The opinion of the court was delivered by: John E. Miller, District Judge.
On October 30, 1957, the plaintiff, Pratt Laboratories, Inc.,
filed its complaint against the defendant, F. A. Teague,
alleging that the plaintiff is a Pennsylvania corporation; that
the defendant is a citizen of Berryville, Arkansas; and that
the matter in controversy exceeds the sum of $3,000, exclusive
of interest and costs. The plaintiff further alleged:
"Plaintiff, Pratt Laboratories, Inc., is one and the same
corporate entity as Pratt Food Company, its name having been
changed to Pratt Laboratories, Inc., by corporate action on or
about the 15th day of August, 1957.
"The defendant, on or about April 9th, 1952, became indebted to
the plaintiff in the sum of Thirty-eight Thousand Dollars
($38,000.00), and executed and delivered to the plaintiff his
promissory note for said amount on April 9th, 1952, due and
payable on December 31, 1952, with interest until paid at the
rate of four per cent (4%) per annum. * *
"The said promissory note is now past due, plaintiff has made
repeated demands upon the defendant for payment, and he has
failed and refused to pay said indebtedness."
Attached to the complaint is a copy of the note sued upon.
On November 25, 1957, the defendant filed his motion to dismiss
on the ground that the plaintiff is a foreign corporation doing
business in the State of Arkansas without first having
qualified to do such business, and that said plaintiff has no
legal right to maintain this action. This motion is now before
the Court on the record and briefs of the parties.
On December 30, 1957, upon motion of defendant and with the
consent of the plaintiff, the Court entered an order making all
the pleadings, files, orders, documents, and records in Civil
Action No. 354, entitled Pratt Food Company, a corporation, v.
F. A. Teague, a part of the defendant's pleadings and of the
record in the instant case.
On January 29, 1958, the defendant filed an affidavit in
support of his motion, attaching thereto certain letters and
The record in Civil Action No. 354 discloses that on March 31,
1953, Pratt Food Company filed its complaint against F. A.
Teague based upon the same note now sued upon in this action.
On April 20, 1953, Teague filed a motion requesting an audit
from the plaintiff. Attached to the motion was a copy of the
agreement made in connection with the $38,000 note. Said
agreement provides, as follows:
"Whereas certain differences have arisen between Pratt Food
Company (hereafter called Pratt) and F. A. Teague (hereafter
called Teague) and the parties are desirous of settling same:
"Teague agrees as follows:
"1. To deliver herewith a promissory note in the amount of
38000 dollars payable to Pratt and due December 31, 1952.
"2. To deliver to First National Bank, Berryville, Ark. an
assignment wherein and whereby Teague assigns to Pratt $38000
of the proceeds of a certain sale of a farm owned by Teague
which sale is covered by an agreement of sale dated March 22,
1952 between Teague as seller and J. D. Vandergriff as buyer
and which agreement of sale is presently lodged with said
Bank as escrow agent.
"3. To release Pratt from any and all claims, demands or
liabilities under any contracts heretofore or presently
existing between Pratt and Teague and more particularly a
distributors contract dated March 13, 1950 and a disputed
contract contained in an offer by Pratt dated February 13,
"4. That nothing contained herein to be considered as
affecting certain trade acceptances presently outstanding in
the amount of $13628.25 which will remain as an obligation of
Teague and will be paid as they become due.
"Pratt agrees as follows:
"1. To release and discharge Teague for any and all liability
in connection with any open book account (except as stated
above) and ascertain 1951 chattel mortgage which mortgage
shall be released of record and the note given in connection
with the same shall be returned to Teague when the $38000
above mentioned shall have been paid.
"2. To examine its records to ascertain whether Teague has
been given the proper credit concerning the purchase of feed
for Ed. Rassmussen and also for the purchase of certain
turkey poults during the year 1950. If said credits were not
properly given in either ...