Case Name: Gunn v. White Sewing Machine Co.
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1892-12-03
Citations: 57 Ark. 24
Docket Number: 
Parties: Gunn v. White Sewing Machine Co.
Judges: MansEieed, J. I concur with the Chief Justice in dissenting, on the grounds stated in his opinion.
Reporter: Arkansas Reports
Volume: 57
Pages: 24–48

Head Matter:
Gunn v. White Sewing Machine Co.
Opinion delivered December 3, 1892.
Interstate commerce — ■Right of foreign corporation to do business in State.
Where a resident of a State contracts with a foreign corporation to canvass certain territory for the sale of its goods which the corporation agrees to sell to him on credit, a bond given to secure payment to the corporation of any sum that may become due under such contract constitutes a part of the inter-state commerce carried on by the sale of the goods, and cannot be affected by a State statute prohibiting business within the State by a foreign corporation which has not complied with certain requirements, such as filing a certificate to designate an agent on whom process may be served.
Appeal from Faulkner Circuit Court.
Joseph W. Martin, Judge.
Suit was instituted February 14, 1890, by the White Sewing Machine Company, an Ohio corporation, against N. H. Gunn to recover upon a bond executed by A. I. Julian, with Gunn as surety, conditioned that Julian would pay any indebtedness to the company which might thereafter- arise out of the purchase or sale of sewing machines or otherwise, under a contract of the same date, wherein the company agreed to sell their machines to Julian at stipulated prices on credit, and Julian agreed to canvass Faulkner county, or to have it canvassed, for the White sewing machine.
The defense was that plaintiff was a foreign corporation carrying on business in Arkansas, and had not filed any certificate under the hand of the president and seal of the corporation, in the office of the Secretary of State of Arkansas, designating an ag'ent upon whom service of process might be had, and stating the principal place of business of the corporation in the State ; that the bond in suit was executed in Arkansas by a citizen of Arkansas.
There was but one witness, S. B. Kirby, whose testimony was as follows :
“ I live in Little Rock, Arkansas ; I am the ag'ent of the plaintiff, the White Sewing Machine Company, which is a corporation organized under the laws of Ohio, with its principal or home office in Cleveland, in that State. I commenced working for plaintiff in June, 1888. My duties as the representative of the plaintiff in this State are to secure the services of agents in different parts of the State to whom machines are furnished to sell in designated territories. These agents are required to g'ive bond with security, to secure the company against loss on account of machines furnished them. One of these agents was A. I. Julian, and he gave bond with the defendant, N. H. Gunn, as surety. I here introduce the bond in evidence, which is in words and figures as follows :
‘ ‘ ‘ Know all men by these presents : That A. I. Julian, of Wooster, and N. H. Gunn, of Greenbriar, Ark., are hereby held and firmly bound, severally and individually, unto the White Sewing Machine Company, in the sum of five hundred dollars, lawful money of the United States of America, to be paid to the White Sewing Machine Company, their representative or assigns, for which payment (together with ten per cent, thereon in case of suit upon this bond), well and truly to be made, they bind themselves, their heirs, executors and administrators, and separate estate, jointly and severally, firmly by these presents. Sealed with their seals. Dated the sixth day of August, one thousand, eight hundred and eighty-eig'ht.
“ 1 The condition of the above obligation is such, that if the above bounden A. I. Julian and N. H. Gunn, heirs, executors or administrators, shall well and truly pay, or cause to be paid, any and every indebtedness or liability now existing, or which may hereafter in any manner exist or be incurred on the part of the 'said A. I. Julian to the White Sewing- Machine Company or its assigns, whether such indebtedness shall exist in the shape of book accounts, notes or leases, renewals or extensions of notes, accounts or leases, acceptances, indorsements, consignments of property or merchandise, failure to deliver or account for the same, or any part thereof or otherwise, and whether such indebtedness shall be incurred under any contract between said White Sewing Machine Company and said A. I. Julian or otherwise, and whether the same shall arise out of the purchase and sale of sewing machines or otherwise, hereby waiving presentment for payment, notice of, non-payment, protest and notice of protest, and diligence upon all notes, accounts or leases, now or hereafter executed, indorsed, transferred, guaranteed or assigned by the said A. I. Julian to the White Sewing Machine Company, its agents or assigms, then this obligation to be void; but otherwise to be and remain in full force and effect.
