Holder v. Aultman Miller Company/Opinion of the Court

This action was brought in the circuit court of the United States for the Eastern district of Michigan, by a manufacturing corporation of the state of Ohio, having its principal office and its facto y at Akron in that state, against one of its commission agents, a citizen of Michigan, to recover the price of agricultural machines sold by the defendant in Michigan, under a contract in writing, by which the plaintiff authorized the defendant to sell, within a certain territory in Michigan, such machines supplied to him by the plaintiff; and the defendant agreed to canvass the territory, to sell the machines at retail prices fixed by the plaintiff, to hold the unsold machines as the plaintiff's property, to keep and render account of sales, and to remit the proceeds to the plaintiff.

The defendant relied on a statute of Michigan of May 13, 1893, which required every foreign corporation permitted to transact business in that state, and not having filed articles of association under its laws, to pay a franchise tax of half a mill upon each dollar of its capital stock, and further provided that 'all contracts made in this state after January 1, 1894, by any corporation which has not first complied with the provisions of this act, shall be wholly void.' Pub. Acts Mich. 1893, c. 79, p. 82.

The circuit court, in giving judgment for the plaintiff, held that the contract was made in the state of Ohio, and that the statute of Michigan, so far as it applied to the business carried on by the plaintiff in that state under the contract, was in conflict with the constitution of the United States authorizing congress to regulate interstate commerce. 68 Fed. 467.

This was therefore a 'case in which the constitution or law of a state is claimed to be in contravention of the constitution of the United States,' and was rightly brought directly to this court by writ of error, under Act March 3, 1891, c. 517, § 5 (26 Stat. 828). Upon such a writ of error, differing in these respects from a writ of error to the highest court of a state, the jurisdiction of this court does not depend upon the question whether the right claimed under the constitution of the United States has been upheld or denied in the court below; and the jurisdiction of this court is not limited to the constitutional question, but includes the whole case. Whitten v. Tomlinson, 160 U.S. 231, 238, 16 Sup. Ct. 297; Penn Mut. Life Ins. Co. v. City of Austin, 168 U.S. 685, 18 Sup. Ct. 223.

But this court has not found it necessary to pass upon the constitutional question, because it is of opinion that the contract is not within the statute set up by the defendant.

By the clear terms of the statute of Michigan, the invalidity of the contract does not depend upon the place where, or the time when, it is to be performed, but upon its being 'made in this state after January 1, 1894.' A contract made before that date is valid, although it is to be performed afterwards; and a contract made elsewhere than in Michigan is valid, although it is to be performed in this state.

A contract is made when, and not before, it has been executed or accepted by both parties, so as to become binding upon both.

This contract is admitted to have been drawn up at Laingsburgh, in the state of Michigan, where the defendant resided. It begins by stating that it is 'made this 20th day of February, 1894, between' the plaintiff and the defendant; and it ends with the clause, 'In witness whereof, the parties hereunto have set their hands the day and date above written.' Then follows the signature, 'Aultman, Miller and Co., by D. C. Gillett,' who may be assumed to have been the plaintiff's local agent at Laingsburgh. That signature is followed by a stipulation, evidently addressed by the plaintiff to the other party to the contract, in these words: 'This contract not valid unless countersigned by our manager at Lansing, Michigan, and approved at Akron, Ohio.' Then follows the signature of the defendant, 'William Holder,' who thereby necessarily assents to this stipulation, as well as to the other terms of the contract. Both parties thus agreed that the contract was not to be valid until countersigned by the plaintiff's manager at Lansing, in Michigan, and also approved at Akron, in Ohio, the site of the plaintiff's principal office. It further appears, upon the contract itself, that it was afterwards, on February 27, 1894, countersigned at Lansing, by 'R. H. Worth, Manager;' and, by an indorsement on the contract, that it was approved at Akron, April 29, 1894, as shown by the signature of 'Ira M. Milloy, Secretary.'

