774 NATIONAL DISTRIBUTORS V. SIMARD [246 NATIONAL DISTRIBUTORS, INC. V. HOUSTON H. SIMARD, ET UX 5-4890 440 S.W. 2d 31 Opinion Delivered April 28, 1969 1. Corporations—Foreign Corporations—Carrying on Business in State.—A contract for the sale of merchandise to be shipped from a foreign corporation's place of business in another state to an Arkansas purchaser does not alone constitute doing business in Arkansas even when the contract is executed in Ar-kansas. 2. Corporations—Foreign Corporations—Determination of Character of Transaction.—Ownership of property after it arrives in Arkansas is a determining factor as to interstate-intrastate character of a transaction. 3. Judgment—Summary _ Proceeding—Grounds.—Grantin g summary judgment on ground that the record presented no genuine issue of a material fact held proper where the record reflected foreign corporation retained title to goods shipped from another state until sold by Arkansas company, and failed to controvert appellee's statement that the guaranty agreement sued on was entered into and executed in Arkansas. Appeal from Sebastian Circuit Court, Ft. Smith • District; Paul Wolfe, Judge; affirmed. • Wan?er, Warner, Ragon & Smith for appellant. Bethell, Stocks, Collaway & King fm . appellees. J. FRED ;JON ES, Justice: This is all appeal by Na-
ARK.] NATIONAL DISTRIBUTORS v. SIMARD 775 tional Distributors, Inc. from On adverse summary judgment in favor of Houston 11. Simard rendered by the Sebastian County Circuit Court. National was the plaintiff in the trial court and the suit was On a guaranty agreement. On December 9, 1.963, Jackson's Furniture, Inc. of Fort Smith contracted to refinish and sell antique furniture and serve as an outlet for antique furniture supplied by National Distributors, Inc. a Tennessee corporation. Jackson's was to sell the furniture and remit to National 134% of the original cost price within eight hours after Jackson's had collected for the furniture sold. Jackson's became indebted to National and on April 5, 1965, it executed and delivered to National a promissory note payable on demand for $22,004.66. Jackson's failed in business and was placed in receivership by chancery court decree. National filed claim for $24,453.64 in the receivership proceedings and was paid $1,934.29 as its pro rata portion of the assets. By chancery decree dated December 26, 1967, National was given judgment for $22,004.66 balance due on the note. On February 9, 1968, National filed the present suit in the Sebastian County Circuit Court against Houston H. Simard, president and general manager of Jackson's, to recover on an undated guaranty agreement whereby Simard guaranteed the payment of any and all indebtedness owed by Jackson's to National. By way of answer and counter-claim, Simard claimed that be was entitled to a declaratory judgment on the basis that the guaranty agreement was void and unenforcable since National was not qualified to do business in Arkansas. National filed a denial to the counter-claim and Simard responded with a motion for summary judgment: The court granted the motion for summary judgthent and on appeal to this court National deSignated the following points for reversal: "The trial court erred in finding that appellant
776 NATIONAL DISTEIBUTOES v. SIMAED [246 was 'doing business' in Arkansas; or, at the very least, an issue of fact exists on that point. The trial court erred in sustaining the summary judgment because app.ellee failed to sustain the burden of demonstrating that there are no genuine issues of material fact." in granting the motion for summary judgment, the trial court found that the record presented no genuine issue of material fact, and the motion for summary judgment was granted under Ark. Stat. Ann. § 64-1202 (RepL 1966) which states: "Any foreign corporation which shall fail to comply with the provisions of this act and shall do any bnsiness in this State, shall be subject to a fine ... and as an additional penalty, any foreign corporation which shall fail or refuse to file its articles or Meorporation or certificates as aforesaid, cannot make any contract in the State which can be enforced by it either in law or in equity ..." (Emphasis supplied.) The guaranty agreement sued on by the appellant is as follows: " The midersigned, for value received, hereby guarantee the payment of any and all indebtedness now or hereafter incurred by Jackson's Furniture, Inc. to National Distributors, Inc., including specifically all presently due amounts in the approximate amount of $17,500.00 and future indebtedness which may be incurred from time to time, it being the intent of this a g reement by the undersigned to personally guarantee payment of all indebtedness incurred by Jackson's Furniture, Inc. to National Distributors, Inc. at ally time during the life of this guaranty agreement. It is the intention of this guaranty to create the same liability on our part to
