Transcript of Record — Wisconsin v. Phila. & Reading Coal Co.

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STATE OF THE STATE OF WISCONSIN, APPELLANT,

Saints

PROM THH DISTRICT COURT OF THE UNITED STATES FOR.

_ THE WESTERN DISTRICT OF WISCONSIN.

(24,381)

SUPREME COURT OF THE UNITED STATES.

OCTOBER TERM, 1915.

No. 254.

JAMES A. FREAR, IN HIS CAPACITY AS SECRETARY OF

STATE OF THE STATE OF WISCONSIN, APPELLANT,

vs.

THE WESTERN UNION TELEGRAPH COMPANY.

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR

THE WESTERN DISTRICT OF WISCONSIN.

INDEX.

Original. Print

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Jupp & DeTweILeR (INC.), PRINTERS, WASHINGTON, D. C., AUGUST 11, 1915,

JAMES A. FREAR, ETC., VS. WESTERN UNION TELEGRAPH COMPANY. 1

United States District Court, Western District of Wisconsin.

117-A, Civil Docket.

WesteRN Union TeLecrarn Company, Complainant,

Vs.

James A. Frear, in His Capacity as Secretary of State of the State of

Wisconsin, Defendant.

A. G. Zimmerman and Rufus B. Smith, of Madison, Wisconsin,

and Perey B. Eckhart of Chicago, Hlinois, solicitors for complainant.

Walter C. Owen, Attorney General of the State of Wisconsin, and

J. E. Messerschmidt, Assistant Attorney General, Madison, Wiscon-

sin, solicitors for defendant.

2 District Court of the United States for the Western District

of Wisconsin.

At the term of the District Court of the United States of America

for the Western District of Wisconsin begun and held at the city of

Madison in said District on the i8th dav of March, A. D. 1912,

present and presiding the Honorable Arthur T.. Sanborn, Judge,

among other, the following proceedings were had, to-wit:

Distriet Court of the Cnited States, Western District of Wis-

consin.

117—A, C. Dk.

Toe Western Union Tetecrarn Company, Complainant,

vs.

James A. Frear, in His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

Be it remembered, that heretofore, to-wit, on the 13th day of

Mareh, A. D, 1912, came The Western Union Telegraph Company

by Messrs. \. G. Zimmerman and Rufus B. Smith, its solicitors, and

filed in the oilice of the Clerk of the District Court of the United

States for the Western District of Wisconsin, its bill of complaint, in

words and figures following, to-wit:

1—254

2 JAMES A. FREAR, ETC., VS.

4 In the District Court of the United States for the Western

District of Wisconsin.

Western Uxiox TeLecrarn Company, Complainant,

vs.

James A. Prear, in, His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

To the Honorable the Judge of the District Court of the United

States for the Western District of Wisconsin:

The Western Union Telegraph Company, a corporation created

and organized under the laws of the State of New York, and a citizen

of said State of New York, having its principal place of business in

the City of New York, in the State of New York, brings this. its bill

of complaint against James A. Frear as Secretary of State of the

State of Wisconsin, whe is a citizen of the State of Wisconsin, and

as a basis therefor states and shows the following facts:

Section I.

Your orator, the Western Union Telegraph Company, is a corpo-

ration created and organized under an act of the legislature of the

State of New York entitled “An Act to Provide for the Incorporating

and Regulating of Telegraph Companies.” approved on. the

5 12th day of April. 1848, with full corporate powers and ca-

pacity to do and perform all of the acts and to acquire and

own all of the properties in this bill of complaint referred to: and

is a citizen of the State of New York, with its principal place of busi-

ness in the Citv of New York, in the State of New York.

(a) Your orator further states and shows, that the Congress of the

United States passed an act, approved July 24, 1866, entitled. “An

Act to Aid in the Construction of the Telegraph Lines and to Secure

to the Government the Use of the Same for Postal. Military and

Other Purposes:” that by a further act of Congress, approved June

10, 1872. entitled. “An Act Making Appropriation for Sundry Civil

Expenses of the Government for the Fiscal Year Ending June 30,

1873, and for Other Puorposes:” all telegraph companies accepting

the provisions of the act approved July 24, 1866, were required to

transmit for the Secretary of War of the United States the results of

observations at signal stations and reports for the Weather Bureau

Department for the Government of the United States, under severe

penalties fixed and defined by said act last named.

(b) Your orator further states, that complying with the provis

ions of said act of Congress, approved July 24, 1866, it did. on or

about the Sth day of June, 1867, duly file with the Postmaster Gen-

eral of the United States its written acceptance of all the restrictions

and obligations of the said act. and thereupon vour orator became en-

titled to all the rights and privileges conferred by said act, and bur-

dened with all the obligations imposed by said act, and that it has,

at all times since the filing of said acceptance, fully performed all

EERO

THE WESTERN UNION TELEGRAPH COMPANY. 3

obligations and requirements of said act, and has, as part of

6 the postal equipment of the United States and an instru-

mentality of the Postal Department of the United States, car-

ried upon its lines of telegraph messages for the Government of the

United States for the several departments thereof, and for the people

of the United States and of the State of Wisconsin, as prescribed and

required in and by the provisions of said act.

(c) Your orator further savs, that it was organized as a telegraph

company in the vear 1851, and immediately thereafter began the

work of construction and operation of telegraph lines in the State of

New York and other States. and has continuously since that time

heen engaged in the work of constructing and operating telegraph

lines for the rapid dissemination of intelligence, and has -onstructed

and acquired a continuous system of telegraph lines which now ex-

tend through the States and Territories of the United States, and into

the borders of the Dominion of Canada, and connect with telegraph

lines in the Republic of Mexico, and through the said lines of Mex-

ico, With the telegraph lines of the Central and South American Re-

publics’ and also connect by means of submarine cables with the

telegraph systems of foreign countries: that at the present time its

said system of telegraph lines. operated and controlled by it as

aforesaid, comprises over 219,000 miles of poles and cables, and over

1,400,000 miles of wire; that upon the said system of telegraph lines

your orater has over 24,900. offices, and transmits vearly about

70,000,000 messages, for the public and for the government of the

United States and for the governments of foreign countries, exelu-

sive of messages for your orator, and exclusive also of messages for-

warded by private parties leasing wires from your orator; that the

said svstem of lines has been built up so as to connect with

and be largely operated from the ceniral office of your orator,

which is situated in the City of New York. and the said lines

radiate therefrom to all the important cities and commercial centres

and to many thousand towns and villages in the United States and

North America, and through ocean cables. and land lines above de-

scribed, to all the important commercial centres of this country and

the continent of Europe, and through lines there situated with the

telegraph forming a component part of the said system of your

orator. and connected with its main office aforesaid, in the City of

New York, are telegraph lines within the State of Wisconsin, most

of which lines have been constructed in said State since the accept-

ance by your orator of the terms and conditions of said aet of Con-

gress approved July 24, 1866.

(7) That the complainant’s said lines of telegraph within the

State of Wisconsin are largely upon the public domain, and upon

the military and post roads of the United States; and that the com-

plainant’s said lines of telegraph are part of the postal routes and

part of the postal establishment of the United States, and as such

the complainant has, under the Constitution and laws of the United

States, the power, and is under the duty and obligation, to transmit

all messages for the government and for the public generally just

4 JAMES A. FREAR, ETC., VS.

as much and as fully with respect to messages between points within

the said State as with respect to interstate messages.

(e) And complainant states and shows, that in carrying on said

business, complainant uses wires, connected with instruments and

batteries, for the transmission of messages by electricity, the said

wires heing supported by poles, carrying cross-arms, firmly

8 set in the ground and stationed at uniform distances for the

purpose; and that it was, and is, necessary for complainant to

acquire and own real estate, rights-of-way and easements over the

lands of others in order to plant its poles to uphold its wires and

make the connections necessary for the transmission and receipt of

messages by telegraph, and for the establishment of its offices and

the general conduet of its business in the publie service.

(f) Your orator avers, that a large percentage of the people of

the State of Wisconsin are dependent upon the facilities maintained

and offered to the public by vour orator for their telegraphic service

to points wholly within, as well as to points bevond, the State of Wis.

consin: and that as hereinafter averred, the safe operation of trains

by many railroads within the State of Wisconsin is dependent upon

the telegraphic service maintained by complainant, under contracts

of many years’ standing entered into with the several railroads. And

complainant shows unto your Tonors, that the conditions herein re-

ferred to have been in existence for a period of many veurs.

Section II.

That heretofore. to-wit on the 6th day of December, A. D. 1911,

one Walter L. Houser in his capacity as Trustee of the estate of

David Blum, bankrupt. a resident of the State of Wisconsin, brought

his action against this complainant in the Circuit Court of Dane

County, in the State of Wisconsin claiming as damages from the said

complainant the sum of Fifteen Thousand Nine Hundred Dollars

($15,900.00) for and on account of an alleged failure upon the part

of the said complainant to transmit and deliver a telegram

9 filed at Philadelphia in the State of Pennsylvania to be trans-

mitted to one David Blum at Mondovi in the State of Wis-

consin.

Section TTT.

Complainant avers that it has been advised by counsel and there-

fore avers, that for the proper presentation of its defense to said

action, it should exercise the right of securing the removal of the

same to the District Court of the United States, as authorized by the

constitution and laws of the United States, and that for the reason

assigned the said complainant has caused to be filed in the Circuit

Court of Dane County, Wisconsin a petition praying for the removal

of the said cause of Walter L. Houser, Trustee therein depending

from the said Cireuit Court of Dane County, Wisconsin to the Dis-

trict Court of the United States for the Western District of Wisconsin

and the Judge of the said Cireuit Court of Dane County, Wisconsin

has entered an order directing the removal of said cause as prayed

satay tid

THE WESTERN UNION TELEGRAPH COMPANY. 5

for, the complainant having filed its bond as is required in the case

of the removal of actions from a State Court to a Federal Court.

And complainant states and shows that it will be advised to, and

will. bring about the removal of other causes filed and about to be

fled against it by citizens of Wisconsin in the Courts of the State

of Wisconsin above referred to, in the event that such removal is

authorized by the constitution and laws of the United States.

10 Section IV,

Your orator further represents and shows that in the vear A. D.

ISOS the legislature of Wisconsin passed an act, now known as section

17704 of statutes of Wisconsin of 1898 providing among other things

that no foreign corporation incorporated or organized otherwise than

under the laws of the State of Wisconsin should transact any business

or acquire, hold or dispose of property in the State of Wisconsin

until such corporation shall have filed in the office of the Secretary

of State of the State of Wisconsin a duly authenticated copy of its

charter and all amendments thereto. That such corporation causing

acopy Of its charter or articles to be so filed should thereby be deemed

to have made, constituted and appointed the Secretary of State its

true and lawful attorney upon whom all pleadings or process in any

action or proceeding against it might be served arising out of or in

respect to any business, contract or transactions in said State and that

such stipulation should continue in force so long as any liability of

such corporation remain outstanding in such State. And that every

such corporation should pay to the Secretary of State twenty-five

dollars ($25.00) for filing such articles of incerporation.

That, to-wit upon the 20th day of June, A. D. 1905 the legislature

of Wisconsin enacted a law, being chapter 506 of the general laws of

Wisconsin for the year 1905 enacting certain new sections to be a part

of the statutes of Wisconsin, one of whieh sections was to be num-

bered section [770f. Section 1770f being in the words and figures

following:

1 “Whenever any foreign corporation doing business in this

state shall remove or make application to remove into any

district or cireuit court of the United States any action or proceeding

commenced against it by any citizen of this state. upon any claim

or cause of action arising within this state, it shall be the duty of the

secretary of state, upon such fact being made to appear to him, to

revoke the license of such corporation to do business within this

state.”

Your orator further shows that in the vear A. D. 1907 at the re-

quest of the Secretary of State and for no other reason, it filed in the

office of the Secretary of State of the State of Wisconsin a duly au-

thenticated copy of its charter as required by section 1770 and paid

to the Secretary of State of the State of Wisconsin the fee of twenty-

five dollars ($25.00) as provided by said act. That the said filing of

‘aid articles and the payment of the said fee to the Secretary of State

as aforesaid was made ex gratia and that your orator at said time did

not helieve and does not now believe that it was required to file said

report or to pay said fee.

6 JAMES A. FREAR, ETC., VS.

Your orator further avers that on the 31st day of December, 1907

the Secretary of State of the State of Wisconsin issued and delivered

to your petitioner a license to transact business within the State of

Wisconsin and that said license or permit has ever since been in the

possession of your petitioner.

Section V.

Your orator further represents and shows that it was organized

as a corporation in the vear 1851 and that soon thereafter, to-wit,

long before the year A. TD. 1860 it extended its lines of tele

12 graph into the State of Wisconsin with the consent and acqui-

escence of the said state and then commenced and has ever

since continued to transact the business of sending by telegram mez

sages both intra-state and interstate messages and that for the pur.

pose of providing for the transaction of its said business it has in-

vested very large sums of money in the State of Wisconsin in and

about the construction of lines of telegraph and the establishment of

telegraph offices and other expenses incidental thereto. And that

the said business has been continuously conducted in said state since

its establishment. The complainant further states that by the term

of its charter it has perpetual succession and its duration is unlimited

and that until the enactment of section 1770f of the statutes of Wis.

consin hereinbefore referred to there has never been any statute of

the State of Wisconsin providing for the expulsion of this corporation

from the state of Wisconsin or the revocation of its right to do busi-

ness in Wisconsin for removing any suit to the Federal Courts or for

exercising any other rights secured to it by the constitution and laws

of the United States or of the State of Wisconsin nor any provision

whatever for revoking the right of this corporation to do business in

the State of Wisconsin.

Section VI.

Complainant further states that in order to conduet its said busi-

ness it has been and is necessary for complainant to acquire, own or

control rights-of-way or easements over land in the State of Wiscon-

sin and to enter into contracts and make leases with reference to

buildings in which to do business and to have and maintain

13. ~ offices in said State for the transaction of its said business and

to have one or more agents at each of said offices: and that

complainant has a large number of offices over the State of Wiscon-

sin to the number of over seven hundred and twenty-five (725).

Complainant has acquired rights-of-way and easements and frat-

chises and has made leases and contracts and has acquired and estab-

lished the properties above referred to in reliance upon and under

and by virtue of the laws of Wisconsin in force prior to the said act

of 1905 and under and in pursuance of a well established policy in

Wisconsin, as indicated by its constitution and statutes, encouraging

corporations not organized under the laws of Wisconsin to come into

said state and do business and acquire property rights in said state,

under general laws applicable to complainant, said enactments not

COPY BOUND T‘

THE WESTERN UNION TELEGRAPH COMPANY.

-

in terms or by implication in any wise limiting such privilege, con-

tract or franchise in point of time.

The said lines of telegraph existing in said State of Wisconsin and

hereinbefore described, have been constructed by your orator as

aforesaid, with the consent and permission of said state and in ac-

wrdance with its laws, and your orator has invested in the said lines

of telegraph now in said state, large sums of money, in excess of

everal hundred thousand dollars; and that continuously since the

construction of said lines of telegraph your orator has used the said

lines for the transmission of telegraph messages for the government

of the United States, and the several departments thereof, and for

the public, as an instrumentality of the Postal Department, and of

commerce wholly within the State of Wisconsin, and also for inter-

state commerce, and commerce between points in said state

14 and foreign countries, and thus said telegraph lines have been

continuously emploved in domestic, interstate and foreign

commerce since their construction.

Section VII.

Complainant avers that this case is wholly between citizens of dif-

ferent states and that the subject matter thereof, and the amount in

controversy is of the value of more than ten thousand dollars ($10,-

000.00) exclusive of interest and costs, and is also one arising under

the constitution and laws of the United States, in that vour orator,

the Western Union Telegraph Company asserts its rights and privi-

leges under acts of Congress, and the constitution and laws of the

United States against the said defendant.

Section VIII.

Complainant states that by reason of its compliance with the con-

titution and laws of the State of Wisconsin, as aforesaid, and its

having paid the said fee to carry on and do business as authorized

by the said act of the legislature hereinbefore referred to and having

complied with the laws of Wisconsin in the respects and under the

dreumstances hereinbefore set out, a valid and subsisting contract

was thus made and entered into, and for a valuable consideration

by and between complainant and the State of Wisconsin whereby

complainant was fully authorized and empowered to do and to carry

on its said business between points in Wisconsin, without being sub-

jet to any greater burden or liabilities, or restrictions, or conditions,

than were then imposed by the terms of said contract, upon

15 complainant, so far, at least, as its right to do business in

Wisconsin is concerned for and during the term of corporate

existence.

