# Transcript of Record — Wisconsin v. Phila. & Reading Coal Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386003_0166%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1916 - **Citation:** 241 U.S. 329 ## Text + 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 BN C.K drains. 8 warn oS a6 os ereh Ww Udo Wenig ke 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 Sa RDS aE re LELEF EMELINE INOS EAA NG LE BLATT RAR oa Bare ctuaeimtve cic: tS Oe ee hetiggice, iM a aaa y Be S 1 ¥ ats a a eA oe ta sb be = iz rid as i ye ax 4 Ps ASABE Sh OLE LIEN TS RR 54 shall be subject to each of the provisions of the act.” That statute also contained a similar pro- vision to the one contained in our statute as to the forfeiture of the permit in case corpora- tions should remove a case to the federal court. It will be observed that in that case it is expressly stipulated that the permit granted should be subject to the provisions of the act; that it should be forfeited if the corporation removed a case to the federal court. This was construed by the court as a stipulation that the corporation would not remove a case to the federal court. Our statute does not use the same or similar language. The statute here provides that the corporation shall state in a sworn statement that it will comply with all the laws of the state with regard to foreign corporations. The same statute makes specific provision of affirmative acts that the corpora- tion is required to do as a condition for doing business in the State of Wisconsin. It must file its articles of incorporation together with a certain statement with the secretary of state; it must iile annually a report of its business; it must pay a certain specified fee upon the filing of its articles of incorporation; it is required to pay a certain specified fee upon the amendment of its articles; it is prohibited from entering into any combination, con- spiracy, trust, pool, agreement or contract intended to restrain or prevent competition in the supply or price of any article or com- modity in general use in the state under sec. 1770g of the statutes. We contend that it is these positive require- ments that the corpcration is promising Lo comply with and that it is not the intention of this statute to exact from it a promise that it will not remove any case to the federal court. This is apparent from the fact that this statute does not contain an express pro- vision forbidding the foreign corporation from removing a case to the federal court, and a similar provision to that of this act requiring the forfeiture of the articles when a case is removed was construed by the court in the Doyle Case as leaving it optional with the foreign corporation whether it would or would not remove the case. It thus appears that the foreign corporation may comply with this law when it removes the case as well as when it does not remove the case. It is given the option to remove it or to refrain from removing it. If it removes the case it is still within its rights under the statute and is complying with the law. If it does not remove the case it is also complying with the law. We contend that this provision of the statute has been given a very strained con- struction by the trial court and that it does not bear such construction. It is held by the trial court that the statute so construed makes this, as well as the provision of sec. 1770f, unconstitutional. It is a cardinal rule of construction that when a statute is susceptible of two construc- Lee APS a aaa oe - BRITS TRON EEA BL VSR UE tees a aaa ae ata arte . . 4 . Serato eee ees a Dea’ BRST BEM eA AE Sih RG Sa ae GSI si Bisa a tae Na sips ¢ setisaye 56 tions, one of which supports the act and gives it effect and the other renders it unconstitu- tional and void, the former will be adopted even though the latter will be the more natural interpretation of the language used. United States v. Coombs, 12 Peters, 75; United States v. Central Pacific Ry. Co., 118 U.S. 2a0; Missouri v. Kansas City, etc. Ry. Co., 32 Fed. 722; Granada County v. Brogden, 112 U.S. 261; Singer Mfg. Co. v. McCollock, 24 Fed. 667; Bigelow v. West. Wis. R. Co., 27 Wis. 478; Palms v. Shawano County, 61 Wis. 211; Johns v. Milwaukee, 88 Wis. 389. The statement in the affidavit by the foreign corporation to be filed with the secretary of state containing a promise that the corpora- tion will comply with the laws of the State of Wisconsin as to foreign corporations was held by the trial court to be a stipulation not to remove, and, therefore, necessarily void. It is our contention that this should be construed as requiring the corporation to do something which is legal and not to do something which is illegal or void. PEROT PNT PE a ee 58 tion “shall cease and terminate” in case it “shall remove into any court of the United States any action or proceeding commenced in any court ‘of this state upon a claim or cause of action arising out of any business or transaction done therein.’ The second is an agreement that it “shall cease and ter- minate” “in case it shall violate or fail to comply with any provision of law applicable to such corporation.” Evidently the lawmakers did not consider the first part of the stipulation as contained in the second, and it was necessary to expressly stipulate that it would not remove the case, in addition to the stipulation that it would not violate or fail to comply with the insurance laws. When, subsequently, the lawmakers enacted the statute concerning foreign cor- porations other than insurance corporations, they left out the stipulation that the corpora- tion would not remove the case to the federal court and only required in the statement to be filed with the secretary of state’s office a promise to comply with all the laws of the state with regard to foreign corporations. In this connection we would call the court’s attention to the provisions of subsec. 