« PreviousContinue »
2. GENERAL LIMITATIONS OF POWERS.-(a) General Laws.Any corporation doing business in a State other than that of its incorporation is bound by the general laws of such State, the law of comity entitling it to no exemption from the action of such laws, other than may be made by legislative enactment.1
(b) Special Franchise.-Comity does not confer any franchise, but that of acting in a corporate capacity, upon a foreign corporation;
distinguishing Ins. Co. v. Morse, 20 Wall. (U. S.) 445. Justices Bradley. Swayne, and Miller dissented, saying, in their opinion: "If these States can, at will, deprive them [foreign corporations] of the right to resort to the courts of the United States, then in large portions of the country the government and laws of the United States may be nullified and rendered inoperative with regard to a large class of transactions constitutionally belonging to their jurisdiction. The whole thing, however free from intentional disloyalty, is derogatory to that mutual comity and respect which ought to prevail between the State and general governments, and ought to meet the condemnation of the courts whenever brought within their proper cognizance." Where, however, Congress has authorized a railroad company, incorporated by a State, to construct a road within an organized territory, such territory, having become a State, could only interfere with such road on the same terms that it could refuse a recognition of its own previously granted right; for in such matters, the State would succeed only to the authority of Congress over the territory. Railroad Co. v. Baldwin, 103 U. S. 426; Van Wyck v. Knevals, 106 U. S. 360.
1. Milnor v. New York, etc., R. Co., 53 N. Y. 363; Bard v. Poole, 12 N. Y. 505; Silver Lake Bank v. North, 4 Johns. Ch. (N. Y.) 370; McGregor v. Erie R. Co., 35 N. J. Law, 115; Bank of Augusta v. Earle, 13 Pet. (U. S.) 539; Stetson v. City Bank, 2 Ohio St. 174; Lewis v. Bank of Kentucky, 12 Ohio, 132; Pierce v. Crompton, 13 R. I. 312.
Devise.-Devises of real estate to corporations, except under certain circumstances, are, under the New York statute of wills, void; and a devise made, to a foreign corporation, in New York is therefore void, though authorized by its charter to receive devises. White v. Howard, 38 Conn. 342. See also United States v. Fox, 94 U. S. 315, where testator devised lands in New York to the United States government, and it was held that the State had absolute power to regulate the devolution
of property, and that the term "person could not be extended to the United States, and the term "corporation" in the statute only applied to one created under the State laws, and therefore such devise of real estate was void, though the gift of personalty was good. See also Boyce v. City of St. Louis, 29 Barb. (N. Y.) 650; Starkweather v. Am. Bible Soc., 72 Ill. 50. See, infra, POWERS AS TO REAL ESTATE.
On the other hand, in a State where corporations are allowed by law to receive lands by devise, a corporation may take such devise, though prohibited by law in the State of its incorporation. Ohio Life Ins. Co. v. Merchants' Ins. Co., II Humph. (Tenn.) 1.
Usury. A foreign corporation, although permitted by its charter to take a higher rate of interest, must conform to the usury laws of the State. Hitchcock United States Bank, 7 Ala. 386; Knox v. United States Bank, 26 Miss. 655; Bard v. Poole, 12 N. Y. 495; Philadelphia Loan Co. v. Towner, 13 Conn. 249; Bank of Louisville v. Young, 37 Mo. 398. Compare Larwell v. Hanover Savings, etc., Soc., 40 Ohio St. 274; Angell & Ames Corp. (11th Ed.) $374, note; Morawetz Corp. (2d Ed.) §
In U. S. Mortgage Co. v. Sperry (Ill.), 24 Fed. Rep, 838, it was held that the limitation in a New York charter that no loan should be made at a rate of interest exceeding the legal rate did not mean the legal rate of New York, but of the place of the loan; and that, even if the legal rate of New York was meant, a violation of the charter could not be taken advantage of by a defendant under a plea of ultra vires, but that it must be left to the State of New York to deal with such violation. See National Bank v. Matthews, 98 U. S. 621. Contra, Scammon v. U. S. Mortgage Co., 17 Chi. Leg. News, 234.