And complainant is advised and informed and believes, and upon

sich information and belief, avers that the said act of the legislature

of Wisconsin forbidding this complainant to exercise its right under

the constitution and laws of the United States to remove causes from

the State Courts of Wisconsin to the Federal Courts and seeking to

D TO CLOSE IN CENTER

—

8 JAMES A. FREAR, ETC., VS.

authorize the cancellation of its right to do business in the State of

Wisconsin, if it exercises such right, impairs the obligation of the

said contract theretofore made and then and now existing between

the complainant and the State of Wisconsin above mentioned. and

said act, or statute in so far as it undertakes to provide a forfeiture

and revocation of complainant’s right to do business within the

State of Wisconsin as a telegraph company, is violative of section 10

of article 1 of the constitution of the United States, and is therefore

null and void.

Section IX.

Complainant further states and shows that in addition to the reg.

ular commercial business in which its wires and instruments are

used, as aforesaid, it has contracts, which have been in existence for

several years, and in some cases, for.many years, with various rail-

road companies doing an intrastate and an interstate business jn

Wisconsin, and under said contracts the said railroad companies

have the right to use one or more of the wires of complainant, which

are, by the terms thereof, to be maintained and kept in order are

replaced by complainant, for the purpose of handling the

16 trains of such railroad companies and directing the move-

ment of such trains; that the use of the wires by the railroad

companies, as aforesaid, is for the purpose, among other, of directing

the movement of trains within the State of Wisconsin, on the tracks

of the several railroad companies with which complainant has con-

tracts.

And complainant avers, that if the license, or permit, of complain-

ant to do business in this State be cancelled, it will not only entail

the damage, annoyance, inconvenience and injury herein set out,

but would, if enforced, result in an inability on part of complainant

to comply with said contracts with the several railroad companies,

aforesaid, and prevent the handling of trains upon such roads by

means of the telegraph and subject complainant to grave suits for

the non-performance of its obligations thereunder. And complain-

ant shows and states, that it is absolutely necessary for said railroad

companies to use the telegraph for the safe and orderly and proper

handling of their trains in performance of the duty imposed upon

them by law, and to prevent collisions between trains; and, further

that if deprived of complainant’s services by the enforcement of the

statute complained of, it would require many months for the rail-

road companies of Wisconsin to install other telegraphic systems for

the handling of their trains within the State of Wisconsin, where

fore complainant avers that if the revocation of its 1cense is enforced

by the State of Wisconsin, or by the defendant, as a ministerial

oflicer, not only will your orator be deprived of the property rights

acquired by it in reliance upon the express invitation and admission

of your orator by the State of Wisconsin, but, in addition, the

17 obligation of and ability to perform valid contracts, inyolv-

ing services of paramount necessity to the people of the State

of Wisconsin, will be impaired or destroyed, and your orator will be

denied the resort to those tribunals which it had the right to resort

COPY BOUND T

a a ee ee

THE WESTERN UNION TELEGRAPH COMPANY. 9

to for the enforcement of its contract rights: with special reference

to which your orator assumed the burdens and obligations of said

contracts.

And in further support of the relief hereinafter prayed, your ora-

tor states and shows that many of the contracts entered into by your

orator, involving interstate commerce, upon which suits are brought

in cour-s of the State of Wisconsin, involve terms which are con-

strued by the courts of Wisconsin materially at a variance from the

construction placed thereon by the courts of the States where the

same were entered into, with reference to which your orator entered

into said contracts, and materially at a variance from the construc-

tion placed thereon by the courts of the United States; wherefore

complainant avers that the attempted forfeiture of its license for the

removal of cases involving interstate commerce, under the circum-

stances averred, is, in effect, the impairment of the obligations of

contracts over which the State of Wisconsin has no control and de-

prives complainant of the equal protection of the laws and confis-

cates its property without compensation, or due process.

Section X.

Your orator avers, that if this complainant is deprived of the right

to do intra-state business within the State of Wisconsin it will be

unable to carry out the obligations required of it by the Congress of

the United States, as hereinabove set out, and will be unable

18 to carry on its interstate business so far as the State of Wis-

consin is coneerned, for the reason that the interstate and -

federal business done by complainant will not enable it to earn a

reasonable return on complainant’s investment within the State of

Wisconsin.

Section XI.

The constitution of the State of Wisconsin now in force provides

in section 9 of article 1:

“Every person is entitled to a certain remedy in the laws for all

injuries or wrongs which he may receive in his person, property or

character; he ought to obtain justice freely, and without being

obliged to purchase it, completely and without denial, promptly and

without delay, comformable to the laws.”

The Complainant avers that the said Act of 1905 known as section

1770f of the statutes of Wisconsin attempting to prohibit or prevent

complainant or other foreign corporations lawfully doing business

in Wisconsin from exercising their legal right to remove a suit

brought in one of the courts of the State to a Federal Court under

penalty of a forfeiture or revocation of their right or license to do an

intra-state business in Wisconsin is violative of the said section of

the constitution of the State of Wisconsin and is therefore null and

void.

Section XII.

Complainant further states, that the said act, which has for its pur-

pose the prevention of the removal of suits from a State Court into

2—254

D TO CLOSE IN CENTER

10 JAMES A. FREAR, ETC., VS.

a Federal Court by corporations organized under the laws of another

State than Wisconsin, by declaring a forfeiture or revocation, or au-

thorizing the Secretary of State to declare such forfeiture oy

19 revocation, of the right, or license, of such corporation to do

an intra-state business within the State of Wisconsin, after

complainant has invested its means and acquired properties in said

State, for the purpose of doing, or operating, said telegraph business,

both within the State and between points in Wisconsin and _ points

outside of Wisconsin, and has been engaged in such business of a

telegraph company for many vears, as aforesaid, under and by virtue

of the laws of the State of Wisconsin and by virtue of the invitation

thereby extended to complainant, and when such forfeiture or revo-

cation of its rights, or license, would be to destroy the value of its said

properties and render them practically useless for the purposes for

which they were designated, and have been, and are, used, and after

a compliance on the part of complainant with the Constitution and

laws of the State of Wisconsin, and after obtaining and paying for an

unlimited license to do business therein, as aforesaid, deprives com-

plainant of its property and the legitimate use thereof, so far, at

least, as all business classed as intra-state business is concerned, with-

out due process of law, and denies to it the equal protection of the

laws, in violation of Sec. 1, Article 14, of the Amendments to the

Constitution of the United States, and is therefore null and void as to

this complainant.

Your orator shows that the cost of taking down and removing its

wires and instruments and movable properties from the State of Wis-

consin, without compensation, would exceed in amount the value of

the materials so removed: and that under the laws of the State of

Wisconsin, no person or domestic corporation is in any wise

20 prohibited or deterred from removing causes to the Federal

Courts of the United States whenever the Constitution and

laws of the United States permit such removal, wherefore. under the

circumstances averred in this bill, the penalty sought to be imposed

on complainant by the statute in question is plainly discriminatory

and void.

And your orator further states, that the attempted cancellation of

the license to do business within the State of Wisconsin imposed by

said Act is, upon its face, not a bona fide exercise by the State of

Wisconsin of its general right to exclude foreign corporations from

doing business wholly within its confines for the reason that all for-

eign corporations are to be readmitted automatically and = imme-

diately by general laws: and the effect of the cancellation and imme-

diate re-issue of a license, upon payment of the admission fee, can

be regarded by this court, not as an attempt to exclude complainant

but merely as the imposition of a penalty or fine for the exercise of a

right secured to complainant by the Constitution and laws of the

United States, wherefore complainant avers that the Act viewed with

reference to all of the system of laws of the State of Wisconsin, is, in

purpose and effect, naught but a denial of valid federal provisions

and is therefore null and void as to this complainant.

And complainant further alleges that the State of Wisconsin, hav-

THE WESTERN UNION TELEGRAPH COMPANY. 11

ing admitted it to do business within the State under certain terms

and provisions in its statutes, with which complainant has complied

prior to the said Act of 1905, cannot lawfully deprive it of the right

secured by the Statutes of the United States to remove suits from a

State Court into a Federal Court, as is sought to be done by the said

Act of 1905.

21 Section XIII.

Your orator avers that it is advised that the said statute of the

State of Wisconsin. to-wit, section 1770f above referred to is uncon-

stitutional and void in so far as the same directs or attempts to direct

the annulment of complainant’s right to do business v hin the State

of Wisconsin upon the removal by complainant of an action to the

Federal Court, where authorized by the constitution and laws of the

United States, but vour orator avers that the defendant under color

of said act, is about to carry out its provisions and cause the cancella-

tion of the complainant’s permit, whereupon the said complainant

will he subjected to heavy penalties and forfeitures, and that every

contract made by or on behalf of the complainant will be denounced

as Wholly void on its behalf and on behalf of its assigns but will be

enfore-able against it or them: that by reason of such attempted can-

cellation Complainant’s business would be impaired or destroyed, its

ability to contract jeopardized, and its property rights diminished,

and that moreover complainant will be interfered with and prevented

from carrying out or enforcing, or suing upon, its valid contracts,

and from collecting large sums due it in said State and will be pre-

vented from performing those services for the Government of the

United States with which it is charged; and will, in addition, be pre-

vented from carrying on its interstate business over which the State

of Wisconsin has no direct control, unless this defendant, and such

others as may attempt, under color of said act, to bright about the

annulment of complainant’s franchise to do business within the State

of Wisconsin, are enjoined by this Court; wherefore, complainant

avers, that without the aid of this Court, it will be subjected to ir-

reparable injury and damage.

22 Your orator further states that the liquidation of the pen-

alties to which complainant, its servants and agents, will be

subjected by the rescission of its license to do business in Wisconsin,

and the litigation to which complainant will be subjected, in the

endeavor to enforce and comply with its contracts and public duties

in the State of Wisconsin, in spite of said statute of outlawry, will

subject it to a multiplicity of suits, all depending upon one single

cardinal question of law: viz, the constitutionality of the act above

referred to and its legality as applied to this complainant; where-

fore, complainant avers that it is remediless at law and can have re-

lief nowhere save in a court exercising chancery jurisdiction, and

that this court has jurisdiction to determine the single question of

law which will be decisive of all of the threatened actions, thereby

preventing a multiplicity of suits, involving great and unnecessary

expense to your orator, and thereby avoiding the loss and injury to

which your orator would, without the aid of this court, be unjustly

subjected.

12 JAMES A. FREAR, ETC., VS.

Your orator further states that the defendant as such Secretary of

State has announced that he will within a certain short period of

time proceed to revoke the said license of your orator to do business

in the State of Wisconsin as is in terms provided by section 1770f

of the statutes of Wisconsin.

Prayer.

In consideration whereof, and forasmuch as complainant is with-

out remedy in the premises at law and can have adequate relief only

in a court of equity where matters of this nature are properly

23 cognizable and relievable, and to the end that the defendant

herein named and such others as it may become necessary to

join as parties defendant to this bill, may answer the several matters

and things hereinbefore set forth as fully and particularly as if the

same were here again repeated and he and they were hereunto inter-

rogated, complainant prays that an order may be made by this Hon-

orable Court, enjoining and restraining the said defendant and his

successors in person or by deputy or assistant from cancelling or re-

voking the license or permit of the complainant to do business in the

State of Wisconsin or from taking any action or causing any action

to be taken against the complainant for or on account of its alleged

violation or of any similar violation of the said act of the legislature

of Wisconsin declaring or purporting to declare the license or permit

of complainant to do business within the State of Wisconsin for-

feited on account of the said removal of a cause from the State Court

of said State to the Federal Court, and from making any entry of

record in person or by deputy or assistant which would purport to

cancel the said permit to do business in this State, or from making

and entering any order that the permit of the complainant was can-

celled as was provided for by section 1770f of the Revised Statutes

of Wisconsin.

And that in the meantime, and until a decision can be had upon

complainant’s motfon for the injunction herein prayed for, a tem-

porary order be immediately granted, restraining and enjoining the

defendant as aforesaid, and complainant avers that there is danger

of irreparable injury from delay, if action should not be taken until

said motion for an injunction can be heard and determined.

Your orator further prays that your Honor will, by inter-

24 locutory ord r or decree, authorize complainant to amend

this origina! bill if so advised, or necessary, by adding any

other party or paities thereto who may be properly added in order

to effectuate the relief herein prayed.

Complainant further prays that on the final hearing of this cause

the said injunction and restraining order be made perpetual and that

this court will further decree that the said provisions of said Act

forfeiting the right or license of the complainant to do business

within the State of Wisconsin or to do intra-state business on account

of the removal by complainant of said cause, shall be declared viola-

tive of the constitution of the State of Wisconsin and therefore null

and void as to this complainant, and shall be declared violative of

the constitution of the United States and therefore null and void as

to this complainant.

THE WESTERN UNION TELEGRAPH COMPANY. 13

And complainant prays that your Honorable Court will grant to

it such other and further relief in the premises as in equity and good

conscience it may appear to be entitled to under the facts of the case.

And may it please your Honors to grant to complainant the tem-

porary restraining order, as aforesaid, the writ of injunction afore-

said, and the most gracious writ of subpeena against the said defend-

ant, the said James A. Frear, as the Secretary of State of the State

of Wisconsin in his official capacity as aforesaid, commanding the

said defendant under a penalty to be fixed therefor, to appear in this

court on some certain day to be therein named to answer the prem-

jses and to abide by and perform such a decree as may be made

therein: but said answers need not be made under oath, as answers

under oath are hereby waived.

25 This bill of complaint is filed under the corporate authority

of the complainant.

This is the first and only application for a restraining order or an

injunction in this case.

WESTERN UNION TELEGRAPH COMPANY,

By A. G. ZIMMERMAN awnp

RUFUS B. SMITH,

Solicitors for Complainant.

GEO. H. FEARONS,

(ren. Att'y, ete., of Counsel.

State oF WISCONSIN,

Dane County, ss.

Personally appeared before me the undersigned, a notary public,

in and for the county of Dane in the State of Wisconsin, William H.

Murray, who being duly sworn deposes and says: That he is the

manager and agent of the Western Union Telegraph Company, the

complainant in the foregoing bill, at Madison, Wisconsin, and as

such is fully authorized to make this affidavit on its behalf. That

he has read the foregoing bill and knows the contents thereof. That

the facts therein stated as of complainant’s own knowledge are true,

and that the facts stated therein as of complainant’s information and

belief, he is informed are as therein stated, and that he verily be-

lieves the same to be true.

WILLIAM H. MURRAY, Mgr.

Sworn to and subscribed before me this 11th day of March, A. D.

1912.

[u. s.] RUFUS B. SMITH,

Notary Public, Dane County, Wisconsin.

26 Endorsed: 117-A Civil Docket. Western District of Wis-

consin, U. 8. District Court. Western Union Telegraph Com-

pany. complainant, vs. James A. Frear as Secretary of State, &c.,

defendant. Bill. Filed Mar. 13,1912. F. W. Oakley, Clerk. A. G.

Zimmerman and Rufus B. Smith, Madison, Wis., solicitors for

compl’t.

14 JAMES A. FREAR, ETC., VS.

27 Whereupon on same day, to-wit, March 13, 1912, file

motion for temporary injunction, as follows:

In the District Court of the United States for the Western District of

Wisconsin,

Western Union TeLrecrarn Company, Complainant,

vs.

James A. Prear, in Ilis Capacity as Secretary of State of the Stat.

of Wisconsin, Defendant.

The complainant having filed its bill against the said defendant

to permanently enjoin and restrain the said defendant from .

voking the license of the Western Union Telegraph Company to dy

business within the State of Wisconsin for the alleged reason that the

said complainant removed from the Cireuit Court of Dane County

to the United States District Court for the Western District of Wis

consin, a cause commenced in said Dane County Cireuit Court by

Walter Tlouser a Trustee against the complainant.

The complainant by its solicitors, A. G. Zimmerman and Rufus B.

Smith now moves your Honors for an interlocutory injunction or

restraining order restraining the defendant in his capacity as Secre

tary of State of the State of Wisconsin from revoking the license of

the Western Union Telegraph Company to do business within the

State of Wisconsin and from taking any step in the matter of

28 the revocation of such license or from making any record

either in person or by deputy or by assistant in the matter

of such revocation until the final determination of this cause by said

Court.

A. G. ZIMMERMAN anb

RUFUS B. SMITH,

Nolicitors for Complainant.

Endorsed: 117A—-Civil Docket. Western Distriet of Wisconsin,

U.S. Distriet Court. Western Union Telegraph Company, Com-

plainant, vs. James A, Frear, as Secretary of State, ete., Defendant

Motion for temporary injunction. Filed Mar. 15, 1912.) F. W.

