157 F. 783 | U.S. Circuit Court for the District of Western Missouri | 1908
All these cases present the same question* and are alike in fact, except with reference to one company which came in the state after 1901, a matter not controlling the decision herein. Subject to that statement, all the companies, either by purchase or construction, between the years 1870 and 1891, became the owners of a line of railroad into and across the state, at an expenditure of many millions of dollars, doing both a state and interstate business. By an act of the Legislature of the year 1870 (Laws 1870, p. 89) it was provided that two or more roads could consolidate, and authorized a road of an adjoining state to build a line into the state, or to buy one already constructed, and thereby form a continuous line. The statute further provided that such nonresident corporation “shall be ■subject to all regulations and provisions of law governing railroads in this state, and may sue and be sued, in all cases, and for the same causes, and in the same manner as a corporation of the state might be sued.” The nonresident corporation in all respects was given the same powers and was made subject to the same burdens as a resident corporation. In 1891 the Legislature enacted that any corporation for pecuniary profit, created under the laws of another state, shall, before allowed to continue in business, file with the Secretary of State a copy of its articles of incorporation, and a statement as to its stock and other matters, pay for and receive a certificate from the Secretary of State showing that it has the right to do business.
This court is mindful of the criticism by many laymen, as well as by some lawyers, to the effect that United States courts have no right, nor even the power, to decree the invalidity of state statutes. The argument, or rather the talk, is that the people know what they need, and that their representatives in Legislature assembled alone should determine what statutes we must have, and when so determined, and evidenced by legislative enactment, that the courts should not interfere by decree and thereby thwart the legislative will. In other words, Great Britain has the model government. This is a most attractive and persuasive argument to many, and has been from the organization of our government. It was the keynote to the Kentucky and Virginia Resolutions. The all power of the state as against the nation was the argument of the minority in the convention of 1787, and in the convention of the states called to ratify that work. Webster, in his second reply to Hayne, defining it, said:
“I understand the honorable gentleman from South Carolina to maintain that it is a right of the state Legislatures to interfere whenever in their judgment this government transcends its constitutional limits, and to arrest the operation of its laws. I understand him to maintain an authority on the part of the states thus to interfere for the purpose of correcting the exercise of power by the general government, or checking it, and of compelling it to conform to their opinion of the extent of its powers. I understand him to insist that, if the exigency of the case in the opinion of any state government require it, such state government may by its own sovereign authority annul an act of the general government which it deems plainly and palpably unconstitutional. This is the sum of what I understand from him to be the South Carolina doctrine, and the doctrine which he maintains.”
Seldom does a court — and particularly an United States court— hold a state enactment void but that the old argument and criticism are made charging the courts with usurpation. And this is not confined to laymen. Lawyers indulge in that kind of talk. An issue of a leading newspaper, recently reporting a convention of Attorneys
His second statement is that Mercer reflected the views of a majority of the convention when he said “that he disapproved of the doctrine that the judges, as expositors of the Constitution, should have authority to declare a law void. He thought that laws ought to be well and cautiously made, and then be incontrovertible.” No doubt Mercer said that, but he did not reflect the views of a majority. Mercer was a delegate from Maryland, and had so little heart in the work that he did not appear in the convention until in point of time the convention was nearly half over; but he appeared in time to oppose the great principles of our government. When the convention was about adjourning, Dr. Franklin, too feeble to talk, gave a paper to James Wilson to read, urging that all objections be put to one side, and begging that every member sign the great instrument. Mercer was not persuaded, and refused to sign. On the same day it was proposed to place the journals in the hands of the President (General Washington), to the end that they might be preserved; and Mercer voted no. The convention having adjourned, Mercer was elected as a delegate to the Maryland convention called to ratify or reject the Constitution, and with a small minority voted against the ratification of the Constitution. Bancroft recites in his history that Washington wrote to Madison as to the efforts made in the Maryland convention to reject the Constitution:
“Chase once more made a display of all his eloquence, John F. Mercer discharged his whole artillery of inflammable matter, and Martin rioted in boisterous language. But no converts were made; no, not one.”
All should decline to follow the teaching of Mercer in constitutional law. In contrast with that, it is-delightfully refreshing to read from the address of the venerable jurist, Justice Harlan, delivered but a
“What, let me ask, are some of the grounds upon which the pessimist of these days bases his fears for the safety of our institutions? He persuades himself to believe that the trend in public affairs to-day is toward the centralization of all governmental power in the nation, and the destruction of the rights of the states. If this were really the case, the duty of every American would be to resist such a tendency by every means in his power. A national government for national affairs, and state governments for state affairs, is the foundation rock upon which our institutions rest. Any serious departure from that principle would bring disaster upon the American people and upon the American system of free government. But the fact' is not as the pessimist alleges it to be. The American people are more determined than at any time in their history to maintain both national and state rights, as those rights exist under the Union ordained by the constitution * * * The best friends of state rights, permit me to say, are not those who habitually denounce as illegal everything done by the general government, but those who recognize the government of the Union as possessing all the powers granted to it in the Constitution, either expressly or by necessary implication; for, without a general government possessing controlling power in relation to matters of national concern, the states would have no prestige before the world and would be in perpetual conflict with one another. With equal truth it may be said that the best friends of the Union are those who hold that the states possess all governmental powers not granted to the general government, and that are not inconsistent with their own Constitution, or with the Constitution of the United States, or with a republican form of government.”
