the agents may be required to retain money received by them for the company until its losses are adjusted, or until litigation in which it is a party is determined; 40 or to pay a twelve per cent. penalty for failure to pay a policy, and such penalty cannot be avoided by a stipulation that the policy shall be payable in the charter State.41

One of the earliest conditions imposed upon insurance companies was that its agents for effecting insurance should be its agents for receiving service of process; and as a result, that a foreign insurance company should be suable in a State in which it did business.42 This condition has now almost everywhere been so extended as to apply to all foreign corporations; 43 and is one which a State may properly enforce.44 But if a corporation has complied with the terms imposed by the State, any attempt on the part of the State to change those terms would be void as impairing the obligations of contracts.4

45

It is clear that as a State may impose terms upon foreign corporations, it may enjoin such corporations from using, within its limits, the name of a similar domestic corporation in any case in which the use of the name would mislead the public.46 And as a corollary to the right of imposing terms it must have the right to revoke a license for the violation

States a standard form of policy is prescribed for all companies doing business within the State.

40 Phenix Ins. Co. v. Burdett, 112 Ind. 204, 13 N. E. 705.

41 Franklin Ins. Co. v. Villeneuve, 25 Tex. Civ. App. 356, 60 S. W. 1041.

42 Lafayette Ins. Co. v. French, 18 How. 404, 15 L. ed. 451.

43 See post, Ch. XI.

44 Cooper Mfg. Co. v. Ferguson, 113 U. S. 727, 28 L. ed. 1137; Cousens v. Lovejoy, 81 Me. 467, 17 Atl. 495.

45 Com. v. Mobile & O. R. R., 23 Ky. L. Rep. 784, 64 S. W. 451; contra (semble) Sandel v. Atlanta Mut. Life Ins. Co., 53 S. C. 241, 31 S. E. 230.

46 Philadelphia Trust, S. D. & Ins. Co. v. Phila. Trust Co., 123 Fed. 534; International Trust Co. v. Internat. L. & T. Co., 153 Mass. 291, 26 N. E. 693, 10 L. R. A. 758; Employees' Liability Assur. Corp. v. Employees' Liability Ins. Co., 16 N. Y. S. 397, 61 Hun, 552; Am. Clay Mfg. Co. v. Am. Clay Mfg. Co. of N. J., 198 Pa. 189, 47 Atl. 936.

of terms,47 and such revocation is not the infliction of a penalty.4

$118. A foreign corporation is subject to law of the State in which it acts.

A foreign corporation may of course do nothing which is contrary to the law of the State in which it acts.49 If, therefore, a law of the State forbids or regulates the acts of a foreign corporation, the law must be obeyed.50 It is, however, sometimes difficult to determine whether a statute applies to all corporations or only to domestic corporations. Acts forbidden in a State under a penalty as contrary to public policy are of course forbidden to all corporations, foreign as well as domestic; 51 and a foreign corporation is therefore subject to the provisions of the usury laws in the State in which it acts.52 It has been held in a few State courts that this is true although the contract contains a stipulation that the payment is to be

51

47 Waters-Pierce Oil Co. v. State, 19 Tex. Civ. App. 1, 44 S. W. 936; State v. Standard Oil Co., 61 Neb. 28, 84 N. W. 413, 87 A. S. R. 449.

48 State v. Standard Oil Co., 61 Neb. 28, 84 N. W. 413, 87 A. S. R. 449. 49 Bishop v. American P. Co., 157 Ill. 284, 41 N. E. 765, 48 A. S. R. 317; Ohio Mut. Life Ins. & Tr. Co. v. Merchants' Ins. & Tr. Co., 11 Humph. (Tenn.) 1, 25.

