that State does not allow it.73 A foreign corporation cannot claim a certain exemption from taxation because it is allowed such exemption by the laws of its own State; 74 nor can a foreign corporation, though authorized by its charter to deal in real estate in a manner not authorized in Texas, exercise that right in Texas."

75

A foreign railroad corporation cannot build and maintain telegraph lines, though allowed by its charter to do so, when domestic railroad corporations are not so allowed,76 nor can a foreign corporation, though given power by its charter, acquire water rights in another State if it has not complied with the law of that State.77 So where, by the laws of Illinois, a stockholder in a building association had a right at any time, upon withdrawing from the association, to receive back the payments he had made, it was held that such an association, chartered in New Hampshire, but doing business in Illinois, was subject to this provision though a clause denying the right was contained in the stock itself.78

73 Fowler v. Bell, 90 Tex. 150, 37 S. W. 1058, 59 A. S. R. 787, 39 L. R. A.

254.

74 Peo. v. Coleman, 135 N. Y. 231, 31 N. E. 1022.

75 Galveston Land & I. Co. v. Perkins, (Tex. Civ. App.) 26 S. W. 256. 76 State v. Cook, 171 Mo. 348, 71 S. W. 829.

77 Rio Grande & W. Ry. v. Telluride Power Transmission Co., 23 Utah, 22, 63 Pac. 995.

78 Granite State Prov. Assoc. v. Lloyd, 145 Ill. 620, 34 N. E. 142.

CHAPTER VI.

CONSTITUTIONAL PROTECTIONS OF A FOREIGN CORPORATION.

§ 121. State jurisdiction over foreign | § 127. Taking property.

§ 121. State jurisdiction over foreign corporations limited.

The absolute power which according to the common law each State has over the actions of a foreign corporation within it may be limited by the Constitution of the United States; but some express limitation must be found, or the power over the foreign corporation is unlimited. In the absence of a constitutional prohibition, a State may impose conditions upon foreign corporations as extensively as upon domestic corporations. This power of the State is, however, confined to control of actions of the corporation within the State; the legislature has no control over actions outside the State, and can in no way prevent a foreign corporation from acting elsewhere, so long as it does not affect conditions within the State. Thus a State, under the guise of regulating a foreign insurance company, cannot forbid and punish the making of a contract outside the State, though it is to insure property inside the State. To forbid such a thing, the court said,

1 Orient Ins. Co. v. Daggs, 172 U. S. 557, 43 L. ed. 552; New York L. Ins. Co. v. Cravens, 178 U. S. 389, 44 L. ed. 1116.

2 Allgeyer v. Louisiana, 165 U. S. 578, 41 L. ed. 832.

would be "an improper and illegal interference with the conduct of the citizen, although residing in Louisiana, in his right to contract and to carry out the terms of a contract validly entered into outside and beyond the jurisdiction of the State,' which in another place the court said was an unconstitutional deprival of liberty.3

But on the other hand, where a foreign corporation doing business in Nebraska went into Iowa and there sued a Nebraska debtor and garnisheed a railroad company which owed wages to the debtor for services rendered in Nebraska, thereby evading the Nebraska exemption laws, it was held that the corporation could be sued in Nebraska to recover the money thus obtained, on a Nebraska statute which gave such a remedy for the evasion of its exemption laws. The distinction. made by the court was that though the garnishment was in Iowa, the debt was situated in Nebraska, and the defendant had therefore violated Nebraska law by interfering with property in that State. The court said: "The general principle is conceded that the law of the place where an act is done determines its validity; but the tort complained of was not committed in Iowa. The tort consisted in seizing property in Nebraska, exempt under the laws of Nebraska. The plaintiff in error was enabled to do this by instituting proceedings in another State. But the tort consisted not in instituting those proceedings in Iowa. A suit might rightfully be begun there in personam had Fleming brought himself within the jurisIdiction of the Iowa courts. No action would have arisen had the property attached been situated in Iowa, or in a State other than Nebraska; but the wrong was in seizing the debt situated in Nebraska, payable in Nebraska, to a citizen of Nebraska. The statute in this respect is not confined to actions begun in another State, but extends to every attach

Acc. McBride v. Fidelity & Casualty Co., 14 Tex. Civ. App. 280, 37 S. W. 1091.