Statutes which forbid the interposition of the defence of usury by a corporation apply also to foreign corporations. Southern Life & F. Co. v. Packer, 17 N. Y. 51. Penal Laws. The penal laws of a State will be enforced against a foreign corporation doing business therein. McGregor v. Erie R. Co., 35 N. J. L. 115.
and such special franchises or privileges as eminent domain or exemption from taxation, though given in the State of incorporation, cannot be enforced in other States, unless by express legislative permission.*
(c) Policy of State Controls Admission.-Whenever a State, by direct enactments, or by its public policy to be deduced from its general course of legislation or the settled adjudications of its highest court, indicates that contracts deriving validity from its comity are repugnant to such policy or injurious to such interests, the presumption in favor of its adoption can no longer be made.3 The expression of such policy must, however, be clear and positive.4
1. State v. Boston, etc., R. Co., 25 Vt. 438; Middle Bridge Co. v. Marks, 26 Me. 326. See also, infra, POWERS AS TO REAL ESTATE.
It was held in Bard v. Poole, 12 N. Y. 495, that it was essential to the validity of a contract by a State corporation that it must be one which would be valid if made at the same place by a natural person not a resident of the State.
Without express permission, a business not open to individuals cannot be carried on by a foreign corporation. People v. Howard, 50 Mich. 239.
2. Union Pacific R. Co. v. Burlington; etc., R. Co., 1 McCrary (C C.), 452. Dodge v. Council Bluffs, 57 Iowa, 560. Compare Holbert v. St. Louis, etc., R. Co., 45 Iowa, 26.
3. Bank of Augusta 7. Earle, 13 Pet. (U. S.) 592; Meyers v. Manhattan Bank, 20 Ohio, 301; Runyan v. Coster's Lessee, 14 Pet. (U. S.) 122; Bank of Marietta v. Pindall, 2 Rand. (Va.) 465, 473; Rees v. Conocscheague Bank, Rand. (Va.) 326; Carroll. City of East St. Louis, 67 Ill. 586; Starkweather v. Am. Bible Soc., 72 Ill. 50 United States Trust Co. v. Lee, 73 Ill. 144; United States Mortgage Co. v. Gross, 93 Ill. 483: Christian Union v. Yount, or U. S. 353.
142; American Christian Union 7. Yount, IOI U. S. 353; Santa Clara Female Academy v. Sullivan, 116 Ill. 375. This, how ever, does not apply to corporations for loaning money on real-estate securities. U. S. Mortgage Co. v. Gross, 93 Ill. 483. Compare Stevens v. Pratt, 101 Ill. 206.
Where a corporation is organized as a foreign corporation for the purpose of evading the laws of other States, comity will not be extended; and a corporation chartered to do business in any State but the one so incorporating it will not be allowed to transact business in the State in which it is foreign. Land Grant R. Co. v. Commissioners, 6 Kan. 245. Compare Hanna v. International Petroleum Co., 23 Ohio St. 622; State v. Milwaukee, etc., R. Co., 45 Wis. 579; Runyan v. Coster's Lessee, 14 Pet. (U. S.) 122, 130; Second Nat. Bank v. Lovell (Ohio), 2 Cin. S. C. Rep. 400; Newburg Petroleum Co. v. Weare, 27 Ohio St. 352; Hill v. Beach, 12 N. J. Eq. 31; Smith v. Alvord, 63 Barb. (N. Y.) 423; Merrick v. Van Santvoord, 34 N. Y. 222; Merrick v. Brainard, 38 Barb. (N. Y.) 574.
