Diamond Glue Co. v. United States Glue Co.

| U.S. Circuit Court for the District of Eastern Wisconsin | May 8, 1900

SEAMAN, District Judge.

As stated in Hooper v. State of California, 155 U.S. 648" court="SCOTUS" date_filed="1895-01-14" href="https://app.midpage.ai/document/hooper-v-california-94074?utm_source=webapp" opinion_id="94074">155 U. S. 648, 652, 15 Sup. Ct. 207, 209, 39 L. Ed. 297" court="SCOTUS" date_filed="1895-01-14" href="https://app.midpage.ai/document/hooper-v-california-94074?utm_source=webapp" opinion_id="94074">39 L. Ed. 297, 299, the principle is well established “that the right of a foreign corporation to engage in business within a state other than that of its creation depends solely upon the will of such other state,” and. the exceptions to the rule “embrace only cases where a corporation created by one state vests its right to enter another, and to engage in business therein, upon the federal nature of its business.” A corporation is an artificial being, the mere creature of local law, and has no legal existence beyond the locality of its creation. Recognition of its existence in other states and enforcement of its contracts made therein rest upon comity, and not upon inherent right. Bank v. Earle, 13 Pet. 519" court="SCOTUS" date_filed="1839-03-18" href="https://app.midpage.ai/document/bank-of-augusta-v-earle-86114?utm_source=webapp" opinion_id="86114">13 Pet. 519, 588, 10 L. Ed. 274; Paul v. Virginia, 8 Wall. 168" court="SCOTUS" date_filed="1869-11-18" href="https://app.midpage.ai/document/paul-v-virginia-88079?utm_source=webapp" opinion_id="88079">8 Wall. 168, 181, 19 L. Ed. 357. Dependent upon assent of the state, express or implied, it is (dear that the assent may be granted upon such terms as the legislature may impose (Paul v. Virginia, supra,), and that an enactment within the power of the state which prohibits the transaction of business therein by foreign corporations except upon compliance with certain conditions invalidates any contract entered into in violation of the statute, so that the contract cannot be enforced in any court administering the law in such state (Manufacturing Co. v. Ferguson, 113 U.S. 727" court="SCOTUS" date_filed="1885-03-16" href="https://app.midpage.ai/document/cooper-manufacturing-co-v-ferguson-91333?utm_source=webapp" opinion_id="91333">113 U. S. 727, 733, 5 Sup. Ct. 739, 28 L. Ed. 1137" court="SCOTUS" date_filed="1885-03-16" href="https://app.midpage.ai/document/cooper-manufacturing-co-v-ferguson-91333?utm_source=webapp" opinion_id="91333">28 L. Ed. 1137, and cases cited). Where the prohibition is plain, this rule governs equally with or without express terms in the statute declaring the invalidity of the contract. Bank v. Owens, 2 Pet. 527" court="SCOTUS" date_filed="1829-03-17" href="https://app.midpage.ai/document/president-of-the-bank-of-the-united-states-v-owens-85646?utm_source=webapp" opinion_id="85646">2 Pet. 527, 539, 7 L. Ed. 508, and citations in 2 Notes on U. S. Reports, p. 870; Miller v. Ammon, 145 U.S. 421" court="SCOTUS" date_filed="1892-05-16" href="https://app.midpage.ai/document/miller-v-ammon-93392?utm_source=webapp" opinion_id="93392">145 U. S. 421, 426, 12 Sup. Ct. 884, 36 L. Ed. 759" court="SCOTUS" date_filed="1892-05-16" href="https://app.midpage.ai/document/miller-v-ammon-93392?utm_source=webapp" opinion_id="93392">36 L. Ed. 759; Insurance Co. v. Harvey, 11 Wis. 394" court="Wis." date_filed="1860-06-04" href="https://app.midpage.ai/document/ætna-insurance-v-harvey-6598124?utm_source=webapp" opinion_id="6598124">11 Wis. 394, 396. Upon these premises the matter set up in the answer states a good defense, unless the statute referred to is inapplicable to the contract of which breach is alleged in the complaint. This contract was entered into after the enactment of the statute, but before its inhibition became operative. It is manifest, therefore, that the contract was not void ab initio, as the statute is not retrospective in terms, and cannot be made retroactive by construction. The transaction of business by the plaintiff in Wisconsin was not made unlawful until the statute went into effect on September 1, 1898, and in the event of its qualification for a continuance of business by compliance with the statute no question could exist of its right to perform the contract, nor of the obligation of the defendant thereunder, so far as affected by this statute. But the contract as made was entirely executory, and its performance related to the management and control by the plaintiff of the proposed factory and its products after completion of the plant, and necessarily after the date then fixed for the statute to go into effect. The contention of the plaintiff is, in effect, that by the making of the contract before September 1, 1898, and entry upon performance with the preliminary advice and supervision of plans on its part, the statute became inapplicable to the transaction of business thereunder by the plaintiff during the term of the contract; in other words, that the doctrine of noninterference with contract obligations enabled the plaintiff to thus evade the impending prohibitory statute at will by means of its agreement previously entered into to that end. However the rule may be in reference to preserving rights, if any there be, which accrued through executed terms of the contract so made, it is clear that the statute cannot be thus set aside by the act of the parties, and that its provisions took effect on September 1, 1898, and incapacitated the plaintiff to transact business' thereafter in the state, except on submission to the requirements of the statute; that performance became illegal without such compliance on the part of the plaintiff; and that refusal by the defendant to carry on the transactions in deliberate violation of the statute constituted no actionable breach of the contract. The complaint alleged as the first breach the refusal of the defendant to continue the arrangement on and after December 2, 1899. It rested with the plaintiff to fulfill the simple requirements of the statute, and become qualified for performance; and whether its failure in that regard, unless excusable, would constitute a breach on its part, need not be determined. It is sufficient that performance became illegal without fault or concurrence on the part of the defendant, and in such view the answer states a good defense. The further contention on behalf of the plaintiff that the statute, thus interpreted, is obnoxious to the interstate commerce provision of the constitution, is not deemed tenable. The fact that the products of the factory are largely sold and shipped to other localities does not make the contract in question a transaction of interstate commerce in the constitutional sense. The demurrer is overruled, without passing on the further question, argued on behalf of the defendant, as to the nature of the contract. So ordered.