11, sec. 17706, as follows: “The failure to comply with any of the pro- visions of this section shall, for such viola- tion, subject the corporation or any agent, officer or person acting for it in this state, to a penalty of five hundred dollars, to be sued for and recovered in the name of the 59 stale with the costs of prosecution, by the attorney-general or by the district attorney of any county in which it or any of its agents or officers shail be located, or reside, or transact or attempt to transact any busi- ness.” Here the word “comply” is also used in the first line and it must be given a consistent meaning in both cases. Under this section a forfeiture could be recovered against a corporation only in case it violated any of the express requirements of the statute. No forfeiture could be recovered against the corporation for removing the case to the federal court. The corporation has the option to take its cases to the federal court and have its license revoked, or it may desist from taking its cases to the federal court and retain its license. The words, “‘failure to comply with any of the provisions of the section,” must be given a strict construction against the state, and so the same words used in the same section requiring the state- ment to be filed with the secretary of state, containing a promise that the corporation “shall comply with all the laws of the state with regard to foreign corporations,’ must be construed in the same way. No stipulation not to remove a case was contemplated. This is the construction placed upon it by the administrative officers of the state. 60 Like words and expressions in the same sec- tion of the statutes should certainly be given the same meaning. Sutherland, Stat. Const., 255; 28 Am. & Eng. Ency. of Law, (2d ed.) 610. We, therefore, find proof within the statutes of the state that a promise to comply with all the laws concerning foreign corporations does not include within it a promise not to remove the case to the federal court. Had the law- makers intended the provision here in question as a stipulation not to remove a case to the federal court, they certainly would have in- serted such provision in ‘his statute in the same way as it is found in sec. 1775 (subsec. 2). That they left it out shows that they did not intend to require such a stipulation. No such construction has ever been placed upon said statute by the administrative officers of the state; no statement filed in the office of the secretary of state contains a stipulation, in express terms, that a foreign insurance com- pany will not remove a case to the federal court. Even though this should be considered a stipulation, we contend that it should not be considered as invalidating other pro- visions of our foreign corporation laws. The provision for the cancelling of the license on removal of a case to the federal court by the foreign insurance company in the Wis- consin statute was upheld in the Doyle Case in spite of the fact that the same statute con- 61 tained a stipulation, which stipulation was declared void and of no effect in the Morse Case. So this statute in question, as to the cancellation of the license of a foreign corpora- tion upon the removal of a case to the federal court, must be held as not being affected in any way by the statement filed in the secretary of state’s office. If the statement is void, that does not make the other provision of the statute void. If the provision requiring the stipulation in the statute is inseparable from that part of the statute which requires the cancellation of the license upon the removal of a case to the federal court, as was held in the case of Barron v. Burnside, then the other pro- vision of our foreign corporation laws author- izing the secretary of state to grant a license to a foreign corporation is also void. The words of Chief Justice Ryan in the case of State ex rel. Drake v. Doyle, 40 Wis. 198, speaking on a similar contention concerning the laws relating to foreign insurance com- panies, in which the stipulation had been declared unconstitutional in the Morse Case, and where it was contended that the whole law was also void, are here pertinent: “Tt is a settled doctrine of this court that, if it be unconstitutional, the whole statute authorizing licenses to foreign insurance companies is unconstitutional. Slauson v. Racine, 13 Wis. 398; Lynch v. The Economy, 27 Wis. 69; State v. Dousman, 28 Wis. 541. In that view of the statute no license to foreign insurance companies would be au- PEI ee TST tive SPREE 62 thorized by law. The secretary of state would have acted without color of authority in issuing the license in question. The license would give no color of right to insurance companies to do business within the state.’ We contend that the position that the law in question is unconstitutional is inconsistent with the position that the defendant is en- titled to the benefits derived from the license. If this law is unconstitutional, then, under the construction placed upon similar statutes by the supreme court of the State of Wisconsin, the whole law is unconstitutional, including that part authorizing a license to be given to a foreign corporation. We contend that the complainant in this case has no right to contend that the statute in question is unconstitutional, while at the same lime retaining the benefits that it received by reason of a license having been issued it by virtue of said law. Furguson v. Landrum, 5 Bush. (Ky.) 230, 196 Am. Dec. 350; Daniels v. Tearney, 102 U. S. 421. The scope and meaning of the law as inter- preted by the higher court of the state should have great weight with this court in passing upon this question. 63 VIL. 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. In the dissenting opinion in the Prewitt Case, Justice Day, at page 208, used the following language: “Furthermore it is stated in the prevailing opinion that, while the state may exclude in advance or deprive a foreign corporation of the privilege of doing business after it is lawfully in the state because of the exercise of a federal right, it cannot require the cor- poration to agree in advance that it will waive such right, as that, it is admitted, would be unconstitutional. We think the distinction is without a substantial differ- ence and makes the validity of the act turn upon the means of attaining the same un- lawful end. In either alternative the cor- poration is excluded from the state because it will not consent to surrender the right given it under the federal constitution.” We agree with this to the extent that there is no substantial difference in the effect of the law as to whether a stipulation is or is not given to remove a case. The effect of the statute in either case is to induce the corpora- cs . ft. E 57 was: vir 9 cote chon MATERA NET ectheheaeeaIER MARAG RCL once aia eaee ee enecth eteaeratneet ea 64 tion lo waive its right to remove a case to the federal court when it is doing an