Court Opinion

ID: 9677818
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:00:48.210334+00
Date Added: 2024-06-11T18:16:58.658797
License: Public Domain

TIJERINA, Justice,
dissenting.
I respectfully dissent.
The principal issue raised by appellant in points of error one through four revolves around the question of whether the foreign corporation, without a permit to do business in Texas, was transacting intrastate or interstate business and creating evidence of debt to qualify under the exceptions to Tex. Bus.Corp.Act Ann. art. 8.01, B(7) and (9) (Vernon 1980). Article 8.01, supra, provides in pertinent part:
No foreign corporation shall have the right to transact business in this State until it shall have procured a certificate of authority to do so from the Secretary of State ... a foreign corporation shall not be considered to be transacting business in this state, for the purposes of this Act, by reason of carrying on in this state any one (1) or more of the following activities:
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(7) Creating evidence of debt, mortgages, or liens on real or personal property;
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(9) Transacting any business in interstate commerce.
The appellee in this case did not file a brief. Consequently, all statements made in appellant’s brief as to the facts, the evidence or the record should be accepted as correct. Tex.R.Civ.P. 419 See also Pathfinder Personnel Service, Inc. v. Worsham, 619 S.W.2d 475 (Tex.Civ.App.—Houston [14th Dist.] 1981, no writ).
My primary reference is Eli Lilly & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276, 81 S.Ct. 1316, 6 L.Ed.2d 288 (1961), wherein the United States Supreme Court addressed a similar question. The Court noted that a state cannot require a foreign corporation to obtain a certificate of authority to do business in the state if the participation of the corporation in its trade is limited to its wholly interstate sales to state wholesalers, but can require it to obtain such certificate if it is engaged in intrastate as well as interstate aspects of its trade. Id. at 291-92, 81 S.Ct. at 1325-26. In Helicopteros Nacionales de Columbia v. Hall, 616 S.W.2d 247 (Tex.Civ.App.—Houston [1st Dist.] 1981, no writ), a foreign corporation appealed from an order overruling its special appearance in a wrongful death action which occurred in Peru. Service was had on the foreign corporation under the “long arm” statute, Tex.Rev.Civ.Stat.Ann. art. 2031b (Vernon 1964). The appellate court dismissed for lack of jurisdiction because it was not shown that the foreign corporation had sufficient minimum contacts with Texas, and cited as one of the reasons for its conclusion that there was no indication that “Helicol” intended to make a profit from any business deal undertaken in Texas.
The facts in this case are distinguishable from Estey Corp. v. St. Mary’s University of San Antonio, Inc., 470 S.W.2d 138 (Tex.Civ.App.—San Antonio 1971, no writ), where the foreign corporation contracted directly with St. Mary’s to furnish them steel book cases. This Court held that the requirement that the foreign corporation install the book cases and obtain the wood-end panels from a materialman in Texas did not change the character of the sale from an interstate to an intrastate transaction.
A foreign corporation which is transacting or has transacted business in this State without a certificate of authority is not permitted to maintain any action, suit or proceedings in any court of this State. Tex. Bus.Corp.Act.Ann. art. 8.18 (Vernon 1980). It is important to recognize that “transacting business” as used in the context of article 8.18, supra, means a substantial intrastate connection with this State on more than an isolated basis. See 20 R. HAMILTON, BUSINESS ORGANIZATIONS, § 987 (Texas Practice 1973). The undisputed evidence in this record shows that appel-lee was conducting intrastate as well as interstate business in Texas without a certificate of authority as required by articles 8.01 and 8.18, supra.
