Elwell v. Adder Machine Co.

TimliN, J. The complaint concedes that the respondent entered into the contract in question and that he failed to perform on his part and withdrew from the contract. The ordinary legal effect of this would be to give rise to a cause of action against him rather than in his favor. But he points us to sec. 1770b, Stats. (1898), as amended by sec. 27, ch. 351, Laws of 1899, sec. 1, ch. 399, Laws of 1901, sec. 1, ch. 434, Laws of 1901, and ch. 506, Laws of 1905, and on these bases his claim that an actionable wrong was first committed against him by the appellant and his withdrawal from the contract in question justified. By ch. 506, Laws of 1905, foreign corporations like the appellant, as a condition precedent to transacting business or acquiring, holding, or disposing of property in this state, must file in the office of the secretary of state a copy of the charter, etc., of the corporation, also certain reports, and pay a fee and appoint the secretary of state as an attorney for such corporation upon whom service of process may be made. License to transact business in this state is by the secretary of [88] state then issued to all foreign corporations which comply with these requirements. Sec. 1770c, Stats. (Supp. 1906; Laws of 1901, ch. 399, sec. 2). “Every contract made by or on behalf of any such foreign corporation, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions of this section, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them.” Ch. 506, Laws of 1905. “The failure to comply with any of the provisions of this section shall, for such violation, subject the corporation or any agent, officer or person acting †or it in this state, to a penalty of five hundred dollars.” Id. “Such penalty shall not attach where a specific penalty is herein provided.” Id. There must be read into the foregoing statutes, where they forbid the transaction of business in this state and the acquisition, holding, and disposal of property in this state, an exception of such business as constitutes interstate commerce and an exception of such property as is acquired, held, or disposed of in this state in carrying on interstate commerce. Also, where every contract is declared to be void, we must except from that provision such contracts as relate to interstate commerce. Loverin & B. Co. v. Travis, 135 Wis. 322, 115 N. W. 829; Catlin & P. Co. v. Schuppert, 130 Wis. 642, 110 N. W. 818; Greek-Am. S. Co. v. Richardson D. Co. 124 Wis. 469, 102 N. W. 888. Based upon this condition of the law the respondent urges that he has a right of action against the appellant “for damages sustained by him by reason of appellant’s having fraudulently induced him to innocently aid it in carrying on an unlawful business within the state of Wisconsin, the action being founded on the deceit of appellant in inducing respondent to enter into a three-year agency contract by which he was to pay his own- expenses when appellant was an unlicensed corporation and had no right to do business within the state.” It is contended that appellant’s fraud consisted in represent [89] ing by its conduct in executing the contract in question that it was a licensed corporation and in concealing from respondent the fact that appellant had not obtained license to do business in this state. West London Com. Bank v. Kitson, L. R. 13 Q. B. Div. 360; Lobdell v. Baker, 1 Met. 193; and Rosenbaum v. U. S. C. S. Co. 64 N. J. Law, 34, 44 Atl. 966 (vide 60 N. J. Law, 294, 37 Atl. 595; 61 N. J. Law, 543, 40 Atl. 591; 65 N. J. Law, 255, 48 Atl. 237), are cited and relied upon by the respondent. But it must be noticed that the mere execution of the contract, if the contract related to and could be carried out by interstate commerce transactions, was not an act forbidden by law. We have here a peculiar legal relation. The appellant is not absolutely prohibited from contracting within this state, but is prohibited from contracting except with reference to a particular subject matter. That the contract set forth in the complaint could relate to interstate commerce and might be carried out by acts constituting such commerce is, we think, apparent from its provisions. Loverin & B. Co. v. Travis, supra. Indeed, the draftsman of the complaint seems to have felt the force of this, for he industriously averred that the appellant was and is transacting business in the state of Wisconsin in violation of the statute in question. On the other hand, if the contract did not relate to matters of interstate commerce and the execution of the contract itself be considered a transaction of business by the appellant in this state, the respondent had by the express terms of the statute acquired by such contract an enforceable contract right against the appellant, which was all he sought or expected in any event. There cannot be much question but that the legislature has the power to give this right of action to one party to a contract by express statute, as this court has held it did by legal implication in Laun v. Pac. Mut. L. Ins. Co. 131 Wis. 555, 111 N. W. 660. The statute is explicit, to the effect that the contract shall be enforceable against the unlicensed corporation, and to this ex [90] tent indicates a legislative policy to treat the foreign corporation, so far as the making of the preliminary contract is concerned, as the offending party by prohibiting it from taking advantage of its own default. The failure to comply with any of the requirements of the act under consideration shall subject the corporation, or any agent, officer, or other person acting for it in the state, to a penalty of $500. No liability under this provision can be predicated upon the mere omission to obtain a license. The acts prohibited are transacting business within the state, or acquiring or disposing of property within the state, without compliance with the statutory conditions precedent. In making and signing the contract in question respondent was not acting for the corporation, but for himself. By this act he violated no law, incurred no penalty. It may well be that the respondent would subject himself to this penalty should he attempt to transact business for the unlicensed corporation not interstate commerce, or to acquire or dispose of property for the corporation in this state and not in the transaction of interstate commerce, and he had the right to refuse so to do. But such refusal did not leave him without remedy upon the contract. Such refusal would leave him in the position of any contracting party who by reason of the default of the other party to the contract, or the nonperformance by the other party, has a right to refuse to proceed further and begin an action ex con-tráctil,. This merely means that the corporation was unable, until it obtained a license, to perform on its part, and for this failure of performance the respondent had a right of action on the contract in question under the statute.. Whether to perfect this right of action he should aver a demand upon the corporation and its failure, or the refusal so to do, we need not here determine. It is sufficient in the case at bar to determine, as we do, that the existence of this right ex contractu excludes any right of action for deceit or upon any quasv-contract liability. If we assume that the contract related to [91] interstate commerce tbe respondent bas shown himself in default ; while if the contract, upon a true construction thereof, considering the language employed and the surrounding circumstances, relates to intrastate commerce, the complaint shows the appellant in default thereon with a right of action ex contractu existing in favor of the respondent. It follows that the demurrer to the complaint was improperly overruled, and that the order of the circuit court should be reversed with directions to enter an order sustaining the demurrer. By the Court. — It is so ordered.