The exaction of a license fee by a state to enable a corporation
organized under the laws of another state to have an office within
its limits for the use of the officers, stockholders, agents, or
employs of the corporation does not impinge upon the commercial
clause of the federal Constitution (Article I, § VIII, clause
3), provided the corporation is neither engaged in carrying on
foreign or interstate commerce nor employed by the government of
the United States.
Corporations are not citizens within the meaning of the clause
of the Constitution declaring that the citizens of each state shall
be entitled to all privileges and immunities of citizens in the
several states, Article IV, § II, clause 1.
A private corporation is included under the designation of
"person" in the Fourteenth Amendment to the Constitution, section
I.
The provisions in the Fourteenth Amendment to the Constitution,
Section I, that "No state shall deny to any person within its
jurisdiction the equal protection of the laws" do not prohibit a
state from requiring for the admission within its limits of a
corporation of another state such conditions as it chooses.
The only limitation upon the power of a state to exclude a
foreign corporation from doing business within its limits, or
hiring offices for that purpose, or to exact conditions for
allowing the corporation to do business or hire offices there,
arises where the corporation is in the employ of the federal
government or where its business is strictly commerce, interstate
or foreign.
Page 125 U. S. 182
The Court stated the case as follows:
In May, 1881, the Pembina Consolidated Silver Mining and Milling
Company was incorporated under the laws of Colorado, with an
authorized capital of one million dollars, for the purpose of
carrying on a general mining and milling business in that state.
Its principal office is in Alpine, Colorado, and since July 1,
1881, it has had, and still has, an office in the City of
Philadelphia "for the use of its officers, stockholders, agents,
and employees." On the 31st of October, 1881, the Auditor General
and Treasurer of Pennsylvania assessed a tax against the
corporation for "office license" from July 1, 1881, to July 1, 1882
at the rate of one-fourth of a mill on each dollar of its capital
stock, which amounted to $250, and added to it a penalty of $125
for failure to take out a license. This tax was assessed and
penalty imposed under section sixteen of the Act of the Legislature
of the Commonwealth approved June 7, 1879, entitled "An act to
provide revenue by taxation." The section provides as follows:
"That from and after the first day of July, A.D. 1879, no
foreign corporation, except foreign insurance companies, which does
not invest and use its capital in this Commonwealth shall have an
office or offices in this Commonwealth for the use of its officers,
stockholders, agents, or employees unless it shall first have
obtained from the Auditor General an annual license so to do, and
for said license every such corporation shall pay into the State
Treasury, for the use of the Commonwealth, annually, one-fourth of
a mill on each dollar of capital stock which said company is
authorized to have, and the Auditor General shall not issue a
license to any corporation until said license fee shall have been
paid. The Auditor General and State Treasurer are hereby authorized
to settle and have collected an account against any company
violating the provisions of this section for the amount of such
license fee, together with a penalty of fifty percentum for failure
to pay the same,
provided that no license shall be
necessary for any corporation paying a tax under any previous
section of this act, or whose capital stock, or a majority thereof,
is owned or controlled
Page 125 U. S. 183
by a corporation of this state which does pay a tax under any
previous section of this act."
It is conceded that the corporation is not within the exception
of the proviso of the act, as it pays no tax under any previous
section.
From this assessment, or settlement of the account against the
corporation, as it is termed in the record, the corporation
appealed to the Court of Common Pleas of Dauphin County on the
ground, among others, that the said 16th section of the revenue act
is in conflict with the clause of the Constitution of the United
States declaring that "Congress shall have power to regulate
commerce with foreign nations and among the several states,"
Article I, Section 8, clause 3, and also with the clause declaring
that "The citizens of each state shall be entitled to all
privileges and immunities of citizens in the several states,"
Article IV, Section 2, clause 10. In that court, the Commonwealth
filed a declaration in debt against the corporation for the amount
claimed. It does not appear from the record that any answer or plea
was filed to this declaration, but it is assumed that issue was
joined, as counsel of the parties agreed that a trial by jury
should be waived, and that the case should be submitted to the
decision of the court, subject to a writ of error as in other cases
at the option of either party.