The national and state governments do not conflict. The one or the other has the power to confer all rights needed, and to remedy all wrongs, and to say that neither has such power is to assail our form of government. James Wilson, in a letter to Washington, presented the entire case when he wrote:
“Neither vacancies nor interferences will be found between the limits of the two jurisdictions which together compose, or ought to compose, only one comprehensive system of government and laws.”
The views of Justice Harlan and of James Wilson are those entertained by this court.
There is a prevalent notion that United States courts only declare state statutes void, as being in conflict with the national Constitution. All informed men know that the state courts so hold for one, as well as an additional reason, because by article 6, § 3, of the national Constitution it is provided:
“All executive and judicial officers, both of the United States and of the several states, shall be bound by oath or affirmation to support this Constitution.”
So that it necessarily follows that state courts, when so persuaded, will not only declare state statutes void when in conflict with the state Constitution, but state courts will declare statutes of Congress void when in conflict with the national Constitution; and all who appreciate our form of government under its written Constitution, knowing that
“This Constitution, and the laws of the United States which shall be made in pursuance 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 contrary notwithstanding.”
And these different state courts as in duty bound gave their respective judgments as to whether congressional enactments were in conflict with the Constitution, and, finding the conflict to exist, upheld the Constitution and decreed the statutes void. And in one case at least — that of Griswold v. Hepburn — the judgment of the Court of Appeals of Kentucky was affirmed by the Supreme Court of the United States. And such holdings should not be otherwise, because, first of all, the Constitution is the supreme law of the land, and next to that are the enactments of Congress, provided, always, such enactments are “pursuant” to the Constitution.
The most attractive argument to some lawyers of recent days is that the state courts alone in the first instance should pass upon the question as to the validity of state statutes, with the right of the defeated party to carry the case for final decree to the Supreme Court of the United States. Such arguments are plausible, are convincing to many good people, but are so dangerous as to amount to a heresy. It is the extreme of “state rights” in a new form. The argument is plausible, because they admit that the final decision should be made by the United States Supreme Court, upholding the national Constitution and overthrowing state legislation, when the two are in conr flict. So they argue that the state courts should first pass upon the case, and, if the statute is upheld, the party defeated can have a remedy' by writ of error, carrying the case to the national Supreme Court.
The only remedy to correct the decision of the highest court of the state is by writ of error, in chancery cases as well as in actions at law. In a large per cent, of these chancery cases the case turns solely on questions of fact, with reference to which the evidence is in conflict; and an important inquiry is thereby suggested as to whether, if the effort is successfully made to keep litigation involving federal questions in the state courts, depriving the national courts from passing on questions of fact in chancery cases, such party thus desiring a review is not deprived of due process of law. This is a question of great moment, but not now for discussion in this case. It is often urged that cases in the United States courts are too tedious, (and that too much time is taken to obtain a final decision. This is an error. Under the equity rules, if either party desires the case be expedited, it can be carried to final decision as quickly, or more so, than in most of the state courts. It is due to counsel for defendant to say that several of the foregoing propositions were not controverted by them in argument. But it has been deemed proper by the court on its own motion to briefly discuss them.
I now turn to the questions presented by the bill of complaint. It is contended that this action, although against a state officer, is in effect a suit against the state of Missouri. The eleventh amendment to the Constitution recites that:
“The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state.”
That the Supreme Court has passed upon this many times is known by all- lawyers. But there are no conflicts in the decisions, although in some of the cases against state officers it was held that the actions were in effect suits against the state, and in other cases the decisions
By'article 3, § 1, of the Constitution, it is provided'that:
“The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish.”
By section 3 thereof it is provided:
.“The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and to controversies between citizens of different states.”