intrastate business within the borders of the state. We hope that this question will not turn upon as narrow a point as the giying of a stipulation. We contend that there was no intention by the lawmakers of the state to require a stipulation not to remove a case, and to hold that the provision here under consideration is, in effect, a stipulation not to remove a case; and then to hold that, because of that stipulation so re- quired, the rest of the law is void and uncon- stitulional is, in our opinion, looking to the form instead of the substance of things. We hope that this court will pass upon the real merits of this question before it and _ will express itself in such clear language that the State of Wisconsin, as well as other states, may have definite knowledge as to whether a state may pass a law of this nature which has for its purpose and necessary effect the placing of a foreign corporation on substantially an equal basis with a domestic corporation. VIII. The Wisconsin Statutes Relating to Foreign #swusance Companies do not in any way Interfere with or Affect Inter- state Commerce. The scope and meaning of a state statute, as determined by the highest court of the state, 65 concludes this court in determining whether or not said statute violates the federal consti- tution. Smiley v. Kansas, 196 U. S. 447; Nat. Cotton Oil Co. v. Tex., 197 U.S. 115; Tampa Waterworks Co. v. Tampa, 199 U. 3. 2at: Horn Silver Mining Co. v. State of N. Y., 143 U. S. 305; Ducat v. Chicago, 10 Wall. 410; Paul v. Virginia, 8 Wall. 168. This statute of Wisconsin relating to foreign corporations has been before the supreme court of the State of Wisconsin a number of times and was applied to a variety of conditions and its general validity sustained. Ashland L. Co. v. Detroit S. Co., 114 Wis. 66; Beaser v. Barber A. P. Co., 120 Wis. 599; Chicago T. & T. Co. v. Bashford, 120 Wis. 281; Greek-American S. Co. v. Richardson D. Co., 124 Wis. 469; Pres. M. Fund v. Thomas, 126 Wis. 281; Allen v. Milwaukee, 128 Wis. 678; Chickering-Chase Bros. Co. v. White, 127 Wis. 83; Catlin & Powell Co. v. Schuppert, 130 Wis. 642; Elwell v. Adder Machine Co., 136 Wis. 82. At page 88 of the last case Judge Timlin, speaking for the court, said: con Spe s e te Se ey er . a ee — 4 Dee ee AN ae a TR GE neo Rint MA Mae er eR ASST SA, eM eT eT eee Te CT Dia ie Oa aR ae ; eae PT NERY RE sa ES re TT ee oF 66 “There must be read into the foregoing statutes, where they forbid the transaction of business in this state and the acquisition, holding, and disposal of property in this state, an exception of such business as con- stitutes interstate commerce and an excep- tion of such property as is acquired, held or disposed of in this state in carrying on inter- stale commerce. Also, where every con- tract is declared to be void, we must except from that provision such contracts as relate to interstate commerce.” Citing Lovzrin & B. Co. v. Travis, 135 Wis. 322, 115 N. W. 829; Catlin & P. Co. v. Schuppert, 130 Wis. 642, 110 N. W. 818; Greek—Am. S. Co. v. Richardson D. Co., 124 Wis. 469, 102 N. W. 888. The revocation of the license in question will therefore not interfere in any way with the right of the corporation to transact interstate commerce in the State of Wisconsin, for that right is not dependent upon a license from the state; neither is any corporation transacting business as the agent of the federal govern- ment required to have a license to do intra- state business in order to transact the business delegated to it by the federal government. The revocation of the license cannot in any way re- move the right to transact such business and will therefore not deprive the corporation of doing business in the State of Wisconsin for which no license is required under the Wis- consin statutes. 67 IX. The Revocation of the License of the Respondent Does not Deprive it of any Constitutional Rights. The respondent has argued that a revoca- tion of its license would deprive it of property without due process of law or would impair the obligation of contracts and property rights acquired in the state. This point, how- ever, the trial court has not passed upon, and it is our contention that it is not well taken. Under sec. 1, art. XI of the constitution of Wisconsin it is provided that all general laws or special acts enacted under the provisions of said section (relating to corporations) may be altered or repealed by the legislature at any time after their passage. Under this provision the supreme court has decided that all special acts of incorporation are subject to modifica- tion or repeal. Pratt v. Brown, 3 Wis. 603; Madison, etc. Plank Road Co. v. Rey- nolds, 3 Wis. 287; Blair v. Milw. etc. Ry. Co., 20 Wis. 254; State v. Milw. Gaslight Co., 29 Wis. 454. In the case of New York & N.E. R. Co. v. Bristol, 151 U.S. 556, it was held that a power reserved to the legislature to alter, amend or repeal a charter authorized it «o make any alteration or amendment of a charter granted ROLLER ROLE ERNE RI SF RLOT LINONLES Ng CIEE RETEST be ae 68 subject to that power, which would not defeat or substantially impair the object of the grant or any rights vested under it and which the legislature might deem necessary to secure either that object or any public right. A corporation organized in this state that has acquired property has a vested interest in said property and when such corporation is dissolved by act of the legislature the property will go to the stockholders of the corporation and they may use and hold the property as any other person in the state. In order to place foreign corporations doing a local business in the State of Wisconsin upon the same basis the legislature may at any time pass a law revoking the license of a foreign cor- poration or prescribing a condition under which a foreign corporation may continue to do busi- ness in the state. This is all that was provided by the statute in question. It cannot be argued that, because a foreign corporation has acquired vested interests in the State of Wisconsin, the state is, for that reason, powerless to annul its license. The vested interests will not be interfered with under this statute. Our supreme court has held, in the case of Chicago Title & Trust Co .v. Bashford, 120 Wis. 281, that the provision of section 17706 that a corporation while in default shall not “‘trans- act business or acquire, hold or dispose of property in this state’ and that every