The statute of Iowa, approved April 6, 1886, c. 76, which
requires that every foreign corporation named in it shall, as a
condition of obtaining a permit for the transaction of business in
Iowa, stipulate that it will not remove into the federal court
certain suits which it would, by the laws of the United States,
have a right to remove is void because it makes the right to a
permit dependent upon the surrender by the foreign corporation of a
privilege secured to it by the Constitution and laws of the United
States.
The case of
Dome Insurance Co. v.
Morse, 20 Wall. 445, approved, and the decision in
Doyle v. Continental Insurance Co., 94 U. S.
535, explained.
This is a writ of error brought by Henry S. Barron to review a
judgment of the Supreme Court of the State of Iowa, on a trial on a
writ of habeas corpus, remanding him to the custody of George W.
Burnside, Sheriff of Linn County, Iowa, by whom he was held under a
warrant for his arrest issued by a justice of the peace of Linn
County, October 5, 1886, for
"the crime of knowingly transacting a portion of the business of
the Chicago and Northwestern Railway Company within the State of
Iowa when such railway company had no valid permit to do business
in the State of Iowa, as provided by chapter 76 of the Laws of the
21st General Assembly of the State pf Iowa, approved April 6, 1886,
and taking effect September 1, 1886."
The statute in question is entitled
"An act requiring foreign corporations to file their articles of
incorporation with the secretary of state and imposing certain
conditions upon such corporations transacting business in this
state."
The provisions of the act are as follows:
"SECTION 1. That hereafter any corporation for pecuniary profit,
other than for carrying on mercantile or manufacturing business,
organized under the laws of any other state or of any territory of
the United States or of any foreign country desiring to transact
its business or to continue the transaction of its business in this
state shall be, and hereby is, required, on
Page 121 U. S. 187
and after September [first,] A.D. 1886, to file with the
secretary of state a certified copy of its articles of
incorporation, duty attested, accompanied by a resolution of its
board of directors or stockholders authorizing the filing thereof,
and also authorizing service of process to be made upon any of its
officers or agents in this state engaged in transacting its
business, and requesting the issuance to such corporation of a
permit to transact business in this state, said application to
contain a stipulation that said permit shall be subject to each of
the provisions of this act. And thereupon the secretary of state
shall issue to such corporation a permit, in such form as he may
prescribe, for the general transaction of the business of such
corporation, and upon the receipt of such permit, such corporation
shall be permitted and authorized to conduct and carry on its
business in this state, provided that nothing in this act contained
shall be construed to prevent any foreign corporations from buying,
selling, and otherwise dealing in notes, bonds, mortgages, and
other securities or from enforcing the collection of the same in
the federal courts in the same manner, and to the same extent as is
now authorized by law."
"SEC 2. No foreign corporation which has not in good faith
complied with the provisions of this act and taken out a permit
shall hereafter be authorized to exercise the power of eminent
domain or exercise any of the rights and privileges conferred upon
corporations until they have so complied herewith and taken out
such permit."
"SEC 3. Any foreign corporation sued or impleaded in any of the
courts of this state upon any contract made or executed in this
state or to be performed in this state or for any act or omission,
public or private, arising, originating, or happening in the state
who shall remove any such cause from such state court into any of
the federal courts held or sitting in this state for the cause that
such corporation is a nonresident of this state or a resident of
another state than that of the adverse party, or of local prejudice
against such corporation, shall thereupon forfeit and render null
and void any permit issued or authority granted to such corporation
to transact
Page 121 U. S. 188
business in this state, such forfeiture to be determined from
the record of removal and to date from the date of filing of the
application on which such removal is effected, and whenever any
corporation shall thus forfeit its said permit, no new permit shall
be issued to it for the space of three months unless the executive
council shall for satisfactory reasons cause it to be issued
sooner."
"SEC 4. Any foreign corporation that shall carry on its business
and transact the same on and after September 1, 1886, in the State
of Iowa, by its officers, agents, or otherwise, without having
complied with this statute and taken out and having a valid permit
shall forfeit and pay to the state, for each and every day in which
such business is transacted and carried on, the sum of one hundred
dollars ($100), to be recovered by suit in any court having
jurisdiction. And any agent, officer, or employee who shall
knowingly act or transact such business for such corporation when
it has no valid permit as provided herein shall be guilty of a
misdemeanor, and for each offense shall be fined not to exceed one
hundred dollars ($100), or imprisoned in the county jail not to
exceed thirty days, and pay all costs of prosecution."