Oakley, Clerk. A. G. Zimmerman & Rufus B. Smith, Solicitors for

Complainant, Madison, Wis.

29 Afterwards, to-wit, March 15, 1912, subpeena issued as fol-

lows:

The Unirep Srares or AMERICA,

Western District of Wisconsin, ss:

The President of the United States of America to James A. Frear, in

his capacity as Secretary of State of the State of Wisconsin, Greet-

ing:

You are hereby commanded, That you personally appear before

the Judges of the District Court of the United States of America, for

THE WESTERN UNION TELEGRAPH COMPANY. 15

the Western District of Wisconsin, in our Court of Chancery, in and

for the District aforesaid, on the first Monday of May, 1912, next

gsuing, at Madison, to answer to a bill of complaint exhibited

qgainst you in our said Court, by Western Union Telegraph Com-

pany. 5 : ’

And to do further, and receive what our said court shall have

vonsidered in that behalf, and this you are not to omit under the pen-

alty which may ensue,

This process of subpeena is directed to the Marshal of this District,

who is hereby commanded to serve the same upon the said James A.

Frear in his capacity as Secretary of State of the State of Wisconsin

ifto be found in his District, and due return thereof make.

Witness. the Honorable Edward D. White, Chief Justice of the

Supreme Court of the United States, at the City of Madison in the

aid District this 15th day of March in the year of our Lord one

thousand nine hundred and twelve, and of our Independence the

one hundred and thirty-six.

F, W. OAKLEY, Clerk. [u. 8.]

A. G. ZIMMERMAN anpb

RUFUS B. SMITH,

Attorneys for Complainant, Madison, Wis.

30 It is ordered by our said court that the said James A, Frear

in his capacity as Secretary of State of the State of Wiscon-

sin, the defendant aforesaid, do enter his appearance in this suit, in

the Clerk’s oflice, on or before the dav and time at which ‘this sub-

pena is returnable, as aforesaid ; otherwise the bill filed may be taken

as confessed, And it is further ordered that. vou show cause by

Monday the 15th day of April, 1912, at ten o’clock in the forenoon,

why an injunction should not be issued, and a receiver be appointed,

acording to the praver of the bill on file.

fh. 6] FLW. OAKLEY, Clerk.

—_— FT eee SF —F

3] Afterwards said subpoena was returned served as follows:

Unirep Srares or AMERICA,

Western District of Wisconsin, ss:

I hereby certify and return that on this fifteenth day of March,

W120 at Madison, in Dane County, Western District of Wisconsin,

| served this chancery subpa@na on the within named James A.

Frear, personally, in lis capacity as Secretary of State of the State of

Wisconsin, and delivered to him a true copy thereof.

I further certify and return that at the same time and place I de-

livered to said James A. Frear, personally, in his capacity as Secre-

tary of State of the State of Wisconsin, a copy of the injunctional

order herein, which was attached to the copy of the subpcena above

mentioned by order of the court.

R. J. FLINT,

U. S. Marshal,

By CARL P. McASSEY,

Chief Office Deputy.

16 JAMES A. FREAR, ETC., VS.

Endorsed: Original. Civil Docket A-No, 117. Western Union

Telegraph Company, complainant, vs. James A. Frear in his capac.

ity as Secretary of State of the State of Wisconsin, defendant. Sub.

pena. Filed Mar. 15, 1912. F. W. Oakley, Clerk.

32 Afterwards, to-wit, March 15, 1912, filed interlocutory re.

straining order, as follows:

In the District Court of the United States for the Western District of

Wisconsin.

Wesrern Union Tevecrapu Company, Complainant,

vs.

James A. Prear, in His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

The complainant having filed its bill to enjoin and restrain the

defendant as Secretary of State of the State of Wisconsin from re-

voking the license of the complainant to do business in said State for

an alleged violation of one of the statutes of the State of Wisconsin

and the complainant having made its motion for an interlocutory

injunction or a restraining order restraining the defendant as such

Secretary of State from revoking the license of said complainant to

do business within the State of Wiseensin or from taking any step

in relation to such revocation,

And the Attorney General of the State of Wisconsin having been

notified of the filing of said bill and of such application for an in-

junction and being now here present,

It is on motion of the Solicitors for the complainant, Ordered, that

the said motion for a temporary or interlocutory injunction be heard

before the District Court of the United States in the Court

33 room of said Court in the City of Madison in said Western

District of Wisconsin, on the 15th day of April, A. D. 1912,

at the opening of the court on that day or as soon thereafter as coun-

sel can be heard.

It appearing from the bill that irreparable loss or damage would

result to the complainant unless a temporary restraining order is

granted, It is on motion of A. G, Zimmerman and Rufus B. Smith,

Solicitors for the Complainant, Ordered, That until the hearing of

said motion above referred to and such application for an_ inter

locutory injunction, the defendant, James A. Frear as Secretary of

State of the State of Wisconsin and his deputies and assistants be,

and they hereby are restrained from revoking the license of the com-

plainant, the Western Union Telegraph Company to do busines

in the State of Wisconsin or from taking any further steps in the

matter of such revocation, or from making any record or entries of

record in respect thereto.

Let a copy of this restraining order be attached to the subpena

herein and served therewith.

Dated March 14, A. D. 1912.

A. L. SANBORN, Judge.

Enter:

A. L. 8.

THE WESTERN UNION TELEGRAPH COMPANY. 17

Endorsed: 117 A—Civil Docket. Western District of Wiscon-

dn, U. S. District Court. Western Union Telegraph Company,

Complainant, vs, James A. Frear as Secretary of State, Defendant.

Interlocutory restraining order. Filed Mar. 15, 1912. F. W. Oak-

ley, Clerk. A. G. Zimmerman, Rufus B. Smith, Solicitors for Com-

plainant, Madison, Wis.

34 Afterwards, to-wit, March 30, 1912, filed notice of appear-

ance of defendant, as follows:

In the District Court of the United States for the Western District

of Wisconsin.

Western Union Tevecrarn Company, Complainant,

Vs.

James A. Frear, in his Capacity as Secretary of State of the State

of Wisconsin, Defendant.

To the Clerk of the District Court of the United States for the

Western District of Wisconsin:

Please enter the appearance of James A. Frear, the defendant in

the above cause, and that of ourselves as solicitors, as of the date of

the filing hereof.

L. H. BANCROFT,

Attorney General of the Ntate of Wisconsin,

RUSSELL JACKSON,

Deputy Attorney General of the State of Wisconsin,

Solicitors for Defendant.

Endorsed: 117 A—Civil Docket. United States District Court,

Western District of Wisconsin. Western Union Telegraph Co.,

Plaintiff, vs. James A. Frear, in his capacity as Secretary of State of

the State of Wisconsin, Defendant. Appearance. Filed Mar. 30,

1912. FF. W. Oakley, Clerk.

35 Afterwards, to-wit, May 6, 1912, filed general demurrer

to complaint, as follows:

In the District Court of the United States for the Western District

of Wisconsin.

Western Union Tececrarn Company, Complainant,

Vs.

James A, FRear, in His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

The Demurrer of James A. Frear, in His Capacity as Secretary of

State of the State of Wisconsin, to the Bill of Complaint.

And now comes the defendant, James A. Frear, in his capacity

as Secretary of State of the State of Wisconsin, and not confessing

3—254

SO

> CLOSE IN CENTER

————

18 JAMES A. FREAR, ETC., VS.

any of the matters in the bill to be true, demurs to the bill herein

filed and says the same does not state any matter of equity entitling

plaintiff to the relief prayed for, nor are the facts as stated suff.

cient to entitle plaintiff to any relief against this defendant.

Wherefore the defendant prays the judgment of this court whether

he shall further answer, and that he be dismissed with his costs,

L. H. BANCROFT,

Attorney General of Wisconsin,

RUSSELL JACKSON,

Deputy Attorney General,

Solicitors for Defendant.

36 I, Russell Jackson, Deputy Attorney General of the State

of Wisconsin, and one of the solicitors for the defendant in

the above action, do hereby certify that the foregoing demurrer, in

my opinion, is well founded in law.

RUSSELL JACKSON, Solicitor,

STATE OF WISCONSIN,

County of Dane, ss:

I, James A. Frear, defendant in the above entitled cause, being

duly sworn, fo say that the foregoing demurrer is not interposed for

delay.

JAMES A, FREAR.

Sworn to and subseribed before me this 7th day of May, 1912.

[L. s.] L. B. NAGLER,

Notary Public, Dane County, Wisconsin.

Endorsed: 117 A, Civil Docket. In the District Court for the

Western District of Wisconsin. Western Union Telegraph Com-

pany, Complainant, vs. James A. Frear in his capacity as Secretary

of State of the State of Wisconsin, Defendant. General Demurrer

to Complaint. Filed May 6, 1912. F. W. Oakley, Clerk.

37 Afterwards, in the record of the proceedings in said caus,

appear the following entries, to-wit:

May 20, 1912.

WesTeRN Union TELEGRAPH Company, Plaintiff,

vs.

James A. FREAR, as Secretary of State of the State of Wisconsin,

Defendant.

Ordered by the Court that the hearing on demurrer be set down

for argument on Oct. 2, 1912.

THE WESTERN UNION TELEGRAPH COMPANY.

Feb’y 25, 1913.

Western Union TELEGRAPH Company, Plaintiff,

vs,

James .\. Frear, as Secretary of State of the State of Wisconsin,

Defendant.

Ordered by the Court that the hearing on demurrer be set down for

argument on Sept. 28, 1913.

38 Afterwards, to-wit, August 10, 1914, filed decision as fol-

lows:

District Court of the United States, Western District of Wisconsin.

Wesrern Union TeLecrarn Company, Complainant,

Vs.

James A. FREAR, as Secretary of State of the State of Wisconsin,

Defendant.

Tue PHILADELPHIA AND ReApING CoAL AND [RON Company,

Complainant,

vs.

Joux S. DoxaLp, as Secretary of State of the State of Wisconsin,

and Walter C. Owen, as Attorney General of Wisconsin, Defend-

ants.

A. G. Zimmerman and Rufus B. Smith, of Madison, Wisconsin,

wlicitors for Western Union Telegraph Company.

Perey B. Eckhart, of Chicago, Illinois, counsel for Western Union

Telegraph Company.

M. IL. Boutelle, of Minneapolis, Minnesota, solicitor for Philadel-

phia and Reading Coal and Iron Company.

Luse, Powell & Luse, of Superior, Wisconsin, counsel for Philadel-

phia and Reading Company.

Walter C. Owen, Attorney General, and J. E. Messersehmidt,

Assistant Attorney General, solicitors and counsel for defendants.

as Application for similar injunctions in both of these cases

were heard together, under section 266 of the Judicial Code,

before Christian C. Kohlsaat, United States Circuit Judge, and Ferdi-

nand A, Geiger, and Arthur L. Sanborn, District Judges, November

24, 1918: preliminary injunctional orders having been previously

entered in both cases, restraining the secretary of state from revoking

the respective licenses to do business in Wisconsin theretofore issued

to complainants respectively.

These corporations have always been rightfully in the state, because

they are engaged in interstate and foreign commerce; the telegraph

company being also a government agent under certain acts of Con-

gress. They were lawfully in the state, engaged in such business,

long before 1898, when the first statute was passed requiring foreign

corporations to take out local licenses under penalty of being unable

20 JAMES A. FREAR, ETC., VS.

to make contracts relating to local business, or to acquire or dispose

of title to property in such business. As to other than local business

they are lawfully in the state, since the statute referred to does not

relate to interstate or foreign commerce transactions. Elwell y.

Adder Machine Co., 136 Wis., 82, 116 N. W., 882.

In 1905 the Wisconsin legislature passed an act providing as fol-

lows: ;

“Section 1770f. Whenever any foreign corporation doing busi-

ness in this state shall remove or make application to remove into any

District Court of the United States any action or proceeding com-

menced against it by any citizen of this state. upon any claim or

cause of action arising within this state, it shall be the duty of the

secretary of state, upon such fact being made to appear to him, to

revoke the license of such corporation to do business within this

state.”’

40 Each of these corporations has removed to the federal court

a case against it of the kind referred to in the statute. The

secretary of state having threatened to revoke their licenses, these

applications for temporary injunctions were made, and heard as al-

ready stated.

So far as purely local business is concerned the state has the right

to impose conditions, not in conflict with the Constitution or the laws

of the United States, to the transaction of business within its terri-

tory by an insurance company chartered by another state, or to

exclude such company from its territory, or, having given a license,

to revoke it, with or without cause. Doyle v. Continental Insurance

Co., 94 U. S., 535, 24 L. Ed., 148.

It is argued by counsel for the state that the mere revocation of

the license of a foreign corporation doing both a local and interstate

business will in no way affect its right to continue the transaction of

business in interstate and foreign commerce. If, however, it makes

a contract or acquires property wholly in its local business, then it

comes within the disabilities and penalties prescribed in section

1770b.

The Supreme Court of the United States has laid down certain

rules in deciding cases similar to these, and so far as that court has

settled the law it is, of course, the duty of this court to apply it.

The following propositions are established:

1. Any attempt to substantially diseriminate between domestic

corporations and foreign corporations admitted to do business in a

state, prejudicial to the latter, is invalid, whether it be by unequal

taxation or other substantial inequality. Under such circumstances

the cancellation of the foreign corporation license by a state

41 officer will be restrained. Tlerndon v. Chicago, R. 1. & PR.

Co., 218 U. S., 185, — Sup. Ct. 54 L. Ed... 970, and Roaeh v.

Atchison, T. & S. F. R. Co., 218 U. S., 159, — Sup. Ct. —, 54 1. Fd.

978.

2. If the state statute requires the foreign corporation, as a con-

dition of being permitted to enter or remain in the state, expressly or

impliedly to stipulate or agree that it will not exercise its constitu-

tional right to remove suits to the federal courts, or prosecute suits

THE WESTERN UNION TELEGRAPH COMPANY. 21

therein, such statute is invalid because requiring the corporation to

give up a constitutional right; and the revocation of its license to do

local business may be restrained. Tome Ins. Co. v. Morse, 20 Wall.,

(45, 22 L. Ed., 865, Barron v. Burnside, 121 U. 8., 186, 7 Sup. Ct.,

931, 1 Inters, Com. Rep., 295, 80 L. Ed., 915, and other cases approv:

ing the Barron case, cited by Mr. Justice Day in Security Mutual

Ins. Co. v. Prewitt, 202 U. S., 246, 263, 26 Sup. Ct., 619, 50 L. Ed.,

1018, 1020.

The rulings referred to seem decisive of this application, so that it

is unnecessary to consider other points.

