Then follow a couple of pages of citations, which are directly to the point and well known. It is said:

Many cases are cited in support of the rule thus laid down. Upon its own merits, this agreement can not be sustained.

Does the agreement in question gain validity from the statute of Wisconsin which has been quoted? Is the statute of the State of Wisconsin which enacts that a corporation organized in another State shall not transact business within its limits unless it stipulates in advance that it will not remove into the Federal courts any suit that may be commenced against it by a citizen of Wisconsin a valid statute in respect to such requisition, under the Constitution of the United States?

Then the court proceeds to declare that a corporation is a citizen of the State of its creation, and that every citizen has the right under the Constitution to remove his suit into the Federal court, any legislation by the State to the contrary notwithstanding, and that the requirement of the statute that they should agree to this is void. That case has often been followed, and it was applied in various cases until we come down to the case of the Security Mutual Life Insurance Company v. Pruitt (202 U. S., 246), where that case just cited and the other cases following along the same line are commented upon and the principles applicable to the subject are discussed and affirmed, with this result. They say, in the first place, that an agreement exacted by a statute that the parties shall not remove a case into the United States court is a nullity; that, as a condition of the company doing business in such State, and preliminary to it, it is a nullity. But the majority of the court in the Pruitt case said that it was still within the power of the State to say, not as a preliminary to doing business in it, but as a condition of forfeiture, "We will let you do business, but if you do it, and you remove the case into the United States court, your right to continue to do business here is forfeited." Now, that is the distinction, and this is what the courts say, pointing out the difference between trying to get at these things by agreement, it being confessedly within the power of the State at all times to deny the foreign corporation the right to do business there. within the power of the State to declare that they shall not remove the case, and if they do remove it, to deny them the right to do business further; but the provision in the contract that the case shall not be removed is an utter nullity, so that the power of the State to rescind that license for doing the thing which the party has stipulated not to do, though it can not be exacted as a preliminary, can be exercised by the State while the stipulation itself is void. Mr. Justice Peckham, delivering the opinion of the court, having called attention to the decisions before, said:

In these two cases this court decided that any agreement made by a foreign insurance company not to remove a cause to the Federal court was void, whether made pursuant to a statute of the State providing for such agreement, or in the absence of such statute; but that the State, having power to exclude altogether a foreign insurance company from doing business within the State, had power to enact a statute which, in addition to providing for the agreement mentioned, also provided that if the company did remove a case from the State to a Federal court, its right to do business within the State should cease, and its permit should be revoked. It was held there was a distinction between the two propositions, and one might be held void and the other not.

And they say that there is no doubt about the fact that any agreement of a party not to remove a case into the Federal court was a nullity that the State could not exact such an agreement from a party, but that after having gotten that permission and having

entered the State, if they did remove a case the State could withdraw the license.

Mr. HASKINS. That is, they could declare the license forfeited? Mr. DAVENPORT. Yes.

Mr. HASKINS. They could do that without that agreement.

Mr. DAVENPORT. Yes, sir. The effect of what the court said in that case in considering the question in the particular relation in which I am now considering it is this: That because Congress has no power to invade the States or infringe upon the relation between individuals directly, you can not enact a law for the same purpose by exacting a stipulation to do it. In other words, the Congress by an act of its sovereign authority can not say to those individuals "You must regulate your arrangements under certain conditions by stipulation," it being conceded that the matter is beyond the direct power of Congress. Now, the cases in principle are exactly parallel. An act of Congress which provided in express terms that the contracts between the contractor and the subcontractor should contain a stipulation of this kind or, rather, provided that the party should waive his right to go into the State court for the protection of his rights which he claimed to exist under that contract and resort to some Federal authority or some Federal tribunal would be void, because the subject is beyond the control of Congress. In other words, to sum it all up, the statute adds no validity whatever to the relations existing between the parties, and is further an indirect attempt to deprive that party of constitutional rights which are secured to him by the State and by the nation, both.

