41 Colo. 299 | Colo. | 1907

1. Corporations — Foreign Corporations — Doing Business in State — Power to Regulate.

The legislature has power to prescribe the conditions on which foreign corporations may do business within the state and to require a compliance therewith as a condition precedent to their invoking the jurisdiction of its courts. — P. 304.

2. Same — Interstate Commerce.

The legislature in prescribing conditions on which a foreign corporation may do business within the state, may not impose any restrictions or burdens on interstate commerce. — P. 305.

3. Same.

A corporation of one state may send its agents to another to solicit orders for its goods, or contract for a sale thereof, without being embarrassed by state requirements as to taking out licenses, filing certificates, establishing resident agencies, and the like, since such business constitutes interstate commerce. — P. 306.

4. Same.

A Missouri corporation. In pursuance of a sale of its products to a Colorado corporation made by its traveling salesman, entered into a written contract in the latter state with the domestic corporation to furnish manufactured materials f.o.b. at its plant and office in St. Louis, and, in pursuance thereof, the materials were furnished. Held, that the sale and delivery of the materials did not constitute doing business within §§ 4. 10, c. 52, Sess. Laws 1001. prescribing the terms on which foreign corporations may do business within the state; and that such corporation had a right to invoke the aid of the Colorado courts in the collection of the indebtedness accruing to it by reason of such transaction. — P. 311.

5. Same — Compliance with Requirements.

Where a foreign corporation subsequent to the commencement of an action on a contract made with a domestic corporation, complies with §§ 4, 10, c. 52, Sess. Laws 1901, prescribing the terms on which a foreign corporation may do business within the state, and prohibiting the exercise of corporate powers, or the prosecution or the defense of actions until such requirements have been complied with. It may maintain the action and enforce the contract, since the prohibition is only provisional, and may be removed at any time. — P. 311. *300 1. The legislature has power to prescribe the terms and conditions upon which foreign corporations may do business within the state, and require a compliance with such terms and conditions as a *305 condition precedent to their invoking the jurisdiction of its courts.

In Paul v. Virginia, S Wall. 168, 181, Mr. Justice Field, speaking for the court, said:

"The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. * * * The recognition of its existence even by other states, and the enforcement of its contracts made therein, depend purely upon the comity of those states — a comity which is never extended where the existence of the corporation or the exercise of its powers are prejudicial to their interests or repugnant to their policy. Having no absolute right of recognition in other states, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those states may think proper to impose. They may exclude the foreign corporation entirely; they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interests. The whole matter rests in their discretion."

2. It is also well settled that, in exercising such power, the legislature may not place any restrictions or impose any burdens upon interstate commerce. As was said in Lyng v. State ofMichigan, 135 U.S. 161, 166:

"We have repeatedly held that no state has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, for the reason that such taxation is a burden on that commerce, and *306 amounts to a regulation of it which belongs solely to congress."

3. The controlling and decisive question presented for our determination is whether the transaction out of which this controversy arises constitutes interstate commerce. That it does is abundantly shown by numerous cases, among them: — Cooper Mfg.Co. v. Ferguson, 113 U.S. 727, 737; Robbins v. Shelby TaxingDist., 120 U.S. 489; Caldwell v. N. Carolina, 187 U.S. 632;Asher v. Texas, 128 U.S. 129; LeLoup v. Port of Mobile,127 U.S. 640; Brennan v. Titusville, 153 U.S. 289; Stockard v.Morgan, 185 U.S. 27; Mearshon Co. v. Lumber Co., 187 Pa. St. 17; Coil Co. v. Sutton, 102 Mich. 324, 327; Rock Island PlowCo. v. Peterson. 101 S.W. 616 (93 Min. 356); Kindel v.Lithographing Co., 19 Colo. 310; Miller of Co. v. Goodman,91 Tex. 41.

The above and many other decisions of the supreme court of the United States and of the highest state tribunal fully establish the rule that a corporation of one state may send its agents to another to solicit orders for its goods, or contract for the sale thereof, without being embarrassed or obstructed by state requirements as to taking out licenses, filing certificates, establishing resident agencies, or like troublesome or expensive conditions.