The only discrimination we are able to perceive in the Wisconsin

law, in favor of domestic and against foreign corporations, is a

very narrow one, Foreign corporations are not allowed to remove

cases against therm by citizens of Wisconsin, on causes of action

there arising. The same rule applies to domestic corporations under

section 28 of the Federal Judicial Code, which does not allow de-

fendants to have removal for diverse citizenship unless they are

non-residents of the state. Tlence domestic corporations cannot

exercise such a right. Tf, however, the suit against the do-

42 mestic corporation presents a federal question, and more

than $3,000 is in dispute, it may remove the case though a

citizen and resident of the state. and though the plaintiff is a

citizen of the same state and the cause of action arose therein. To

this limited degree there is discrimination; but instances of such

cases would be very rare. The question of the right to remain in

the state may also be litigated by the foreign corporation in the

state courts, with a final right of review in the Supreme Court by

writ of error to the highest state court. It is unnecessary on these

motions for injunctions to pass on this narrow question because

a consideration of the second point referred to seems to require the

court to direct the temporary injunctions praved,

On first reading the Wisconsin statutes seem to discriminate

against foreign corporations by exacting an occupation tax from

which domestic bodies are exempt; but a careful consideration of

the acts shows that this is not true. Paragraph e of subdivision 7 of

section 1770b requires foreign companies to report annually the

amount of business done in Wisconsin, and to pay a dollar a thou-

sand on any increase not previously reported. Domestic companies

are not required to include in their annual reports any such facts, or

make any such payment. But a complete and thorough comparison

of the statutes demonstrates that this tax on business is really on the

capital stock, and is not required to be paid unless the charter is

amended so as to increase the capital locally employed beyond the

amount already paid for. So the tax is only a license fee, payable

on substantially the same terms as domestic fees. It is a well known

fact in Wisconsin that this is the construction adopted by the state

officers, under which they have uniformly acted. The con-

43 sistent policy in Wisconsin has been to encourage foreign

corporations to do business in the state by making their status

the same as that of domestic companies, but to prevent them from

carrying on business there unless licensed, so as to collect from them

22 JAMES A. FREAR, ETC., VS.

taxes or license fees commensurate with those exacted from local

bodies, and making them readily suable there. This policy of

equality appears from the statute, and is emphasized by subdivision

10 of section 1770, adopting from Illinois a provision that foreign

corporations shall have no other or greater powers than like domestic

bodies, and from the uniform construction of these statutes by the

state officers. Provisions designed to prevent the removal of causes

to federal courts, like that of section 1770f and the insurance statute

under review in State ex rel. Drake v. Doyle, 94 U. 8., 535, 24 L,

Ed., 148, were found necessary by the unreasonable and oppressive

conduct of the foreign corporations themselves in removing cases

merely for greater delay, vexation and expense. It used to be com-

mon practice in Wisconsin for foreign corporations under injunction

from state courts to remove the case on a Saturday afternoon, thus

ipso facto vacating the state injunction, and then hustle a gang of

men upon the enjoined work and get it done by Monday, before any

other restraining order could issue. ;

The second point, resting on the Morse and Burnside cases, raises

the question whether the statute requires foreign companies, as a

condition of coming in or staying in, to agree that they will not re

move cases to the federal courts. If so the legislation is invalid

under those decisions. The statute provides that the foreign cor-

poration, as a condition of doing business in the state, or con-

44 tinuing it, shall state in its application to come in, and its

annual sworn reports, that it will comply with all the laws of

the state relative to foreign corporations. One of these laws provides

that if the corporation shall avail itself of the right of removal it

shall lose its local license. The question is whether the company,

thus compelled to state that it will comply with the local law, is in

substance compelled to contract, as a condition of its admission or

continued presence in the state, that it will not exercise its constitu-

tional right of removal, but consent to litigate certain cases only in

the state court. Counsel for the state officers urge that the corpora-

tion is required to stipulate only that it will comply with certain

positive requirements, such as making annual reports, paying license

fees when it amends its articles, and keeping out of trusts, pools or

combinations in restraint of trade. It is given the option, it is said,

to remove or refrain from removing. Whether it does one or the

other it is still complying with the Wisconsin law.

The question is whether section 1770f is substantially a command

or prohibition to refrain from taking a removal. It is evident that

such a stipulation in the ordinary private contract would not be a

prohibition, but merely a condition, But contracts such as those

here in question are not between citizens or subjects, but between a

political superior and a subject—between the state as a local sover-

eignty and a citizen or subject of another state. The object of such

. statutes is public policy. The corporation cannot. elect

45 whether it will stay out, being practically coerced to come in

by threatened loss of contract and property rights. The pat-

ties are by no means on equal terms. One is a sovereign, dictating

what the subject, in these cases lawfully in the state for some pur-

poses, shall do if it remains therein for other purposes closely related.

PNR ry vcr

THE WESTERN UNION TELEGRAPH COMPANY. 23

So when the state enacts that if the subject does something it has a

rfect abstract right to do it shall be punished, it is thereby substan-

tially prohibited. The federal penal code of 1909, (35 Stat., 1089,

Comp. Stats., 1911 Sup., 1590), contains very few express com-

mands. Most of its sections provide that whoever shall do certain

acts shall be punished. This is the same as enacting that these are

unlawful and prohibited. No one would contend that these were

not commands to refrain from those acts. They are prohibitions

from a political superior to a subject, enacted for the public welfare.

The state says to the telegraph company or coal company, “You are

in the state lawfully for interstate and government business. If,

however, you do any other kind of business you must have a local

license, If you remove to a federal court any case, whether in your

interstate or local business, brought against you by a citizen of Wis-

consin on a cause of action arising therein, your license to do a

local business will be revoked. Any contract not in interstate

commerce you may thereafter make will be void in your favor but

valid against vou, and any conveyance of land for local purposes

which you may take will not vest any title.” This is a substantial

command or prohibition. It is the same as saving, “You shall not

remove such a case.”

In the Morse case, (20 Wall., 445), there was an express

stipulation not to remove actions against the company. But

in the Burnside case, (121 U, S., 186), the prohibition was

implied, as it is here. The application of the foreign corporation

to be permitted to do business in Towa was required to contain a

tipulation “that said permit shal- be subject to each of the pro-

visions” of the foreign corporation statute. A removal to a federal

court by the corporation was made a forfeiture of the permit. No

application had ever been made by the company to be permitted

to do business in the state, and one of its servants was arrested for

running an interstate train in Iowa. The court said: ‘The loco-

motive 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. * * * 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

has been held to be void.” This decision has been many _ times

approved by the Supreme Court and circuit courts of appeals. The

citing cases are discussed by Mr. Justice Day in the dissenting

opinion in the Prewitt case supra.

Being unable to distinguish these cases from the Burnside de-

dsion, the duty to grant the applications for a preliminary in-

junction is plain. The case of Harrison v. San Francisco R. Co.,

232. U. S., 818, decided since the hearing, seems to strengthen our

position,

Aug, 10, 1914. KOTLSAAT, Creuit Judge.

SANBORN, District Judge.

GEIGER, District Judge.

PIEDRA ANGERS SIE BORA ABN LESION SD AEDT hei SSCA A ALE

24 JAMES A. FREAR, ETC., VS.

Endorsed: 117 A. Civil Docket. United States District Court,

Western District of Wisconsin. Western Union Telegraph Com.

pany, Complainant, vs. James A, Frear, in his capacity as Secretary

of State of the State of Wisconsin, and others, Defendant. — Decision,

Filed Aug. 10, 1914. F. W. Oakley, Clerk.

48 Afterwards, to-wit, August 22, 1914, filed interlocutory in-

junction, as follows:

In the District Court of the United States for the Western District of

Wisconsin.

Wesrern Union Tetecrarn Company, Complainant,

vs.

James A. Frear, in His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

The complainant having filed its bill, praying for a final decree

enjoining and restraining the Defendant as Secretary of State of the

State of Wisconsin, and his successors in person, or by deputy, or

assistant from cancelling or revoking the license, or permit of the

Complainant to do business in the State of Wisconsin, or from taking

any action, or causing any action to be taken against the Complain-

ant for, or on account of an alleged violation of an act of the legisla-

ture of Wisconsin purporting to declare the license, or permit of the

Complainant to do business within the State of Wisconsin, forfeited,

on account of the removal of a cause from the State Court of said

State to the Federal Court, and praying that an interlocutory injune-

tion be issued, forbidding such action on the part of the defendant,

and his successors during the pendency of this action, and until the

final determination thereof.

49 And, five (5) days’ notice of such application for such

interlocutery injunction having been given to the Attorney

General of the State of Wisconsin, and to the defendant, Secretary

of State.

And, the Judge of the District Court of the United States for the

Western District of Wisconsin, to-wit, Honorable Arthur L. San-

born, having called to his assistance to hear and determine the said

application, two (2) other judges, namely, Honorable Christian C.

Kohlsaat. United States Circuit Judge, and Honorable Ferdinand A,

Geiger, United States District Judge.

And, the said application having been heard before the said three

(3) Judges, and the said three (3) judges having heard solicitors

for the Complainant, and the said Attorney General of the State of

Wisconsin, for the Defendant, and the matter having been sub-

mitted,

And, the said three (3) judges having on the 10th day of August

1914 filed in said District Court of the United States for the Western

ANA SIP MIC AARC | Prrmal asitat

THE WESTERN UNION TELEGRAPH COMPANY. 25

District of Wisconsin their decision, granting an interlocutory in-

junction to the Complainant, as prayed for,

It is therefore on motion of A. G. Zimmerman and Rufus B.

Smith, solicitors for said Complainant, and Perey B. Eckhart of

counsel, Ordered, that during the pendency of this action, and until

final decree herein, the Defendant, as Secretary of State of the State

of Wisconsin, and his successor in said office in person, or by deputy

or assistant, are enjoined and restrained from cancelling, or revok-

ing the license, or permit of the Complainant to do business in the

State of Wisconsin, or from taking any action, or causing any action

to be taken against the Complainant, for or on account of its alleged

violation of an act of the legislature of Wisconsin, declaring,

50 or purporting to declare the license, or permit of complainant

to do business within the State of Wisconsin, forfeited, on

account of the removal of a cause from the State Court of said State

of Wisconsin to the Federal Court, and from making any entry of

record in person, or by deputy, or assistant, which would purport to

eancel the said permit of the said complainant to do business within

said State of Wisconsin.

Dated August 22nd, 1914.

By the Court:

A, L. SANBORN, Judge.

Endorsed: 117 A—C. Dk. Western District of Wisconsin. U.

§, District Court. Western Union Telegraph Company, complainant,

vs, James A. Frear, Sec’ty of State etc., defendant. Interlocutory

injunction. Filed Aug. 22, 1914. F. W. Oakley, Clerk, A. G.

Zimmerman & Rufus Bb. Smith, sol’s for complainant’ Madison, Wis.

Afterwards, to-wit, September 17, 1914, came the defendant by

his solicitors, and filed petition for and order allowing appeal, as

follows :

51 United States District Court in and for the Western District

of Wisconsin.

Ture WESTERN UNIoN TELEGRAPH Company, Complainant,

vs.

James A, FreaR, in His Capacity as Secretary of State of the State

' of Wisconsin, Defendant.

The above named defendant, James A, Frear in his capacity as

Secretary of State of the State of Wisconsin, conceiving himself ag-

grieved by the interlocutory injunction entered on September 17,

1914, in the above entitled action, doth hereby appeal from said inter-

locutory injunction to the Supreme Court of the United States, and

he prays that this his appeal may be allowed; and that a transcript

of the record and proceedings and papers upon which said inter-

4— 254

238 JAMES A. FREAR, ETC., VS.

to make said appeal good, then this obligation shall he void,

56 otherwise the same shall be and remain in full force and

virtue.

JOHN 8S. DONALD, [ SEAL. |

Secretary of Ntate,

—_ ——— | SEAL. |

UNITED ST ATES FIDELITY «&

GUARANTY CoO.,

By C. F. LAMB,

[L. s. | General Age nt and lorney in Fuet,

Sealed and delivered and taken and acknowledgel this 17th day

of September, 1914 before me

Approved by

A. L. SANBORN,

District Judge.

Endorsed: 117-\ C. Dk. United States District Court. Western

Pistrict of Wisconsin. Western Union Telegraph Company, com-

plainant, vs. James A. Frear, in his capacity as Secretary of State

of the State of Wisconsin, defendant. Bond. Filed Sep. 21. 1914,

F. W. Oakley, clerk.

September 18, 1914, filed precipe for transcript and admission

of service, as follows:

Due and personal service of the within praecipe admitted this 18th

day of September, 1914.

A. G. ZIMMERMAN,

RUFUS B. SMITH,

Solicitors for Complainant.

57 United States District Court in and for the Western District

of Wisconsin.

Tue WesteRN Unton TELEGRAPH Company, Complainant,

vs. .

James A, Frear, in His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

To the Clerk of the United States District Court in and for the

Western District of Wisconsin:

You will please prepare a transcript of the following papers con-

stituting the record filed in the above entitled action in your office

in the United States Court for the Western District of Wisconsin,

to wit:

Bill in Equity, Subpeena, Motion for Temporary Injunction,

THE WESTERN UNION TELEGRAPH COMPANY. 29

Temporary Restraining Order, Notice of Appearance of the Attorney

General, General Demurrer by Defendant to Bill in Equity, Opinion

by the Court, Interlocutory Injunction, Petition for Appeal, Order

Mllowing Appeal, Citation, Assignment of Error-, Appeal Bond

and Approval, and Precipe, and transmit the same to the Clerk of

the Supreme Court of the United States, together with the appeal

papers. for the use of said court in the trial of the appeal herein.

WALTER C. OWEN,

Attorney General;

J. E. MESSERSCHMIDT,

Assistant Attorney General,

Attorneys for Defendant.

58 UNITED STATES OF AMERICA,

Western District of Wisconsin, ss:

I. fF. W. Oakley. Clerk of the Distriet Court of the United States

for said district, do hereby certify that I have compared the fore-

going transcript of record with the original records of this Court

now remaining of record in my office in the case herein lately pend-

ing of the Western Union Telegraph Company, complainant, vs.

James A. Frear, in his capacity as Seeré*hry of State of the State of

Wisconsin, defendant, and that the same is a correct transcript

thereof.

I further certify that the citation, with admission of service

thereon, hereto annexed. is the original citation and admmision

of service granted in said cause.

In testimony whereof, I have hereunto set my hand and duly

affixed the seal of the said Court. at the City of Madison, in the

said Western District of Wisconsin, this 21st day of September, in

the vear of our Lord one thousand nine hundred and fourteen, and

of the Independence of the said United States the one hundred

and thirty-ninth.

[Seal U.S. District Court Western Dist. of Wisconsin, Madison. |

F. W. OAKLEY, Clerk,

By FRED W. FRENCH, Deputy.

September 17, 1914, citation issued in said cause, as follows.

to-wit :

—— - 2 4 Sch abe ACL NDS MAMET.

LP J

30) JAMES A. PREAR, ETC., VS. WESTERN UNION TELEGRAPH COMPANY,

59 Original.

United States District Court in and for the Western District of

Wisconsin.

Tue WesteERN Union TELEGRAPH Company, Complainant,

vs.

JAMEs A, FReAR, in His Capacity as Secretary of State of the State

of Wisconsin, Defendant.

Unitrep STATES OF AMERICA, 88:

To Rufus B. Smith, Madison, Wisconsin; A. G. Zimmerman, Mad:

son, Wisconsin, and Perey B. Eckhart, Chicago, [linois, Gree,

ing:

You are hereby cited and admenished to be and appear at the Sa

preme Court of the United States, to be holden at Washington, on

the 17th day of October, nineteen hundred and fourteen, pursuant

to an appeal filed in the clerk’s office of the District Court of the

United States for the Western District of Wisconsin, wherein Jame

A. Frear in his capacity «- Secretary of State of the State of Wis

consin, is appellant and The Western Union ‘Pelegraph Company

is respondent, to show cause, if any there be, why the interlocuto

injunction in the said appeal mentioned should not be correct

and speedy justice should not be done to the parties on that behalf,

Witness the Honorable Edward Douglass White, Chief Justice of

the United States, this 17th day of September, in the year of our

Lord one thousand nine hundred and fourteen.

A, L. SANBORN,

District Judge.

60 | Endorsed:| 117-A, Civil) Docket. Original. State of

Wisconsin. United States District Court, Western Distrie

of Wisconsin. The Western Union Telegraph Company, complain

ant, vs. James A. Frear in his capacity as secretary of state of the

State of Wisconsin. defendants. Citation. Due and personal serviee

of the within citation admitted this 18 day of September, 1914

A. G. Zimmerman & Rufus B. Smith, solicitors for complainant,

Filed Sep. 18, 1914. F. W. Oakley, clerk.

Endorsed on cover: File No. 24,381. W. Wisconsin D.C. U.S,

Term No. 254. James A. Frear, in his capacity as secretary of

state of the State of Wisconsin, appellant, vs. The Western Union

Telegraph Company. Filed September 26th, 1914. File No. 24;

381

8

SUBJECT INDEX.

wo

dt OS RR GARE SIG TIN DRS gto arene eaten ,

Page

I osu olic cea yskevanacsvbenscitede choeetuanger’ 1

Result

Statement of Facts... Pole oe uada eine oes 3

Assignments of Error........ Se anchauckoneast 9

Argument 10 ;

I. Policy of the State of Wisconsin é

Concerning Corporations. ....... 11 Ps

II. The Provision of the Wisconsin 3

Statutes, that, if a Foreign Cor- &

poration shall Remove or Make q

Application to Remove into any :

District or Circuit Court of the :

United States any Action or E

Proceeding Commenced against 4

it by any Citizen of Wisconsin My

upon any Claim or Cause of K

Action Arising within this State,

the License Issued to said Cor-

poration shall be Void and the

Secretary of State shall enter

such Forfeit in the Records in

his Department, has not for its

Object to Oust the Federal court

of Jurisdiction, but the Primary

Purpose is the Putting of For-

eign Corporations on Substan-

RS HOE RG Rent eats ate

tially the same Footing as Do- 4

mestic Corporations and such is 4

MN MINI o.oo Seaceuse poss seks 14 ‘

ii

Page

III. The “Mantate of the Fourteenth

Amendment to the Constitu-

tion of the United States, that

no State shall Make or Enforce

any Law which shall deny to

any Person within its Jurisdic-

tion the Equal Protection of the

Laws, is Applicable to Remedial

ER pa AL - 23

IV. The Rule of Comity goes only so

far as to Place Foreign Corpo-

rations on an Equal Basis with

Domestic Corporations, but

BIE TRIE ovicsincecseccscccns... 31

V. The Rule of the Doyle and Prewitt

Cases, Properly Qualified and

Limited in its Scope, is Appli-

cable to this Statute and is

Sufficient to Sustain its Con-

SIE So citekctinmaiiciadin. 34

VI. A Foreign Corporation is not Re-

quired by the Statutes of Wis-

consin, as a Condition for Re-

ceiving a License in the State of

Wisconsin, to Stipulate that it

will not remove a Case to the

i, o , Sn eee 53

VII. A Stipulation Required to be

Filed in the Secretary of State’s

Office by a Foreign Corporation

that it will not Remove a Case

to the Federal Court does not

in any way Change the Effect of

a Statute of this Nature.............. 63

ili

VIII. The Wisconsin Statutes Relating

to Foreign +aemseeree Companies

do not in any way Interfere

with or Affect Interstate Com-

IX. The Revocation of the License of

the Respondent Does not De-

prive it of any Constitutional

Noten Sc ctizre a tea ckute late ceucnnsuskSeottase meee

ROE Ee iets SR Ne AL, ERR Ea Nee peety Bees

Appendix, Laws of Wisconsin Relating to

Foreign Corporations ...............

