Court Opinion

ID: 7823461
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:01:41.99189+00
Date Added: 2024-06-11T16:30:47.991348
License: Public Domain

Darrell Hickman, Justice, dissenting. I dissent because in my judgment the Wingo Act should not be applied in this case. The Wingo Act is a statute, penal in nature, that prohibits a foreign corporation from enforcing a contract made in this state. The act cannot apply to interstate transactions for obvious reasons. There is the additional question of whether this appellant was “doing business in the State of Arkansas.” The appellee called an out-of-state company to initiate this agreement. There is no evidence that the appellant (the company’s predecessor actually) regularly did business in Arkansas, maintained a sales staff here or even did a substantial portion of its business in Arkansas. It was brought out that the appellant was a national company. Therefore, we have a business transaction occurring in Arkansas only because one of our citizens brought an out-of-state firm into this state. The documents themselves, while signed in Arkansas, provided expressly that the law of the State of New York would apply, and “[t]his agreement is subject to acceptance by the lessor at its offices in Schiller Park, Illinois.” The majority misunderstands the legal issue. The most significant question is whether the contract was made in Arkansas, and we should look at our cases dealing with this issue in connection with the Wingo Act. That is what the statute requires, and that usually means the place where the final act occurs. Leflar discusses this law of the place of making in Leflar, American Conflicts Law, 3rd ed. § 145, pp. 297, 298 (1977): Since it is important, however, it sometimes becomes necessary to determine where the contract was made. Ordinarily this will not be difficult, but sometimes the acts of chaffering which constitute offer and acceptance are scattered over more than one state. The authorities are reasonably clear that, in this event, the contract is made at the time and place ‘where the last act necessary to the completion of the contract was done — that is, where the contract first creates a legal obligation.’ Frequently this is controlled expressly by terms insisted upon by the parties who either by offer or counteroffer designate particular acts as decisive to the completion of the contract. Thus an order blank furnished to traveling salesmen for use by customers may declare expressly that no contract is to arise until the order is approved at the home office, or an application for an insurance policy may state that the policy is not to take effect until the first premium is paid during the life and good health of the applicant. The place where such last decisive acts are done is normally the place where the contract is made. Negotiable instruments and deeds usually become legally effective by delivery, therefore the place of delivery is the place of contracting. An offer may contemplate acceptance by mail or telegraph, in which event it is usually held that the acceptance is effective and the contract is completed by the contemplated mailing of the letter or sending the telegraph of acceptance. If the law of the place where the accepting letter is mailed or other message sent declares for any reason that no contract is thereby completed, then the contract will be completed at the next step in the succession of events, which will be at the time and place of receipt of the acceptance by the offeror. The time and place at which an unconditional acceptance becomes effective, whether by voluntary act of the parties or by operation of law, is the time and place of making the contract. In Hough v. Continental Leasing Corp., 275 Ark. 340, 630 S.W.2d 19 (1982), a Wingo Act case, we said: . . . The trial court was correct in finding that the contract was made in Mississippi, where final acceptance occurred. As stated in Goode v. Universal Plastics, Inc., 247 Ark. 442, 445 S.W.2d 893 (1969): . . . The rule is stated in Leflar’s American Conflicts Law (1969), § 144 at page 353: The authorities are reasonably clear that, in this event, the contract is made at the time and place ‘where the last act necessary to the completion of the contract was done — that is, where the contract first creates a legal obligation.’ The contract was therefore a Mississippi contract in interstate commerce and Continental may enforce it in the courts of Arkansas despite its status as a nonqualifying corporation. Brown Broadcast, Inc. v. Pepper Sound Studio, Inc., 242 Ark. 701, 416 S.W.2d 284 (1967). When we refer to Goode v. Universal Plastics, Inc., 247 Ark. 442, 445 S.W.2d 893 (1969), relied on in Hough, we find a foreign corporation, not registered to do business in Arkansas, soliciting orders in Arkansas, for covers it manufactures for telephone books. The contract provided it was subject to acceptance by the Tennessee company and Tennessee law applied. We said: The solicitor of a contract may by its terms dictate the mode of acceptance by which legal obligations will arise thereunder. Mechanics Lumber Co. v. Yates American Machine Co., 181 Ark. 415, 26 S.W.2d 80 (1930). The terms of the instrument before us make it clear that no contract came into being until acceptance by appellee at its home office in Tennessee. Upon approval in Tennessee ‘the last act necessary to completion of the contract was done.’ The contract was therefore a Tennessee contract and appellee may enforce it in the Arkansas courts despite its status as a nonqualifying corporation. Brown Broadcast, Inc. v. Pepper Sound Studio, Inc., supra. The Wingo Act cannot be used to deny a foreign corporation access to our courts even if it was “doing business” in Arkansas, if the contract was not made in this state. That was the holding in UPI v. Hernreich, 241 Ark. 36, 406 S.W.2d 317 (1966). There, we discussed the Wingo Act and how it should be applied: The statute (§ 64-1202) has two distinct penalty provisions. The first provision is a fine to be collected against any non-domesticated foreign corporation that does business in this State. This fine provision applies regardless of where any contract may have been made, but the statute does not state that the assessment of the fine also makes the contract void. The second penalty provision in the statute is the one here in issue, and is contained in this statutory language: ‘. . . and as an additional penalty, any foreign corporation which shall fail or refuse to file its articles of incorporation or certificate as aforesaid, cannot make any contract in the state which can be enforced by it either in law or equity . . .’ It will be observed that by the quoted language the courts of this State are closed to any non-domesticated foreign corporation only when seeking to enforce any contract made in this State. So the place of the making of the contract becomes most material in the case at bar, assuming any intrastate commerce is involved and that any such would taint the entire transaction. The court concluded: We have repeatedly held that § 64-1202 is a penal statute and must be strictly construed in favor of those against whom the penalty is sought. Alexander Film Co. v. State, 201 Ark. 1052, 147 S.W.2d 1011; Murray Tool Co. v. State, 203 Ark. 874, 159 S.W.2d 71. In thus strictly construing the statute in favor of the appellant, we must conclude that the statute closes the doors of the State courts to a non-domesticated foreign corporation only on those actions involving contracts made in this State. The majority does not really decide this case on the question of where the contract was made; rather it goes off on the question of interstate commerce, which is only one aspect of the question. The Wingo Act is entirely penal in nature — it denies irrevocably a corporation the right to litigate its claim. Therefore, it is important to first strictly construe the statute against the one using it. This is what we said in Leenerts Farms v. Cranco, 265 Ark. 359, 578 S.W.2d 229 (1979), about applying the Wingo Act: In Alexander Film Company v. State, Use of Phillips County, 201 Ark. 1052, 147 S.W.2d 1011 (1941), we pointed out that the Wingo Act, Ark. Stat. Ann. §§ 64-1201 and 64-1202 (Repl. 1966), is a penal statute which must be strictly construed in favor of those against whom the penalty is to be imposed. Furthermore, in construing a contract to determine whether it is valid or invalid, we find in 17 Am. Jur. 2d Contract § 254 the following: ‘It is a general principle that where a contract is fairly open to two constructions, by one of which it would be lawful and the other unlawful, the former will be adopted. Thus, if a contract is capable of a construction which will make it valid, legal, effective, and enforceable, it will be given that construction if the contract is ambiguous or uncertain. A construction which renders the contract valid is preferred to one which renders it invalid, and it will not be construed so as to be invalid unless that construction is required by terms of the agreement in the light of the surrounding circumstances.’ When the record in this case is considered in the light of the penal nature of the Wingo Act and the principle that a contract should be construed where possible to make it valid, we must hold that the trial court erred in ruling that the contract sued upon was an Arkansas contract within the provision of Ark. Stat. Ann. §§ 64-1201 and 64-1202 (Repl. 1966). The fact that the contract for purchase of the real estate was to be closed in Arkansas would not make a contract entered into out of the State of Arkansas invalid under Ark. Stat. Ann. § 64-2102 (Repl. 1966). This contract was not made in Arkansas and according to most of our cases the Wingo Act should not apply. I regret our decision in this case only further confuses the question. I would reverse the judgment of the trial court and remand the matter for a trial. Hays, J., joins in the dissent.