ARK.] NATIONAL DISTRIBUTORS V. SIMARD 777 and in favor of the said National Distributors, Inc. or its order as though we had actually •executed sepuarate guaranty agreements for each separate indebtedness incurred and to be incurred in the future by Jackson's Furniture, Inc, to National Distributors, Inc. ..We 'hereby severally waive presentment for payment, notice of non-payment, protest and notice of protest, and due diligence in enforcing payment of any or all of said indebtedness; and consent that an extension of time for payment may be granted or renewal taken on. all or on any of said indebtedness without notice to us. s/ . Houston H. Simard si Dorothy J. Simard" Appellant argues .that there, is no, allegation that Plaintiff came to Fort Smith for the execution of the guaranty agreement, and that it was actually mailed to the appellant in Tennessee. That appellant had no physical assets in Arkansas, no agent here, no office here, and that DO services were performed here. Appellant argues that the record does not even suggest that any representative of plaintiff ever set foot , in ... Arkan-sas, let alone conduct business here, and that the -undisputed facts established that the transaction entered into by_ the parties in 1963. was a Tennessee contract which hivolved the intersta.te shipment of goods to Fort, Smith. The appellant also argues: "it is elementary that Houston H. Simard's contract of guaranty was an enforceable promise on his part, which was collateral to the primary obligation on .the part of Jackson.'s Furniture, Inc. *.* * Simard thus promised to answer for the debt of Jackson's Furniture, Inc., which was incurred in interstate, commerce, and his guaranty cannot he severed or separated from his ,corporation's primary obligation.''
778 NATIONAL v. SIMA:ED [246 While not so important to our decision in the case now before us, appellant was apparently doing business in Arkansas through Jackson's Furniture, Inc. under the agreements entered into in 1963. A note was executed by jacksoa's for the indebtedness due under these agreements, appellant's rights thereunder were litigated in chancery court and it obtained judgment against Jack-son's. The pertinent Portions of the 1963 agreements, retied on by appellant, are as follows: "It is agreed that NDI shall furnish adequate and continuing supply of antique furniture to Jack-son's Furniture, Inc. on the following basis: National Distributors, Inc. shall pay all purchase and transpOrtation expenses to Fort Smith and shall furnish Jackson's with the original suppliers invoice on all purchases. * * * National Distributors, Inc. and Beno Friedman further agree for a period of five years after this association might be dissolved for any reason; not to contact personally and to prevent their servants or acquaintances from contacting any customer or other business associate to whom they are introduced by Mr. Simard in the performance of this agreement. A. The only exception to this shall be on antiques belonging to Jackson's Furniture, Inc, and now in stock. B. National Distributors, Inc. shall be paid on terms set forth above 134% of the cost price of every piece of antique furniture sold by Jackson's Furniture, Inc. or by Houston H. Simard from this date forward. C. This agreement shall continue for a period of 99 years unless 30 days cancellation notice is giv-
ARK.] NATIONAL DISTRIBUTORS V. SIMA.RD 779 en one of the parties by the other via •registered mail. It is further agreed that Jackson's Furniture, Ine. shall furnishadequate and continuing sales outlet on the following basis for antique furniture provided by National Distributors, Inc. Jackson's shall pay for all costs involved selling, refinishing and delivering merchandise going to customers, and shall furnish National . Distributors, Inc. with a carbon copy of every Jack-son's invoice • for antiques of any kind which Jack-son's sells. A. 34% shall be added to . the National Distributors, Tue. cost price and the to . tal shall be. paid to National Distribntors,, Inc. within eight (8) working hours of the time Jackson's receives payment from its customer. On invoices, factoring, and credit, the same terms and . conditions apply here as in our agreement dated November 22, 1963, covering the Reneau's Wholesale antiques Stock now in your possession.- * * * Further, Jaekson's 'Furniture, - Inc. and Hous-ton II. Simard agree for a period of five yearS after this association might be dissolved for any reason; not 'to contact persorially'and•to 'prevent their servants or acquahrtances from contacting'any supplier or other business associate to whom they are introduced by Benno Friedman in the performance of this agreement. A. By December 15, 1963,:Jackson's lure, IT16. agrees to furnish National Distributors, Inc. a complete list of all antiques now in stock not belonging to National Distributors, Inc. and as these pieces are sold they will be checked off the list. National Distributors, Inc. will receive no payment for