Page

64

1984

EAGLES RORY ATONE

SRE LE ENS

:

‘

|

«

.

CASES CITED.

; Page

Allen v. Milwaukee, 128 Wis. 678................. 65

Ashland L. Co. v. Det. S. Co., 114 Wis. 66...... , 65

Bank of Augusta v. Earle, 13 Pet. 519............ 32

Barbier v. Connolly, 113 U.S. 27.0000... 24

Barron v. Burnside, 121 U.S. 186............39, 40, 53, 61

Beaser v. Barber A. P. Co., 120 Wis. 599...... 65

Bigelow v. West. R. Co., 27 Wis. 478.............. 56

Blair v. Milw. etc. Ry. Co., 20 Wis. 254........ 67

Catlin & Powell Co. v. Schuppert, 130 Wis.

___-_ BERRA AAD ar on SEE PEDO See ERs Raine as PP 65

Chicago R. R. Co. v. Cutts, 94 U.S. 155........ 73

Chicago T. & T. Co. v. Bashford, 120 Wis. 281 65, 68-71

Chickering-Chase Bros. Co. v. White, 127 Wis.

Rr ee Naas rhea 0hs ak oancvvecn xen 65

Clark v. Central Ry. Co., 50 Fed. 338........... 31

Coe v. Rothman, 126 Wis. 515............0......... 71

Cohens v. Virginia, 6 Wheat. 399................... 51

Coler v. Tac. R. etc. Co., 65 N. J. Eq. 347........ 33

Coen, Gtale.o., T7i Bbe. S4B........55<..5.....60600..05.. 33

Daniels v. Tearney, 102 U.S. 421................. 62

Doyle v. Continental Ins. Co., 94 U. S. 535,

oP ck RRR Pe 22, 37, 39, 40, 46, 47, 48, 50, 55, 57, 60

Doyle, State ex rel. Drake v., 40 Wis. 175....18, 36, 37, 61

Drake v. Doyle, 40 Wis. 175.................. ...18, 36, 37, 61

Ducat v. Chicago, 10 Wall. 410.000.000.000... 65

Durkee v. City of Janesville, 28 Wis. 464....... 26-29

Elwell v. Adder Machine Co., 136 Wis. 82... 65, 71

Empire Mills Co. v. Alston G. Co., 15 S. W.

Bee eT BERET oe Oe iisis toa te op 32

Falls v. U. S. Savings, Loan, etc. Co., 97 Ala.

SO RII PTE ae ht oP Batt 33

Faulker v. Hyman, 142 Mass. 53.................... 33

Fisher v. Lord, 63 N. H. 514....... Ske La oe 33

Pemeer 0. Ben, FO Tem. VOD... 5. 5...6..00...0005..... 33

Furguson v. Landrum, 5 Bush. 230, 196 Am.

Granada Co. v. Brogden, 112 U. S. 261.

Greek-Am. S. Co. v. Richardson D. Co., 124

REE ak oyna n OW mee

Gulf, C. & S.F. Ry. Co. v. Ellis, 165 U.S. 150

Harding v. Am. Glu. Co., 182 Il. 551................

Harrison v. St. L. & S. F. R. Co., 232, wu. &.

Hiskey v. Pac. States Savings, etc. Co., 27

Pata PSS ena pe RAC tena 2

Page

56

25

46

44

33

Home Ins. Co. v. Morse, 20 Wall. 447........ 34, 40, 57, 61

Horn Silver Mining Co. v. New York, 143

Inde. Tug Line v. Superior L. & B. Co., 146

Wis. 121...

Janesville v. Carpenter, 7 Wis. 288.

Johns v. Milwaukee, 88 Wis. 389...

Johnson v. Goodyear, 59 Pac. 304.....

Kellogg v. Currens, 111 Wis. 431.......... =

Louis. & N. R. Co. v. Kentucky, 183 U. S.

<a . ;

Ludwig v. WwW. U. Tel. &. 216 U. ‘, 146...

Madison, etc. Plank Road Co. v. Reynolds,

I a cpuucncs

Milwaukee Gaslight Co., State v., 29 Wis. 454

Missouri v. Kansas City, etc. -~ Co., da

Fed. 722... epee

Missouri v. Lewis, 101 U. Ss. 22.

33, 65

19

30

56

25

30

72

43

67

67

56

26

Morse, Home Ins. Co. v., 20 ee 57, 61

National Cotton Oil Co. v. Texas, 197 U. S.

Newport & C. Bridge Co. v. United States,

Pe EN ie rs ns cuthe si cuetiensint nance

New York & N. E. R. Co. v. Bristol, 151

65

vi

Page

Palms v. Shawano Co., 61 Wis. 211............... 56

Paul v. Virginia, 8 Wall. 168.................0...... 65

People v. Howard, 50 Mich. 239..... hetvebaete 33

Pratt». Bremn, 3 Wits GOG.......-.....0sc056.6.0.00..:.. 67

Presbyterian M. Fund v. Thomas, 126 Wis.

I ech oe ia 8 ease aac eee: sah 32, 65

Prewitt, Security Mut. Life Ins. Co. v., 202

U. S. 246, 50 L. Ed. 1013......22, 39, 46, 47, 48, 50, 63

Pullman Co. v. Kansas, 216 U.S. 56........... 43

Randolph v. Builders, etc. Supply Co., 106

PA Dg We I Ti os ivcsaccxcsdiedacbesessanceesoctee’s 25

Security Mut. Life Ins. Co. v. Prewitt, 202

U.S. 246, 50 L. Ed. 1013......22, 39, 46, 47, 48, 50, 63

Singer Mfg. Co. v. McCollock, 24 Fed. 667...... 56

Smiley v. Kansas, 196 U. 8. 447..0.0.000000000..... 65

Southern Ry. Co. v. Green, 216 U.S. 400......... 30, 43

State v. Cook, 171 Mo. 3468...................... 3s

State v. Milw. Gaslight Co., 29 Wis. 454............ 67

State ex rel. Drake v. Doyle, 40 Wis. 175....18, 36, 37, 61

State ex rel. Kellogg v. Currens, 111 Wis. 431.. 30

Stricker, Ex parte, 109 Fed. 150... Ss 24

Swing v. Weston Lbr. Co., 205 U. s. 278... 41

Tampa Waterworks Co. v. Tampa, 199 U.S 5.

RES ge BI SRY oS 0 AT te Sieh ae RESETS 65

Toomey v. Sup. Lodge Kk. P. W., 74 Mo

BE: EE Sie 2 em ace not ag AAP Seen Re ee 33

United States v. Cent. Pac. Ry. Co., 118

U. &. 236... Scans 56

United States v v. Coombs, 12 Pet. 75... oe 56

United States v. Del. Ry. Co., 213 U.S. 366... 73

United States Mort. Co. v. Gross, 93 Il. 483.... 33

Van Steuben v. Cent. Ry. Co., 178 Pa. St. 367.. 32

Walters v. Whitlock, 9 Fla. 86... 33

Western Union Tel. Co. v. Julian, 169 Fed.

ME ard eka ethan Be 5

Western Union Tel. Co. v. Kansas, 262!

White v. Howard, 46 N. Y. 144.......... eae ep 33

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1915.

No. 254,

JAMES A. FREAR, in his Capacity as Secre-

tary of State of the State of Wisconsin,

Appellant,

DS.

THE WESTERN UNION TELEGRAPH

COMPANY,

Respondent.

Appeal from the District Court of the

United States for the Western

District of Wisconsin.

BRIEF FOR APPELLANT.

NATURE OF SUIT.

This is an appeal from a temporary injunc-

tion enjoining the Secretary of State, of the

State of Wisconsin from revoking the license

of the Western Union Telegraph Company,

ry eas

ye EE PROGR NT TIPE RSS: ME bh pI pl Seo

pesiotei Kiewit arse

2

the complainant, to transact intrastate busi-

ness in Wisconsin as a foreign corporation.

The application was made in the district

court of the’ United States for the western

district of Wisconsin. Judge Sanborn, the

district judge, granted a preliminary restrain-

ing order under the provisions of section 262 of

the Judicial Code. The case was heard on

November 24, 1913, at Chicago, before Hon.

Christian C. Kohlsaat, United States circuit

judge, Hon. Ferdinand A. Geiger and Hon.

Arthur L. Sanborn, district judges, under sec-

tion 266 of the Judicial Code (Act March 3,

1911, c. 231, 36 Stats., 1162 [U. S. Comp. St.

Supp. 1911, p. 236)).

RESULT.

After having the matter under consideration

for nearly ten months decision was rendered

August 10, 1914, in favor of the complainant

and the temporary injunctional order was

thereupon issued.

The issues in this case were raised by a de-

murrer to the bill.

ta: t

ace

1 NES

A BRIEF STATEMENT OF THE FACTS

ALLEGED IN THE COMPLAINT.

The Western Union Telegraph Company is

a corporation organized under the laws of New

York and has its office and principal place of

business in the city of New York.

The Congress of the United States passed

an act approved July 24, 1866, entitled ‘“‘An

act 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.”

Another act of Congress, approved July 10,

1872, entitled “‘“An act making appropriation

for sundry civil expenses of the government

for the fiscal year ending June 30, 1875,” pro-

vided that all telegraph companies accepting

the provisions of the act approved July 24,

1866, were required to transmit to the Secre-

tary of War of the United States the results of

observations at signal places and reports for

the weather bureau department of the govern-

ment under penalties fixed and defined by the

last named act; that the complainant complied

with the provisions of said act of Congress

approved July 24, 1866, and did, on the eighth

day of June, 1866, file with the Postmaster

General of the United States its written

acceptance of all the restrictions and obliga-

tions of the said act, and that thereupon the

complainant became entitled to all the rights

SED TONG I AIS TNA a IEE

4

and privileges of said act and that it has at all

times since the filing of said acceptance fully

performed all obligations and requirements of

said act, and has, as part of the postal equip-

ment of the United States, and as an instru-

mentality of the postal department of the

United States, carried, upon its lines of tele-

graph, messages for the government of the

United States for the several departments

thereof and for the people of the United States

and of the State of Wisconsin as prescribed

and required in and by the provisions of said

acl.

The Western Union Telegraph Company

organized in the year 1851, and then began

the construction and operation of telegraph

lines. Since that time it has been continuously

engaged in the transmission of messages and

information by telegraph, and at the present

time its telegraph lines cover over 219,000

miles of poles and cables and over 1,400,000

miles of wire. Upon its system it has over

24,900 offices, and transmits yearly about

70,000,000 messages for the public and for the

government of the United States, and, by

arrangement with other countries, into Can-

ada, Mexico and the South American republics,

and by cable with foreign countries. These

lines are all connected with its main office in

New York; and most of them constructed in

the State of Wisconsin were placed there since

the acceptance by the complainant of the terms

and conditions of the act of Congress approved

July 24, 1866.

Sit AKIO Fie ORI AEE AD RSD PG HABA LLM ONDE ADB EI VEL TY Bade gs

5

Its telegraph lines within the State of Wis-

consin are largely upon the public domain and

upon the military and postal routes of the

United States, and said lines of telegraph in

Wisconsin are part of the postal routes and

part of the postal establishment of the United

States, and the complainant is under a duty

and obligation to transmit all messages for

the government and for the public generally,

including both messages between points within

the state and interstate messages.

A large per cent of the people of the State

of Wisconsin are dependent upon the facilities

maintained and offered by the complainant,

both as to intrastate and interstate service,

and many of the railroads are dependent upon

the service of the complainant for the success-

ful operation of their trains.

The bill further alleges that on the 6th day

of December, A. D. 1911, one Walter L.

Houser, in his capacity as trustee of the estate

of David Blum, bankrupt, a resident of the

State of Wisconsin, commenced an action in

the circuit court of Dane county, Wisconsin,

against this complainant, claiming as damages

the sum of fifteen thousand nine hundred

($15,900) dollars for or on account of an alleged

failure on the part of this complainant to

transmit and deliver a telegram filed at

Philadelphia in the State of Pennsylvania, to

be transmitted to said David Blum at Mon-

dovi, in the State of Wisconsin; that the com-

plainant was advised by counsel that, for the

proper presentation of its defense to said ac-

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tion, it should exercise the right of removal

of said cause to the district court of the

United States for the western district of Wis-

consin as authorized by the constitution and

laws of the United States, and that, for the

reason assigned, the said complainant did re-

move the said action from the state court to

the district court of the United States and will

remove other causes if such removal is author-

ized by the constitution and laws of the United

States; that in the year 1898 the legislature of

the State of Wisconsin duly passed an act

now known as section 17706 of the statutes of

Wisconsin, which act provided, among other

things, that no foreign corporation incorpo-

rated otherwise than under the laws of the

State of Wisconsin should transact any busi-

ness or own property in the State of Wisconsin

until such corporation should have filed in the

office of the secretary of state of the State

of Wisconsin a duly authenticated copy of its

charter and consent to the appointment of the

secretary of the state as its attorney to accept

service of any process or proceedings against it.

On the 20th day of June, 1905, the legis-

lature of Wisconsin enacted a law now known

as section 1770f of the statutes of Wisconsin,

which enactment is in the words and figures

following:

‘‘Whenever any foreign corporation doing

business in this state shall remove, or make

application to remove, into any district

court of the United States any action or

proceeding commenced against it by any

7

citizen of this state, upon any claim or

cause of action arising within this state,

it shall be the duty of the secretary of state,

upon such fact being made to appear before

him, to revoke the license of such corpora-

tion to do business within this state.”

It is further alleged that in the year 1907,

at the request of the secretary of state, and

for no other reason, the complainant filed in

the office of the secretary of the state of the

State of Wisconsin a duly authenticated copy

of its charter as required by section 17706 of

the statutes of Wisconsin, and paid to the

state the fee of twenty-five ($25.00) dollars as

provided by said act, and that such filing and

the payment of such fee to the secretary of

state as aforesaid was made ex gratia, and not

because the complainant believed such filing

and such payment was obligatory; and it is

further averred that on the 31st day of Decem-

ber, 1907, the secretary of state of the State of

Wisconsin issued to the complainant a license

to transact business within this state and that

said license is unrevoked and is now in the

’ possession of the complainant;

That after the year 1851, and before the

year 1860, complainant extended its license for

telegraph into the State of Wisconsin, with

the consent and acquiescence of the state, and

has since been engaged in the business of

transmitting messages by telegraph, both in-

trastate and interstate; and, for the purpose

and transaction of the said business, has

invested very large sums of money in and about

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the construction of lines of telegraph in said

state and in the establishment of telegraph

offices and other equipment incidental thereto;

and that prior to the enactment of the statute

hereinbefore referred to, there was no statute

of the State of Wisconsin providing for the

revocation of the right of the complainant to

do business in the state as a penalty for remov-

ing any suit to the federal court and for exer-

cising any other right secured to it by the

constitution and laws of the United States;

That relying upon the consent of the state,

complainant has entered into a large number

of contracts and made leases with reference

to buildings and has established a large num-

ber of offices exceeding in number seven

hundred and twenty-five #(725) within the

state and has acquired rights-of-way, ease-

ments and franchises, all of which was done

long prior to the said resolution of 1905, and

all with the consent of the State of Wisconsin,

and that since the establishment of said lines

the complainant has used them for the trans-

action of telegraph messages for the govern-

ment of the United States and for the public

as an instrumentality of the postal department,

both wholly within the State of Wisconsin

and also for interstate commerce;

That the complainant has invested in the

State of Wisconsin large sums of money in

excess of seven hundred thousand ($700,000)

dollars;

That the legislation of Wisconsin hereinbe-

fore set forth is unconstitutional and void

9

under the provisions of the constitutions of

Wisconsin and of the United States and is

violative of the Fourteenth Amendment to the

constitution of the United States.