contract made by it or in its behalf affecting its personal liability or relating to property within the 69 state shall be wholly void on its behalf, is to be construed as applying to prospective con- tracts and transactions only. At page 285 the court said: “We can feel no doubt that the legisla- tion of 1897 was prospective only. That is the presumptive purpose in all enactments except some merely remedial statutes, unless the contrary clearly appears. State v. At- wood, 11 Wis. 422; Seamans v. Carter, 15 Wis. 584; Finney v. Ackerman, 21 Wis. 268; Vanderpool v. L. C. & M. R. Co., 44 Wis. 652, 663; Jochem v. Dutcher, 104 Wis. 611, 614, 80 N. W. 949. Especially strong is that presumption in the present case, when the avoiding of an existing contract or the di- vesting of a vested right of property would be so clearly obnoxious to the constitutional prohibition against the impairment of the obligation of contracts (sec. 12, art. I, Const. Wis.; sec. 10, art. I, Const. U. S.), and against the deprivation of any person of property without due process of law (art. XIV, Amendment Const. U. S.).”’ At page 286 the court further said: “So there remains of the acts prohibited by section 1770b only the holding of prop- erly in this state, if, indeed, the trustee holds property, instead of a mere lien thereon, hav- ing situs, not in Wisconsin, but at the domi- cile of the holder. State ex rel. Dwinnell v. Gaylord, 73 Wis. 316, 41 N. W. 521. From what has been said already, our conclusion must be obvious that the statute was not intended to apply to the acquisition of any property prior to its enactment, nor to the 70 holding of any so acquired, so long as the prohibition against transacting business in this state be not breached. That one, even a foreign corporation, owning property the day before the enactment of section 17708, ceased to own or hold it upon the enact- ment of that statute, is a result which no legislature had any right to intend, nor have courts any right to impute such an intent. The absurdity of such a construc- tion is emphasized by the accompanying prohibition against disposing of any such property. If the legislature intended to for- bid the holding of previously acquired prop- erty, they equally forbade its disposal. Hence no foreign corporation owning prop- erty in this state when section 17706 took effect could escape criminality save upon the theory that the statute, ex proprio vigore, confiscated the property, so that its former owner had ceased to be such without having disposed of it. Clearly such confisca- tion would be obnoxious to the fourteenth amendment to the federal constitution, for- bidding any state to deprive any person of property without due process of law. The only reasonable construction of this portion of the statute is that the prohibitions against holding or disposing of property must be taken as associated with that against ac- quiring any, so that they apply only to property attempted to be acquired after the statute, and therefore in its defiance. The question how far full enjoyment of pre- viously acquired property so continued to be held by a foreign corporation may be affected by restraint on the doing of business or the making of contracts does not arise in the present case, since none of these pro- hibited acts appear to have been attempted 71 by plaintiffs. The consideration of that ques- tion may properly wait till it arises.” See also Coe v. Rothman, 126 Wis. 515. It thus appears that the vested interests of foreign corporations are protected under ie statute in question and the decisions of the supreme court of the State of Wisconsin. The revocation by the secretary of state of the license of the complainant in this case will not interfere with the vested interests of that cor- poration. So far as the property acquired and contracts made are necessary for the transac- tion of interstate business, they are not to be anticipated by a revocation of the license, be- cause, under the decision of Elwell v. Adder Machine Co., 136 Wis. 82, the act does not apply to interstate commerce. Neither will such vested rights be affected if the property was acquired and the contracts made in the transaction of local business prior to the revo- cation of the license, for the reason that such contracts are declared to be valid after the license has been revoked. Should this court hold that the license of the complainant cannot be revoked and that the state is powerless to expel it from the state, so far as the transaction of future local business is concerned, then the complainant will have far greater powers in this state than it would have were it organized under the laws of the State of Wisconsin. The state would be powerless to revoke its privilege of doing busi- a ee ee eh, ee ee Oe ee BOS EIR ITE EE AD i RR EI OTE PORT: 72 ness within the state, while, if it were a domes- tic corporation, the corporate powers could be taken away at any time, under the reserve power vested in the legislature. At this time we desire to call the attention of the court to the following provisions of sec. 1768: “The legislature may at any time limit or restrict the powers of any corporation or- ganized under any law and for just cause annul the same and prescribe such mode as may be necessary for the settlement of its affairs.” If the power to revoke the license of a domestic corporation may be exercised in a case where a domestic corporation is engaged in interstate commerce, then how can it be said that a cancellation of the license of a foreign corporation to do intrastate business interferes with interstate commerce. In the former case, it would be more of an inter- ference than in the latter. There is no question but that the state can revoke the license of a domestic corporation even though it is engaged in interstate commerce. See Louisville & Nashville Ry. Co. ov. Kentucky, 183 U.S. 503. As the Wisconsin law is interpreted by the supreme court, and administered by the offi- cers of the state, it is limited in its scope to intrastate business and it cannot be held void under the commerce clause of the federal constitution, unless this court is prepared to 73 go to the length of holding that a state alto- gether loses the right to exclude or regulate any foreign corporation whenever a part of its business is interstate commerce. The reserve right of the state to control the purely domestic business is as sacred and is to be as jealously