780 NATIONAL DISTRIBUTORS V. SIM ARD 11246 antiques oh this list. B. As of start of business the first day of each month a complete inventory of pieces (numbers only) in stock and not sold will be furnished to National Distributors, Inc. by Jackson's Furniture, Inc. This list will be placed in the mail at the latest by close of business the 5th of each month." An additional agreement dated December 9, 1963, is set out, in part, as follows: 'The following material belonging to NDI [National Distributors] is 'low ill the possession of Houston Simard, President of Jackson's Furniture, Inc., Fort Smith, Arkansas. * * * It is agreed that all material in this stock not paid for by Mr. Simard as of March 31, 1964, will be returned in good shape and at no expense to NDI ... Excepted from this statement will be the pieces which have been Tefinished by 'Simard, and these pieces shall remain on consignment in Ft. Smith until sold by Simard. As each piece is sold, a copy of the invoice will be furnished to NDI. Most sales are to be factored, and within S working hours after money iS received by Mr. Sim-ard from the factor, the amount of the 'NM price' on the piece sold will be forwarded to NM. by Mail." Of course, a contract for the sale of merchandise to be- shipped from a foreign corporation's place of business in another state to an Arkansas purchaser does not alone constitute doing business in Arkansas even when the contract i.s executed in this state. In Robertson v. Southwestern Co., 136 Ark. 417, 206 S.W. 755, this court said:
AUK.] NATIONAL DISTELBUTOBS V. SIMAIRD 781 "A. contract for the sale of merchandise to be shipped from appellee's place of business in Tennessee to the purchaser here does not constitute business in this State so as to bring the transaction under the ban of our statute, which prohibits a foreign corporation from doing business here without first filing copies of its articles of incorporation and obtaining permissicm to do business." The ownership of the property is a determining lac-hp r as to the interstate-intrastate character of a transaction. ln the case of Hogan v. Intertype Corporation, 136 Ark; 52, 206 S.W. 58, the appellant agreed to purchase a typesetting machine if it . were demonstrated on his premises and performed as represented. The machine was shipped from out of state to Huntingtmi, Ar-kansas, set up and demonstrated, .whereupon appellant signed a note seemed by a mortgage for the purchase price. In reversing the trial court's finding that the appellee was not doing business in Arkansas, this court said: "We think it conclusively established by the facts in this case that the Inteniational Typesetting Machine Company owned the machine in questioti after it arrived in Huntington, Arkansas, and thereafter sold it to appellant, accepting in part payment notes executed and payable in Arkansas and secured by a mortgage on the machine, which was also executed and filed for record in this state. One test laid down by the Arkansas eases differentiating an interstate transaction from an intrastate transaction is the ownership of the property after it arrives in the state." (Emphasis supplied.) In Eisenwayer Milling Company v. George E. Shel-ton Produce Company ., 176 Ark. 620, 3 S.W. 2d 688, appellant shipped a carload of flour to brokers in Arkan-sas, and had the flour stored with appellee. The brokers were authorized to sell the flour at their own price,
782 NATIONAL DISTRIBUTORS v. SIMARD [246 and. pay, appellant's invoice price and .appellant was to be furnished dray tickets so that it could Check deliveries. After three or four, weeks the brokers dissolved .their partnership and the appellant arranged with the appellee to sell the remainder of the flour paying .appellant as. it was, sold less charges for_ storage .and selling. ..In..holding that appellant was doing business in Arkan-sas, tbis court said: "... [T]he arrangement made with the brokers, and subsequent thereto, with appellee, was nothing .more than an agency contract with tbe brokers and appellee to sell appellant's flour . and to remit there-for as the same was-sold. -There was no outright sale of said flour either to the brokers . ... or to ap-pellee. Such flour was not the property of the brokers or appellee, could not have been levied upon by creditors as their property, but on the contrary, according to the undisputed testimony of appellant's .witnesses, .said flour had . at