That the defendant, in his capacity of secre-

tary of state of the State of Wisconsin, has

threatened and given out that he will revoke

the license of the complainant to do business

in the State of Wisconsin for the reason that

complainant has exercised his rights under the

constitution and laws of the United States in

removing to a court of the United States the

action commenced in the state court by said

Walter L. Houser.

The complaint also alleged conclusions of

law which it is not necessary to give in this

brief.

ASSIGNMENTS OF ERROR.

1. The United States District Court for

the Western District of Wisconsin erred in

refusing to grant the prayer of the defendant

that the temporary restraining order against

the defendant be dissolved and that the bill of

complaint and this suit be dismissed.

2. The said court erred in granting the

interlocutory injunction against the defend-

ants herein.

3. The said court erred in its construction

of the statutes of Wisconsin relating to foreign

corporations.

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4. The said court erred in holding that the

Wisconsin statutes require a foreign corpora-

tion to stipulate or agree that it will not

remove into any district court of the United

States any action or proceeding commenced

against it by any citizen of Wisconsin upon

any claim or cause of action arising within

said state.

5. The said court erred in holding as invalid

and unconstitutional and as contravening the

constitution of the United States the follow-

ing provision of section 1770f of the Wisconsin

statutes:

‘“‘Whenever any foreign corporation doing

business in this state shall remove, or make

application to remove, into any district

court of the United States any action or

proceeding commenced against it by any

citizen of this state, upon any claim or

cause of action arising within this state, it

shall be the duty of the secretary of state,

upon such fact being made to appear to

him, to revoke the license of such corpora-

tion to do business within this state.”

ARGUMENT.

The question before this court is whether

section 1770f of the Wisconsin statutes is

constitutional.

In presenting this question to this honorable

court, we are not unmindful of the fact that

statutes of other states which appear to con-

MEAS Wal SE SERISN P I SAA LRT, NS SoA ML A TES SE RD DALE ENE a Ni Ta ATT I NS

11

tain somewhat similar provisions have been

declared to be violative of provisions of the

constitution of the United States. But, be-

lieving that the corporation laws of the State

of Wisconsin and the scope and purpose of

the above provision present somewhat differ-

ent issues to this court than those considered

in said cases, and in view of the necessity of a

law of this nature, we respectfully call the

court’s attention to the following argument

which we believe gives sufficient grounds to

sustain the constitutionality of this law.

We deem it our duty, as public officers oi

the State of Wisconsin, to again urge upon the

honorable court the consideration of this ques-

tion and the reasons for the need of this law,

and that the same is consistent with that

mutual comity and respect which should pre-

vail between the state and general govern-

ment.

Policy of the State of Wisconsin Concern-

ing Corporations.

The State of Wisconsin has always en-

deavored to place foreign and domestic cor-

porations doing intrastate business within its

borders on substantially an equal footing. The

corporation laws of this state do not contain

any discriminations against any foreign cor-

poration nor any provisions favoring corpora-

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tions that have been created under the laws of

the State of Wisconsin. This policy is not

only exemplified in all the provisions of the

Wisconsin corporation laws, but finds expres-

sion in the specific provisions of subsec. 10,

sec. 17706, which are as follows:

*‘All foreign corporations and the officers

and agents thereof doing business in this

state shall be subjected to all the liabilities

and restrictions that are or may be imposed

upon corporations of like character organized

under the laws of this state, and shall have

no other or greater powers.”

Thus, when a license fee is imposed upon a

domestic corporation, a like fee is also placed

upon a foreign corporation of the same nature.

When a report of ils business and property is

required of one, it must also be made by the

other. Forfeitures are imposed equally for

like offenses and no advantage is given to

either. It is not necessary to enumerate the

various provisions in which this policy finds

expression, for the corporation laws of Wis-

consin are very extensive and it is not made

necessary for the reason that we understand

thatcounselfor respondent do not and cannot

point out any substantial discrimination under

the laws of this state against foreign corpora-

tions; and the trial court herein has found that

there is no discrimination unless it be found

in the said provision of section 1770), above

quoted, which will be considered hereinafter.

SR ANS SAAN BATA AO IO Da I AES RL CEN IRR SBR DEO ORNS sl

13

It must be remembered, in connection with

this question, that Judge Ferdinand A. Geiger

and Judge Arthur L. Sanborn, who, with

Judge Christian C. Kohlsaat, heard the instant

case in the lower court, are federal district

judges of the State of Wisconsin, having

formerly practiced law within the jurisdiction

of said state and being conversant with the

laws concerning corporations, and, after ex-

amination of the same, have come to the follow- °

ing conclusion in their opinion expressed, to wit:

“The consistent policy in Wisconsin has

been to encourage foreign corporations to

do business in the state by making their

status the same as that of domestic com-

panies, but to prevent them from carrying

on business there unless licensed, so as to

collect from them laxes or license fees com-

mensurate with those exacted from the local

bodies, and making them readily suable

there. This policy of equality appears from

the statute, and is emphasized by subdivi-

sion 10 of section 1770b, adopting from

Illinois a provision that foreign corporations

shall have no other or greater powers than

like domestic bodies, and from the uniform

construction of these statutes by the state

officers.”” (Trans. p. 21.)

In view of said policy, which cannot be

successfully controverted, we will now con-

sider the purpose and reasons for the enact-

ment of the statute in question.

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If.

The Provision of the Wisconsin Stat-

utes, that,if a Foreign Corporation shall

Remove or Make Application to Remove

into any District or Circuit Court of the

United States any Action or Proceeding

Commenced Against it by any Citizen of

Wisconsin upon any Claim or Cause of

Action Arising within this State, the

License Issued to Said Corporation shall

be void and the Secretary of State shall

enter such Forfeit in the Records in his

Department, has not for its Object to

Oust the Federal Court of Jurisdiction,

but the Primary Purpose is the Putting of

Foreign Corporations on Substantially

the same Footing as Domestic Corpora-

tions, and such is the Result.

It will be observed that this provision of the

statute does not prohibit a foreign corpora-

tion from resorting to the federal court when

il begins a suit of its own accord against any

citizen of the State of Wisconsin. It may begin

any suit or proceeding in a federal court

against any citizen of the state and its license

cannot be revoked on that ground. If a

citizen of the State of Wisconsin brings an

action against a foreign corporation in a

federal court, the foreign corporation is per-

mitted to defend such action and no revoca-

tion of its license can take place on that

fp GANGA NCAP LAT SRO NOEL TERY TTR ADE OES

15

ground; neither can the license be revoked

because a case has been taken by a writ of

error from the supreme court of the state to

the federal court of the United States for the

purpose of litigating federal questions that

may arise in the case. The restriction of the

provision is further limited to causes of action

that arise within the State of Wisconsin.

Only when cases that have been started by

citizens of the state against a foreign corpora-

tion in a court of the state on a cause of action

arising within the state are removed to either

the district or circuit court of the United

States, then its license must be revoked. This

is for the purpose of placing the foreign cor-

poration on exactly the same basis as a do-

mestic corporation.

Without this provision in the statute, a

foreign corporation, such as the complainant,

may remove every action that may arise

in the State of Wisconsin brought against

it by a citizen of the state from the state

court to the district or circuit court of the

United States. Such corporation may, there-

fore, entirely take away from every citizen of

the state the right to have a controversy that

arises between it and such citizen determined

and tried in the courts created for that pur-

pose by the constitution and statutes of the

state. It may entirely take away from the

state courts the right to try any such cases.

This is possible simply because a foreign

corporation is a citizen of another state. A

domestic corporation cannot remove a case

MSP, Leh SANS: iad

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BENE TREN RL TMG NA Na ORE RA ARE LSS

16

from a state court to the district or circuit

court of the United States unless a federal

question is involved, for the reason that a

domestic corporation is a citizen of the State

of Wisconsin. The result is, that all statutes

enacted in the State of Wisconsin as to court

procedure, and as to the methods of enforcing

claims of the citizens of the state against

corporations, may be successfully circum-

vented by a foreign corporation by removing

all of its cases to the federal courts. As an

illustration, we direct the court’s attention to

section 4096 of the Wisconsin statutes pro-

viding for the adverse examination of the

officers and employees of corporations prior

to the trial, and requiring the production of

the books of the corporation, which is a statute

that has shown itself to be of great value in

litigations against corporations and to be

entirely reasonable and just in its require-

ments.

Another example is ch. 219, Laws of 1915,

being an act to simplify and expedite legal pro-

cedure, and enacted by the last legislature of

the state on recommendation of the board of

circuit judges and judges of the supreme court.

If the statute in question herein is declared

unconstitutional, then the state is powerless to

enact any law which shall improve in any way

the procedure in court and reach foreign cor-

porations doing an intrastate business within its

borders. The statutes enacted to secure to

the citizens of the state the remedial rights

guaranteed to them by the constitution can

FEN 0 LER AT ORS

17

be successfully circumvented by a foreign

corporation, while a domestic corporation of

like nature doing both domestic and interstate

business, and which, perchance, may be exer-

cising functions as an agent of the federal

government the same as a foreign corporation

is subject to these local laws.

Under the provisions of the state laws, a

citizen of the State of Wisconsin may bring

an action against a domestic corporation in

any county in the state where he may reside

and where the corporation transacts business.

The action may be tried, as a general rule, in

the county in which the witnesses of the plain-

tiff are located. A removal of the action to

the United States court will harass such a

citizen and will cause not only delay in the

suit but also additional expense and other

inconveniences. The court will take judicial

notice of the fact that some of the counties in

the state are located a great distance from the

federal courts. These matters are so well

known that legislators and courts have taken

notice of the fact, the legislature enacting

statutes as the one under consideration de-

signed to remedy the defect and courts giving

free expression to these matters. Judge San-

born and Judge Geiger made candid statements

of it in the opinion filed deciding the instant

case, in which they say:

“Provisions designed to prevent the re-

moval of causes to federal courts, like that

of section 1770f and the insurance statute

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under review in State ex rel. Drake v. Doyle,

94 U. S. 535, 24 L. Ed. 148, were found neces-

sary by the unreasonable and oppressive

conduct of the foreign corporations them-

selves in removing cases merely for greater

delay, vexation and expense. It used to be

common practice in Wisconsin for foreign

corporations under injunction from state

courts to remove the case on a Saturday

afternoon, thus ipso facto vacating the state

injunction, and then hustle a gang of men

upon the enjoined work and get it done by

Monday, before any other restraining order

could issue.”” (Trans. p. 22.)

The supreme court of the State of Wisconsin,

in State ex rel. Drake v. Doyle, 40 Wis. 175,

194, through Justice Ryan, used the follow-

ing language:

“The statute extended to these foreign

insurance companies the privilege of doing

business in this state on equal footing with

domestic companies. Experience showed

their powers to harass the citizens of the

state doing business with them by removing

actions on their policies from courts of this

vicinage to distant and expensive tribunals.

Hence the provisions of both statutes. And,

conceding to the fullest extent the right of

removal of actions commenced, we can

see no pretense for questioning the power

of the state, in the exercise of its absolute

discretion on the subject, to revoke the

license of a company exercising the right.

The state has power to make its volun-

tary license subject to forbearance of a right,

and revocable upon its exercise.”

19

Judge Vinje, in a later case, that of the

Independent Tug Line v. Superior L. & B. Co.,

146 Wis. 121, 123, speaking of sec. 1770b, said:

**The conditions of the section in question

are imposed upon foreign corporations for

the purpose of protecting our citizens in

their dealings with each other, viz., to have

the right to sue them in the courts of this

state in respect to any liability arising out

of any business contract or transaction

within the state—surely not an unreasonable

condition. Nor is the burden of complying

with the statute an onerous one.”

It will readily be seen that, without this

provision under consideration, a foreign cor-

poration can do business in the State of Wis-

consin under better conditions than a domestic

corporation is permitted to do. No citizen of

the state can enforce against a foreign cor-

poration his rights and have the advantage of

the statutes enacted as to the procedure in

court; nor can he have the advantage of the

courts created by the state to secure his con-

stitutional and legal rights. It needs no argu-

ment in this court to impress it with the im-

portance of the remedial rights of ihe citizen

ofastate. They are of the greatest importance

and have been guaranteed to him by consti-

tutional enactments. It is our insistence that

the state has the right to enact all laws that

have for their object and effect the placing of

foreign corporations on the same footing as

domestic corporations. The state has a right

to require foreign corporations to be subject

Seer vetmetetan

OEE AED CPE RNS BRERA GE Aa cle NOI M, RENLY

20

to the same laws as to procedure as a domestic

corporation, if the foreign corporation is at-

tempting to do business within the state.

In other words, a sovereign state has the

right to impose such conditions upon a foreign

corporation for doing intrastate business as

will place such foreign corporation on a foot-

ing with similar domestic corporations trans-

acting the same business. However, this

phase of the argument will be taken up later,

when the constitutional basis upon which our

contention is predicated will be definitely set

forth.

It has been suggested and argued in the

lower courts that, because a domestic corpora-

tion may remove a case where a_ federal

question is involved from the state court to

the federal court, this statute is discriminatory

against foreign corporations on the ground that

a foreign corporation has not the right to

remove a case to the district court, on the

same grounds. At first blush this would seem

to be a discriminatory provision, but, upon

careful consideration, it is apparent that no

substantial rights of a foreign corporation are

interfered with and that no substantial rights

are given to a domestic corporation by this

phase of the law. A foreign corporation is not

deprived of the right to have the federal

question in any case decided by the United

States court for the reason that any case may

be taken on a writ of error to the United

States supreme court after the state court has

passed upon the question, for the purpose of

SEN MA CEB IP ORE ELE OM

21

determining the federal question. For that

reason it was considered by the lawmakers as

not a discrimination against foreign corpora-

tions to provide that their license should be

revoked if they would remove a case to the

federal court.

The legislature could not pass a valid law

prohibiting domestic corporations from remov-

ing a case to the federal court when a federal

question is involved. The object of the law

here in question was not to oust the federal

court of any jurisdiction, but to place foreign

corporations on the same footing as domestic

corporations, and it was thought to be super-

fluous to enact a law ousting the federal court

of the jurisdiction to try the actions of domestic

corporations where a federal question was

involved when the foreign corporations were

not deprived of the right to have the federal

questions decided by the federal court. If

this should be considered as a discrimination

against foreign corporations, it is so shadowy

that it should not decide this case in favor of

the complainant. On this point the trial

court in its opinion said:

“The only discrimination we are able to

perceive in the Wisconsin law, in favor of

domestic and against foreign corporations,

is a very narrow one. Foreign corporations

are not allowed to remove cases against

them by citizens of Wisconsin, on causes of

action there arising. The same rule applies

to domestic corporations under section 28

of the Federal Judicial Code, which does not

SELES MELE POLE ABELL ICE LIEN LEE OLE LE ELI

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22

allow defendants to have removal for diverse

citizenship unless they are non-residents of

the state. Hence domestic corporations

cannot exercise such a right. If, however,

the suit against the domestic corporation

presents a federal question, and more than

$3000 is in dispute, it may remove the case,

though a citizen and resident of the state,

and though the plaintiff is a citizen of the

same state and the cause of action arose

therein. To this limited degree there is dis-

crimination; but instances of such cases

would be very rare. The question of the

right to remain in the state may also be

litigated by the foreign corporation in the

state courts, with a final right of review in

the supreme court by writ of error to the

highest state court. It is unnecessary on

these motions for injunctions to pass on this

narrow question because a consideration of

the second point referred to seems to require

the court to direct the temporary injunc-

tions prayed.” (Trans. p. 21.)

On this point this legislation is within the

rule laid down in the cases of Security Mutual

Life Insurance Company v. Prewitt, 202 U. S.

246, and Doyle v. Continental Insurance Com-

pany, 94 U.S. 535.