guarded as the granted right of Congress to regulate its interstate business. It can with no more reason be held that the power of the state is lost because of the difficulty of severing the two kinds of com- merce than it can be said that the power of Congress is lost for the same reason. The difficulty is one of administration and not of power. Chicago R. R. Co. v. Cutts, 94 U.S. 155; Osborne v. Florida, 164 U. S. 650. We cannot agree that the necessary effect of enforcing the revocation of its license against a foreign corporation which has ac- quired property rights in the state and made contracts, is to deprive it of property without due process of law. In reply to a similar argument presented to the consideration of this court in United States v. Delaware Railway Co., 213 U. S. 366, the court said: “In the form of statement these conten- tions apparently rest upon the ruinous con- sequences which it is assumed would be operated upon the propertly rights of the carriers by the enforcement of the clause interpreted as the Government construed it. For the purposes of our consideration of the pooh eS rd eo go os a os in a ic Se TS 74 subject it may be considered as insisted in behalf of the United States that these con- tentions proceed upon the mistaken and baleful conception that inconvenience, not power, is the criterion by which to test the constitutionality of legislation.” See also Newport & Cincinnati Bridge Com- pany v. United States, 105 U. S. 470. The position of counsel is that a corporation admitted into a state by its comity can trans- fer such comity into a perpetual right by the mere extent or nature of its investments. Constitutional limits upon the powers of the state do not have regard to the degrees of transgression. If a state cannot terminate the license of a foreign corporation to do busi- ness in the state for any declared and recog- nized grounds of forfeiture because the conse- quences to the corporation will be disastrous, then it is also true that it cannot forfeit the charter of any corporation whatever, since every forfeiture must be attained with similar loss. Certainly the powers of the state as to the right to exclude or control foreign cor- porations cannot be measured solely by the volume of the business and the nature and amount of the investments. SUMMARY. We have shown that: It is the policy of the State of Wisconsin to treat foreign and domestic corporations equally. No discriminatory laws have been 75 enacted or enforced in the State of Wisconsin against foreign corporations, and the state has scrupulously endeavored to place foreign corporations on an equal footing with domestic corporations. Section 1770f was enacted for the purpose of carrying out this policy, and it has the purpose and the effect of putting the two classes of corporations on an equal basis. Without this law or one similar thereto, a foreign corporation would have greater powers in the state than a domestic corpo- ration. It would be able to circumvent every statute enacted by the state for the protection of its citizens, concerning court procedure, by removing every case originating in the state, brought by a citizen of the state against such corporation, to the federal court. A foreign corporation would be in a _ position to prevent the citizens of the state exercising their remedial rights enacted by the state against corporations. Experience has shown that foreign corpo- rations have the power to harass the citizens of the state doing business with them by re- moving actions, brought against them for the purpose of enforcing remedial rights of the citizens, from courts created by the state to distant tribunals and thereby causing in- convenience and expense. The provision 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 76 jurisdiction the equal protection of the law, is applicable to remedial rights. This amend- ment requires that all persons, including do- mestic and foreign corporations, shall have like access to the courts of the country for the protection of their persons and property, the redress of wrongs and the enforcements of contracts. When a foreign corporation is within the state doing an intrastate business, it is a person within the contemplation of the Four- teenth Amendment and can not be placed in a separate class from domestic corporations, but all corporation laws of the state must be equally applicable to both. The rule of comity goes only so far as to place foreign corporations on an equal basis with domestic corporations, but never beyond. This court has held that it does not lie in any foreign corporation to complain that it is subjected to the same law with the domestic corporation. The unanimous holding of the authorities is to that effect. 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 constitutionality. The condition attached to the license of the respondent to do intrastate bsuiness in the State of Wisconsin is constitutional for the reason that it is the only way in which foreign and domestic corporations can be placed upon an equality in the state, and is, therefore, authorized by the Fourteenth Amendment. 77 The right of a foreign insurance company to remove its cases to the federal court is just as sacredly guarded by the constitution and statutes of the United States as the right of any other corporation to do so, and the need of a law of this kind is as great in the case of a foreign corporation doing intrastate busi- ness and interstate business in this state as it is for a foreign insurance corporation. A foreign corporation is not required by the statutes of Wisconsin, as a condition for re- ceiving a license in the State of Wisconsin, to stipulate that it will not remove a case to the federal court. The Wisconsin statutes relating to foreign corporations do not in any way interfere with or affect interstate commerce. The revocation of the license of the re- spondent does not deprive it of any consti- tutional right. Without this statute or one similar thereto, a foreign corporation would have greater powers in the state than a domestic corpo- ration and this would induce corporations to organize in states where they do not intend to transact business, and thus greatly increase the number of “‘tramp”’ corporations. * * We therefore respectfully submit that the act of the legislature of the State of Wisconsin here under consideration is constitutional and a necessary enactment to prevent foreign 78 corporations from exercising greater powers in the State of Wisconsin than domestic corpo- rations. Respectfully submitted, WALTER C. OWEN, Attorney General, J. E. MESSERSCHMIDT, Assistant Attorney General, Attorneys for Appellant. 