‘1 ‘ iOach one signing- this bond is bound according to the purport of it, without any regard to any understanding that any person should also sign this instrument; and the person to whom this is intrusted has absolute authority to deliver it, and the same is made and shall be construed without reference to any other instrument or agreement whatever. It is further understood, and the undersigned hereby agree and consent that the White Sewing Machine Company or its agent may, in their discretion, take or receive from said A. I. Julian any security whatever, mortgage, personal or other property at any time or times, and grant any extension to said A. I. Julian, or release, cancel or discharge any security which they may have taken, without in any way affecting the liability of the signers hereto, or either of them, from the obligation of this bond.’
(Here follow signatures.)
“When I secured the services of A. I. Julian, he entered into the following contract with the plaintiff, which I here introduce in evidence, and which is in words and figures as follows :
‘ ‘ ‘Articles of ag'reement, by and between White Sewing Machine Company, party of the first part, and A. I. Julian, Wooster, Faulkner county, Arkansas, party of the second part, in terms as follows : The party of the first part agrees : First, to sell White sewing machines to the said party of the second part at the following prices, viz.: (Here follow prices of machines). Second, to give territory wherein the second party shall sell the White sewing machines, as follows : In Faulkner county, Arkansas. The party of the second part, first to order, accept and pay for White sewing machines upon the terms and conditions as above provided, or as hereinafter set forth, and machines sold by the first party to second party for sales elsewhere than in said territory, shall, unless otherwise agreed, be accepted and paid for upon the same terms and conditions. It is understood and agreed by all parties hereto that the terms of, payments for the White sewing machines, accessories and parts, and other forms of indebtedness, shall be as follows: The first party shall keep a book account of all indebtedness due it from the second party, and on or before the twelfth of each month a statement of such indebtedness shall be sent to the party of the second part who shall, within thirty days, give a promissory note for the amount therein stated, payable in six months from the date of said statement; also, if the second party so chooses, the amount due the first party, as specified in aforesaid statement, may be paid in lawful money of the •United States of- America, within thirty days from the date of said statement, less a discount of five per cent. Said second party to canvass, or have canvassed, said Faulkner county, Arkansas, with horse and wagon, for the sale of the White machine, exclusively of any other makes or makers. This agreement to take effect from and after the 6th day of July, 1888, and continue in force until dissolved by mutual consent ; but it may be dissolved by either party giving thirty days’ notice, or, in case of a violation of this agreement by the second party, the first party may cancel it, if it so chooses, without notice.’ ■
(Here follow signatures of the parties).
“A. I. Julian at this time owes the plaintiff over sixteen hundred dollars. We had agents, in thirty or forty counties in this State between June, 1888, and November 16, 1889, and in that time had as many as seventy-five or eighty bonds like the one sued on here, taken for the company, and plaintiff also had that many contracts with its agents, all of which are like the contract heretofore introduced in evidence ; I neg-otiated these contracts, looked after getting the bonds and collected claims due the company. The last item on account of plaintiff against Julian which the bond sued on secures was obtained November 6, 1891 ; the above bond and contract were both signed in Arkansas ; Julian and Gunn are both citizens of Faulkner county, Arkansas, and were at the time the contract and bond were executed, between June 1888 and November 1889 ; plaintiff sold in Arkansas probably two thousand machines, and between these dates this contract and bond sued on were executed.
“On the 16th day of November, 1889, the plaintiff filed in the office of the Secretary of State of Arkansas a certificate under its seal and the hand of its president, designating me as its agent for Arkansas, and Hittle Rock as its principal place of business in the State ; no certificate of any kind had been filed prior to that time. The parties referred to in my original testimony as ‘ agents ’ are the parties who purchased the goods from plaintiff, and to whom they were shipped as their own goods, and not those of the plaintiff, as shown by their contracts, all like the one herein exhibited.”
This was all the evidence in the case.
The cause being submitted by consent to the court sitting as a jury, the court found the facts to be, that plaintiff is a corporation organized and doing business under the laws of the State of Ohio, and its place o£ business and manufactory is located at Cleveland, Ohio. The defendant is a citizen of Faulkner county, Arkansas, as is also the principal (Julian) on the bond. The bond was made for securing the plaintiff in goods sold and shipped, and to be shipped from time to time to said Julian. Kirby was the agent of plaintiff in Arkansas for making and forwarding contracts, such as exhibited in the case, to the home office at Cleveland, when the contract, if disapproved, was returned to the parties, and, if approved, was accepted and thereby made a contract for shipment between the parties, and goods were sold and shipped under this contract to Julian. When so shipped into the State and delivered, they became and were the goods of Julian. At the time of suit brought, Julian’s indebtedness was over fifteen hundred dollars, largely more than the face of the bond. This bond was given to secure this indebtedness. The plaintiff was a foreign corporation, and at time of maturity of this debt had never filed the certificate as required by statute of our State. The certificate was filed November 16, 1889.