The Court of Common Pleas affirmed the validity of the
assessment, and the corporation took the case on writ of error to
the Supreme Court of the Commonwealth, which affirmed the judgment
of the Common Pleas. To review this judgment, the case is brought
here.
MR. JUSTICE FIELD, after stating the facts as above, delivered
the opinion of the Court.
The only questions passed upon by the Supreme Court of
Pennsylvania, which can be considered by us, are those which
Page 125 U. S. 184
arise upon its ruling against the contention of the plaintiff in
error that the statute of the commonwealth is in conflict with
clauses of the federal Constitution. Its ruling upon the conformity
of the statute with the Constitution of the commonwealth does not
come under our jurisdiction.
The clauses of the federal Constitution with which it was urged
in the state supreme court that the statute conflicts are the one
vesting in Congress the power to regulate foreign and interstate
commerce, the one declaring that the citizens of each state are
entitled to the privileges and immunities of citizens in the
several states, and the one embodied in the Fourteenth Amendment
declaring that no state shall deny to any person within its
jurisdiction the equal protection of the laws.
1. It is not perceived in what way the statute impinges upon the
commercial clause of the federal Constitution. It imposes no
prohibition upon the transportation into Pennsylvania of the
products of the corporation, or upon their sale in the
commonwealth. It only exacts a license tax from the corporation
when it has an office in the commonwealth for the use of its
officers, stockholders, agents, or employees. The tax is not for
their office, but for the office of the corporation, and the use to
which it is put is presumably for the latter's business and
interest. For no other purpose can it be supposed that the office
would be hired by the corporation.
The exaction of a license fee to enable the corporation to have
an office for that purpose within the commonwealth is clearly
within the competency of its legislature. It was decided long ago,
and the doctrine has been often affirmed since, that a corporation
created by one state cannot -- with some exceptions, to which we
shall presently refer -- do business in another state without the
latter's consent, express or implied. In
Paul v.
Virginia, 8 Wall. 168, this Court, speaking of a
foreign corporation (and under that definition the plaintiff in
error, being created under the laws of Colorado, is to be
regarded), said:
"The recognition of its existence even by other states, and the
enforcement of its contracts made therein, depend purely upon the
comity of those states -- a comity which is never extended where
the existence of the corporation
Page 125 U. S. 185
or the exercise of its powers are prejudicial to their interests
or repugnant to their policy. Having no absolute right of
recognition in other states, but depending for such recognition and
the enforcement of its contracts upon their consent, it follows as
a matter of course that such consent 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 interests. The whole
matter rests in their discretion."
A qualification of this doctrine was expressed in
Pensacola
Telegraph Co. v. Western Union Telegraph Co., 96 U. S.
12, so far as it applies to corporations engaged in
commerce under the authority or with the permission of Congress.
The Act of July 24, 1866, "to aid in the construction of telegraph
lines, and to secure to the government the use of the same for
postal, military, and other purposes," which was considered in that
case, declared that any telegraph company then organized, or which
might thereafter be organized, under the laws of any state, should
have the
"right to construct, maintain, and operate lines of telegraph
through and over any portion of the public domain of the United
States, over and along any of the military or post roads of the
United States, which had been or might thereafter be declared such
by act of Congress, and over, under, or across the navigable
streams or waters of the United States,"
upon certain conditions specified therein, and this Court held
that the telegraph, as an agency of commerce and
intercommunication, came under the controlling power of Congress as
against any hostile state legislation, and that the Western Union
Telegraph Company, having accepted the conditions of the act, could
not be excluded by another state from prosecuting its business
within her jurisdiction. The legislature of Florida had granted to
another company, for twenty years, the exclusive right to establish
and maintain telegraph lines in certain counties of the state, but
this exclusive grant was adjudged to be invalid as against the
company acting under
Page 125 U. S. 186
the law of Congress. And undoubtedly a corporation of one state,
employed in the business of the general government, may do such
business in other states without obtaining a license from them.
