Barron v. Burnside/Opinion of the Court

by Samuel Blatchford

United States Supreme Court

121 U.S. 186

Barron  v.  Burnside

The statute manifestly applies to the Chicago & 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 oft he 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.'

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 non-resident 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 employe 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 in the county jail not to exceed 30 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 section 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 along; 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 Ins. 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 Compay , 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 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 3, § 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: (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 court, upon compliance with the terms of the removal statute; (2) 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; (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. 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. The case of Doyle v. Continental Ins. 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 Ins. 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 licens. 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 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 transanction 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, 407; Ducat v. Chicago, 10 Wall. 410, 415; Insurance Co. v. Morse, 20 Wall. 445, 456; St. Clair v. Cox, 106 U.S. 350, 356, 1 Sup. Ct. Rep. 354; Philadelphia Fire Ass'n v. New York, 119 U.S. 110, 120, 7 Sup. Ct. Rep. 108.

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.

Notes