Preston Motor Sales Co. v. Preston Motor Corporation

The Preston Motor Sales Company, a corporation, sues the Preston Motor Corporation, a corporation, for damages growing out of the breach of a contract made by defendant, under the terms of which plaintiff was to become defendant's sole sales agent, with exclusive right to sell in a certain territory, during three years, certain motor cars to be manufactured by the defendant, on terms and conditions mentioned in the contract, which is copied in and made part of the count. There was also a count for money had and received, and a count claiming an amount due by account.

The defendant filed two pleas, numbered 1 and 2. Plea 2 was amended. Each plea was verified by affidavit. The judgment of the court shows demurrers to plea 1 were sustained, and demurrers to plea 2 as amended were overruled. Plaintiff took a nonsuit, with bill of exceptions, on account of the adverse rulings of the court to it on its demurrers to plea 2 as amended. Section 3017, Code 1907.

The bill of exceptions recites that demurrers to pleas 1 and 2 as amended were overruled by the court as to each of said pleas, separately and severally. This court will look to the judgment of the court in the minutes for the rulings of the court on demurrers to pleas, and will be governed by its recitals, and not by the statements thereon in the bill of exceptions. Wallace v. Crosthwait, 139 Ala. 529, 36 So. 622; Brooks v. Rogers, 101 Ala. 112, 13 So. 386.

Hence there is only one assignment of error to be considered: Did the court err in overruling demurrers of plaintiff to plea 2 as amended? The plea as amended is verified by affidavit. It avers that all of the alleged wrongs, matters, and causes of action set forth in each count of the complaint relate to and arise under the alleged contract, referred to and made part of count 1 of the complaint. It avers that said contract was made in writing oil November 24, 1919, by defendant, not with the plaintiff as a corporation, but with the Preston Motor Sales Company as a partnership, composed of J. S. Wood and Fred S. Jones, doing business under said name. It avers that there was no such corporation in existence as plaintiff at the time of the execution of the contract. It avers that at the time this suit was brought there was no such corporation in existence as Preston Motor Sales Company, because, as it avers, its certificate of incorporation was obtained by fraud by its three subscribers for $8,100 of its stock. They valued property reasonably worth only $4,000 at $8,000, conveyed it to the corporation at that false valuation, and in this way paid for $8,000 of stock, and obtained thereby a certificate of incorporation with authorized capital stock of $25,000, $10,000 being preferred, and $15,000 common stock, and $8,100 of stock paid into the corporation by transfer of $4,000 in property at the false valuation of $8,000 and the payment of $100 cash. Whether this plea 2 as amended is a plea in bar or in abatement must be determined by its subject-matter and prayer under the statute. Sections 5333, 5330, Code 1907; Day v. Huckabee, 60 Ala. 425.

The plaintiff, a corporation, sues defendant, a corporation, for damages for breach of a contract which plaintiff alleges was made by defendant with it on November 24, 1919, giving plaintiff exclusive agency and right to sell its motor cars in certain territory, Jefferson county, for three years. The defendant pleaded, under oath, verified by affidavit, that it made the contract, but not with plaintiff — made it with a partnership, the name of which was the same as plaintiff; that plaintiff was not in existence as a corporation on November 24, 1919, when the contract was made; that a partnership with plaintiff's name, and not plaintiff, was appointed its agent, with exclusive right to sell its motor cars for three years within the prescribed territory; that plaintiff was not organized as a corporation until May 13, 1920, after the execution and delivery of the contract.

This first part of said plea is in legal effect a non est factum plea. It denies under oath the execution of the contract with plaintiff. It avers it was made with a partnership, and not with plaintiff, a corporation, as averred in the complaint. The difference between a partnership and a corporation is marked; each having the same name does not make them the same in fact or in law. They are entirely separate and distinct. The entity of each is different. A contract made by defendant with one, a partnership, could not be a contract made by defendant with the other, a corporation, even if both had the same name. Unauthorized change of parties in a contract is a material change in the contract; and that alteration, being material, can be raised by plea of non est factum. Smith v. Hiles, etc., Co., 107 Ala. 272, 18 So. 37; section 5332, Code, and authorities there cited.

If the facts alleged in this plea are true, the contract was made with a partnership by the same name as the corporation, but not with plaintiff, a corporation; and under the averments of the complaint, plaintiff could not recover, as it did not make the contract with defendant as averred therein. If the allegations of this plea are true, there is nothing in the complaint to show the privity of the parties to this suit arising out of or under the contract. The first part of the plea is a non est factum plea, and the demurrers to it were properly overruled. The latter part of the plea alleges facts constituting fraud, from which it draws the conclusion:

"Hence, that at the time this suit was brought there was no such corporation in existence as Preston Motor Sales Company."

These averments are surplusage, unnecessary, when considered in connection with the non est factum part of the plea.

There is no demurrer to that part of the plea alleging fraud in the organization of the corporation, and in payment for subscriptions of stock; hence it is not necessary for us to decide whether these averments are sufficient for defendant to base its conclusion that there was no such corporation as plaintiff when this suit was filed.

There is no demurrer that defendant improperly combined in this one plea two pleas, viz. a plea of non est factum and a plea of nul tiel corporation, which would require us to test its sufficiency as a nul tiel corporation plea. Berlin Mach. Wks. v. Ewart Lumber Co., 184 Ala. 272, 63 So. 567.

Affirmed.

ANDERSON, C. J., and SAYRE and GARDNER, JJ., concur.