Thus, to take an illustration from the opinion of MR. JUSTICE
BRADLEY in a case recently decided by him,
"If Congress should employ a corporation of shipbuilders to
construct a man-of-war, they would have the right to purchase the
necessary timber and iron in any state of the union,"
and, we may add, without the permission and against the
prohibition of the state.
Stockton v. Baltimore & New York
Railroad Co., 32 F. 9, 14.
These exceptions do not touch the general doctrine declared as
to corporations not carrying on foreign or interstate commerce, or
not employed by the government. As to these corporations, the
doctrine of
Paul v. Virginia applies. The Colorado
corporation does not come within any of the exceptions. Therefore
the recognition of its existence in Pennsylvania, even to the
limited extent of allowing it to have an office within its limits
for the use of its officers, stockholders, agents, and employees,
was a matter dependent on the will of the state. It could make the
grant of the privilege conditional upon the payment of a license
tax, and fix the sum according to the amount of the authorized
capital of the corporation. The absolute power of exclusion
includes the right to allow a conditional and restricted exercise
of its corporate powers within the state.
Bank of
Augusta v. Earle, 13 Pet. 519;
Lafayette
Insurance Co. v. French, 18 How. 404;
Ducat v.
Chicago, 10 Wall. 410;
St. Clair v. Cox,
106 U. S. 350.
We do not perceive the pertinency of the position advanced by
counsel that the tax in question is void as an attempt by the state
to tax a franchise not granted by her, and property or business not
within her jurisdiction. The fact is otherwise. No tax upon the
franchise of the foreign corporation is levied, nor upon its
business or property without the state. A license tax only is
exacted as a condition of its keeping an office within the state
for the use of its officers, stockholders, agents, and employees --
nothing more and nothing less -- and
Page 125 U. S. 187
in what way this can be considered as a regulation of interstate
commerce is not apparent.
2. Nor does the clause of the Constitution declaring that the
"Citizens of each state shall be entitled to all privileges and
immunities of citizens in the several states" have any bearing upon
the question of the validity of the license tax in question.
Corporations are not citizens within the meaning of that clause.
This was expressly held in
Paul v. Virginia. In that case,
it appeared that a statute of Virginia, passed in February, 1866,
declared that no insurance company not incorporated under the laws
of the state should carry on business within her limits without
previously obtaining a license for that purpose, and that no
license should be received by the corporation until it had
deposited with the treasurer of the state bonds of a designated
character and amount, the latter varying according to the extent of
the capital employed. No such deposit was required of insurance
companies incorporated by the state for carrying on their business
within her limits. A subsequent statute of Virginia made it a penal
offense for a person to act in the state as an agent of a foreign
insurance company without such license. One Samuel Paul, having
acted in the state as an agent for a New York insurance company
without a license, was indicted and convicted in a circuit court in
Virginia, and sentenced to pay a fine of $50. On error to the Court
of Appeals of the state, the judgment was affirmed, and to review
that judgment the case was brought to this Court. Here it was
contended, as in the present case, that the statute of Virginia was
invalid by reason of its discriminating provisions between her
corporations and corporations of other states; that in this
particular it was in conflict with the clause of the Constitution
mentioned, that the citizens of each state shall be entitled to all
the privileges and immunities of citizens in the several states.
But the Court answered that corporations are not citizens within
the meaning of the clause; that the term "citizens," as used in the
clause, applies only to natural persons, members of the body
politic owing allegiance to the state, not to artificial persons
created by the legislature, and possessing only
Page 125 U. S. 188
such attributes as the legislature has prescribed; that the
privileges and immunities secured to citizens of each state in the
several states by the clause in question are those privileges and
immunities which are common to the citizens in the latter states,
under their Constitution and laws, by virtue of their citizenship;
that special privileges enjoyed by citizens in their own states are
not secured in other states by that provision; that it was not
intended that the laws of one state should thereby have any
operation in other states; that they can have such operation only
by the permission, express or implied, of those states; that
special privileges which are conferred must be enjoyed at home
unless the assent of other states to their enjoyment therein be
given, and that a grant of corporate existence was a grant of
special privileges to the corporators, enabling them to act for
certain specified purposes as a single individual, and exempting
them, unless otherwise provided, from individual liability, which
could therefore be enjoyed in other states only by their assent. In
the subsequent case of
Ducat v.
