Court Opinion

ID: 8197296
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:20:45.599661+00
Date Added: 2024-06-11T16:40:48.308563
License: Public Domain

Fowler, J.
(dissenting). I cannot agree with the decision of the court in this case, and the question in issue, involving as it does the sovereignty of the state, the power of the legislature, and the duty of the courts, is of such importance that I feel that I should briefly state the reasons for my dissent.
The facts material to an understanding of my view are that the plaintiff is a New York corporation not licensed in Wisconsin. The defendant is a Wisconsin corporation owning property and conducting a business in Wisconsin. The contract sued upon was signed by the parties in Illinois. It provides for appraisal by the plaintiff of the defendant’s *475property and the earning capacity of its business, and in making the appraisal considerable time was spent by agents of the plaintiff in Wisconsin in examining the property and investigating the defendant’s business and business prospects.
The defendant bases its defense on the fact that the plaintiff corporation has not procured a license to transact business in this state and on the provisions of sec. 226.02, Stats., and sub. (2) and (10) thereof, which provide that a foreign corporation shall not transact business in this state until it has procured a license as provided by said section and that every contract made by a non-licensed corporation (1) affecting its personal liability or (2) relating to property within this state shall be wholly void in its behalf.
I am of the opinion that the transaction involved under the contract does not constitute interstate commerce. If this be correct, it follows that if the contract is within the purview of the statute under consideration the judgment of the circuit court should be affirmed.
By reference to (1) and (2) above it is manifest that if (1) a contract relates to property in the state, or (2) if it affects the personal liability of the corporation, it falls within the statute. To me it seems plain that the contract here involved, providing for the appraisal-of property within .this state, relates to property within this state. This conclusion rests-directly upon the language of sub. (10) of the statute. No argument need be made to support it. If the phrase “relating to property” means what it purports to mean, giving to the word “relating” its ordinary meaning, then the conclusion is correct. If the wprd does not so mean, the conclusion is erroneous.
- It is equally clear to me that the contract affects the personal liability of the plaintiff corporation within the meaning of sub. (10) construed according to the rule laid down in *476the case of Catlin & Powell Co. v. Schuppert, 130 Wis. 642, 110 N. W. 818. It is there said, page .649, respecting contracts
. . . “not coming within the prohibition against transacting business and sought to be brought within the clause . . . declaring the contract void, the words ‘affecting personal liability,’ used in describing one of the prohibited classes of contracts, must be held intended to exclude all unilateral contracts, like bills and notes, all contracts fully executed outside of this state upon which there remains as obligation only payment, or payment and delivery, to be made in this state, and all contracts not by their stipulations imposing duties or liabilities on such foreign corporation. Because the contract (there) in question was not, so far as it was made or took effect in this state, (1) one affecting the personal liability of the plaintiff by any covenant or stipulation therein contained, and (2) was wholly executed by the plaintiff in New York (except as to delivery and payments), and (3) because it did not relate to property within this state, and (4) did not constitute, on the part of the corporation, a transaction of business in this state,” . . .
the plaintiff was held entitled to recover thereon. If a contract does not fall within any one of the four classes above enumerated it is not included in-the statute. Conversely, if it falls within any one of those classes it is included. If it be conceded that the contract here involved does not fall within any one of classes (2), (3), and (4), it plainly is one affecting the personal liability of the plaintiff by a covenant or stipulation therein contained, and consequently is included within class (1). I cannot concede that the contract in suit does not fall within either class (4) or (3) above enumerated. In my opinion it falls within both of them. It falls within (4) -because it was partially performed'by the plaintiff within this state, as the physical examination and valuation of the property by plaintiff’s engineers in Milwaukee and the investigation there made into the business *477and business prospects of the defendant was a substantial and necessary part of the full performance of the contract and constituted transacting business within this state; and it falls within (3) because, as above stated, it related to property situated in this state.
The rule of the Catlin Case above enumerated •( 1) has never been disapproved. It was directly applied in International Textbook Co. v. Peterson, 133 Wis. 302, 113 N. W. 730. The first paragraph of the opinion in that case (p. 307) is as follows:
“Aside from the question of interstate commerce involved, this case would be governed by the rule laid down in Catlin & Powell Co. v. Schuppert, 130 Wis. 642, 110 N. W. 818, and. the contract in question invalid because bilateral and conr taining an express undertaking on the part of the plaintiff corporation affecting the ‘personal liability’ of such corporation. That it would be for this reason within the letter of sec. 1770&, Stats. 1898 [now sec. 226.02] as amended, seems obvious. That it would be within the spirit of that act seems equally clear, if we consider that one purpose of the act was to enable persons contracting with foreign corporations to enforce the contractual obligations of such corporation in domestic tribunals, state or federal, without being obliged to follow such corporation for such purpose to the distant place of its domicile.”