Upon the state of facts, the court declared the law to be for the plaintiff; that this business carried, as shown by the facts, was of the character of inter-state commerce, and the company would not be bound by the regulation imposed by State law as to such business.
Judg-ment was accordingly entered for the amount sold for.
Defendant has excepted and appealed.
J. H. Harrod and E. A. Bolton for appellant.
The act of April 4th, 1887 (Acts 1887, p. 234), was designed to carry into effect the mandate of the Constitution. Art. 12, sec. 11, Const. 1874. Its intention was to place the citizen upon an equality with the foreign corporation that seeks to do business with the citizen. It is claimed the act is inoperative :
First. Because the appellee was not carrying on business in Arkansas within the meaning of this act.
Second. Because the requirements of the act would constitute a prohibited interference with inter-state commerce, and the act is therefore unconstitutional as conflicting with the Federal Constitution.
1. The proof shows that appellant had been doing business in this State.
2. The act is not an interference with inter-state commerce. Beg'islation by a State will not be restrained except when the exercise of the right conflicts with the perfect execution of a sovereign power delegated to the United States. 16 Peters, 435. The act imposes no tax, requires no license and in no way discriminates against foreign corporations, but rather seeks to place foreign and domestic corporations on the same level. No fee or compensation is required to be paid, and the act in no way prohibits commerce among the States. Morawetz on Priv. Corp. Vol. 2, sec.' 974.
Sanders & Watkins for appellee.
1. A corporation carrying on .the character of business in this State as appellee is not required to comply with the act. It was not doing business in this State. 113 U. S. 727; 5 Hill, 490 ; 16 Pac. Rep. 605. As to what constitutes commerce see 114 U. S. 195 ; 5 Sup. Ct. Rep. 826 ; 8 Wall. 168 ; 91 U. S. 275 ; 102 id. 691; 116 id. 446. The non-action by congress is equivalent to a declaration by that body that such commerce shall remain free.
2. But if such dealings by appellee be “carrying on business,” then the act is an interference with commerce between the States, and therefore unconstitutional. See cases sufra and 114 U. S. 196 ; 2 So. Rep. ■ 592 ; 26 Red. Rep. 889 ; 23 id. 469 ; 102 U. S. 702.

Opinion:
BatteE, J.
The White Sewing Machine Company was a corporation organized and doing business under the laws of the State of Ohio, and was engaged in the selling of sewing machines and other goods at Cleveland, in that State. A. I. Julian and N. H. Gunn were citizens of Raulkner county, in this State. On or about the 6th day of August, 1888,- the Sewing Machine Company entered into a contract with Julian, by which the company undertook and bound itself to sell sewing machines and the component parts thereof to Julian at stipulated prices, on a credit, and Julian agreed to canvass Raulkner county or cause it to be canvassed " with horse and wagon, exclusively, for the sale of the White sewing machines." Julian was to order the machines, or the component parts of the same, when he desired them to be sent to him. At the same time Julian, as principal, and Gunn, as surety, executed a bond to the Sewing Machine Company, conditioned, among other things, that Julian would pay all sums of money that he would be owing to the company for sewing machines or otherwise. After this the company, pursuant to the terms of its contract and on the faith of the bond executed to it, sold and shipped to Julian a large number of sewing machines and other property, and Julian became indebted to it on account thereof in a large sum of money. Julian failing to pay, the company brought this action on the bond against Gunn to recover the same, or a part thereof.
The only defense made by Gunn was, the company had not, at the time the bond was executed, filed any certificate in the office of the Secretary of the State of Arkansas, designating an agent upon whom process could be served, and its principal place of business in this State.
Evidence was, however, adduced at the trial tending to prove, among other things, the facts before stated, and that the machines and other property were sold by the company in Ohio and shipped to Julian in this State. The court below held that thése transactions were a part of the inter-state commerce of the United States, and were not affected by the laws of this State, and rendered judgment in favor of plaintiff against the defendant, and he appealed.
Appellant contends that the bond sued on is void under the act of the general assembly of April 4th, 1887. That act declares that, before any foreign corporation shall begin to carry on business in this State, it shall, by a certificate under the hand of the president and seal of such company, filed in the office of the Secretary of State, designate an agent, who shall be a citizen of the State, upon whom process may be served, and also state therein its principal place of business in this State ; and provided that if any such corporation shall fail to file such certificate, all its contracts with citizens of this State shall be void as to the corporation, and shall not be enforced in any of the courts of this State in favor of the corporation.