Now, that is a very practical matter; it is a matter that will "raise hob," if this law should happen to be passed. Suppose the Cramps had the opportunity to secure a contract from the Government for the building of a battle ship, and they resorted to Judge Payson or Mr. Hayden, whoever might be their legal adviser, to know whether they could protect themselves, or how they could protect themselves, from the consequences of the violations that are possible, and more than probable, indeed, by the various subcontractors. Well, he would have to advise them; and how would he do it? He must say to them "Why, you are going to get in a mess here; you are going to get into a hopeless tangle. Your situation is bad enough now, but it would be infinitely worse if you resorted to this method, if you were to come under this stipulation. I advise you that you can not protect yourself from all these consequences. That is what he would probably say. But if he attempted to do it, if he said "The job is a good one and the pay is ample; you had better take your chances, and I will see if I can not get up some sort of arrangement on which you can fall back and feel absolutely sure that if the money is withheld from you by the United States Government on account of the acts of the subcontractors, you can come back on the subcontractor and his subcontractor perhaps, or at any rate upon the subcontractor, being the immediate contracting party," he would be at once confronted with this difficulty, that every question of fact growing out of that matter would have to be settled and tried by a jury in some State court, with all the chances of loss by the contractor in view of the claims of the subcontractor that he did not violate the provisions of it, or if he did, that it had been waived; and a waiver, you know, may be inferred from a great variety of circumstances, some very slight. Anything

that indicates a disposition on the part of one party not to insist upon it, which the other party acts upon, is in law a waiver.

The CHAIRMAN. Is not that rule modified where the waiver constitutes a breach of contract?

Mr. DAVENPORT. Why, no. We have it every day in our practice. You know that the provisions of a written contract can be waived by parol, sometimes even where a party stipulates in the contract that the waiver must be in writing. Any provision in the contract, of course, can be waived by the parties, and you must fall back upon conflicting testimony, oral testimony, and proof of circumstances and the judgment or opinion or whim of the jury.

The CHAIRMAN. I do not want to interrupt your argument, but take a case like this, the best illustration, perhaps, that we can find: Everybody is assumed to know the law. Now, this bill is law. The subcontractor, therefore, knows that a waiver of it on the part of the contractor would constitute on his part a breach of contract. not that very much modify the rule?

Would

Mr. DAVENPORT. How would it constitute a breach of contract? The CHAIRMAN. Because the contractor contracts not to violate the law.

Mr. DAVENPORT. I am talking about the contract between the contractor and subcontractor.

The CHAIRMAN. You do not catch the point. You might say to me things what I would construe to be a waiver under one set of circumstances; but if I knew that your contract was governed by law, and that such a waiver on your part would be a breach of your contract and a breach of the law, is not the rule as to waiver very different there?

Mr. DAVENPORT. There is nothing here in this law that does anything more than relate to the relation between the contractor and the Government.

The CHAIRMAN. No, but it would be a public statute.

Mr. DAVENPORT. No; but in its terms it is governing the relation between the contractor and the Government. Now, then, of course the contractor could say, "Why, I will stand all penalties; go ahead and do this work. I have got to have it. I can waive it." Indeed, except in the case we were talking about the other day, where the act would be a violation of a criminal statute like the act of 1892, the Government itself could waive it. I do not know whether the Government could waive the provisions in its favor.

Of course it is not necessary for me to elaborate the matter any further. The very acute minds of the gentlemen who have to pass upon this question will follow it out to its conclusion, remembering always that this bill, if it should become a law, would be the chart by which the Federal officials are hereafter to sail. They go out into the future with this to guide them; and when you get a law like this on the statute book it is a long time before you can get it repealed, even though it works badly, and it is years and years and years-it will be years and years and years before these matters can be ultimately and conclusively settled by the tribunal of last resort.

The CHAIRMAN. I would be obliged, speaking for myself alone, if you would formulate your proposition as closely and accurately as you would formulate a syllabus, for instance. We would be very glad to have it, if it suits you. I have attempted it here, but the result is not altogether satisfactory.

We are

Mr. DAVENPORT. There is another aspect of this matter. wading, you know, in pretty deep water when we undertake to discuss these matters.

It

The CHAIRMAN. See if I have your idea: The Government of the United States makes laws as sovereign; it contracts as a person. may enforce as to its own contracts the laws it makes as a sovereign. These laws, however, can extend no further than its sovereign powers extend when, as a contractor, the United States is within its jurisdiction as a sovereign as to legislative power, but when it is outside of its jurisdiction, as measured by its legislative power, it is controlled by the same law which controls other contracts. Is that pretty near it?

Mr. DAVENPORT. That is all right as far as it goes, but what I am drawing attention to are the constitutional rights of the parties, which can not be got rid of.

The CHAIRMAN. That is covered in this.