all times belonged to it, and was being . sold for its account . by the brokers and appellee. ... Suffice it to say that the undisputed facts here show that the shipment, of the flour into this State in the first instance was not 'a sale to ... [the brokers] and that the arrangement between appellant and appellee was not a sale thereof in continuation of the former arrangement between appellant and ... [the brokers]. It amounted, to no more than the storage of the flour in this State as its Own, and the employment of an agent to make sales thereof from time to time, as purchasers could be found thereof. Had it been a sale in the first instance, with title retained and the flour retaken and a resale thereOf made to appellee, the facts would be wholly different, and the result would be a transaction in interstate, commerce, as held in the- case of L. D. Powell Co. v. Rown,dtree, supra."
ABK.1 NATIONAL DisTranuTons v. SIMARD 788 The intrastate character of the relationship between the parties in the case at bar is clearly evident from the written agreements they entered into, and it is apparent to us from the plain wording of agreement, supra, that the appellant retained title to the goods in Jack-son's possession until the goods :were sold by Jackson's, and that the appellant was simply engaged in the antique furniture business through Jackson's Furniture, Inc. in Fort Smith, Arkansas. . It is apparent from the record before us, that jack-son's simply sold the furniture, paid for and furnished to it by the appellant, and instead of remitting 134% the cost price to the appellant within eight hours after it was collected from the purchasers as Jackson's.agreed to do, Jackson's either failed to collect or failed to re. mit until over, a two year period it owed the appellant the sum of the chancery judgment, plus the amount appellant received from the 'liquidation. The guaranty agreement actually sued on in this ease is a unilateral agreement separate and apart from the contracts entered into in 1963 between the appellant and Jackson's Furniture, Inc. and is separate and apart from the promissory note given in 1965 on which judgment was entered and partially satisfied in 1967. The guaranty agreement was the only subject before the trial court in the ease at bar and the appellee's affidavit in support of his motion for summary judgment states that this agreement was entered into and executed in Fort Smith, Arkansas, at the instance and upon the request of appellant's attorney in Fort Smith. Appellant's affidavit. does -not controvert. appellee's affidavit on this point, but only states that the original promissory note, as well as the. guaranty agreement., was mailed to appellant in Tennessee from Fort Smith, Arkansas. .The appellant already has its judgment on the promissory note and the validity of that judgment is not be-
784 NATIONAL DISTRIBUTORS v. SIMARD [246 fore us. The question before us is not where the appellant corporation was when it received its copy of the guaranty agreement signed by the appellee, and sued Oil in this case, the . question on this point is where the contract was ente.red into. The appellee says it was in Fort Smith; Arkansas; and the appellant leaves this fact unL controverted. The judgment of the trial -court is affirmed. GEORGE. ROSE SMITH, BROWN and FOGLEMAN, JJ., dissent.. -JOHN A. FOGLEMAN, Justice.. I would reverse the summary judgment in this case as to Houston H. Sim-ard. I do not believe that the trial court or the majority has required appellee to meet the heavy burden resting upon hnn to- show entitlement to this extreme remedy. Our eases with reference to this burden are, outlined in my dissenting opinion in Gordon v. Matson, 246 Ark. 533, 439 S.W. 2d 627. 1 subniit that there is a genuine fact issue in this ease. As I see it, both trial court and the majority have overlooked the most material issue raised by appellant. - Although I do not agree with the treatment given the guaranty agreement in the majority opinion as "a unilateral agreement separate and apart from the contracts entered into in 1963," the material fact in issue which determines whether appellant is to be allowed to maintain suit in this state is the place of making of the contract. Our statute closes the doors of our courts to a nondomesticated foreign corporation only on those actions involving contracts made in this state. U. P. 1. V. Hernreicli d/b/a Station KZNG, 241 Ark. 36, 406 S.W. 2d 317. Under the law of this. state, a contract is deemed to have been entered into at the place where the last act necessary to the completion of the contract took place. Cooffr v. Cherokee 'Appellant does not seek reversal of the summary judgment against Dorothy J. Simard, so Houston H. Simard is referred to herein as appellee.