79 APPENDIX LAWS OF WISCONSIN RELATING TO FOREIGN CORPORATIONS Section 1770b, as amended by Ch. 351, 1899; Ch. 399, 1901; Ch. 434, 1901; Ch. 506, 1905; Ch. 562, 1907; Ch. 142, Ch. 214, 1911; Chs. 212 and 248, 1913. Corporation defined. Section 1770). 1. For the purposes of this section, the term ‘‘corporation” shall include all corporations, associations, companies, joint stock companies, or express companies organ- ized otherwise than under the laws of this state. Articles; filing with secretary of state. 2. No corporation incorporated or organized otherwise than under the laws of this state, except railroad corporations, corporations, or associations created solely for religious or charitable purposes, insurance companies and fraternal or beneficiary corporations, societies, orders and associations furnishing life or casually insurance or indemnity upon the mutual or assessment plan, shall transact business or ac- quire, hold or dispose of property in this state until such corporation shall have caused to be filed in the office of the secretary of state a copy of its charter, articles of association or incorporation and all amendments thereto duly certified by the secretary of state of the state wherein the corporation was organized. In case the laws of the state wherein the corporation was organized do not require that the charter, articles of association or incorporation be filed in the office of the secretary of state, then said charter, articles of association or incorporation shall be certified to by the register of deeds or other officer with whom said articles of association or incorpora- tion were filed with a certificate of the secretary PHT RAS Cy hE RO ERY eS ears arms ? = ne Pe) eee a = a0 Wes a ai na ech ee aaa ta aa Ee a alia ela 80 of state attached, certifying that said officer is the proper officer to certify to said articles of asso- ciation or incorporation. Mortgages or trust deeds taken by foreign corporations after the twenty- sixth day of-May, 1911, and prior to January 1, 1914, to secure the payment of money heretofore or hereafter loaned or advanced pursuant to such mortgages or deeds of trust, are hereby declared valid. But no trust deed given as security upon property in this state, if otherwise valid, shall be void merely because the trustee named therein shall be a forcign corporation which is not licensed to do business in this state. Statement to be filed with articles; contents. 3. Such corporation, by its president, secretary, treasurer or general manager, shall make and for- ward to the secretary of state, with the articles of association or incorporation above provided for, a statement duly sworn to, stating: a. The name of such corporation and the location of its principal office or place of business without this state, and, in case said corporation is to have any place of business or principal office within this state, the location thereof. b. The names and addresses of the officers of said corporation, and the name and address of the agent or manager of said corporation who may represent said corporation in this state. c. The amount of the capital stock paid in money, property or services. d. The nature of the business to be transacted in this state. e. The proportion of the capital stock of said corporation which is represented in this state by its property located or to be acquired therein and by its business to be transacted therein. In determining said proportion of the capital stock, the property of said corporation located in this state or to be acquired therein and the business transacted within and without the state for one year immediately preceding the filing of its charter or articles of asso- ciation or incorporation shall be considered and control. f. Shall constitute and appoint the secretary of state its true and lawful attorney upon whom the summons, notices, pleadings or process in any action or proceeding against it may be served in respect 81 to any liability arising out of any business, contract or transaction in this state, and stipulate that service thereof upon the secretary of slate, or his assistant, shall be accepted irrevocably as a valid service upon it, and that such appointment and stipulation shall continue in force irrevocably so long as any liability of such corporation remains outstanding in this state. g. When such corporation*»was authorized to do business in the state wherein incorporated and whether now so authorized. h. That such corporation as a condition of its being permitted to begin or continue doing business within this state, shall comply with all the laws of the state with regard to foreign corporations. Fee for filing. 4. Such corporation shall pay into the office of the secretary of state, upon filing its articles of association or incorporation, a fee of twenty-five dollars, and one dollar for every one thousand dollars of its capital stock exceeding twenty-five thousand dollars employed or to be employed in this state, as shown by its sworn state- ment. Amendments; fee; penalty. 5. All amend- ments to the articles of association or incorporation made subsequent to the first filing with the secretary of state shall be certified to and filed in the same manner as the articles of association or incorporation, and shall be so filed within thirty days after the same have been filed with the secretary of state or other proper officer of the state wherein the corporation is organized. For filing such amendment the cor- poration shall pay to the secretary of state a fee of ten dollars except in case of amendment increasing capital stock, in which case the fee for filing shall be in addition to ten dollars, one dollar for each addi- tional one thousand dollars of the increased capital stock to be used in this state, as shown by a sworn statement to be filed with the amendment increasing the capital stock, which said statement shall be signed by the president, secretary, treasurer or gen- eral manager of the corporation, and shall state the proportion of the increased capital stock to be em- ployed in this state. In case of failure to file amend- ments, as above stated, the corporation shall pay to the secretary of state, on filing said amendment, a penalty of twenty-five dollars. e Ma 82 Officers; filing notice of change; license; re- vocation. 