That the contract falls within the statute seems to me plain unless the statute covers only such contracts as are made within the state. It seems to have been inferred from the opinion in Southwestern Slate Co. v. Stephens, 139 Wis. 616, 120 N. W. 408, that only such contracts are covered, but that case does not warrant such inference. The contract there involved was made within this state, but it does not follow from the fact that it was so made that a contract made without the state is not covered. The recent case of American Timber Holding Co. v. Christensen, 206 Wis. 25, 238 N. W. 897, seems to have gone on the assumption that a *478contract made outside the state is not covered. But the case of International Textbook Co. v. Peterson, supra, involved a contract made outside the state and was held within the statute. The contract there involved was also held to be within the statute because the details of the performance of the contract constituted transacting business within the state, but it was first and just as squarely held within the statute on the other ground. The decision in the International Textbook Co. Case, supra, was reversed by the United States supreme court in 218 U. S. 664, 31 Sup. Ct. 225, on the ground that the transactions involved constituted interstate commerce, but the reversal does not at all affect the soundness of the decision as to the construction and coverage of the statute under consideration.' There is no language in the statute expressly limiting the coverage to contracts made in the state and none indicating an intention so to limit it. One reason for the statute — that quoted from the Peterson Case, supra, to enable citizens of this state contracting with foreign corporations, through the provisions of the statute for service of summons upon them, to enforce the obligations of the corporations in the courts of this state, and thus avoid the expense and inconvenience and hazard incident to enforcing them in the state where the corporation is domiciled — applies as well and with as much force when the contract is made without the state as when it is made within it. It is beside the case to say that a statute can have no force outside the territorial limits of the state enacting it. While this is quite true, that a statute has no extraterritorial effect does not support the inference that it was intended to apply only to contracts made within the state. There is no constitutional provision, state or federal, except as interstate commerce may be affected, that prohibits a state from enacting a statute governing the rights of its citizens under contracts made with foreign corporations. Wisconsin Trust Co. v. Munday, 168 Wis. 31, 50, 168 N. W. 393, 169 N. W. 612. A *479state has jurisdiction of persons within the state as well as property within the state. It may legislate with respect to the personal rights of its citizens as well as to their property rights, and in respect to persons within the state as well as to property within the state. A state may therefore enact a statute conferring rights under a contract whether the contract be entered into within or without its borders. The statute will not be given'effect outside the borders of the state enacting it unless upon principles of comity, but when it is invoked by the citizens for whose benefit it was enacted, in a court of the state enacting it, that court should give it full effect to accomplish the purpose for which it was enacted, and in my opinion that court may not rightly refuse to give 1 it such effect. The citizen invoking such a statute is entitled to all the defensive rights conferred upon him by its terms. The statute declares it to be the public policy of the state that every contract made by an unlicensed foreign corporation that affects the personal liability of the corporation shall be. held void on its behalf. It is the province of the legislature to determine the state’s public policy, and when the legislature has declared a public policy it is the duty of the courts to enforce it. Foreign corporations have recently been given fhe full benefit of this rule operating in their favor. State ex rel. Smith v. Belden, 205 Wis. 158, 236 N. W. 542. They cannot justly complain of its application when it operates against them. While the broad proposition invoked that a contract valid where made is valid everywhere is true as a general proposition, it is subject to the exception that “the courts of one state will not enforce contracts which, though valid in the place where made, contravene their policy. Bartlett v. Collins, 109 Wis. 477, 482, 85 N. W. 703. The doctrine as to recognition of foreign contracts in the courts of a state, if valid by the laws of the home jurisdiction, rests in comity. Therefore it must necessarily rest in sound judicial discretion to limit it,.and its general limitations exclude those *480agreements which are injurious to public rights, or offend against public morals, or contravene public policy, or violate public law as recognized in the place of the forum.” Fox v. Postal Tel.-Cable Co. 138 Wis. 648, 652, 120 N. W. 399.
That sub. (10) of the statute must be taken as establishing the public policy of the state was expressly declared by this court in Wisconsin Trust Co. v. Munday, supra (page 47) :
“It is clear that sec. 17705 [226102] is a declaration of a public policy of this state with reference to the transaction of business within the state by a foreign corporation. If we permit the provisions of that law to be whittled away and diminished from time to time in order to give effect to private rights, the whole legislative purpose will be defeated.”
The provision of sub. (10) relating to property was strictly applied in that case. One person is as much entitled to have one provision of the statute strictly applied as another person is to have another so applied. The court has applied the statute in all its strictness in many cases. Street Railway Adv. Co. v. Lavo Co. 184 Wis. 395, 198 N. W. 595, is quite similar to the instant case. A contract between a Wisconsin corporation and a non-licensed foreign corporation, accepted by the corporation in New York and therefore entered into in that state, related to advertising in street cars. In a suit on the contract non-compliance with sec. 226.02 and the provision of sub. (10) were invoked in defense. The defense was sustained. The court expressly based its ruling on the provision of sub. (10) respecting the personal liability of the foreign corporation, as appears from the two opening paragraphs of the opinion at page 398. In State ex rel. Goldwyn D. Corp. v. Gehrz, 181 Wis. 238, 194 N. W. 418, the statute was so strictly applied that an action brought by a non-licensed foreign corporation upon a contract made outside the state was ordered dismissed because (page 243)—
. . . “by sec. 17705 et seq. there is plainly indicated a public policy which authorizes and justifies a denial of the use of our courts to settle such a controversy as is here presented.”
*481A licensed foreign corporation not only invoked the statute in defense of the suit but successfully invoked it to prevent its entertainment by the court.
For the reasons above stated I am of opinion that the judgment.of the circuit court should be affirmed.
A motion for a rehearing was denied, with $25 costs, on April 5, 1932.