4 Singer Mfg. Co. v. Fleming, 39 Neb. 679, 58 N. W. 226, 23 L. R. A. 210, 42 A. S. R. 613.

ment or garnishment of exempt wages, whether the proceeding be instituted in this State or elsewhere."

$122. Terms affecting jurisdiction of the Federal courts.

5

There is a constant desire among the States to subject foreign corporations to the same control as domestic corporations. One great obstacle to this result is the jurisdiction which the Federal courts may exercise in controversies between a foreign corporation and a citizen of the State. Naturally efforts have been made to take away the right of removal to the Federal courts, and to substitute the exclusive jurisdiction of the State courts. The great difficulty in the way is that such legislation and agreements are invalid as ousting the Federal courts of their jurisdiction. Of course any direct enactments forbidding removal would be declared unconstitutional; and an agreement made not to exercise this right of removal is void. Wisconsin passed an act granting a permit to foreign corporations on condition of their filing an agreement not to remove any cause to Federal courts. The Home Insurance Company filed such an agreement and received its permit. It afterwards wished to remove an action to the Federal courts. The Supreme Court of Wisconsin held that the corporation after filing the agreement was estopped to set up its foreign citizenship. But on appeal this decision was reversed in the Supreme Court of the United States." The court laid down these rules: 1. The Constitution of the United States secures to citizens of another State than that in which suit is brought, an absolute right to remove their cases into the Federal courts, upon compliance with the terms of the act of 1789. 2. The statute of Wisconsin is an obstruction to this right, is repugnant to the Constitution of

5 Moore v. Chicago, S. P. & M. & O. Ry., 21 Fed. 817; Chicago, M. & S. P. Ry. v. Becker, 32 Fed. 849; B. & O. R. R. v. Cary, 28 Oh. St. 208. But see contra, Glen Falls Ins. Co. v. Judge, 21 Mich. 577, 4 A. R. 504.

• Morse v. Home Ins. Co., 30 Wis. 496, 11 A. R. 580.

7 Insurance Co. v. Morse, 20 Wall. 445, 22 L. ed. 365.

the United States, and the laws in pursuance thereof, and is illegal and void. 3. The agreement of the insurance company derives no support from an unconstitutional statute and is void as it would be had no such statute been passed.8 It is to be observed that the last resolution alone was required for the decision of the case; and it was held in a later case in Wisconsin that the Supreme Court of the United States had not declared the statute unconstitutional-all that was said upon that point being obiter. The court in that case decided that the company, having removed a suit to the Federal court, and therefore broken the condition upon which it was allowed to do business in the State, might be excluded." And a company thus excluded having applied in the Federal court for an injunction against exclusion, the majority of the Supreme Court held that it should not be granted.10 Mr. Justice Hunt said: "The effect of our decision in this respect is that the State may compel the foreign company to abstain from the Federal courts, or to cease to do business in the State. It gives the company the option. This is justifiable, because the complainant has no constitutional right to do business in that State; that State has authority at any time. to declare that it shall not transact business there."

In Barron v. Burnside,11 a later case, a statute of Iowa required that every foreign corporation should make an application for a permit, application to be accompanied by a stipulation that the permit should be subject to each of the provisions of the act. One of the provisions was that the permit should be void in case the corporation removed any action from State to Federal courts. Under this act a loco

motive engineer was arrested because the railway corporation

8 See acc. Rece v. Newport News & M. V. Co., 32 W. Va. 164, 9 S. E. 212, 3 L. R. A. 572. See also Barling v. Bank of B. N. A., 50 Fed. 260. 9 State v. Doyle, 40 Wis. 175, 22 A. R. 692.

10 Doyle v. Continental Ins. Co., 94 U. S. 535, 24 L. ed. 148.

11 121 U. S. 186, 30 L. ed. 915; followed, Southern Pacific Co. v. Denton, 146 U. S. 202, 36 L. ed. 942; Barrow S. S. Co. v. Kane, 170 U. S. 100, 42 L. ed. 964.