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could act as administrator.13 "It cannot be said that the failure to provide for the organization of other corporations by general laws is an exclusion of foreign corporations of a like character, unless it shall be held that the failure to enact such general laws is an evidence that they are opposed to our policy. Mere absence of legislation authorizing the formation of a particular class of corporations, cannot be accepted as conclusive evidence that it is against public policy to create such corporations." 14 And it was accordingly held, overruling an earlier case 15 on this point, that the fact that no corporation could be created under general laws for loaning money did not prevent a foreign corporation from doing so. 16 The contrary view has, however, been taken in some jurisdictions; and it has been held that no foreign corporation can do an act which no domestic corporation has been empowered to do, or at least no act which domestic corporations were formerly empowered to do by a statute since repealed, the repeal being held to indicate the legislative policy.1 17 So, in Missouri, it was held that a foreign railroad corporation could not build and maintain telegraph lines since no domestic corporation had been given that right; 18 and in Pennsylvania it was held for the same reason that a foreign railroad corporation could not lease, in Pennsylvania, a line with which it did not connect, the only authority to lease other roads being given to domestic corporations and confined to a lease of connecting railroads. 19

13 Deringer v. Deringer, 5 Houst. (Del.) 416, 1 A. S. R. 150. Acc., In re Galletly, 10 Queensl. L. J. 74. But see contra, In re Riley, 21 New So. Wales Bkr. 7. 14 Stevens v. Pratt, 101 Ill. 206; and see Commercial Union Ass. Co. v. Scammon, 102 Ill. 46.

15 U. S. Mortgage Co. v. Gross, 93 Ill. 483.

18 Stevens v. Pratt, 101 Ill. 206.

17 Empire Mills v. Alston Grocery Co., 4 Wills. (Tex.) 346, § 221, 15 S. W. 505, where it was alleged that the purpose in incorporating abroad was fraudulently to avoid the laws of the State.

18 State v. Cook, 171 Mo. 348, 362, 71 S. W. 829.

19 Van Steuben v. Cent. R. R. of N. J., 178 Pa. 367, 35 Atl. 992, 34 L. R. A. 577, citing Empire Mills v. Alston Grocery Co., supra.

§ 114. Corporations formed to act in foreign States only.

The mere fact that at the time of forming a corporation it is intended to do business in a foreign State, or that no business (except the formation of the corporation) is in fact done in the incorporating State, does not render the incorporation a nullity,20 or prevent the corporation from acting in a foreign State.21 It is no fraud or evasion of the laws of a State for its citizens, intending to act only in their own State, to form themselves into a corporation under the laws of another State.22 As Judge Gray said, in Lancaster v. Improvement Company: 23 "If our citizens are attracted to other jurisdictions for purposes of incorporation, because of more favorable corporation or taxation laws, I cannot see in that fact, however, and in whatever sense, to be deplored, any reason that they should be prevented from employing here the corporate capital in the various channels of trade or manufacture. That, as it seems to me, would be a rather hurtful policy and one not to be attributed to the State."

20 Princess of Reuss v. Bos, L. R. 5 H. L. 176; Mo. Lead M. & S. Co. v. Reinhard, 114 Mo. 218, 21 S. W. 488, 35 A. S. R. 746; State v. Taylor, 25 Oh. St. 279.

21 Baughman v. National Water-works Co., 46 Fed. 4; State v. Topeka Water Co., 61 Kan. 547, 60 Pac. 337; Mo. Lead Min. & S. Co. v. Reinhard, 114 Mo. 218, 21 S. W. 488, 35 A. S. R. 746; Demarest v. Flack, 128 N. Y. 205, 28 N. E. 645, 13 L. R. A. 854; Hanna v. International Petroleum Co., 23 Oh. St. 622; Lasater v. Purcell Mill & Elev. Co., (Tex. Civ. App.) 54 S. W. 425 (semble).