State Lotteries.-A foreign lottery corporation, whose business is lawful in its domicil, cannot engage in the same in a State where the business is unlawful. Those who sell or advertise for it in the latter State may be prosecuted. But a contract to advertise in other States, where the business is not illegal, does not violate the law of the State prohibiting lotteries so as to render the contractor liable to indictment. People v. Noeike, 29 Hun (N. Y.), 461; Grover v. Morris, 73 N. Y. 473; Wilkinson v. Gill, 74 N. Y. 463; Ormes v. Dauchy. 82 N. Y. 443; Lemon v. Grosskoff, 22 Wis. 447.
So, a foreign corporation will not be allowed to do acts which are prohibited by the State laws to its own citizens or corporations in a similar business, the State by the common law having the right to limit the organization and privileges of corporations of its own creation. People v. Howard, 50 Mich. 239.
In Illinois, it is declared to be against public policy to create a perpetuity in lands: so, foreign corporations, authorized by their charters to buy and sell 4. Cowell v. Springs Co., 100 U. S. lands without any provision to compel 55; Christian Union v. Yount, 101 U. S. them to sell within a certain time, cannot 352; Stevens v. Pratt, 1or Ill. 206; Compurchase lands, as tending to create a permercial Union Assoc. Co. v. Scammon, petuity. Carroll v. East St. Louis, 67 Ill. 102 Ill. 46; Carroll v. East St. Louis, 67 568; U. S. Trust Co. v. Lee, 73 Ill. Ill. 568.
(d) Charter Limitations.-The powers which a foreign corpora tion may exercise depend upon two considerations-first, whether it was endowed with the power in the State of its creation, and, second, conceding the original existence of the power, whether another State will permit its exercise. It is well settled that a corporation can do no acts and make no contracts except such as are authorized by its charter; 3 and these acts must be done by such officers and agents, and in such manner, as the charter authorizes.4 A State will never concede permission to a foreign corporation to exercise powers beyond the terms of its charter." Knowledge of the limitations imposed upon a foreign corporation by its charter, or the general laws of the home State, will commonly be imputed to those dealing with them.6
1. See CORPORAtions (Private), PowERS OF CORPORATIONS, + Am. & Eng. Encyc. of Law, 207.
2. See, supra, this title, GENERAL LIMITATIONS OF POWERS.
that is the law of its existence. It may be restricted in the use of some of its powers while doing business away from its corporate home, but every person who deals with it everywhere is bound to take notice of the provisions which have been made in its charter for the management and control of its affairs both in life and after dissolution.
3. Bank of Augusta v. Earle, 13 Pet. (U. S.) 588 (Taney, J.): "If the law creating the corporation does not, by the true construction of the words used in the charter, give it the right to exercise its powers beyond the limits of the State, all contracts made by it in other States would be void. . . . The corporation must, no doubt, show that the law of its creation gave it authority to make such contracts through such agents. Every power, however, of the description of which we are speaking, which a corporation exercises in another State, depends for its validity upon the laws of the sovereignty in which it is exercised; and a corporation can make no contract without this sanction, express or implied." See also Bockover v. Life Assoc., 77 Va. 85; s. c., 6 Am. & Eng. Corp. Cas. 603; Bank of Washtenow v. Montgomery, 2 Scam. (Ill.) 422; Metropolitan Bank v. Godfrey, 23 Ill. 579; Ohio Life Ins., etc., Co. v. Merchants' Ins., etc., Co., II Humph. (Tenn.) 24; Aspinwall v. Ohio, etc., R. Co., 20 Ind. 492: Thompson v. Waters, 25 Mich. 222; Pierce v. Crompton, 13 R. I. 312; Bard v. Poole, 12 N. Y. 505; Hitchcock's Heirs v. United States Bank, 7 Ala. 386. Compare Milnor v. N. Y., etc., R. Co., 53 N. Y. 363.