"SEC 5. All acts and parts of acts inconsistent with the
provisions hereof are hereby repealed, provided that nothing
contained in this act shall relieve any company, corporation,
association, or partnership from the performance of any duty or
obligation now enjoined upon them or required of them, or either of
them, by the laws now in force."
The information on which the warrant of arrest was issued was as
follows:
"State of Iowa"
"Linn County ss:"
"Before C. W. BURTON, Justice of the Peace in and for Rapids
Township."
"The State of Iowa"
"v."
"Henry Barron"
"The defendant is accused of the crime of knowingly transacting
a portion of the business of the Chicago and Northwestern
Page 121 U. S. 189
Railway Company within the State of Iowa when such railway
company has no valid permit to do business in the State of Iowa as
provided in chapter 76 of the Laws of the 21st General Assembly of
said State of Iowa, and taking effect September 1, 1886."
"For that the said defendant, on the 5th day of October, 1886 at
the City of Cedar Rapids, in the county and state aforesaid, well
knowing the Chicago and Northwestern Railway Company to be a
foreign corporation organized under the laws of Illinois, and not a
corporation organized under the laws of Iowa, and well knowing that
the said Chicago and Northwestern Railway Company was such foreign
corporation for pecuniary profit other than for carrying on
mercantile or manufacturing business, to-wit, for the operating of
a line of railroad, and well knowing that said railway company has
failed, neglected, and refused to file its articles of
incorporation with the Secretary of State of the State of Iowa, and
has neglected and refused to request the issuance to such Chicago
and Northwestern Railway Company of a permit to transact business
in said State of Iowa, and well knowing that said railway company
has no permit to do business in said State of Iowa, as required by
said chapter 76 of the Laws of Iowa passed by the 21st General
Assembly aforesaid, did knowingly act as a locomotive engineer for
the transaction of the business of said Chicago and Northwestern
Railway Company within the State of Iowa by running a locomotive
engine, with a passenger train attached thereto, through the
Township of Rapids, in the county and state aforesaid, contrary to
law, and the statute in such case made and provided."
"J. H. PRESTON"
"Subscribed and sword to by J. H. Preston before me, this 5th
day of October, A.D. 1886."
"E. C. PRESTON"
"
Notary Public in and for Linn County, Iowa"
"[Notarial Seal]"
Barron, having been arrested, applied to the supreme court of
the state for a writ of habeas corpus by a petition setting
Page 121 U. S. 190
forth various facts as showing that his imprisonment was
illegal, and praying that his petition might be tried before the
supreme court. The writ was issued, a return was made to it by the
sheriff, and the case was heard upon an agreed statement of facts,
the only material ones, in the view we take of the case, being that
the Chicago and Northwestern Railway Company was and is an Illinois
corporation, operating railroads in Iowa and claiming to do so
under the authority of statutes of that state, and that Barron,
"at the time he was arrested, was in the employment of the
Chicago and Northwestern Railway Company and engaged as an engineer
on a locomotive in running a passenger train, which was made up at
Chicago, in the State of Illinois, and was destined to Council
Bluffs, in Iowa, and that said train was carrying passengers and
the United States mails received at different points in the State
of Illinois and destined to points in the State of Iowa and beyond,
and also from points in the State of Iowa to other points in the
same state,"
and that he was arrested while he was engaged in controlling the
engine on the train while it was running. It was admitted that the
company had not complied with the Iowa statute by taking out the
required permit. On the hearing before the state court, it was
urged, among other things, that the statute of Iowa is void as an
attempt to interfere with the jurisdiction of the federal courts as
established by the Constitution of the United States and acts of
Congress. The court upheld the validity of the statute.
Page 121 U. S. 195
MR. JUSTICE BLATCHFORD, after stating the case as above
reported, delivered the opinion of the Court.
The statute manifestly applies to the Chicago and Northwestern
Railway Company as an Illinois corporation. The first section
provides that a foreign corporation desiring to continue the
transaction of its business in Iowa is required, on and after
September 1, 1886,
"to file with the secretary of state a certified copy of its
articles of incorporation, duly attested, accompanied by a
resolution of its board of directors or stockholders authorizing
the filling thereof, and also authorizing service of process to be
made upon any of its officers or agents in this state engaged in
transacting its business, and requesting the issuance to such
corporation of a permit to transact business in this state, said
application to contain a stipulation that said permit shall be
subject to each of the provisions of this act. And thereupon the
Secretary of State shall issue to such corporation a permit, in
such form as he may prescribe, for the general transaction of the
business of such
Page 121 U. S. 196
corporation, and upon the receipt of such permit, such
corporation shall be permitted and authorized to conduct and carry
on its business in this state."