It is conceded that the certificate required by that act was not filed by the appellee until after the debt sued on matured. Was the bond void ?
In Paul v. Virginia, 8 Wall. 168, the court, speaking of a foreign corporation, said : " The recognition of its existence even by other States, and the enforcement of its contracts made therein, depend purely upon the comity of those States — a comity which is never extended where the existence of the corporation or the exercise of its powers are prejudicial to their interests or repugnant to their policy. Having no absolute right of recognition. in other States, but depending' for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely ; they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion. "
But this rig'ht of the State cannot be so exercised as to interfere with the power of Cong'ress to reg'ulate inter-state commerce. In Paul v. Virginia the corporation involved in litigation was.an insurance company, and was not engaged in inter-state commerce. In speaking of the power to regulate commerce, in that case, the court further said : "It is undoubtedly true, as stated by counsel, that the power conferred upon Congress to regulate commerce includes as well commerce carried on by corporations as commerce carried on bjr individuals. This state of facts forbids the supposition that it was intended in the grant of power to Cong'ress to exclude from its control the commerce of corporations. The language of the grant makes no reference to the instrumentalities by which commerce may be carried on ; it is g'eneral, and includes alike commerce by individuals, partnerships, associations, and corporations."
In Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, the court, speaking- of inter-state commerce, said : " The power to regulate that commerce, as well as commerce with foreigm nations, vested in Congress, is the power to prescribe the rules by which it shall be governed, that is, the conditions upon which it shall be conducted; to determine when it shall be free and when subject to duties or other exactions. The power also embraces within its control all the instrumentalities by which that commerce maybe carried on, and the means by which it may be aided and encouraged. The subjects, therefore, upon which the power may be exerted are of infinite variety. While with referelice to some of them, which are local and limited in their nature or sphere of operation, the States may prescribe regulations until Congress intervenes and assumes control of them ; yet, when they are national in their character, and require uniformity of regulation affecting alike all the states, the power of Congress is exclusive. . Nor does it make any difference whether such commerce is carried on by individuals or by corporations."
In Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, the court, after discussing- this power at length, said: "The only limitation upon this power of the State to exclude a foreigm corporation from .doing business within its limits, or hiring offices for that purpose, or to exact conditions for allowing the corporation to do business or hire offices there, arises where the corporation is in the employ of the federal government, or where its business is strictly commerce, inter-state or foreign. The control of such commerce, being in the federal government, is not to be restricted by State authority." Pensacola Telegraph Co. v. Western Union Telegraph Co. 96 U. S. 1; Cooper Manufacturing Co. v. Ferguson, 113 U. S. 727.
In Robbins v. Shelby Taxing District, 120 U. S. 489, the court said : 1 ' Certain principles have been already-established by the decisions of this court which will conduct us to a satisfactory decision. Among those principles are the following: (1). The Constitution of the United States having given to Congress the power to regulate commerce, not only with foreign nations, but among- the several States, that power is necessarily exclusive whenever the subjects of it are national in their character, or admit only of one uniform system, or plan of regulation. (2). Another established doctrine of this court is, that where the power of Congress to regulate is exclusive, the failure of Congress to make express regulations indicates its will that the subject shall be left free from any restrictions or impositions ; and any regulation of the subject by the States, except in matters of local concern only, as hereafter mentioned, is repugnant to such freedom."
"Of the former class may be mentioned all that portion of commerce with foreign countries or between the States which consists in the transportation, purchase, •sale, and exchange of commodities. Here there can of necessity be only one system or plan of regulations, and that Congress alone can prescribe." County of Mobile v. Kimball, 102 U. S. 691; Escanaba Co. v. Chicago, 107 U. S. 678.
"Of the class of subjects local in their nature, or intended as mere aids to commerce," on which it has been held that the authority of the States may be exerted for their regulation and management until Congress interferes and supersedes it, ' ' may be mentioned harbor pilotage, buoys, beacons to guide mariners to the proper channels in which to direct their vessels," bridges over navigable streams, wharfs, wharfage, and quarantine. "State action upon such subjects," said the court, in County of Mobile v. Kimball, 102 U. S. 691, "can constitute no interference with the commercial power of Congress, for when that acts the State authority is superseded. Inaction of Congress upon these subjects of a local nature or operation, unlike its inaction upon matters affecting- all the States and requiring uniformity of regulation, is not to be taken as a declaration that nothing- shall be done in respect to them, but is rather to be deemed a declaration that for the time being, and until it sees fit to act, they may be reg-ulated by State authority."