In Diamond Match Co. v. Powers, 51 Mich. 145; s. c., 8 Am. & Eng. Corp. Cas. 144, where a foreign corporation owning large amounts of real estate in Michigan brought a writ of mandamus against a register of deeds to enforce access to county records in order to investigate titles and the privilege demanded was refused, the court observes: Unless the State of Delaware, to which it owes its existence, and within whose dominion it belongs, has legally empowered it to deal in land and in land titles, it cannot engage in such affairs in Michigan. Thompson v. Waters, 25 Mich. 214. For the purpose of exercising any business activities here, it must rely on the comity of the State, and not on any inherent absolute right, because it has none. And the State, in extending its comity, may go no further than its pleasure dictates. It may stop short and tolerate but a part of the relator's powers, or a limited rather than a full exertion of them. But it will never concede permission to go beyond a charter."
4. The binding power of an agent's acts upon a corporation depends on the terms of the charter, and their legality on the laws in force where the act is performed. Ellsworth v. St. Louis, etc., R. Co., 98 N. Y. 553.
In Relfe v. Rundle, 103 U. S. 222, Waite, C.J., observes: "No State need allow the corporations of other States to do business within its jurisdiction unless it chooses, with perhaps the exception of commercial corporations; but if it does, without limitation, express or implied, the corporation comes in as it has been 6. Bockover v. Life Assoc., 77 Va. created. Every corporation necessarily 85; s. c., 6 Am. & Eng. Corp. Cas. 603. carries its charter wherever it goes, for See also Relfe v. Rundle, 103 U. S. 222.
5. Diamond Match Co. v. Powers, 51 Mich. 145; s. c., 8 Am. & Eng. Corp. Cas. 144.
The word "charter" does not always include the general laws of the incorporating State, or even sometimes all the conditions or terms of the charter itself. The rule, as usually stated, is that all such laws or charter limitations as owe their origin simply to the local policy of a State, which there is no good reason for extending beyond State limits, and which it cannot be supposed were expected to be so extended, will not be presumed to have entered into the charter contract, or to have been intended to regulate the company's transactions outside of the State, and hence do not affect the validity of such transactions.1
In Hoyt v. Thompson's Exr., 19 N. Y. 208, the Morris Canal & Banking Co., a New Jersey corporation, being the holder of a bond and mortgage for $60,000 upon property within the State, assigned the same to the State of Michigan and Michigan sold and delivered the security to the defendant in the city of New York, who paid the price agreed on. The assign ment to the State of M. was the act of the corporation, and so far valid. But it was voidable as to creditors, according to the provisions of a general law of New Jersey, applicable to all insolvent corporations. The defendant was not shown to have notice of that law, or of the fact of insolvency. Held, that he was to be deemed a bona fide purchaser, and, as such, that he had acquired a good title to the security, Defendant's title, as against the foreign corporation which assigned the security to his assignor, did not rest upon any principle of interstate comity, but upon the jus disponendi, or right of the corporation to transfer its effects, and also upon the doctrine that a voluntary transfer of personal estate, good by the law of the State where it is made, is good everywhere.
1. Thompson v. Waters, 25 Mich. 214; Ohio Life Ins. Co. v. Merchants' Ins. Co., 11 Humph. (Tenn.) 1; Relfe v. Rundle, 103 U. S. 222. See also Hoyt v. Thompson's Exr., 19 N. Y. 207. Compare Hoyt v. Thompson, 5 N. Y. 320.
In Ellsworth v. St. Louis, etc., R. Co., 98 N. Y. 553, where an Illinois charter prohibited a corporation from disposing of its bonds at less than eighty cents on the dollar, it was held that there was nothing in the laws of New York which rendered the contract illegal, and the provision did not apply to a sale made in New York; and, even if the charter granted under the statutes of another State contained prohibitions which would have rendered the contract illegal in that State if made there, they did not have that effect in New York, or any effect except as restriction upon the power of the corporation or its officers.
8 C. of L.-22
There is a distinction between an incapacity to take created by the statute of a State which is local, and a prohibitory clause in a charter which everywhere cleaves to the corporation; and, while corporations are prohibited by statute from taking by devise in New York, nevertheless a corporation chartered in New York may take by devise in Connecticut. White v. Howard, 38 Conn. 342.
