Crespi & Co. v. Giffen

This action was begun by plaintiff, a Texas corporation, against Giffen-Troutt Company, a copartnership comprised of L. F. Giffen and W. L. Troutt, and L. F. Giffen and W. L. Troutt, individually. Service was had on the copartnership and L. F. Giffen, but W. L. Troutt was not served. Judgment was rendered against the copartnership and defendant, L. F. Giffen. From this judgment Giffen has appealed. The action is upon a promissory note which was executed by the defendants in favor of plaintiff for the sum of $12,500. Appellant pleaded his discharge in bankruptcy, but respondent claims the money was obtained by the defendant copartnership, by means of misrepresentation and fraud of appellant’s partner and that such misrepresentation and fraud prevented his discharge in bankruptcy on this debt.

The points urged by appellant are: (1) that respondent was a foreign corporation doing business within this state without having complied with the statute relative to foreign corporations; (2) that appellant was discharged in bankruptcy from this debt; and (3) that the alleged misrepresentation and fraud are not within the exception of discharges of debtors in bankruptcy.

The facts may be summarized briefly as follows: Respondent, at all times during the negotiations for the loan, was a Texas corporation with its principal place of business at

Relative to the interstate character of the transactions, the trial court made the following findings: “ . . . that at the time of the transaction herein involved, the plaintiff was engaged solely and only in interstate and not in intrastate commerce. . . .

“ . . . which seven hundred bales of cotton the said Anderson had agreed and promised to sell to plaintiff, which said agreement had been made by plaintiff through its agent, L. P. Giffen, said cotton to be delivered by said Anderson free on board cars, at California shipping points, to be shipped to plaintiff in Texas; . . .

“ . . . that plaintiff was not, at any time in the year 1926, engaged in intra-state business in California, and was not doing business in California, and was not required to file with the Secretary of State copies of its Articles of Incorporation; ...”

There is ample evidence to support the court’s findings upon the subject.

In the case of H. K. Mulford Co. v. Curry, 163 Cal. 276 , 282 [ 125 Pac. 236 , 238], the Supreme Court said: “The admitted power of a state to regulate and prescribe terms upon which a foreign corporation may engage in intra-state or domestic business, is subject to this limitation, that where such foreign corporation is engaged in inter-state as well as intro-state business, no such term, condition or requirement will be constitutional if it imposes any burden upon the inter-state business of such corporation, whatever be its name or form; ...”

Appellant contends that section 1 of the Act of 1915 (Stats. 1915, p. 422) specifying the conditions upon which a corporation may transact business in this state, as amended in 1923 (Stats. 1923, p. 1034), applies to this case. This act provides that any foreign corporation engaged in intra

Appellant cites numerous cases which he claims supports his position but in examining them we find for the most part that the cases relate to intrastate business.

This action is based upon a promissory note executed by the defendants. Appellant Giffen pleaded a discharge in bankruptcy releasing him from his obligation on the debt. The court made a finding as follows: “That at the time of said statement, representation and promise made for, on behalf of and by the defendants, defendants did'not intend to hold, pay out or apply said money to the credit or for the use and benefit of said Anderson, but on the contrary intended to and did immediately pay out and use said money so deposited in paying creditors of defendants; that within three days after said funds were so deposited by plaintiff, the same had all been used by defendants for paying their debts, and none thereof was ever delivered over or paid to said Anderson; that defendant Giffen did not know of the statements, representations and promises made by defendant Troutt.”

Appellant contends that the proof of misrepresentation arid fraud was admitted in evidence over his objection, when it had not been pleaded. In the instant case the original obligation is on a promissory note. Fraud was included in and incidental to the creation of that obligation. That incident was properly urged without pleading, to avoid the plea of discharge in bankruptcy. Section 462 of the Code of Civil Procedure provides: ‘ ‘ Every material allegation of the complaint, not controverted by the answer, must, for the purpose of the action, be taken as true; the statement of any new matter in the answer in avoidance or constituting a defense or counterclaim, must, on the trial, be deemed controverted by the opposite party.”

This is a sufficient answer to appellant’s contention.

Appellant next contends that the discharge in bankruptcy was a complete defense. Subdivision 2 of section 17 of the Bankruptcy Act (sec. 35, title 11, U. S. C. A.), provides that a discharge in bankruptcy shall release a bank

The judgment is affirmed.

Barnard, P. J., and Marks, J., concurred.

A petition by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on August 7, 1933.