The initial step required is a resolution authorizing the filing
of the copy of the articles of incorporation and authorizing
service of process in the manner specified and requesting the issue
of the permit, the application to be accompanied by a stipulation
that the permit shall be subject to each of the provisions of the
act. This proceeding is a unit. The filing of the articles of
incorporation and the provision in regard to service of process are
to be authorized by the same resolution which requests the issue of
the permit, and this request or application is to contain the
stipulation above mentioned. These various things are not
separable. They are all indissolubly bound up with the application
for a permit, which is to be subject to every provision of the act.
The permit cannot be issued unless such a stipulation is given, and
the corporation is not to be permitted to carry on its business in
the state unless the permit is issued to it and received by it.
Section 3 of the act provides that if the permit is issued, and
the foreign corporation being thereafter sued in a court of Iowa
upon a contract made or executed in Iowa, or to be performed in
Iowa, or for any act or omission, public or private, arising,
originating, or happening in Iowa, shall remove the suit from the
state court into any federal court in Iowa because the corporation
is a nonresident of Iowa or a resident of a state other than the
State of the adverse party or because of local prejudice against
the corporation, that fact shall forfeit the permit and render it
void, such forfeiture to be determined from the record of removal
and to date from the filing of the application on which the removal
is effected.
Section 4 imposes a penalty of $100 a day on the corporation for
carrying on its business in Iowa without having complied with the
statute and having a valid permit, and provides that any agent,
officer, or employee who shall knowingly act or transact such
business for the corporation when it has no valid permit shall be
guilty of a misdemeanor, and for each offense shall be fined not to
exceed $100 or be imprisoned
Page 121 U. S. 197
in the county jail not to exceed thirty days and pay all costs
of prosecution.
It is apparent that the entire purpose of this statute is to
deprive the foreign corporation, in suits as those mentioned in
§ 3, of the right conferred upon it by the Constitution and
laws of the United States to remove a suit from the state court
into the federal court either on the ground of diversity of
citizenship or of local prejudice. The statute is not separable
into parts. An affirmative provision requiring the filing by a
foreign corporation with the secretary of state of a copy of its
articles of incorporation and of an authority for the service of
process upon a designated officer or agent in the state might not
be an unreasonable or objectionable requirement if standing alone,
but the manner in which in this statute the provisions on those
subjects are coupled with the application for the permit and with
the stipulation referred to shows that the real and only object of
the statute and its substantial provision is the requirement of the
stipulation not to remove the suit into the federal court.
In view of these considerations, the case falls directly within
the decision of this Court in
Home Insurance Co. v.
Morse, 20 Wall. 445. In that case, which was twice
argued here, a statute of Wisconsin provided that it should not be
lawful for any foreign fire insurance company to transact any
business in Wisconsin unless it should first appoint an attorney in
that state, on whom process could be served, by filing a written
instrument to that effect containing an agreement that the company
would not remove a suit for trial into the federal court. The Home
Insurance Company, a New York corporation, filed the appointment of
an agent containing the following clause:
"And said company agrees that suits commenced in the state
courts of Wisconsin shall not be removed, by the acts of said
company, into the United States circuit or federal courts."
A loss having occurred on a policy issued by the company, it was
sued in a court of the state. It filed its petition in proper form
for the removal of the suit into the federal court. The state court
refused to allow the removal, and, after a trial, gave a judgment
for the plaintiff, which was
Page 121 U. S. 198
affirmed by the Supreme Court of Wisconsin. The company brought
the case into this Court, which held these propositions:
first, the agreement made by the company was not one which
would bind it without reference to the statute;
second,
the agreement acquired no validity from the statute. The general
proposition was maintained that agreements in advance to oust the
courts of jurisdiction conferred by law are illegal and void, and
that while the right to remove a suit might be waived or its
exercise omitted in each recurring case, a party could not bind
himself in advance, by an agreement which might be specifically
enforced, thus to forfeit his rights at all times and on all
occasions whenever the case might be presented.