22 Cumberland Tel. & Tel. Co. v. Louisville Home Tel. Co., 24 Ky. L. Rep. 1676, 72 S. W. 4 (semble); Demarest v. Flack, 128 N. Y. 205, 28 N. E. 645, 13 L. R. A. 854; Lancaster v. Amsterdam Improvement Co., 140 N. Y. 576, 35 N. E. 964, 24 L. R. A. 322; Oakdale Mfg. Co v. Garst, 18 R. I. 484, 28 Atl. 973, 49 A. S. R. 784, 23 L. R. A. 639. But see Second Nat. Bank v. Lovell, 2 Cincinnati Super. Ct. 397; Hill v. Beach, 12 N. J. Eq. 31; Empire Mills v. Alston Grocery Co., 4 Wills. (Tex.) § 221, 15 S. W. 505, holding incorporators liable as partners. Even if the act of the incorporators in forming the corporation abroad were fraudulent, the better view is that it would make no difference in their right to do business as a corporation. United States Vinegar Co. v. Schlegel, 143 N. Y. 537, 38 N. E. 729; Second Nat. Bank v. Hall, 35 Oh. S. 158.

23 140 N. Y. 576, 35 N. E. 964, 24 L. R. A. 322.

But where the legislature which chartered a corporation forbade it to act within its own State, it was rightly held that the corporation could have no legal existence and could do no business elsewhere. "A corporation," the court said, "in order to have any legal or valid existence, must have a home, a domicile, a principal place of doing business, within the boundaries of the State which creates it. It may send agents into other States to do business, but it cannot migrate in a body. If it attempts to migrate in a body, to go beyond the jurisdiction of the laws which bind and hold it together, it dissolves into its original elements, and the persons who compose it become only individuals." "No rule of comity will allow one State to spawn corporations, and send them forth into other States to be nurtured, and do business there, when said first mentioned State will not allow them to do business within its own boundaries." 24

§ 115. Right to exercise a franchise.

A foreign corporation cannot without express permission exercise a franchise, since the right to do so depends upon the permission of the sovereign. Thus it cannot exercise the right of eminent domain,25 nor the franchise of collecting tolls.20 And where by statute the carrying on of a certain business is forbidden, except by permission of the State, a foreign corpo

24 Valentine, J., in Land Grant Ry. v. Coffey County, 6 Kan. 245, 253. See this case explained in Mo. Lead Min. & S. Co. v. Reinhard, 114 Mo. 218; 21 S. W. 488; 35 A. S. R. 746; distinguished in State v. Topeka Water Co., 61 Kan. 547, 60 Pac. 337 (Doster, C. J., dissenting).

25 St. Louis & S. F. R. R. Co. v. Foltz, 52 Fed. 627 (semble); Saunders v. Bluefield W. W. & Imp. Co., 58 Fed. 133; St. Louis & S. F. R. R. v. S. W. Tel. & Tel. Co., 121 Fed. 276; Holbert v. St. L. K. C. & N. Ry., 45 Ia. 23; Dodge v. Council Bluffs, 57 Ia. 560, 10 N. W. 886. As the United States has the right of eminent domain within the States for some purposes, a corporation may be chartered by Congress and empowered to exercise the right of eminent domain for such purposes within a State. U. P. Ry. v. B. & M. R. R. R., 1 McCr. 452, 3 Fed. 106.

26 Middle Bridge Co. v. Marks, 26 Me. 326. But see Mayor &c. of Columbus v. Rodgers, 10 Ala. 37.

ration cannot carry on such business without permission.27 But the right to acquire property is inherent in its nature of corporation, and is a function which may be exercised by any individual; no express permission of the legislature is needed for this purpose.28 When territory is ceded from one State to another, a corporation of the former cannot continue to exercise a franchise within the ceded territory, since it does not become a corporation of the latter State; and the principle by which, upon a change of territorial jurisdiction, private rights of property are respected does not extend to mere privileges allowed by the former State.29

By express permission of the State a foreign corporation. may however exercise a franchise,30 as for instance the right to take land by eminent domain.31

8116. A foreign corporation may be excluded from a State.

Although as we have seen a foreign corporation is ordinarily allowed to act by the common law, yet any State may (unless it is forbidden by constitutional provisions) by act of legislature, exclude a corporation created by another State from acting, through agents, within its territory.32 Foreign insurance companies, for instance, are frequently altogether excluded from a State.33

§ 117. A foreign corporation may be admitted on terms.