In both of these cases the same discrimina-

tion was present in the statute and the court

did not consider the same as a substantial

discrimination, for in the former case, at page

257, the court used the following language:

“The truth is that the effect of the statute

is simply to place foreign insurance com-

panies upon a par with the domestic ones

doing business in Kentucky.”

actuate MEDAL hey ELS Ee act DY IE Loe PY CSAS Tes Soci SEE A OLLCLE

23

In those cases the fact that a domestic

corporation could remove a case in which

a federal question was involved to the federal

court, and that the federal corporation could

nol remove such a case to said court on the

same ground, was not considered as a sub-

stantial discrimination, for the state is not

depriving the foreign corporation from having

the federal question settled in the federal

court. As an offset to this advantage the

foreign corporation may bring an action in the

federal court when no federal question is

involved, which a domestic corporation cannot

do. The lawmakers evidently considered this

form of the enactment the most practical

and most easy of administration. It would be

difficult to frame a law in which equality could

be more nearly attained than in the law in

question.

IIl.

The Mandate of the Fourteenth Amend-

ment to the Constitution of the United

States, that no State shall Make or Enforce

any Law which shall deny to any Person

within its Jurisdiction the Equal Protec-

tion of the Laws, is Applicable to Reme-

dial Rights.

The equal protection of the law is denied

by a state court when it is apparent that the

same law or course of procedure would not

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and could not lawfully be applied to any per-

son in the state under similar circumstances.

Ex parte Stricker, 109 Fed. 150. That persons

belonging in the same class should have

equal access to courts is required under the

Fourteenth Amendment.

In the case of Barbier v. Connolly, 113 U. S.

27, Justice Field, speaking for the court, said:

“The Fourteenth Amendment, in declar-

ing that no state ‘shall deprive any person

of life, liberty or property without due

process of law, nor deny to any person within

its jurisdiction the equal protection of the

laws,’ undoubtedly intended not only that

there should be no arbitrary deprivation of

life or liberty, or arbitrary spoliation of

property, but that equal protection and

security should be given to all under like

circumstances in the enjoyment of their per-

sonal and civil rights; that all persons should

be equally entitled to pursue their happiness

and acquire and enjoy property; that they

should have like access to the courts of the

country for the protection of their persons and

property, the prevention and redress of wrongs,

and the enforcement of contracts; that no

impediment should be interposed to the

pursuits of any one except as applied to the

same pursuits by others under like circum-

stances; that no greater burdens should be

laid upon one than are laid upon others in

the same calling and condition, and that in

the administration of criminal justice no

different or higher punishment should be

imposed upon one than such as is pre-

scribed to all for like offenses.’’ (Italics

ours. )

25

In the case of Railway Co. v. Ellis, 165 U. S.

150, the statute under consideration allowed

an attorney’s fee of $10 to be taxed in the

costs in case of recovery in favor of a plaintiff

having a claim of less than $50 against a

railway company, not paid within thirty days

after its presentation, for labor, damages, over-

charges or for stock killed or injured, and the

act was held to be in contravention of the

Fourteenth Amendment because denying equal

protection of the law as it applied only against

railway companies and in favor only of persons

having certain demands not to all alike.

The Fourteenth Amendment by Brannon, 335.

A statute in California gave a lien for wages

to laborers and required payment of such

wages once a month. It was held void under

the Fourteenth Amendment as class legisla-

tion applicable only against corporations and

in favor of their employees.

Johnson v. Goodyear, 59 Pac. 304.

A statute may not constitutionally give a

lien to certain persons named therein.

8 Cyc. 1076;

Randolph v. Builders, etc. Supply Co.,

106 Ala. 501, 17 South. 721.

“State courts may be arranged, jurisdic-

tion fixed, the procedure fixed, the effects of

their judgments declared and one law made

operative in one section of the state, another

in another section, without its being con-

sidered denial of equal protection under

the amendment, if the legislation touching

26

the same be applicable to all alike under

like circumstances.”

The Fourteenth Amendment by Bran-

non, 343, citing Mo. v. Lewis, 101 U.

5. a

A state under republican form of govern-

ment is as imperatively bound to give equal

remedial rights as it is to impose equal burdens

and obligations.

Brief of Counsel in Mo. v. Lewis, 101

U. S. 22, 27, and cases cited.

In the case of Durkee v. City of Janesville,

28 Wis. 464, this court held:

‘“As a rule acts of the legislature exempt-

ing particular individuals or corporations by

name from the operation of general laws are

not within the proper scope of the legislative

power and are void.”

This was a case in which a law which

exempted the city of Janesville from costs in

certain cases where other corporations or per-

sons were liable was under consideration by

the court and declared unconstitutional. The

court said at page 465:

“‘By an amendment of the charter of the

city, P. and L. Laws of 1862, ch. 107, sec. 15,

and a further amendment, P. and L. Laws

of 1869, ch. 298, sec. &, it is declared that

no cost shall be recovered against the city

in any action where the same is commenced

to set aside any tax assessments or tax deed,

or to prevent the collection of taxes or assess-

27

ments in said city. It is said in answer, that

these provisions of the charter are in-

operative and void, because in violation of

that principle of constitutional law which

prohibits unequal and partial legislation

upon general subjects—the enactment of a

special law dispensing with the general law

in a particular case, or granting to one man

or corporation, by way of exemption from

the operation and effect of a general law, a

privilege or indulgence which no other per-

son or corporation has or enjoys. There is

no reason to doubt the existence or correct-

ness of the constitutional principle, which

forbids such legislation. Enactments of the

kind have frequently been held unconstitu-

tional and void. In Bull v. Conroe, 13 Wis.

238, 244, it was held by this court that the

general laws exempting property from

seizure and sale on execution could not be

varied for particular cases and localities. An

act suspending the statute of limitations in

favor of an individual has been held invalid.

Holden v. James, 11 Mass. 396. And so an

act ‘empowering’ a judge of probate to

take an administration bond in a mode

differing from that prescribed by the general

laws of the state. Ricquel, Appellant, 5

Pick., 65. Also an act granting an appeal

from the decree of the probate court in a

particular case, contrary to the provisions

of the general law. Lewis v. Webb, 3 Greenl.,

326. An act to grant a review in a suit be-

tween private citizens. Durham v. Lewiston,

4 Greenl., 140. An act making it a felony

in the officers, agents or servants of a

particular banking corporation, to embezzle

or appropriate without authority the funds

of the corporation, was adjudged a partial

law, and unconstitutional and void, because

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28

it did not embrace all persons in like state,

and surrounded by similar circumstances.

Budd v. The State, 3 Humph. 483. And the

same was determined of an act authorizing

the court to dismiss Indian reservation cases,

when prosecuted for the use of another. It

was a partial law, intended to operate only

upon a few individuals. Wally’s Heirs v.

Kennedy, 2 Yerg., 554. And so also of an

act creating a special court for the deter-

mination of suits commenced by a particular

bank against its officers, and other persons

in default to it. State Bank v. Cooper, 2

Yerg., 599. An act authorizing the execu-

tors of one person deceased to revive a

judgment obtained by another person in his

life time, in their names by scire facias, was

decided to be partial in its character, and

not the law of the land, and void. Tate v.

Bell, 4 Yerg., 202. And likewise an act

authorizing a particular person named to

prosecute a suit then pending in the name

of the deceased party plaintiff, without

taking out letters of administration upon

the estate of such deceased. Officer v.

Young, 5 Yerg., 320. And so also an act

which authorized the guardians of the minor

heirs of a deceased person to sell lands which

descended to the heirs from their ancestor,

and apply the proceeds in payment of the

ancestor’s debts, though passed with the

assent of such minor heirs, was held un-

constitutional and void. Jones’ Heirs v.

Perry, 10 Yerg., 59. And see also Simonds v.

Simonds, 103 Mass. 572.

“The principle thus clearly shown by the

decisions, if applicable to the acts under con-

sideration, seems conclusive against their

validity. And I think they are invalid.

Certainly no discrimination more arbitrary,

29

unjust and odious, between one individual

or corporation and another, or every other,

in a matter where the rights and privileges

of all should be equal, could well be, than

would thus be established, if such acts were

valid. The city of Janesville would have a

special privilege or advantage not given to

any other like corporation under the same

circumstances.”

At page 470 the court continued:

“And if the legislature might thus exempt

the cily of Janesville from the operation of

a general law, or from burdens cast upon all

other corporations and persons, under like

circumstances, then why might it not, in

like manner, exempt any other corporation

or person by name, thus opening the door

to the greatest corruption, partiality and

favoritism? It is not perceived where acts

of this kind would end, if once begun, and

held to be a legitimate exercise of legislative

power.”

And at page 471:

“Certainty of remedy implies uniformity

of remedy and equality of rights and privi-

leges in all things respecting it, which can

only be obtained by general laws, equally

binding upon every member of the com-

munity. The language denotes that there

can be but one remedy for all similar cases,

which must operate upon all persons or

parties alike, and be equally free and

favorable to all.”

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30

See also:

City of Janesville v. Carpenter, 77 Wis.

288;

State ex rel. Kellogg v. Currens, 111

Wis. 431.

In the case of Southern Railway Co. v.

Green, 216 U. S. 400, it was held that a cor-

poration which comes into the state other than

that in which it is created, pays taxes thereto,

and acquires property, and carries on business

therein, is within the jurisdiction of that

state, and, under the Fourteenth Amendment,

is entitled to protection against any statute of

that state, depriving it of the equal protection

of the law.

The same principle is applicable to a do-

mestic corporation.

It was also held in that case that a classifi-

cation, which divides corporations doing ex-

actly the same business with the same kind

of property into foreign and domestic, in a

tax law, is arbitrary, and a denial of equal pro-

tection of the law. The peremptory require-

ments of the Fourteenth Amendment, of

equality to all persons within the jurisdiction

of a state, belonging Lo the same class, requires

a state, when it empowers these artificial per-

sons to do intrastate business within its

borders, to place them on substantially an

equal footing.

31

IV.

The Rule of Comity goes only so far as

to place Foreign Corporations on an Equal

Basis with Domestic Corporations, but

never Beyond.

Thompson on Corporaticn:, (2d ed.) vol. 5,

§ 6628, expresses this rule in the following

language:

“The principle of comity permits a foreign

corporation to exercise only those powers

within the state which a domestic corpora-

tion of the same kind is permitted to exercise

under the constitution, the laws and the

policy of the state, and such a corpora-

tion may nol exercise powers and privileges

which were denied to domestic corpora-

tions of like character. It is another ex-

pression of the principle to say that a

foreign corporation will not be allowed to

transact business within the state on more

favorable conditions than prescribed by law

for domestic corporations though it is given

authority to do such acts by the laws of

the state of its incorporation.”

The same principle was laid down in the

cease of Clark v. Central Railway Company, 50

Fed. 338, as follows:

“Comity between the states will not

authorize a foreign railroad corporation to

exercise powers within the state which a

domestic corporation would not be permitted

32

to exercise under the constitution and policy

of the state.”’ (Syllabus.)

In Van Steuben v. New Jersey Central Rail-

way Co., 178 Pa. St. 367, at page 373, the

following language was used:

“A corporation being the mere creature of

local law can have no legal existence beyond

the limits of the sovereignty where created.

The recognition of its existence even by

other states, and the enforcement of its

contracts made therein depend purely upon

the comity of these states, a comity which

is never extended where the existence of the

corporation or the exercise of its powers is

prejudicial to their interest or repugnant to

their policy.”

The supreme court of the State of Wisconsin

in the case of Presbyterian Ministers Fund v.

Thomas, 126 Wis. 281, at page 285 said:

‘The rule of comity claimed by respondent

would place foreign corporations on more

favorable ground in the transaction of in-

surance business with residents of this state

than domestic corporations and foreign cor-

porations duly licensed. The rule of comity

does not go to this extent.”’ Citing:

6 Thompson, Corp. § 7885;

2 Morawetz, Private Corp., (2d ed.)

§ 965;

Empire Mills Co. v. Alston G. Co.,

(Tex. App.) 15 S. W. 200;

Bank of Augusta v. Earle, 13 Pet. 519,

592.

33

In the case of Horn Silver Mining Co. v.

New York, 143 U. S. 305, at page 315, the

court said:

“It does not lie in any foreign corporation

to complain that it is subjected to the same

law with the domestic corporation.”

Quotations from courts of last resort might

be multiplied almost indefinitely to the same.

effect as the above holding that the rule of

the comity does not go so far as to permit a

foreign corporation to exercise powers within

the state that a domestic corporation of the

same kind is not permitted to exercise under

the constitution, laws and policy of the state.

We content ourselves in calling the court’s

attention to the following authorities:

Hiskey v. Pac. States Savings etc. Co.,

27 Utah, 409;

Fowler v. Bell, 90 Tex. 150;

Coler v. Tacoma R. Etc. Co., 65 N. J.

Eq. 347;

White v. Howard, 46 N. Y. 144:

Falls v. U. S. Savings, Loan, etc. Co., 97

Ala. 417;

Walters v. Whitlock, 9 Fla. 86;

Harding v. Am. Glucose Co., 182 Ill. 551;

U.S. Mort. Co. v. Gross, 93 Ill. 483;

Faulker v. Hyman, 142 Mass. 53;

People v. Howard, 50 Mich. 239;

State v. Cook, 171 Mo. 348;

Toomey v. Supreme Lodge K. P. W.,

74 Mo. App. 507;

Fisher v. Lord, 63 N. H. 514.

34

V.

The Rule of the Doyle and Prewitt

Cases, Properly Qualified and Limited

in its Scope, is Applicable to this Statute

and is Sufficient to Sustain its Con-

stitutionality.

The first case in this court in which the

question presented in the instant case was

squarely before the court was a case that

originated in the £.ate of Wisconsin, that of

Insurance Company v. Morse, 20 Wallace, 447.

The insurance laws enacted in 1870 contain

the provision that before any foreign insurance

company was permitted to do business in the

state it should “‘first appoint an attorney in

the state on whom process of law can be served,

containing an agreement that such company

will not remove the suit for trial into the

' United States circuit court or federal court

and file in the office of the secretary of state a

written instrument duly signed and _ sealed

certifying such appointment, which shall con-

tinue until another attorney shall be sub-

stituted.”” The Home Insurance Company of

New York established an agency in the state

and appointed H. S. Durand as its agent on

whom process might be served.

The power of attorney thus filed contained

this clause:

35

“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.”

An insurance policy was issued to one Morse,

and a loss having occurred under it, Morse

sued in the county court of Winnebago county,

one of the said courts of Wisconsin, to recover

the amount alleged to be due on the policy.

The company entered its appearance and filed

its petition to remove the case in proper form

as was required by the United States statute.

The petition was accompanied by the required

bond and bail. The state court in which

the suit was brought held that the statute

of the state above quoted, and the agreement

under it, justified a denial of the petition.

It was therefore denied and a trial was had

and judgment given to the plaintiff for the

claim sued for. The case was taken to the

supreme court of the state and affirmed (30

Wis. 496). Thereupon the insurance company

brought the case to this court on writ of error.

This court held that the Wisconsin statute in

question was repugnant to the constitution

of the United States and the laws in pursuance

thereof, and that the agreement of the insur-

ance company, filed in pursuance of the act,

derived no support from a statute thus uncon-

stitutional, and was as void as though no

such statute had been passed.

Subsequent thereto an action was started

in the name of the state on the relation of one

36

Drake against the secretary of state in the

supreme court to compel the secretary of

state to revoke the license of the Continental

Insurance Company of New York on the

grounds that said company had removed a

case started against it in the circuit court for

Winnebago county to recover the amount of

damages caused by the destruction of property

which was insured by the defendant. In

that case a mandamus was issued to the

secretary of state requiring him to revoke the

license of the insurance company. The court

held that, although the agreement made by

the company not to remove a case to the

federal court started by a citizen of the state

against it in one of the state courts was void

because repugnant to the constitution of the

United States, the statute requiring the secre-

tary of state to revoke the license, however,

upon such removal in the same act was con-

stitutional. See State ex rel. Drake v. Doyle,

40 Wis. 175. A distinction was drawn _ be-

tween the validity of the agreement and the

validity of the statute as a whole. The

opinion was written by Chief Justice Ryan,

one of the brightest intellects that has ever

graced a court of a sovereign state, and the

rule was there first announced that a state

had the absolute right to say upon what terms

a foreign corporation should be permitted to

do intrastate business within the borders of

a sovereign state, and that although the state

had not the right to prohibit a foreign corpora-

tion from removing cases started against it in

te ee ee tes se Nil SL Uhh aI ED SIG More

37

state courts, by citizens of the state, to the

federal court, the state did have the right to

revoke the license if such removal were exer-

cised. Thereupon an injunction was secured

from the federal court of the western district

of Wisconsin, restraining the secretary of

state from revoking the license. This case

was appealed to the supreme court and is

reported as Doyle v. Continental Insurance

Company, 94 U. S. 535. In that case this

court took practically the same position as

was taken by the supreme court of the state of

Wisconsin in the case of State ex rel. Drake v.