In regard to the second question, the proposition laid down was
that the jurisdiction of the federal courts under Article III,
Section 2, of the Constitution depends upon and is regulated by the
laws of the United States; that state legislation cannot confer
jurisdiction upon the federal courts nor limit or restrict the
authority given to them by Congress in pursuance of the
Constitution, and that a corporation is a citizen of the state by
which it is created and in which its principal place of business is
situated, so far as its right to sue and be sued in the federal
courts is concerned and within the clause of the Constitution
extending the jurisdiction of the federal courts to controversies
between citizens of different states. The conclusions of the court
were summed up thus: 1st, 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
court upon compliance with the terms of the removal statute; 2d,
the statute of Wisconsin is an obstruction to this right, is
repugnant to the Constitution of the United States and the laws
made in pursuance thereof, and is illegal and void; 3d, 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. For these reasons, the judgment of the Supreme
Court of Wisconsin was reversed and it was directed that the prayer
of the petition for removal should be granted.
Page 121 U. S. 199
The case of
Doyle v. Continental Insurance Co.,
94 U. S. 535, is
relied on by the defendant in error. In that case, this Court said
that it had carefully reviewed its decision in
Insurance Co. v.
Morse, and was satisfied with it. In referring to the second
conclusion in
Insurance Co. v. Morse, above recited --
namely that the statute of Wisconsin was repugnant to the
Constitution of the United States and was illegal and void -- the
Court said in
Doyle v. Continental Insurance Co. that it
referred to that portion of the statute which required a
stipulation not to transfer causes to the courts of the United
States. In that case, which arose under the same statute of
Wisconsin, the foreign insurance company had complied with the
statute, and had filed an agreement not to remove suits into the
federal courts, and had received a license to do business in the
state. Afterwards it removed into the federal court a suit brought
against it in a state court of Wisconsin. The state authorities
threatening to revoke the license, the company filed a bill in the
circuit court of the United States praying for an injunction to
restrain the revoking of the license. A temporary injunction was
granted. The defendant demurred to the bill, the demurrer was
overruled, a decree was entered making the injunction perpetual,
and the defendant appealed to this Court. This Court reversed the
decree and dismissed the bill. The point of the decision seems to
have been that as the state had granted the license, its officers
would not be restrained by injunction by a court of the United
States from withdrawing it. All that there is in the case beyond
this, and all that is said in the opinion which appears to be in
conflict with the adjudication in
Insurance Co. v. Morse,
must be regarded as not in judgment.
In both of the cases referred to, the foreign corporation had
made the agreement not to remove into the federal court suits to be
brought against it in the state court. In the present case, no such
agreement has been made, but the locomotive engineer is arrested
for acting as such in the employment of the corporation because it
has refused to stipulate that it will not remove into the federal
court suits brought against it in the state court as a condition of
obtaining a permit, and consequently
Page 121 U. S. 200
has not obtained such permit. Its right, equally with any
individual citizen, to remove into the federal court under the laws
of the United States such suits as are mentioned in the third
section of the Iowa statute is too firmly established by the
decisions of this Court to be questioned at this day, and the State
of Iowa might as well pass a statute to deprive an individual
citizen of another State of his right to remove such suits.
As the Iowa statute makes the right to a permit dependent upon
the surrender by the foreign corporation of a privilege secured to
it by the Constitution and laws of the United States, the statute
requiring the permit must he held to be void.
The question as to the right of a state to impose upon a
corporation engaged in interstate commerce the duty of obtaining a
permit from the state as a condition of its right to carry on such
commerce is a question which it is not necessary to decide in this
case. In all the cases in which this Court has considered the
subject of the granting by a state to a foreign corporation of its
consent to the transaction of business in the state, it has
uniformly asserted that no conditions can be imposed by the state
which are repugnant to the Constitution and laws of the United
States.
La Fayette Ins. Co. v.
French, 18 How. 404,
59 U. S. 407;
Ducat v.
Chicago, 10 Wall. 410,
77 U. S. 415;
Insurance Co. v.
Morse, 20 Wall. 445,
87 U. S. 456;
St. Clair v. Cox, 106 U. S. 350,
106 U. S. 356;
Philadelphia Fire Ass'n v. New York, 119 U.
S. 110,
119 U. S.
120.
The judgment of the Supreme Court of Iowa is reversed, and
the case is remanded to that court with an instruction to enter a
judgment discharging the plaintiff in error from custody.
