act, for it is not denied that the consignments of freight were broken up by him when he received them and that he placed his wares in his wagon and went about from place to place delivering the goods whenever he made a sale. The judgment will be reversed and the case remanded to the court, with directions to submit this question of agency to the jury with directions to return a verdict for the appellees if they find the relationship between tbe litigants was that of vendor and vendee, rather than that of principal and agent. Kirby, J., dissents.