*195The record reflects that Peerless, as the agent or representative of Trans Union, performed duties relating to business transactions of the principal as follows: (1) assisted the customer in preparing the application and financial and credit reports, all on forms provided by Trans Union; (2) as part of the leasing agreement, Peerless was required to install the equipment and the installation required five days work; (3) Peerless, as a prerequisite to the leasing agreement, obtained the customer’s signature to an “acceptance acknowledgment of the unit”; (4) Peerless, having paid dealers cost for the unit, was reimbursed by Trans Union in an amount that covered the profit and all other costs and expenses; (5) Peerless, pursuant to instruction from the principal, placed Trans Union stickers on the equipment; (6) Peerless, pursuant to instructions from Trans Union, gave a year warranty on the unit; (7) Peerless, on instructions from Trans Union, serviced the equipment’s malfunctions; and (8) the lease was executed in Texas. As a general rule, an agent or representative must have duties and obligations relating to commercial or business transactions having something to do with the affairs of the corporation. See Rouse v. Shell Oil Co., 577 S.W.2d 787 (Tex.Civ.App.—Corpus Christi 1979, writ dism’d w.o.j.). It is apparent from the facts indicated in this record that Trans Union was engaged in intrastate aspects of the business of financing the purchase of irrigation equipment through the participation of Peerless as its agent and representative. Trans Union is not a manufacturer selling its goods in Texas through dealers or wholesalers, which is recognized as a valid activity in interstate commerce. The proven facts clearly establish that Trans Union was purposefully well organized to transact intrastate financing business providing its agents or representatives with forms and detailed instructions.
The finding by the court that appellee was creating evidence of debt under the exception provided by article 8.01, B(7), supra, is necessarily related to the finding of an interstate business transaction. In Squyres Construction Co., Inc. v. Chemical Bank, 596 S.W.2d 283 (Tex.Civ.App.—Houston [1st Dist.] 1980, no writ), the court first found that the transaction in question was not an intrastate transaction, stating:
The lease agreement provides that the agreement ‘shall be deemed to have been made in New York;’ the rental payments were payable to appellee in New York; and the lease agreement negated any duty by appellee to perform any act in Texas concerning the backhoe. There is no evidence of where Advanced executed the lease, so we cannot assume that it was executed in Texas. [Emphasis added.]
Id. at 284.
Therefore, Trans Union, as a foreign corporation without a certificate of authority to do business in Texas, could not file suit in Texas to collect the debt occasioned by the default in the lease payment. We note additionally that the lawsuit in question was not for collection of the debt but for possession or conversion of the equipment. Points of error one through four should be sustained.
Points of error numbers five through eight concern appellant’s contention that there was insufficient evidence to support the findings that appellant converted the property; the value of the property; that the conversion was willful and malicious; that appellant had superior title to the equipment. Appellant also claims that such findings are against the great weight and preponderance of the evidence. The question on the insufficiency of the evidence requires that we consider and weigh all the evidence in the case and set aside the judgment and remand the cause for a new trial if we conclude that the judgment is so against the great weight and preponderance of the evidence as to be manifestly unjust. See In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). Appellee has not filed a brief, so we should accept the facts from appellant’s brief as true. Tex.R. Civ.P. 419. The record indicates that title to the irrigation equipment was never conveyed or transferred to Trans Union; the Hundleys did not sign a security agree*196ment; there was no financing statement filed with the Secretary of State designating Trans Union as the secured party, nor was a financing statement filed in Frio County where the realty and equipment in question were located. Further, appellee had difficulty in identifying the equipment it claimed was converted.
An absolute refusal to transfer possession of property to one entitled thereto has been held to constitute a conversion; however, a qualified refusal based upon a reasonable qualification or requirement does not constitute a conversion per se, provided that such refusal is made in good faith. The refusal must have a legal foundation or rest on reasonable doubt as to the claimant’s right or the possessor’s duty under the circumstances. Earthman’s, Inc. v. Earthman, 526 S.W.2d 192, 204 (Tex.Civ.App.—Houston [1st Dist.] 1975, no writ). The undisputed evidence establishes that appellant purchased the irrigation equipment at a foreclosure sale from the Medina Valley State Bank and in good faith placed the equipment in storage until a legal determination as to ownership was established. Having reviewed the entire record, I would conclude that the evidence is clearly insufficient to support the trial court’s judgment that appellant converted the property; that the value of the equipment was $7,500.00; that the conversion was wilful and malicious and that appellee had superior title.
The judgment should be reversed and a take-nothing judgment should be rendered against appellee.