The judiciary act of 1888 covered this with particularity, providing that United States courts shall have jurisdiction in all cases of a civil nature wherein the amount in controversy shall exceed $3,000 in several classes of cases, two of which only need be stated. The one is, in the language of the Constitution, “in an action between citizens of different states.” And as to that the uniform holding for many years has been that a corporation shall be regarded as a citizen of the state where incorporated. The other class is that jurisdiction is conferred, both by the Constitution and the act of 1888, regardless of citizenship, “in a case arising under either the federal Constitution or the laws of the United States.” So that, if the act of the Missouri Legislature of 1907, hereinbefore referred to, is valid, then no .nonresident railway company can have any of its litigation in the United States courts; but a railway corporation organized under the laws of Missouri can bring its actions in such courts against citizens of Missouri, provided such cases “arise under the Constitution or laws of the United States.” And it is said that at least three of the trunk lines of road in the state are Missouri corporations. They can bring their cases of the nature referred to in the United States courts; but, if the nonresident companies do that, they are not only subjected to heavy penalties, but the penalties, if enforced, drive them from doing any and all business of a state character. And, if the statute of 1907 is valid, then we have
The Missouri statute does not provide that the litigation of nonresident railway corporations shall not be had in United States courts, but provides that, if carried there, its rights of doing business shall cease for five years. An analysis of a few of the decisions of the Supreme Court will lead to the conclusion about which there can be no doubt. In Doyle v. Insurance Co., 94 U. S. 535, 24 L. Ed. 148, there was under consideration a statute of Wisconsin which provided that, if any foreign insurance company removed any case to an United States court, its right to do business in the state should cease. A case having been removed, the company sought to enjoin the revocation of its license and from being ousted from the state. The Supreme Court held the statute to be valid and enforceable. The recent case of Insurance Co. v. Prewitt, 202 U. S. 246, 26 Sup. Ct. 619, 50 L. Ed. 1013, construing a Kentucky statute, is to the same effect. There are many other decisions of like holdings by judges on the circuit, which will not be reviewed. But from these two decisions, and the one so recent, it can be stated that the undoubted rule is that a foreign corporation can be kept out, or excluded when once in, by any state, .and this with or without good reason, and for no reason at all. Such is the general rule, but to which there are exceptions, presently to be noticed. In the two cases cited the company had no property in the state, and had made no investments, but had a license to do an insurance business. It is true the company had advertised its business, established agencies, and incurred expenses of those kinds. So that as to a foreign insurance company it is wholly immaterial for what reason the state does not desire it to continue in business. It can be excluded, and the company can have no relief.
The state officers insist that the two cases cited, and those of like holdings, demand at the hands of this court a decree upholding the validity of the Missouri statute in question. The concluding paragraph of the majority opinion of the Doyle Case will arrest the attention of any one investigating the question in all its phases. It was said:
“No right of the complainant under the laws of the Constitution of the United States, by its exclusion from the state is infringed; and this is what the state now accomplishes. There is nothing, therefore, that will justify the interference of this court.”
Whether a state can prevent a foreign corporation engaged in interstate commerce from coming in the state will not be here discussed.
The case of Barron v. Burnside, 121 U. S. 186, 7 Sup. Ct. 931, 30 L. Ed. 915, arose under an Iowa statute much like, and in principle the same as, the Missouri statute now being considered. The Supreme Court held the statute to be void. The Iowa statute required a foreign corporation desiring to do or continue in business in Iowa should file with the Secretary of State a resolution designating a person upon whom service should be made, whereupon a permit to do business should be issued.. It was further provided that, if any nonresident company should remove a case to the United States court on the ground of diverse citizenship, such permit should be vacated, and not again given a permit for three months, and in the meantime doing business should subject it to large penalties. The decision holding the statute void was by an unanimous court; .and the statute was declared void in the following language, not capable of being misunderstood by any one:
“As the Iowa statute makes the right to a permit dependent upon the surrender by the foreign corporation of a privilege secured to it by the Constitution and laws of the United States, the statute requiring the permit must be held to be void.”
And the privilege secured to it, which the court was discussing, was the privilege of having its litigation in United States courts. It will be observed that this decision was long after the Doyle Case, and by express mention it was held that the Doyle Case .did not control'. On the foregoing the case at bar could be safely grounded. But for another reason the statute is void, as being in conflict with the national Constitution, in that it is repugnant to the provision which reads:
“No state shall pass any law impairing the obligation of contracts.”
It is stoutly denied that there is any contract, and, of course, there must be a contract before the obligation of one can be impaired. What was the contract? The state gave it the power of eminent domain. In many instances it gave it pecuniary aid. It gave it the rights of
From the foregoing the opinion of this court is as follows:
1. The Doyle and Prewitt Cases do not have the slightest application to the case at bar. In those cases property rights were not in-' volved. The mere naked right to a license to do business by a foreign corporation was considered.
2. The Missouri statute of 1907 is void, because it allows a resident company to sue in the federal court, if there is a federal question, and denies that right to a nonresident company.
3. Regardless of the last preceding statement, the statute is void because it seeks to take from the complainant its right to bring or remove a case to the United States court, which right is given by the Constitution and the acts of Congress, which by article 6, § 2, of the’ Constitution is declared to be “the supreme law of the land, anything in the Constitution or laws of any state to the contrary notwithstanding.”
4. The statute is void, because it is an effort to impair and to repudiate the contract of the state, made with the company, by which it was induced to come into the state, making investments in large sums, and was authorized to do a state business, but now declaring that it shall not do such business, thereby rendering it insolvent, and taking from the people along its line the use of a railway for state business, unless the company will surrender under coercion rights given it by the national Constitution and valid enactments of Congress.
This court recognizes the rule that presumptively all legislation is; valid; but it is only a presumption, and in no sense conclusive. This court recognizes that all doubts should be solved in favor of upholding legislation; but there are no doubts in this case. This court recog
The defendant’s demurrer to the bill of complaint is overruled, and, as he declines to plead further, a final decree will be entered as prayed, perpetually enjoining him and his successors from attempting to give force to the Missouri statute which seeks to prohibit the railway company from doing business within the state, if it seeks to have any of its litigation in the United States courts.