Interstate Const. Co. v. Lakeview Canal Co.

Blume, Justice.

This ease involves a “cost-plus” contract, and, like many other contracts of that kind has resulted in trouble. The Interstate Construction Company, plaintiff below and appellant here, is a corporation organized under the laws of the State of Colorado, and on April 3, 1920 entered into a contract at Denver, Colorado with the Lakeview Canal Co., respondent herein, whereby the appellant agreed to enlarge and extend the so-called Hammitt canal in Park County, Wyoming, the whole work involving the excavation of approximately 1.68,000 cubic yards. Appellant agreed to complete the work on the 15th day of June, 1920, which time was subsequently extended by agreement of the parties. Appellant agreed to furnish all labor and material that might be necessary for the prosecution and completion of the work. A dispute arose between the parties and on or about June 20th, 1920, the Lakeview Canal Company terminated the contract and compelled the appellant to abandon it. Approximately $40,000 had been paid on the contract, and appellant claims that there is still due thereunder the sum of $38,442.58, for work and material furnished. The trial court entered judgment in favor of defendant, from which appellant appeals.

The Lakeview Canal Company pleaded as a defense herein, and it is conceded, that the appellant is a foreign corporation and that it did not accept the constitution of the State of Wyoming and did not file such acceptance in the office of the Secretary of State as required by the constitution and statutes of the state until June 28, 1920, after the termination of said contract. The question thus raised is the only one that we need to consider. Section 5, Art. X of the Constitution provides as follows:

“No corporation organized under the laws of Wyoming Territory or any other jurisdiction than this state shall be permitted to transact business in this! state until it shall have accepted the constitution of this state and filed such acceptance in accordance with the laws thereof. ’ ’

Subsequently, by Chapter 42 of the Laws of 1890-91, now Section 5974, Wyo. Comp. Stat. 1920, the legislature made provision to carry the foregoing constitutional provision into effect. These provisions were construed and considered at length in the case of Gould Land and Cattle Company vs. The Rocky Mountain Bell Telephone Co., 17 Wyo. 507, 101 Pac. 939. In that case, the Gould Land and Cattle Company, a foreign corporation, which, had not accepted our constitution, conducted a live stock business in this state and sued the telephone company for breach of contract in failing to correctly transmit a message over its telephone line from one of its offices in this state to another point in the state with directions to forward the same to an agent of the plaintiff in Idaho. The court held that the constitutional and statutory provisions above mentioned are mandatory and make unlawful, voidable and unenforceable all contracts entered into in this state in violation thereof.

The holding in that case is inconsistent with the contention that a compliance with our law subsequent to the making of an unlawful contract, but before suit is started, avoids the necessity of declaring such a contract void. If a contract, or any business that gives rise to a claim is unlawful, it cannot well be made lawful by anything that is done subsequently. Where the right of action only is suspended during the time of non-compliance with a statute, the rule is different. But the courts are agreed, we think, that where the claim sued on arises; out of a transaction unlawful by reason of non-compliance with the constitution or laws, a subsequent compliance has no effect. Fletcher Cyc. Corp., section 5972. The case at bar cannot, accordingly, be taken out of the rule laid down in the Gould case because of the fact that appellant complied with the law on June 28, 1920, before the bringing of this suit. Nor does the fact that the contract in the case at bar was entered into at Denver, Colorado, alter the situation. The contract has reference solely to business to be done in this state. The law forbids the doing of any business in this state, by a foreign corporation, until acceptance of the constitution. It can, clearly, make no possible difference whether the unlawful business is done pursuant to a written or oral contract, or pursuant to a contract entered into in one place rather than another. If the ' business is done within the state, without accepting the constitution, it is done unlawfully. The criterion in any case is: Does the claim arise out of, or in connection with, an unlawful doing business in the State? The claim in the Gould ease arose out of a contract, the making of which was unlawful. In the case at bar, the claim arises1 out of the unlawful performance of a contract. Whether or not a suit could be maintained, in this state, upon a claim arising out of a breach of contract, lawful in its origin, as1 in the ease at bar, before the unlawful performance is entered upon, we need not determine. It is at least clear, that where, as in the case at bar, the claim arises out of the unlawful performance, the fact that the contract was lawful when made, does not make the claim lawful. If the contrary contention were correct, the.constitution and statutory requirements above mentioned, may be evaded in all cases by merely making the formal contract outside of the limits of the state. The point here involved has been passed on several times and always contrary to the contention of appellant. Fletcher, supra, sec. 5960; S. R. Smythe Co. vs. Fort Worth etc. Co., 105 Tex. 8, 142 S. W. 1157; Buhler vs. E. T. Burrowes Co. (Tex. Civ. App.) 171 S. W. 791; Alabama Western R. Co. vs. Talley-Bates Constr. Co., 162 Ala. 396, 50 So. 341; Citizens National Bank vs. Buckheit, 14 Ala. App. 511, 71 So. 82. In the last ease cited the court said:

"Where the contract is to be performed in this state, although not entered into here, and in the performance the non-resident corporation must engage in business in this state, although the contract is valid, the policy1 of the state as evidenced by the constitution and statutes compels the courts of the state to refuse their aid to such offending corporation in the enforcement of such contract and in recovering the benefits accruing thereunder. ’ ’