As a foreign corporation may be absolutely excluded from a State, so it may be excluded unless it fulfils certain condi

27 Hartford Fire Ins. Co. v. Raymond, 70 Mich. 485, 38 N. W. 474 (insurance); Peo. v. Howard, 50 Mich. 239, 15 N. W.101; Bard v. Poole, 12 N. Y. 495 (banking); State v. Cook, 171 Mo. 348, 71 S. W. 829 (tel. lines by R. R. Co.). 28 State v. B. C. & M. Ry., 25 Vt. 433, and see Chap. IX.

29 Myers v. Manhattan Bank, 20 Ohio, 283. A statute of the latter State forbade any company doing a banking business which was "not incorporated by a law of this State."

30 Union B. R. R. v. East Tenn. & Ga. R. R., 14 Ga. 327.

31 Infra, § 232.

32 Waters-Pierce Oil Co. v. Texas, 177 U. S. 28, 44 L. ed. 657, affirming 8. C., 19 Tex. Civ. App. 1, 44 S. W. 936.

33 Amer. Ins. Co. v. Stoy, 41 Mich. 385, 402, 1 N. W. 877.

tions; that is, it may be admitted on terms.34 "Having no absolute right to recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows as a matter of course that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely, they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion." 35 This principle is often used to regulate dealings by foreign insurance companies. Thus a foreign insurance company may be required, as condition of doing business in a State, to deposit a certain amount of bonds with a State official, for the protection of policy holders, or otherwise to have a certain amount of assets invested within the State. So its agents may be forbidden to make a rebate from the premium; 38 or the provisions of the policy may be dictated by the State, as by forbidding the forfeiture of a policy for immaterial misrepresentation.39 And

36

34 Doyle v. Continental Ins. Co., 94 U. S. 535, 24 L. ed. 148; Cooper Mfg. Co. v. Ferguson, 113 U. S. 727, 28 L. ed. 1137; Hooper v. California, 155 U. S. 648, 39 L. ed. 297; Orient Ins. Co. v. Daggs, 172 U. S. 557, 43 L. ed. 552; Waters-Pierce Oil Co. v. Texas, 177 U. S. 28, 44 L. ed. 657; Fletcher v. N. Y. Life Ins. Co., 13 Fed. 526; Woodson v. State, 69 Ark. 521, 65 S. W. 465; Keystone Driller Co. v. Superior Court, 138 Cal. 238, 72 Pac. 98; State v. Ins. Co., 115 Ind. 257, 17 N. E. 578; Com. v. Read Phosphate Co., 23 Ky. L. Rep. 2284, 67 S. W. 45; State v. Hammond Packing Co., 110 La. 180, 34 So. 368; Tolerton & Stetson Co. v. Barck, 84 Minn. 497, 88 N. W. 20; Daggs v. Orient Ins. Co., 136 Mo. 382, 38 S. W. 85, 58 A. S. R. 638, 35 L. R. A. 227; State v. Ins. Co., (Neb.) 99 N. W. 36; People v. Formosa, 131 N. Y. 478, 30 N. E 492, 27 A. S. R. 612; Central R. R. v. Georgia C. & I. Co., 32 S. C. 319 (semble); State v. Phoenix Ins. Co., 92 Tenn. 420, 21 S. W. 893; Canadian Pac. Ry. v. Western U. T. Co., 17 Can. 151; Merritt v. Copper Crown Min. Co., 34 Nov. Sc. 416.

35 Field, J., in Paul v. Virginia, 8 Wall. 168, 181, 19 L. ed. 357.

36 Paul v. Virginia, 8 Wall. 168, 19 L. ed. 357.

37 Granite State Mut. Aid Assoc. v. Porter, 58 Vt. 581, 3 Atl. 545. People v. Formosa, 131 N. Y. 478, 30 N. E. 492, 27 A. S. R. 612.

8 Fletcher v. N. Y. Life Ins. Co., 13 Fed. 526. In Massachusetts and other

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