state shall be entitled to all the privileges and immunities of citizens in the several states. City and County of S. F. v. Liverpool etc. Co., 74 Cal. 113, 15 Pac. 380. A state may forbid foreign corporations to do business or acquire property within its borders, or may confer such right and limit it by prescribing conditions precedent to its exercise. Barling v. Bank of B. N. A., 50 Fed. 260. The California constitution [Art. XII, Sec. 15] provides that no corporation organized outside the limits of this state shall be allowed to transact business within this state on more favorable conditions than are prescribed by law to similar corporations organized under the laws of this state. This is a declaration of public policy binding on all foreign corporations that come here to do business, and it means that the penalties and liabilities imposed by California's laws on corporations, directors, officers and stockholders enter into every contract, conveyance or power made or given by any foreign corporation in the course of its business dealings in the state. [Williams v. Gold Hill M'g. Co., 96 Fed. 454.] A statute of the state [Stats. 1880 p. 131] providing that leases of the mining ground of any mining corporation can only be made. with the consent of the stockholders, is intended to apply to all corporations, foreign or domestic, doing business here, because it is a declaration of public policy. [Williams v. Gold Hill M'g. Co., 96 Fed. 454.] A foreign railroad corporation coming here to engage in the business of a common carrier, must allow the stop-over privilege to its passengers, because the Civil Code [C. C. 490] provides that "every railroad corporation" must so allow, and foreign corporations do business here only pursuant to the laws of the state. [Robinson v. So. Pac. Co., 105 Cal. 526, 38 Pac. 94, 722.] As the legislature has power to amend or alter all laws regulating corporations [C. C. 404 (old Sec. 387)], it would seem to be immaterial whether the regulation is enacted before or after the foreign corporation enters the state, as long as no vested rights are impaired. [C. C. 404.] An act requiring foreign insurance corporations now doing business in the state to pay a portion of their income to the city or county in which their place of business is located [Stats. 1885, Chap. 15], violates the state constitution [Art. XI, Sec. 12], since the act imposes a tax. S. F. v. Liverpool etc. Co., 74 Cal. 113, 15 Pac. 380; see sec. 193, post. The liability of each stockholder of a corporation formed under the laws of any other state or territory of the United States, or of any foreign country, and doing business within this state, is the same as the liability of a stockholder of a corporation created under the constitution and laws of this state [C. C. 322], and all the penal liabilities of directors, officers or agents for making or publishing false reports, prospectuses and subscription lists, and for hampering legislative investigation [Pen. C. 557-572], are expressly made applicable to foreign corporations. Pen. C. 571. These are, again, declarations of public policy. Whether or not they are enforcible against foreign corporations depends on the question whether they are regulations of the business dealings of the corporation or regulations of its internal affairs; if of the former they are enforcible,' if of the latter they are beyond the power of the legislature." SECTION 193-PHRASE, "DOING BUSINESS WITHIN THE STATE," DEFINED. A foreign corporation is not "doing business" within a state unless it does a substantial part of its business there; an isolated act is not such. Acts of selling, leasing or mortgaging are "doing business."4 So is the making of contracts. Statutes regulating such acts apply, therefore, to foreign corporations. But posting mining reports in the company's office is an internal regulation for the benefit of the stockholders and covers the internal affairs of the corporation. An act requiring such reports [Stat. 1880 p. 400] applies only to domestic 1. Barling v. Bank Brit. N. A., 50 Fed. 260; City & County S. F. v. Liverpool etc. Co., 74 Cal. 113, 15 Pac. 380; Williams v. Gold Hil Min. Co., 96 Fed. 454; Robinson v. So. Pac. Co., 105 Cal. 526, 38 Pac. 94, 722. 2. Miles v. Woodward, 115 Cal. 308, 46 Pac. 1076; Williams v. Gold Hill Min. Co., 96 Fed. 454. 3. Doe v. Springfield Boiler Co., 104 Fed. 684. corporations. Miles v. Woodward, 115 Cal. 308, 46 Pac. 1076. Any act which places a burden or restriction on the conduct of the business of a corporation is a regulation of its power to do business. [Id.] Such an act applies to all corporations, domestic or foreign, doing business here. See Sec. 192, supra. Though there is no decision in the state on the subject, it would seem that the statutory regulations regarding stockholders' liabilities and the penal liabilities of officers and agents [See Sec. 192, supra] are regulations of business dealings, rather than of internal affairs, and therefore within the power of the legislature to enact. In McGowan v. McDaniel, 111 Cal. 57, 43 Pac. 418, it is said that the stockholder's statutory liability is a burden imposed on the stockholder that has nothing whatever to do with the creation or formation of the corporation. That case decided that Sec. 322 C. C. imposing this liability applied to all corporations created either before or after the code. The same reasoning would declare it applied to foreign as well as domestic corporations. When the purpose of an act against foreign corporations is to raise revenue, whether it is a condition under which to do business or a tax is a difficult matter of statutory construction. S. F. v. Liverpool etc. Co., 74 Cal. 113, 15 Pac. 380. SECTION 194-REGULATION-IN GENERAL. The act of April 1, 1872, Stats. p. 826, as amended by Stat. 1899 p. 111 (which act is now sections 405 and 406 C. C.), sections 618624 of the Political Code, relating to foreign insurance corporations, Sec. 407 C. C. relating to foreign transportation companies, and the act of March 8, 1901, Stats, p. 108, together with the constitution, Art. XII, Sec. 15, and sections 557-572 of the Penal Code (considered in sections 192, supra) contain all the existing statutory conditions under which foreign corporations can do business here. Section 405 Civil Code declares that every foreign corporation must within forty days of the time it commences to do business here file in the office of the secretary of state a designation of some person residing within the state upon whom process issued under any law of this state may be served. Such process may be served on the person so designated, or, in the event that no such person is designated, then on the secretary of state, and the service is a valid service on such corporation. [See Part II, post, for section in full.] As a reward for filing such a designation, the corporation can plead the California statutes of limitation [C. C. 406], and can prove its legal existence in any action by a copy of the designation certified by the secretary of state. C. C. 405. [The full text of the acts relating to foreign insurance corporations and foreign corporations engaged in the business of common carriers in this state, is given in part II, post.] |