ARK.] NATIONAL DIsTnintrocs V. SimAnn 785 'Village Development Co., 236 Ark. 37, 364 S.W. 2d 158; Leflar, Conflicts of Law, § 122, page 230; Leflar, Amer-ican Conflicts Law, § 144, page 353. See also Hicks Body Co. v. TFord. Body -Works, 233 F. 2d 481 (1956). It is recognized that a written contract acquires no validity until delivery, either actual or constructive. Dem. Ply. & Litho. Co. v. Parker. Auditor, 192. Ark. 989, 96 S.W. 2d . 16. A. mortgage prepared at the office of the lender in Oklahoma, mailed to its representative within Arkansas for signature of the mortgagors and returned to the lender was held to constitute an Oklahoma contract. Smith V. Brokaw, 174 Ark. 609, 297 S.W. 1031. There is no place of execution, or date, shown on the guaranty agreeinent exhibited with the amended coMplaint in this case. Appellee did not allege in his answer and counterclaim that the guaranty agreement was entered into, or made, in the State of Arkansas. Ap-pellee's only allegation having to do with the status of ifie appellant as a foreign corporation, and relating to the guaranty agreement, was that appellant has engaged in business in Arkansas without qualifying to do business in the state. Appellee's motion for summary judgment asked that the trial court adjudicate that the guaranty agreement and promissory note alleged as the basis of appellant's claim were void and unenforceable. In ap-pellee's affidavit supporting his motion, he merely stated that the guaranty agreement was presented to him and his wife by an attorney acting for appellant in Fort . Smith, Arkansas, and that it was executed at his place of residence there. Appellant's response was supported by the affidavit of Jay Fred Friedman. .Friedman stated that he was one of the attorneys for appellant and that lie had personal knowledge of the facts set forth ii. the affidavit. He stated that the promissory note and guaranty agreement sued . on were both 'sent to the appellant by United States mail in interstate commerce and across state lines, as substantiated b y the date receiving stamp
786 [246 placed on all incoming mail by appellant. I do not see how it could be more clearly made to appear that appellant was contending that the contract was made in Tennessee and not in Arkansas. Under this state of the record, there is uertainly a material fact issue as to the place where the contract was made. At least, appellee failed to show that there was not an issue of fact on this point by simply showing the isolated fact as to the place of signing. While the trial court found that there was no gen. nine issue of fact relevant to issues raised by the motion for sunmiary judgment and dismissed the complaint holding the note and guaranty agreement null, void and unenforceable, the court made specific findings of fact, none of which has any bearing at all upon the place where the contract was made. The court's specific finding in that respect was simply that the appellant engaged in business in Arkansas, and, in the course of such business, obtained from appellee the guaranty agreement sued on. This point is argued by appellant under both points relied upon in his brief. BROWN. J., joins in this dissent.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.