Chicago, 10 Wall. 410, the Court followed this
decision, and observed that the power of the state to discriminate
between her own domestic corporations and those of other states
desirous of transacting business within her jurisdiction, was
clearly established by it and the previous case of
Bank of
Augusta v. Earle, 13 Pet. 519, and added that
"as to the nature or degree of discrimination, it belongs to the
state to determine, subject only to such limitations on her
sovereignty as may be found in the fundamental law of the
union."
Philadelphia Fire Association v. New York, 119 U.
S. 110,
119 U. S.
120.
3. The application of the Fourteenth Amendment of the
Constitution to the statute imposing the license tax in question is
not more apparent than the application of the clause of the
Constitution to the rights of citizens of one state to the
privileges and immunities of citizens in other states. The
inhibition of the amendment that no state shall deprive any person
within its jurisdiction of the equal protection of the laws was
designed to prevent any person or class of persons from being
singled out as a special subject for discriminating
Page 125 U. S. 189
and hostile legislation. Under the designation of "person" there
is no doubt that a private corporation is included. Such
corporations are merely associations of individuals united for a
special purpose and permitted to do business under a particular
name and have a succession of members without dissolution. As said
by Chief Justice Marshall: "The great object of a corporation is to
bestow the character and properties of individuality on a
collective and changing body of men."
Providence
Bank v. Billings, 4 Pet. 514,
29 U. S. 562.
The equal protection of the laws which these bodies may claim is
only such as is accorded to similar associations within the
jurisdiction of the state. The plaintiff in error is not a
corporation within the jurisdiction of Pennsylvania. The office it
hires is within such jurisdiction, and on condition that it pays
the required license tax, it can claim the same protection in the
use of the office that any other corporation having a similar
office may claim. It would then have the equal protection of the
law so far as it had anything within the jurisdiction of the state,
and the constitutional amendment requires nothing more. The state
is not prohibited from discriminating in the privileges it may
grant to foreign corporations as a condition of their doing
business or hiring offices within its limits, provided always such
discrimination does not interfere with any transaction by such
corporations of interstate or foreign commerce. It is not every
corporation, lawful in the state of its creation, that other states
may be willing to admit within their jurisdiction, or consent that
it have offices in them -- such, for example, as a corporation for
lotteries. And even where the business of a foreign corporation is
not unlawful in other states, the latter may wish to limit the
number of such corporations or to subject their business to such
control as would be in accordance with the policy governing
domestic corporations of a similar character. The states may
therefore require for the admission within their limits of the
corporations of other states, or of any number of them, such
conditions as they may choose, without acting in conflict with the
concluding provision of the first section of the Fourteenth
Amendment. As to the meaning and extent of that section of the
amendment,
Page 125 U. S. 190
see Barbier v. Connolly, 113 U. S.
27;
Soon Hing v. Crowley, 113 U.
S. 703;
Missouri v. Lewis, 101 U. S.
22,
101 U. S. 30;
Missouri Pacific Railway Co. v. Humes, 115 U.
S. 512;
Yick Wo v. Hopkins, 118 U.
S. 356;
Hayes v. Missouri, 120 U. S.
68.
The only limitation upon this power of the state to exclude a
foreign corporation from doing business within its limits or hiring
offices for that purpose, or to exact conditions for allowing the
corporation to do business or hire offices there, arises where the
corporation is in the employ of the federal government, or where
its business is strictly commerce, interstate or foreign. The
control of such commerce being in the federal government, is not to
be restricted by state authority.
Judgment affirmed.
MR. JUSTICE BRADLEY, was not present at the argument of this
cause, and took no part in its decision.