6. Whenever any change is made in the offices of such corporation, the names and addresses of the officers elected shall be filed with the secretary of state within twenty days after such change. The license of such corporation to do business in this state shall be revoked if it 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. (1905 c. 506.) Annual report; contents; date of filing. 7. Every foreign corporation which has heretofore filed with the secretary of state a copy of its charter or articles of association or incorporation or which shall hereafter file the same as required by this act, and every foreign corportion transacting business in this state shall annually, between the first day of January and the first day of March, file with the secretary of state a report sworn to by the president, secretary, treasurer or general manager of the corporation, as of the first day of January, which shall state: a. The name of such corporation and the location of its principal office or place of business without this state, and its place of business or principal office within this state, if maintained. b. The names and addresses of the officers of said corporation, and the name and address of the agent or manager who may represent said corporation in this state. c. The nature of the business transacted in this state during the year preceding. d. The amount of capital stock paid in money, property or services. e. The proportion of the capital stock represented in the state of Wisconsin by its property located and business transacted therein during the preceding year. In determining the proportion of capital stock em- ployed in the state, the same shall be computed by taking the gross business in dollars of the corporation in the state and add the same to the full value in dollars of the property of the corporation located in the state. The sum so obtained shall be the numer- ator of a fraction of which the denominator shall consist of the total gross business in dollars of the corporation, both within and without the state, 83 added to the full value in dollars of the entire property of the corporation, both within and without the state. The fraction so obtained shall represent the pro- portion of the capital stock represented within the state. The secretary of state may demand, as a condilion precedent to the filing of such report, such further figures, information and statements as he may deem proper in order to determine the accuracy of the reports submitted; the additional information so obtained shall not become a matter of record in the department of stale. The corporation shall pay a fee of two dollars for filing such report. In case said report shows that said corporation employs in this state a proportion of its capital stock in excess of twenty-five thousand dollars, said corporation shall pay to the secretary of state, at the time of the filing of said report, an additional fee of one dollar for each one thousand dollars of such excess, except that the said corporation shall receive a credit for the proportion of its capital stock already paid for in excess of twenty-five thousand dollars. f. That such corporation as a condition of its being permitted to begin or continue doing business within this stale, shall comply with all the laws of the state with regard to foreign corporations. In case of failure to file said report in the time above stated, the corporation shall pay to the secretary of state a penally of twenty-five dollars, if the same is filed before May first. In case said report is not filed by May first, or if said corporation shall remove or make application to remove into any district or circuit court of the United States any action or pro- ceeding 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. (1907 c. 562.) Actions against; service upon. 8. Actions may be brought against any corporation in the name by which it is commonly known. All sum- mons, notice, pleading or process, relating to foreign corporations which have been licensed under the provisions of this chapter, shall be served on the secretary of state in duplicate, one copy to be filed by him in his office, and the second copy to be forwarded by mail forthwith, postage prepaid, FOE ALIS baa Bo NS TRIER BORA IA Ty oats 2h ee RRR RS Oh La 84 and directed to such corporation at its principal place of business in the United States, as shown by the last sworn statement on file in his department, and at the time of serving said papers a fee of two dollars shall be paid to the secretary of state, which said fee shall be taxed as taxable costs in the action. (1907 c. 562.) Articles; statements, when required. 9. In case any corporation shall not have any articles of incorporation, organization or association, it shall file in the office of the secretary of state the sworn statement above required of other corporations, and shall include in such statement a statement to the effect that such corporation has no articles of incorporation, organization or association. Such corporation shall file an annual report, as above required of other corporations, and shall pay the same fees and be subject to the same penalties as such corporations. Contracts made before filing articles; liabili- ties; restrictions, powers. 10. All foreign cor- porations 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 im- posed upon corporations of like character, organized under the laws of this state, and shall have no other or greater powers. Every contract made by or on behalf of any such foreign corporation, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions of this section, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them. Penalty. 11. The failure to comply with any of the provisions of this section shall, for such violation, subject the corporation or any agent, officer or person acting for it in this state, to a penalty of five hundred dollars, to be sued for and recovered in the name of the state with the costs of prosecution, by the attorney-general or by the district attorney of any county in which it or any of its agents or officers shall be located, or reside, or transact or attempt to transact any business; and such penalty, when recovered, shall be paid into the treasury of the ag Sg: ROURE, - SGA: Bow Ki ROE 85 county for the benefit of the school fund. Such penalty shall not attach where a specific penalty is herein provided. Subsections 3 and 4 when not to apply. 