Where a devise was made in Massachusetts to a New York corporation, it was held that, there being no prohibition in Massachusetts, the corporation could take, and, the devise being a charity, could be held in abeyance until the New York legislature could by statute enable the corporation to take. Fellows v. Miner, 119 Mass. 541. Compare Baker v. Clarke Institution, 110 Mass. 88; Ould v. Washington Hospital, 95 U. S. 313.
The New Jersey act voiding the transfer of property by an insolvent corporation does not affect a transfer made by a New Jersey corporation in New York. Hoyt v. Shelden, 3 Bosw. (N. Y.) 267. See also Hoyt v. Thompson, 5 N. Y. 320; s. c., 19 N. Y. 208; Ohio Life Ins., etc., Co. v. Merchants' Ins., etc., Co., II Humph. (Tenn.) 24. Compare Chafee v. Fourth Nat. Bank, 71 Me. 514.
In Pierce v. Crompton, 13 R. I. 312, it was held that where it appeared a corporation, by reason of the New York statute preventing an assignment in contemplation of insolvency, could not make such an assignment in New York, such an instrument could not be upheld in Rhode Island, where no statute forbids its execution. The latter State merely permitted the exercise, within its limits, of such powers as the corporation already possessed; no additional powers were conferred by the mere doing business in Rhode Island.
Where a banking corporation was prohibited by its charter from charging more than six per cent interest on its loans and discounts, it was held it might charge a higher rate in foreign States if allowed by the laws of such States. Hitchcock v. 337
3. STATUTORY CONDITIONS IMPOSING LIMITATIONS.-It is a consequence of the right of a State to entirely exclude foreign corporations, that such conditions may be imposed upon them in the transaction of business within the State limits as may be deemed expedient. These statutes are subject, however, to the constitutional limitations upon the power of States, and must recognize principles of natural justice. In pursuance of this policy, statutes have been passed in most, if not in all, the States, which commonly require that a foreign corporation, before transacting business in the State shall obtain a license; record its articles of association, disclosing
ists, although the person injured may be a citizen of the former State. See CONFLICT OF LAWS, 3 Am. & Eng. Encyc. of Law,521, and authorities contra there cited. A statute of one State, by which a right of action for personal injuries survives, will not be enforced by the courts of another State, where the common law, by which such course of action dies with the
United States Bank, 7 Ala. 386; Bard v.
Actions For Torts.-The statutory right of action against corporations for negligence causing death is confined in its operation to the State where it is in force, and cannot be applied to foreign corporations in a State where no such statute ex
person, is unchanged. Railway Co. v. Richards (Texas, 1887), 4 S. W. Rep. 627, reviewing the cases wherein action is allowed to survive in the other State, and wherein it is not.
1. See, supra, this title, ExCLUSION. 2. The legislature may prescribe conditions under which a foreign insurance company may transact business, and how its agents shall be qualified. List v. Pennsylvania, 118 Pa. St. 322; Doyle v. Continental Ins. Co., 94 U. S. 541; State v. Fosdick, 21 La. Ann. 434: W. U. Tel. Co. v. Mayer, 28 Ohio St. 539; Slaughter v. Commonwealth, 13 Gratt. (Va.) 767; Tatem v. Wright, 3 Zabr. (N. J.) 429; Fire Dept. v. Noble, 3 E. D. Smith (N. Y.) 449. Peirce v. People, 106 Ill. 11; People v. Fire Asso. of Phila., 92 N. Y. 311; s. c., I Am. & Eng. Corp. Cas. 1; Goldsmith v. Home Ins. Co., 62 Ga. 379; Granite, etc., Aid Assoc. v. Porter, 58 Vt. 581; Charter Oak Life Ins. Co. v. Sawyer, 44 Wis. 387.