A few cases will serve to show the character of some of the statutes which have been held by the courts to be unconstitutional because they interfered with the exclusive power of Congress to regulate inter-state commerce, and thereby what constitutes, in part, the commerce over which such power extends. In Hall v. De Cuir, 95 U. S. 485, a statute of the State of Louisiana, which attempted to reg*ulate the carriage of passengers upon railroads, steamboats and other public conveyances, and which provided that no regulation of any companies engaged in that business should make any discrimination on account of race or color, was considered. The case presented under the statute was that of a person of color who took passage from New Orleans for Hermitage, both places being within the limits of the State of Louisiana, and was refused accommodations in the general cabin on account of color. In regard to this the court declared that, "for the purposes of this case, we must treat the act of Louisiana of February 23, 1869, as requiring- those engaged in inter-state commerce to give all persons traveling in that State upon the public conveyances employed in such business, equal rights and privileges in all parts of the conveyance, without distinction or discrimination on account of race or color.' We have nothing whatever to do with it as a- reg-ulation of internal commerce, or as affecting anything- else than commerce among- the States." And, speaking in reference to the right of the States in certain classes of inter-state commerce to pass laws regulating them, the court said : " The line which separates the powers of the States from this exclusive power of Congress is not always distinctly marked, and oftentimes it is not easy to determine on which side a particular case belongs. But we think it may safely be said that State legislation which seeks to impose a direct burden upon inter-state commerce, or to interfere directly with its freedom, does encroach upon the exclusive power of Congress. The statute now under consideration, in our opinion, occupies that position. It does not act upon the business through the local instruments to be employed after coming within the State, but directly upon the business as it comes into the State from without or g'oes out from within. While it purports only to control the carrier when engaged within the State, it must necessarily influence his conduct to some extent in the management of his business throughout his entire voyage."
In Robbins v. Shelby Taxing District, 120 U. S. 489, the taxing district of Shelby county, Tennessee, which included the city of Memphis, acting under the authority of a statute of that State, attempted to impose a license tax upon a drummer for soliciting, within that district, the sale of goods for a firm in Cincinnati which he represented ; but the court decided that such a soliciting of business constituted a part of inter-state commerce, and that the statute of Tennessee imposing a tax upon such business was in conflict with the commerce clause of the Constitution of the United States, and was therefore void.
In McCall v. California, 136 U. S. 104, the plaintiff in error was convicted of violating an order of the city and county of San Francisco, in the State of California, which made it a misdemeanor for any one to act as an agent of a railroad company without having first paid the sum of twenty-five dollars as a license fee. He was an agent in said city and county for the New York, Hake Brie and Western Railroad Company, a corporation having its principal place of business in the city of Chicago, and which operated a continuous line of road between Chicago and New York. As such ag'ent his duties consisted in soliciting passeng'er traffic in that city and county over the road he represented. He did not sell tickets for his company ; neither did he receive nor pay out money on account of it. His sole offense consisted in soliciting passengers to go over his company's road, without having paid the license tax imposed upon him by said order as a condition precedent to his right to act as such agent in said county. The court held that the license fee as to such agency was a tax upon inter-state commerce, and in that respect was unconstitutional. The court, speaking of the agency and tax, said: "The object and effect of his soliciting- agency were to swell the volume of the business of the road. It was one of the ' means ' by which the company sought to increase and doubtless did increase its inter-state passenger traffic. It was not incidentally or remotely connected with the business of the road, but was a direct method of increasing that business. The tax upon it, therefore, was, according to the principles established by the decisions of this court, a tax upon a means or an occupation of carrying on inter-state commerce, pure and simple."
In this case the contract between the corporation and Julian and the bond sued on were executed in this State and were business transacted in Arkansas. But no sales or indebtedness were created by them. The contract was only an agreement to sell, and the bond was a condition upon which the corporation agreed to sell and a means adopted to secure the indebtedness to be contracted by sales, and both constituted a contract. They were made a foundation of a future trade between a corporation of one State and a citizen of another and were a direct method devised to increase the business of the former, and as to them served as a basis of inter-state commerce. Relying- on them the corporation sold the machines and other property and shipped them from the State of Ohio, its place of manufacture and business, to Julian in Arkansas, the place of sales being in Ohio. Until they ceased, according to their terms or by agreement of the parties, to be of any force, they were an inducement to, and entered into, every sale and formed a part of it. According to the principles firmly established by numerous decisions of the Supreme Court of the United States, they {the bond and contract) the sales and shipment of the machinery and other property were a part of the inter-state commerce of the United States, which Congress has the exclusive rig'ht to regulate, and were not and could not be affected by the act of April 4th, 1887.
Judgment affirmed.