Doyle, supra, and held that, although the

agreement made by the company that it

would not remove a case to the federal court

was void, the condition in the statute, which

required the secretary of state to revoke the

license if a removal were actually made,

was valid.

In deciding said case the court used the

following pertinent language:

‘The correlative power to revoke or recall

a permission is a necessary consequence of

the main power. A mere license by a state

is always revocable. Rector v. Philadelphia,

24 How. 300; People v. Roper, 35 N. Y. 629;

Peopie o. Comrs., 47 N. Y¥. Di. * * *

‘“A license to a foreign corporation to

enter a state does not invsive a permanent

right to remain, subject to the laws and

constitution of the United States. Full

power and control over its territories, its

citizens and its business belong to the state.

38

“If the state has the power to do an act,

its intention or the reason by which it is

influenced in doing it cannot be inquired

peed

“Tf the act of an individual is within the

terms of the law, whatever may be the

reason which governs him, or whatever may

be the result, it cannot be impeached. The

acts of a state are subject to still less inquiry,

either as to the act itself or as to the reason

ae SI ol ace

Again the court said:

“The statute of Wisconsin declares that

if a foreign insurance company shall remove

any case from its state court into the

federal courts, contrary to the provisions

of the act of 1870, it shall be the duty of

the secretary of state immediately to can-

cel its license to do business within the state.

If the state has power to cancel the license,

it has the power to judge of the cases in

which the cancellation shall be made. It

has the power to determine for what causes

and in what manner the revocation shall

be made.

“Tt is said that we thus indirectly sanction

what we condemn when presented directly,

towit: that we enable the state of Wisconsin

to enforce an agreement to abstain from

the federal courts. This is an ‘inexact

statement.’ The effect of our decision in

this respect is that the state may compel

the foreign company to abstain from the

federal courts or 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

39

time to declare that it shall not transact

business there. This is the whole point of

the case, and, without reference to the

injustice, the prejudice or the wrong that is

alleged to exist, must determine the ques-

tion.”

Subsequently, the case of Barron v. Burn-

side was decided in 121 U.S. 186. It was held

that the statute of lowa, which required that

every foreign corporation named in the act

shall, as a condition of obtaining a permit

for the transaction of business in Iowa, stip-

ulate thai 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 a foreign

corporation of a privilege secured to it by

the constitution and the laws of the United

States.

The case of Doyle v. Continental Insurance

Company, 94 U. S. 535, was not expressly

overruled in this case, but was distinguished.

Later a statute of the State of Kentucky

came before this court in Security Mutual

Life Ins. Co. v. Prewitt, 202 U. S. 246, 50 L.

Ed. 1013. This statute, which is known as

Act 631 of the Kentucky statutes, contained,

among other things, the following:

“And, if any company shall, without

consent of the other party to any suit or

proceeding brought by or against it, in any

court of this state, remove such suit or pro-

ceeding to any federal court, or shall insti-

40

tute a proceeding against any citizen of

this state in any federal court, it shall be

the duty of the commissioners to forthwith

revoke all authority to such company and

its agents to do business within this state.”

This statute was held to be good. In this

case will be found a careful analysis of the

decisions in the cases of Home Insurance

Company v. Morse; Doyle v. Continental In-

surance ©o., and Barron v. Burnside, and other

cases. The court said at page 1018:

“It has not been decided that a statute

which has no requirement for a stipulation

or agreement not to remove is void, if there

be simply a provision therein for a revo-

cation of the permit, such as is contained

in the statute under review.

““As a state has power to refuse per-

mission to a foreign insurance company

to do business at all within its confines, and

as it has power to withdraw that per-

mission when once given, without stating

any reason for ils action, the fact that it

may give what some may think a poor

reason or none for a valid act is immaterial. |

“Counsel for the companies, in their

brief, admit that the state has the right at

any time to pass a statute expelling a

company or revoking its license, and the.

validity of the statute or expulsion would

not be affected by the motives of the state

in so doing, even though the preamble

expressly recited that the license was re-

voked because the company had removed

a case. The statute would be valid—for

the company had no constitutional right

to remain in the state any longer than it

41

chose to allow; and the statute would not

abridge any right of removal—for, as the

case had already been fully removed before

the statute was in existence, the right of

removal could not be said to have been

hindered or abridged by a statute not even

in existence.

“Thus it is admitted that a state has

power to prevent a company from coming

into its domain, and that it has power to

take away its right to remain after having

been permilted once to enter, and that

right may be exercised from good or bad

motives; but what the companies deny is

the right of a state to enact in advance that

if a company remove a case to a federal

court its license shall be revoked.

“We think this distinction is not well

founded. The truth is that the effect of

the statute is simply to place foreign in-

surance companies upon a par with domestic

companies doing business in Kentucky. No

stipulation or agreement being required as

a condition for coming to the state, and ob-

taining a permit to do business therein, the

mere enactment of a statute which, in sub-

stance, says if you choose to exercise your

right to remove a case into a federal court,

your right to further do business within the

state shall cease and your permit shall be

withdrawn, is not open to any constitutional

objection. The reasoning in the Doyle

Case, we think is good.”

This case has been quoted with approval

in a number of subsequent decisions in the

supreme court of the United States.

National Council v. State Council,

aoe U.S. 163;

Swing v. Weston Lbr. Co.. 205 U.S. 278.

42

It is true that this rule was stated broader

by the supreme court than it was necessary to

state it, and in subsequent decisions it was

found necessary to distinguish or modify it.

In Western Uni Telegraph Company ov.

State of Kansas, 268,U.S. 1, a statute of Kansas

provided, among other things, that before a

corporation of another state should be given

authority to do local business in Kansas it

should pay to the state treasurer for the

benefit of the permanent school fund a charter

fee of one-tenth of one percent of its author-

ized capital upon the first one hundred thou-

sand dollars of its capital stock, or any part

thereof, or upon the next four hundred thou-

sand dollars, or any part thereof, one-twentieth

of one percent, and for each million dollars

or major part thereof, over and above the sum

of five hundred thousand dollars, two hundred

dollars. The Western Union Telegraph Com-

pany had a capital stock of one hundred

thousand dollars. The fee demanded of it as

a condition of its right to do local business in

Kansas was twenty thousand dollars. The

state brought suit in one of its own courts

against the company and sought a decree

ousting and restraining the company from

doing any local business in that state. The

court gave the relief asked for, but the supreme

court of the United States reversed the deci-

sion. It was held that this was a tax and a

burden upon interstate commerce and the

court could not give relief without giving

ee ee etna? Beet Wa.

43

effect to a condition that was in violation of

the federal constitution.

The same question was before the court in

the case of Pullman Co. v. Kansas, 216 U. S.

56. An attempt was made to tax interstate

commerce by exacting the payment of a tax

as a condition precedent to the right of the

corporation to do intrastate business. The

court held that this could not be done; that

interstate commerce could not be taxed by

the state, either directly or indirectly; and

that, as there is a special provision in the

United States constitution delegating the regu-

lation of such commerce to the United States,

the state has no right to subject such commerce

to any burdens whatever.

In the case of Ludwig v. Western Union

Telegraph Company, 216 U. S. 146, the secre-

tary of state was enjoined from revoking the

license of the company, on the ground that the

company had not paid the tax that was levied

on interstate commerce as a condition prec-

edent to continuing to do local business in

the state.

In the case of Southern Railway Company v.

Green, 216 U. S. 400, it was decided that, what-

ever power a state may have to exclude or

determine the terms of admission of foreign

corporations not already within its borders,

it cannot subject a foreign corporation, already

within the state in compliance with its laws and

which has acquired property of a fixed per-

manent nature, to a new and additional fran-

chise tax for the privilege of doing business

PIT Sete DR ARAL R I Se ORT eek TT ree en ee YC

oe

sin id

SPDR. ODT TE Ue Raya a” VaR:

44

which is not imposed upon domestic corpora-

tions; that this would be an unconstitutional

denial of equal protection of the law, under the

Fourteenth Amendment.

The learned counsel for the complainant in

the instant case are placing great weight upon

the case of Herndon v. Chicago, Rock Island &

Pacific Ry. Co., 118 U. S. 135, in which the

secretary of state of Missouri was restrained

from revoking the license of the defendant

in that action for the reason that it had re-

moved a case from the state court to the

federal court. In that case, however, it ap-

pears that the statute in question was placing

upon interstate commerce an unnecessary

burden which was declared unlawful and in

violation of the constitution of the United

States.

It must be borne in mind that the statute

in the State of Missouri prohibited the foreign

corporations from instituting any suit or pro-

ceeding against any citizen of the state in

any federal court and from removing, without

the consent of the other party in writing, any

suit or proceeding brought by or against it

in any court of ihe said state. It was apparent

in this case that the legislation was dis-

criminatory against foreign corporations.

The defendant could not institute or bring suit

in any federal court against any citizen of that

state, nor any proceeding whatever. It was

ousting the federal courts of jurisdiction of all

cases in which citizens of the state might be a

party. Not only actions or proceedings that

45

were found upon causes originating in the state,

but all suits and all proceedings were prohib-

ited from being taken to the United States court.

The prohibition was not limited to suits and

proceedings in the district or circuit courts,

but it included those in the supreme court.

It was very evident that this was discrim-

inatory. It even took away the right to have

the federal court pass on a federal question.

The statute in the State of Wisconsin has no

resemblance to such a law. It was very

evident that the Missouri act was not passed

for the purpose of pulting foreign corporations

on an equal footing with the corporations of

the state.

Great stress is also laid upon the case of the

Western Union Telegraph Company v. Julian,

169 Fed. 166. It will be observed, however,

that the statute in that case, requiring the

forfeiture of the license of the foreign corpora-

tion for removing a case to the federal court

or instituting a case or proceeding in the federal

court, was unconstitutional by reason of the

following provision in the constitution of

Alabama:

“All corporations shall have the right to

sue and shall be subject to be sued in ail

courts in like cases as natural persons.”

The court held that the statute in question

was void as violative of the said provision of

the state constitution. It follows that it was

not necessary in that case to decide wh-ther

that statute is in violation of the consti_ution

SPL LIE LOR TN BOE LI EE I I Fee ATE Ne OMEN

Eee ee EN

pom

POE AR ELD AB VO TEND RIE RPSL OO ie LON 2

46

of the United States because it was a void

statute, and everything said on that point in

said case was obiter dicta. This case was not

passed upon by this court. Later cases cited

by counsel we contend are not in point.

In the case of Harrison v. St. L. & San

Francisco R. R. Co., 232 U. S. 318, this court

held that a state cannot destroy the right to

remove causes to the federal court by imposing

arbitrary conditions as to state citizenship

which render it impossible for one entitled to

the right to avail of it. This somewhat unique

and complicated statute of the State of Okla-

homa was declared unconstitutional and the

Doyle and Prewitt Cases were distinguished,

and it was said that the rule in those cases had

an extremely narrow scope.

Having reviewed the decisions of the court,

we now come to a consideration of the present

status of the rule as laid down in the Doyle

and Prewitt Cases and as distinguished and

modified by subsequent cases. It must be

borne in mind that in none of these subsequent

cases has this court expressly overruled the

doctrine announced in said cases. In making

practical application of the principle to dif-

ferent cases as they arose from time to time

and in construing certain statutes somewhat

similar to those in the said cases, this court

has found it necessary to greatly diminish the

scope in which said rule is now held operative.

This court has intimated that this rule has a

very narrow application at the present time

and is probably only applicable to insurance

47

cases. It must be remembered, however, that

in the Doyle and Prewitt Cases the rule was

laid down in general terms as applicable to

all foreign corporations and not limited to

insurance corporations. We believe we have

shown in this brief that the reasons for a law

of this nature are just as potent and necessary

against foreign corporations doing an inter-

state business in the state as they are against

foreign corporations doing an insurance busi-

ness. This law attempts to place a foreign

corporation doing an interstate business on an

equal footing with a domestic corporation

which also is doing an interstate business.

When both corporations are engaged in intra-

state business, the domestic corporation,

although it is engaged in interstate business,

has not the right to remove to the federal

court cases started against it by citizens of

this state, where the cause of action arises

within the state, unless a federal question is

involved.

A foreign corporation doing an interstate

business, which is also licensed to do intra-

state business in this state, can _ therefore

transact like business under more favorable

conditions than a domestic corporation. They

are not on an equal footing. This statute

places them on a substantially equal basis.

In the later cases above referred to, the rule

that a state cannot attach unconstitutional

conditions to a license given to a foreign com-

mercial corporation to do interstate business

within its borders has been given a new sanc-

ee A ee RS Te Oe

BA GD ARRAS MET aE RSL! GTI,

48

tion. And in this connection it is well to state

that the right to remove a case to the federal

court by a foreign insurance company is just as

sacredly guarded by the constitution and

statutes of the United States as it is for any

other corporation. These guaranties apply

to all foreign corporations including insurance

as well as others. Other constitutional guaran-

lies are equally applicable to foreign insurance

companies.

We believe that, if at the present time the

State of Wisconsin should enact a law requiring

a foreign insurance corporation, duly licensed

to do business in Wisconsin, to pay an uncon-

stitutional and discriminatory tax as a condi-

tion for continuing to do business in the state,

and requiring the secretary of state to revoke

the license if such tax were not paid, this

court would find it necessary to declare such

statute unconstitutional on the authority of

the recent cases modifying the rule in the

Doyle and Prewitt Cases. It may well be

argued that, if the state has a right to make one

condition which is violative of the United

States constitution, it may impose other con-

ditions that are also violative of the con-

stitution.

As was well said in the dissenting opinion of

Justice Day in the Prewitt Case, at page 267:

“If the State may make the right to trans-

act business dependent upon the surrender

of one constitutional privilege, it may do so

upon another, and finally upon all. In pur-

suance of the principle announced in this

PEON d UTE LO MEARS EMER SLRS Na AT FEE AE SOR S

49

case, that the right of the state to exclude,

includes the right, when exercised for any

reason or for no reason, the state may say to

the foreign corporalion,—You may do busi-

ness within this State, provided you will

yield all right to be protected against de-

privation of property wilhout due process

of law; or provided you surrender your right

to have compensation for your property

when taken for private use, or provided you

surrender all right to the equal protection of

laws; and so on through the category of

rights secured by the Constitution and

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deemed essential to the protection of people t

and corporations living under our institu- y

tions.” a

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It is our contention that there are two ie

distinct provisions of the constitution of the ¥

United States involved in this question instead

of one, one provision being as follows:

e)

es

NEPA KORN peineeern

“This constitution and the laws of the

United States which shall be made in pur-

suance thereof * * * shall be the supreme

law of the land; and the judges in every state

shall be bound thereby; anything in the

constitution or laws of any state to the con-

trary notwithstanding.

“The judicial power of the United States

* * * shall extend to * * controversies be-

tween citizens of different states.”

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And the second being the provision con-

tained in the Fourteenth Amendment to the

United States constitution that no state shall

pass any law denying to any person the equal

protection of the law.

50

We have shown heretofore in this brief,

we believe, that the statute in question in the

instant case is necessary for the purpose of

placing a foreign and a domestic corporation

doing intrastate business in Wisconsin on an

equal basis. We know of no way in which

that can be done other than by a statute like

the one here in question, or very similar

thereto. The mandates of the Fourteenth

Amendment that no state shall pass any law

denying to any person within its borders the

equal protection of the law is violated if the

state passes laws permitting foreign corpo-

rations to come within its borders and compete

with domestic corporations in intrastate busi-

ness on an unequal! basis. We therefore con-

tend that the Fourteenth Amendment author-

izes the enactment of a statute that has the

effect of placing the two corporations on an

equal basis and that the rule laid down in the

Doyle and Prewitt Cases should be, therefore,

modified to the extent that the condition

attached must not be violative of any pro-

vision of the constitution of the United States

unless authority is found for its enactment in

some other provision of the constitution of

the United States. The two provisions of

the constitution applicable to the law under

consideration are in part materia and must be

considered together. We contend that if so

considered and applied to this Wisconsin

statute the same may be upheld as constitu-

tional and as being an exception to the rule

that no condition can be attached to the

“ . - . et Sa A et

SATB EP APOC NALIN IAN LBL ELE LOE LLG IE EES Ty Maia A abe

51

license of a foreign corporation to do inter-

state business which

This text is long and has been trimmed here. Open the source document for the complete record.