Mr. DAVENPORT. A citizen can not agree, in his dealings with a citizen, not with the sovereign, not to resort to the courts, and I say that the whole matter of disagreements between the contractor and those who follow after him down the line is thrown necessarily into the State courts, or into a Federal court under similar conditions to that of a State court, and it is not possible for you gentlemen to protect that contractor from the consequences of the violation of this act by those below him, and therefore he is confronted with this difficulty, that he has the wall of the United States Treasury in front of him; the door will be closed against him and he can not get what is behind it out, and at the same time he will be harrassed and compelled, very likely, more than likely, to pay his subcontractors the very things, the price, which he has agreed upon; that he will be stripped of all the protection which he attempts to gain by stipulations in his contracts with them. You put him, as I have said often before this committee, between the upper and the nether millstones, and he will be ground to powder between them. It is not a wise. provision for those who were compelled to resort to contracts to do their business to put in such stipulations and such limitations and restrictions upon the dealings with those people, and it is not just, either.

Mr. PAYSON. Before you leave that, upon the argument of inconvenience, it will be remembered, Mr. Chairman and gentlemen of the committee, that as to every subcontractor, no matter what the character of subcontracts may be or the matter which it covers, the thing that is provided by the subcontract is a finished product as to him when delivered to the contractor he has above him, and he is entitled to and receives his pay for it at the time, when the penalties provided for in this bill as between the Government and the contractor, if insisted upon between the Government and the subcontractor, would run for years, possibly, before they would ever be adjusted between the principal contractor and the Government. To make myself understood by a specific illustration: At the shipyard we contract with the Bethlehem Steel Company for the forging of a shaft. That order is given immediately upon our getting the contract, with the specifications. We know what we have to get into shape in constructing that shaft, and I may say in passing that it is one of the valuable things. To use an illustration that I heard employed by Mr. Huntington, he said that the cost of that great big shaft in the ship in its

finished condition was more than the value of the entire material in that ship in its raw condition. When the Bethlehem Steel Company delivers us that forging that is the end of the business with them. We contract for it when we get ready to go on with the Government. Then we commence the process of finishing it, and we have to pay for it when we get it, but we do not settle with the Government, maybe, for two or three years afterwards, maybe during the lifetime of the contract, usually from three to four years, while the forging was furnished to us during the first-six months of the contract and paid for. There may be any number of penalties that inspectors may be treasurying up. We pay the Bethlehem Steel Company for the forging, and three years afterwards here is a bill presented to us for the violations of that contract. In the meantime the witnesses have died, and we are at a disadvantage in furnishing proof that we have not violated the contract, and it just leads to endless, unnecessary, and unjustifiable interruption of orderly business transactions.

Mr. DAVENPORT. Of course, I accept that as a very admirable illustration of what I sought to explain. I am always in this position, gentlemen, when I am before a court; I know that the court understands the law probably better than I do; that I am consuming the time of the court, it seems to me, always in talking about it. The most that could be done is to suggest to the court the points and the principal reasons, and then drop it, because I know that under the responsibility of their positions they will be impelled to examine the matter thoroughly and come to as wise and as sound a conclusion as they can.

I also always feel a reluctance to suggest anything outside of the immediat matter to be discussed, the legal propositions involved. Would it be considered indelicate for me, however, to suggest to the members of this committee the very great individual risk they take in enacting a law of this character, which confessedly, according to the proponents of it, as expressed by Mr. Gompers yesterday, and as admitted by everybody, strikes down the right of the individual workingman of this country to work overtime for overtime pay? Mr. Gompers frankly conceded that that was the purpose and effect of it, and he said that was the desire of labor. I thought, when I heard him talk yesterday, how queer things come about. I was reminded of the incident, you remember, in the French Revolution; when Madame Roland mounted the scaffold her eye lighted on that plaster statue of liberty which the French, after their fashion, had erected in the Place de la Concorde, and as she looked at it and looked at the mob, she said, "Oh, liberty, how they have juggled with thee!"

I heard that man, standing before this committee, in the name of labor, in the name of the rights of the laboring man, in the name of the interests of the laboring man, advocating a law which stripped them of the right, and, as he said it would, carried to its logical conclusion, stripped them of all rights to work for themselves and their families by agreement with their employers anything over eight hours a day. He says he knows what the laboring people want. Other gentlemen have appeared here who said "We know they do not want it. Their whole lives are a contradiction of it. Our whole experience with them is a contradiction of it." I have no doubt that Mr. Emery could have produced thousands of witnesses, if it would not wear