The plaintiff, in its declaration, alleged that on February 27, 1894, at Laingsburgh and Lansing, the plaintiff, 'by D. C. Gillett and R. H. Worth, its duly-authorized agents, entered into a written contract with the defendant.' The date on which the plaintiff 'entered into' the contract with the defendant is thus alleged to have been, not February 20, 1894, mentioned at the beginning of the contract as the day on which it was made, and which may have been the day on which it was signed at Laingsburgh, by Gillet in behalf of the plaintiff, and by the defendant in person, but February 27, 1894, the day on which it was countersigned at Lansing by Worth, the plaintiff's manager. The plaintiff thus assumed that the contract did not exist as a contract before it was countersigned by the plaintiff's manager at Lansing; and there is no more reason for assuming that it existed as a contract before it was approved at the plaintiff's principal office at Akron, for the stipulation above quoted required both countersigning by the manager at Lansing and approval at Akron to make it a valid contract. Accordingly, the declaration further alleged that 'afterwards, to wit, on April 27, 1894, the said written contract was approved by the plaintiff at its office in the city of Akron, and the same then and there was and became a binding and valid contract between the defendant and the plaintiff, according to the terms thereof.' The words 'to wit, at the city of Lansing, in the Eastern district of Michigan,' would seem to have been added by way of formal venue only, in accordance with the ancient mode of pleading in suing upon a transaction which took place abroad. As Lord Mansfield said: 'No judge ever thought that, when the declaration said in Fort St. George, viz. in Cheapside, that the plaintiff meant it was in Cheapside.' Mostyn v. Fabrigas, Cowp. 161, 177. See, also, McKenna v. Fisk. 1 How. 241, 248.

The circuit court found, as facts, that the parties entered into the contract on April 29, 1894, which was the date of its approval at the plaintiff's home office in Ohio; and that it was executed, accepted, and approved, as set forth therein, and in the indorsement thereon.

Whether, therefore, we look to the contract itself, to the plaintiff's declaration, or to the findings of fact by the court, it clearly appears that the contract, when, after being drawn up in writing and signed by the plaintiff's local agent, it was tendered to the defendant, and assented to and signed by him in Michigan, contained a distinct stipulation that it was not valid unless not only countersigned by the plaintiff's manager in Michigan, but also approved at the plaintiff's principal office in Ohio; and that it was on April 29, 1894, and at Akron in the state of Ohio, that the contract was approved by the plaintiff's secretary at its principal office, and then and there, for the first time, became a valid and binding contract between the parties. It cannot therefore be considered as 'made,' within the meaning of the statute in question, at any earlier time or other place.

The approval at the plaintiff's home office was not a ratification by the plaintiff of an unauthorized act of one of its agents; for each of its agents, Gillett in first signing the contract, and Worth in countersigning it, appears to have acted within the strict limits of his authority. But the final approval by the plaintiff itself was an act which, according to the express stipulation of the parties, and in the contemplation of every person who affixed his signature to the paper, was a necessary step to complete the execution of the instrument by the plaintif, and to make it a valid and binding contract between the parties.

The opinion of the supreme court of the state of Michigan in Seamans v. Temple Co., cited at the bar, contains nothing inconsistent with this conclusion. It was there held that a contract of insurance, made in another state, by a corporation thereof, upon an application procured through its agents in Michigan, upon property in Michigan, could not be sued on in the courts of Michigan, because of provisions of earlier statutes of Michigan making it unlawful for any foreign insurance company to transact any business of insurance in the state, and for any person to aid in any way in procuring a policy of insurance by a foreign corporation upon property in the state. How. Ann. St. §§ 4331, 4354, 8136. And the court said: 'If it be conceded that the contract was made in Wisconsin, and that the premiums and loss, if any, are payable there, it is as much in contravention of the policy of this state as though it had been made and was to be performed here. It cannot be supposed that the statutes cited were intended merely to prevent the act of making the contract in this state.' 105 Mich. 400, 404, 63 N. W. 410.

The statute now before this court contains no such provisions as were contained in the statutes in question in that case, but it simply invalidates 'contracts made in this state' by a foreign corporation, which has not filed its articles of association in Michigan and paid the franchise tax imposed by this statute.

Judgment affirmed.