50 Peo. v. Howard, 50 Mich. 239, 15 N. W. 101; Bard v. Poole, 12 N. Y. 495. 51 McGregor v. Erie Ry., 35 N. J. L. 119; but see Cory v. State, 55 Ga. 236; McBride v. Fidelity & Cas. Co., 14 Tex. Civ. App. 280, 37 S. W. 1091. 52 Hitchcock v. U. S. Bank, 7 Ala. 386 (semble); Falls v. U. S. Sav. Loan & Bld. Co., 97 Ala. 417, 13 So. 25, 38 A. S. R. 194, 24 L. R. A. 174; Knox v. Bank of U. S., 26 Miss. 655 (semble); Sokoloski v. New South B. & L. Assn., 77 Miss. 155, 26 So. 361; Building & Loan Assn. v. Bilan, 59 Neb. 458, 81 N. W. 308; Anselm v. Am. Sav. & Loan Ass. (Neb.), 92 N. W. 745; Southern L. Ins. & T. Co. v. Packer, 17 N. Y. 51; Floyd v. Nat. Loan & I. Co., 49 W. Va. 327, 38 S. E. 653, 54 L. R. A. 536, 87 A. S. R. 805. There is a difference of opinion whether National Banks are subject to the usury laws of the States. In First Nat. Bank v. Lamb, 50 N. Y. 95, 10 A. R. 438, it was held that they are; in First Nat. Bank v. Garinghouse, 22 Oh. St. 492, 10 A. R. 751, that they are not. The question in these cases was whether the whole debt should be forfeited for usury, under the State law, or only the interest, as provided in the national bank act. See also Shunk v. First Nat. Bank, 22 Oh. St. 508, 10 A. R. 762; Tiffany v. Nat. Bank of Missouri, 18 Wall. 409, 21 L. ed. 862.

made in the charter State where the interest is lawful; 53 but by the great weight of authority a contract is not void for usury if it is permitted by the law, either of the State of making, or of the State of performance.54 If, therefore, the foreign corporation bona fide selects its own State as the State of performance, and the contract is there valid, the usury law of the State of contracting does not affect the obligation.55 If, however, the place of performance is not bona fide agreed upon, but is named as a means of evading the usury laws of the place of contracting, the contract is usurious. 56

In some jurisdictions, however, greater stress is laid on the law of the place of performance; and a contract good by the law of the place of contracting but void by that of the place of performance is held invalid, unless the parties are shown to have intended otherwise. In these States the law of the State in which the corporation acts does not apply unless the usurious payment is to be made within the State.57

53 Nat'l Mut. Bldg. & Loan Ass. v. Brahan, 80 Miss. 407, 31 So. 840, 57 L. R. A. 793, and cases cited; Washington Nat. Bldg. Loan & Invest. Ass. v. Stanley, 38 Or. 319, 63 Pac. 489, 80 A. S. R. 793, 58 L. A. R. 816; Pacific States S. L. & Bldg. Co. v. Hill, 40 Or. 280, 67 Pac. 103, 91 A. S. R. 477, 56 L. R. A. 163.

54 Andrews v. Pond, 13 Pet. 65, 10 L. ed. 61; Junction R. R. v. Bank of Ashland, 12 Wall. 226, 20 L. ed. 385; Andruss v. People's B. L. & S. Assoc., 94 Fed. 575; Dygert v. Vermont L. & T. Co., 94 Fed. 913; Pancoast v. Travelers' Ins. Co., 79 Ind. 172 (cf. Smith v. Muncie Nat. Bank, 29 Ind. 158); Brown v. Freeland, 34 Miss. 181; Coad v. Home Cattle Co., 32 Neb. 761, 49 N. W. 757, 29 A. S. R. 465; Townsend v. Riley, 46 N. H. 300; U. S. S. & L. Co. v. Shain, 8 N. D. 136, 77 N. W. 1006; Thornton v. Dean, 19 S. C. 583, 45 A. R. 796; Sharp v. Davis, 7 Baxt. (Tenn.) 607; Fisher v. Otis, 3 Chand. (Wis.) 83.

55 Manship v. New South B. & L. Assoc., 110 Fed. 845; U. S. Sav. & L. Co. v. Harris, 113 Fed. 27.

56 Andrews v. Pond, 13 Pet. 65, 10 L. ed. 61; Nat. Mut. B. & L. Assoc. v. Burch, 124 Mich. 57, 82 N. W. 837; Meroney v. Atlanta N. B. & L. Assoc., 112 N. C. 842, 17 S. E. 637.

57 Jackson v. Amer. Mtg. Co., 88 Ga. 756, 15 S. E. 812; Odom v. N. E. Mtg. Sec. Co., 91 Ga. 595, 18 S. E. 131; Underwood v. Amer. Mtg. Co., 97 Ga. 238, 24 S. E. 847; Dickinson v. Edwards, 77 N. Y. 573, 33 A. R. 671. (See Sheldon v. Haxtun, 91 N. Y. 124.)

§ 119. What laws of a State apply to foreign corporations.