2. The contention is made that the transaction in this case is a single transaction and therefore is not prohibited. It is true that a number of cases hold that to engage in a-single transaction does not constitute doing business in the state. ¥e need not determine the soundness of that holding. Appellant was engaged for a period of at least two months in performing or attempting to perform the contract. During that time it established an office at Cody, 'Wyoming, a number of laborers were hired, a great deal of material was bought, and a great many miscellaneous matters of business transacted. If all of that business', together, could be construed to be a single transaction, then performance of a contract entered into for highway construction, for instance, which would take a period of a year or perhaps' two years, would come within the same rule. That is not, we think a reasonable construction to be placed upon the constitution and statute, and few cases, we think, if any, would bear out the contention made herein. The contract considered in the case of Fort Worth etc. Co. vs. Smythe Co., 61 Tex. Civ. App. 388, 128 S. W. 1136, affirmed in 105 Tex. 8; 142 S. W. 1157, involved the equipment of a gas plant. The court said:

"It was one transaction in the sense of one contract, to be sure. But, if the statute should be so construed as contended for, the question of commerce between the states not being involved, then a contract by a foreign corporation to erect and complete a building in this state, regardless of the time it took or the magnitude of the work, would not be require cl to comply witb tbe statute. If a contract requiring five weeks to complete is not witbin its terms, then a contract requiring two years to complete is likewise not within the terms of the statute. The purpose of the statute would not be accomplished by such construction. ’ ’

See also United States Construction Co. vs. Hamilton National Bank, 73 Ind. App. 149, 126 N. E. 866 and cases cited; Alabama etc. R. R. Co. vs. Talley-Bates Const. Co., supra; National Refrigerator Co. vs. Southwestern etc. Co., 288 Mo. 290, 231 S. W. 930; Natural etc. Co. vs. Fred. Bredel Co., 193 Fed. 897, 114 C. C. A. 111.

3. The contract in question seems to have contemplated that horses and some of the machinery to be used in connection with the enlargement and extension of the ditch should be shipped from Denver, Colorado, and returned after the completion of the work. Payment for the use of such horses and machinery was provided to be made at a definite rate per day, starting from the date of shipment, and counsel for the appellant seem to think that the transportation of these horses and machinery to Cody and return should be construed to constitute interstate commerce, and hence not in contravention of the constitution and statutes of this state. It is clear, however, that such transportation was a mere incidence of the work to be performed under the contract. It would have been immaterial whether the outfit with which to do the work was shipped from Denver or from some other place. The contract was for the enlargement and extension of a ditch in this state, not for the hire of horses or material. In order to accomplish the purpose in view, appellant necessarily had to use horses, implements and machinery, but it was immaterial to respondent where they come from. The law is that where the performance of labor is merely incident to the sale and transportation of goods from one state to another and is reasonably necessary for the purpose of completing and effectuating such sale and transportation, then the mere fact that some labor is done within the state does not change the transaction from one that is interstate to one that is intrastate. York Mfg. Co. vs. Colley, 247 U. S. 21, 38 Sup. Ct. Rep. 430, 62 L. Ed. 963, 11 A. L. R. 611, and cases cited in a note. On the other hand, there are transactions in which the transportation of property from one state to another is merely incident to a contract for labor within the state and when that is the case the transportation is not protected by the commerce clause of the Federal constitution. Browning vs. Waycross, 233 U. S. 16, 34 Sup. Ct. Rep. 578, 58 L. Ed. 828; General Railway Signal Co. vs. Commonwealth of Virginia, 246 U. S. 500, 38 Sup. Ct. Rep. 360, 62 L. Ed. 854; A. H. Andrews Co. vs. Colonial Theatre Co. (D. C.) 283 Fed. 471; Peck, Williamson etc. Co. vs. McKnight, 140 Tenn. 563, 205 S. W. 419; In re Springfield Realty Co. (D. C.) 257 Fed. 785; U. S. Constr. Co. vs. Hamilton Nat. Bank, supra, and cases cited. Also cases in note 11 A. L. R. 622, 623.

4. It must be clear from what we have said, that we must hold the claim of the appellant unenforceable unless we overrule the Gould' case, supra. That is, in fact, virtually what we have been asked to do, and we have given that point our thoughtful consideration. We are not unmindful of the fact that adherence to the rule in that case will occasionally lead to gross injustice, and, perhaps, at times foster a spirit of dishonesty. We cannot but regret such results. Bixt the Gould case was carefully considered and the rule there laid down was adopted only after a review of a long list of cases, and is supported, if not by the weight of authority, at least the greater number of authorities. Fletcher, supra, Sec. 5942. We must also bear in mind that courts cannot refuse to enforce a constitution or a statute merely on the ground that conditions imposed are unreasonable or oppressive. Fletcher, supra, Sec. 5896. We must, accordingly, adhere to the rule in the Gould ease, and are constrained to hold that the claim of appellant arises out of business done in this state in violation of the constitution and statutes of this state. Appellant, therefore, has no right to maintain the action herein.

The judgment of the lower court must accordingly be affirmed and it is so ordered.

Affirmed.

Potter, Ch. J., and Kimball, J., concur.

NOTE — See 12 C. J. pp. 36, 887; 14A C. J. pp. 1273, 1302.