12. The provisions of subsections 3 and 4 relating to statements first to be filed and the fees first to be paid by a corporation of another state, shall not apply to any such corporation now actually doing — in this state under a license heretofore issued. License; conditions imposed. Section 1770c. The secretary of state, shall, upon being satisfied that such foreign corporations, joint stock company, express company, has fully complied with the require- ments of the preceding section, and all other pro- visions of law governing such corporations or asso- ciations, deliver to such corporation or association, as the case may be, a license to transact business in this state, which such license shall continue in force until revoked. And such license shall contain the conditions upon which such foreign corporation or association is permitted to do business in this state. (1901 c. 399.) Foreign corporations not to transact business unless licensed. Section 1770d. No such foreign corporation or association, except such as have here- tofore filed with the secretary of state copies of their articles of incorporation or association and have complied with the laws then in force, shall transact any business in this state without first having paid the license fee prescribed by section 17706 and obtained a license as provided in section 1770c. (1901 c. 399.) Jurisdiction of circuit courts over. Section 1770e. The circuit courts shall have jurisdiction to give proper remedies to all persons injured or damni- fied or threatened with injury or damage, by any unlawful or illegal act of any such foreign corporation or association, or by any violation of any provision of law, and for the purpose of enforcing any of the penalties imposed upon such foreign corporations or associations by law. (1901 c. 399.) a a Rae Re tee ce a er ace ¥ 5 he i * b 4 & & 86 Removal to Federal Court. Section 1770f. Whenever any foreign corporation doing business in this state 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 this state, upon any claim or cause of action arising within this state, it shall be the duty cf 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. (1905 c. 506.) Combinations; trusts. Section 1770g. Any for- eign corporation which shall enter into any combina- tion, conspiracy, trust, pool, agreement or contract intended to restrain or prevent competition in the supply or price of any article or commodity in general use in the state, or constituting a subject of trade or commerce therein, or which shall in any manner control the price of any such article or commodity, fix the price thereof, limit or fix the amount or quantity thereof to be manufactured, mined, pro- duced or sold in this state, or fix any standard or figure by which its price to the public shall be in any manner controlled or established, shall, upon proof thereof, in any court of competent jurisdiction, have its license or authority to do business in this state cancelled and annulled. (1905 c. 506.) Statement of non-violation. Section 1770h. No foreign corporation shall be authorized to file its charter or articles of incorporation or association with the secretary of state, or be authorized to do business in this state unless it shall at the time of making application therefor, file with the secretary of state an affidavit executed by its president, secre- tary or general managing officer stating that such corporation has not violated any of the provisions of section 1770g; and every such corporation shall upon filing its annual statement with the secretary of state, make and attach thereto the affidavit of its president, secretary or general managing officer, fully stating the facts in regard to the matters specified in section 1770g. (1905 c. 506.) Ouster. Section 1770. Upon complaint being made to the attorney-general and evidence produced to him which shall satisfy him that any such foreign 87 corporation has violated any of the conditions speci- fied in sections 1770f and 1770g, he shall forthwith bring an action in the name of the state in any circuit court of this state, to have the license of such cor- poration to do business in this state, cancelled and annulled and upon due proof being made thereof to the satisfaction of the court, judgment shall be entered therefor. The provisions of section 1791m shall extend to all proceedings under this and the two foregoing sections. (1907 c. 506.) Real property acquired before complying with Section 1770b. Section 17707. 1. Any cor- poration organized otherwise than under the laws of this state, having acquired, or attempted to acquire, legal title by deed, or lease to any real property in this state, before complying with the terms of section 17706 of the statutes, and which has there- after, and before the passage of this section, com- lied with said section, shall be and is hereby relieved rom any disability provided in said statute or prohibition therein contained, so far as said section relates to the acquisition and holding of the property so acquired, or attempted to be acquired, and the title so acquired, or attempted to be acquired, is hereby confirmed. 2. Any person claiming that the legal title of any corporation or of any person claiming by, through, or under such corporation, to any real property ac- quired, or attempted to be acquired, is invalid by reason of the failure of any corporation coming within the terms of subsection 1 of this section, to comply with section 1770b of the statutes, shall commence aclion to recover the property, or to declare the legal title of said corporation void, or interpose a defense on such grounds, within one year from the passage and publication of this section, and in case of failure to do so his right of action or defense, based upon the failure to comply with said section by any such cor- poration, shall be deemed to have expired; provided that this subsection shall not affect any action now pending. Section 4096 (Ch. 231, 1911) relates to depositions of officers, agents and employees of corporations. Section 4097 (Ch. 232, 1911) provides penalty for refusal or neglect of any officer, agent or employee to appear and testify. ah 4 '* 4 “1 : Be ¢ 3 Bs & %: ‘ : &: K wy Pe 2 Bg 4 b --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386003_0166%3A2. Public record. Not legal advice.