Laws of a general nature which concern not the inner affairs of the corporation but their manner of doing ordinary acts would usually he held to apply to foreign corporations. Thus a statute to regulate tolls charged by a corporation,58 or by its assignees,59 would apply to a foreign corporation; so would a statute requiring corporations to show their books on occasion, 60 and one regulating proceedings where banks are parties. On this principle foreign corporations have been held subject to local laws regulating the transfer of shares.62 So a local law forbidding corporations to enter into partnership with other corporations, applies to foreign corporations.63

On the other hand, certain statutes which are interpreted as passed to regulate the management of corporate affairs, have been held not to apply to foreign corporations. Thus a statute requiring the vote of the stockholders of a corporation in order to mortgage its property, applies only to domestic corporations; and an act forbidding assignments by insolvent corporations does not prevent such assignments by foreign corporations, since the courts of the State could not fully administer the assets, and the object of the act could therefore not be obtained.65 And it has been held generally in New

58 Clarke v. Cent. R. R. & Banking Co., 50 Fed. 338, 15 L. R. A. 683; McGregor v. Erie Ry., 35 N. J. L. 115; Chapman v. Hallwood Cash Register Co., (Tex. Civ. App.) 73 S. W. 969.

59 Stetson v. City Bank, 2 Oh. St. 167.

60 Winter v. Baldwin, 89 Ala. 483.

61 Lewis v. Bank of Kentucky, 12 Ohio, 132, 40 A. D. 469.

62 London, Paris & American Bank v. Aronstein, 117 Fed. 601.

63 Bishop v. American P. Co., 157 Ill. 284, 41 N. E. 765, 48 A. S. R. 317.

64 Saltmarsh v. Spaulding, 147 Mass. 224, 17 N. E. 316. So of an act requiring the registration of debentures of a company. Braithwaite v. McArthur, 19 New So. Wales Eq. 158; Bergl v. Mt. Chalmers Copper Mines, (1902) Queens. St. Rep. 35. Contra, In re King of the West G. M. Co., 1 Western Austr. R. (Law) 70.

65 Vanderpoel v. Gorman, 140 N. Y. 563, 35 N. E. 932, 37 A. S. R. 601, 24 L. R. A. 548; Lane v. Wheelright, 23 N. Y. S. 596, 69 Hun, 180; Standard Nat. Bank v. Garfield Nat. Bank, 56 App. Div. 43, 67 N. Y. S.

York that a general statute which confers powers on corporations refers only to domestic corporations.66 It has been held in Mississippi that a statute allowing building and loan associations to charge more than the legal rate of interest does not apply to foreign corporations,67 and a State statute extending the benefit of the insolvency law to corporations was held not to apply to foreign corporations.

68

Where the law of a State forbids the taking of land by a corporation, a foreign corporation is to be treated just as a domestic one would be. In New York no corporation may take land by devise unless expressly authorized by its charter so to take. Under this statute a devise of land to the United States was held void; 69 and one to the city of St. Louis.70 By the mortmain act of Pennsylvania, land of a corporation may be declared forfeited by the State; but unless this is done the holding is lawful. Under this act a foreign corporation may hold land, so long as the State takes no action in the matter.71

§ 120. Not exempted from local law by law of charter.

The fact that the corporation is expressly permitted to do the act by its charter or by the laws of its own State will not alter the case. Thus a corporation cannot in a foreign State, make a loan usurious there, though by its charter the rate of interest is expressly allowed; 72 nor, in the charter State, execute a valid mortgage of property in a foreign State, if

472; East Side Bank v. Columbus Tanning Co., 170 Pa. 1. See contra, Lamb v. Russell, 81 Miss. 382, 32 So. 916.

66 Estate of Prime, 136 N. Y. 347, 32 N. E. 1091, 18 L. R. A. 713.

67 National Mut. B. & L. Ass. v. Pinkston, (Miss.) 31 So. 834.

68 Whitcomb v. Robbins, 69 Vt. 477, 38 Atl. 233.

69 United States v. Fox, 94 U. S. 315, 24 L. ed. 192.

70 Boyce v. St. Louis, 29 Barb. (N. Y) 659.

71 Runyon v. Coster, 14 Pet. 122, 10 L. ed. 382.

72 Falls v. U. S. Sav. L. & B. Co., 97 Ala. 417, 13 So. 25, 38 A. S. R. 194, 24 L. R. A. 174; Sokoloski v. New South B. & L. Ass., 77 Miss. 155, 26 So. 361; Interstate Sav. & L. Ass. v. Strine, 58 Neb. 133, 59 Neb. 27, 80 N. W. 45; Building & L. Ass. v. Bilan, 59 Neb. 458, 81 N. W. 308.