The case of Robbins v. Shelby Taxing District is one of the leading cases upon this subject. It was tried upon an agreed statement of facts, as follows:

"Sabine Robbins is a citizen and resident of Cincinnati, Ohio, and on the __ day of ____ 1884, was engaged in the business of drumming in the taxing district of Shelby county, Tenn.;i.e., soliciting trade by the use of samples for the house or firm for which he worked as a drummer, said firm being the firm of `Rose, Robbins Co.', doing business in Cincinnati, and all the members of said firm being *307 citizens and residents of Cincinnati, Ohio. While engaged in the act of drumming for said firm, and for the claimed offense of not having taken out the required license for doing said business, the defendant, Sabine Robbins, was arrested by one of the Memphis, or taxing district, police force, and was carried before the Hon. D.P. Hadden, president of the taxing district, and fined for the offense of drumming without a license. It is admitted the firm of `Rose, Robbins Co.' are engaged in the selling of paper, writing materials and such articles as are used in the book stores of the taxing district of Shelby county, and that it was a line of such articles for the sale of which the said defendant herein was drumming at the time of his arrest."

The court held upon these facts that the statute of Tennessee of 1881, enacting that "all drummers and all persons not having a regular licensed house of business in the taxing district `of Shelby county,' offering for sale, or selling goods, wares or merchandise therein by sample, shall be required to pay to the county trustee the sum of $10 per week, or $25 per month, for such privilege," was void as against Robbins.

The opinion of the court was delivered by Mr. Justice Bradley, in the course of which he said (page 494):

"In a word, it may be said, that in the matter of interstate commerce the United States are but one country, and are and must be subject to one system of regulations, and not to a multitude of systems. The doctrine of the freedom of that commerce, except as regulated by congress, is so firmly established that it is unnecessary to enlarge further upon the subject. In view of these fundamental principles, which are to govern our decision, we may approach the question submitted to us in the present case, and inquire *308 whether it is competent for a state to Jevy a tax or impose any other restriction upon the citizens or inhabitants of other states, for selling or seeking to sell their goods in such state before they are introduced therein. Do not such restrictions affect the very foundation of interstate trade? How is a manufacturer, or a merchant, of one state, to sell his goods in another state, without in some way obtaining orders therefor? Must he be compelled to send them at a venture, without knowing whether there is any demand for them? This may, undoubtedly, be safely done with regard to some products for which there is always a market and a demand, or where the course of trade has established a general and unlimited demand. A raiser of farm produce in New Jersey or Connecticut, or a manufacturer of leather or woodenware, may, perhaps, safely take his goods to the city of New York and he sure of finding a stable and reliable market for them. But there are hundreds, perhaps thousands, of articles which no person would think of exporting to another state without first procuring an order for them. It is true, a merchant or manufacturer in one state may erect or hire a warehouse or store in another state, in which to place his goods, and await the chances of being able to sell them. But this would require a warehouse or store in every state with which he might desire to trade. Surely, he cannot be compelled to take this inconvenient and expensive course. In certain branches of business he may adopt it with advantage. Many manufacturers do open houses or places of business in other states than those in which they reside, and send their goods there to be kept on sale. But this is a matter of convenience, and not of compulsion, and would neither suit the convenience nor be within the ability of many others engaged in the same kind of business, and would be enholders *309 unsuited to many branches of business. In these cases, then, what shall the merchant or manufacturer do who wishes to sell his goods in other states? Must he sit still in his factory or warehouse, and wait for the people of those states to come to him? This would be a silly and ruinous proceeding. The only way, and the one, perhaps, which most extensively prevails, is to obtain orders from persons residing or doing business in those other states. But how is the merchant or manufacturer to secure such orders! If he may be taxed by such states for doing so, who shall limit the tax? It may amount to prohibition. To say that such a tax is not a burden upon interstate commerce is to speak at least unadvisedly and without due attention to the truth of things."

In Miller Co. v. Goodman, it is said:

"The statute is not invalid because it violates any right of the corporation to do business in this state, but is void if so applied, because the state legislature had no power to make such provisions applicable to interstate commerce. Such legislation would be equally void, whether applied to natural persons, citizens of other states, or corporations created by such other states. It is the character of the business transacted, over which the state has no authority, which renders its action a nullity."

In Coit Co. v. Sutton, the findings of fact show that plaintiff was engaged in the business of shipping from Illinois goods manufactured in that state to its customers in Michigan on orders given by mail, or, taken by its agents in Michigan. At the time of making the sale there under consideration, the plaintiff had not filed articles of association in that state, and had not paid to the secretary of state the franchise fee, as prescribed by the statute. The court had under consideration the validity of a judgment *310 recovered by the plaintiff corporation for lead sold in pursuance of a written contract with the defendant, which defendant refused to receive, claiming the contract to be void. It was there said:

"The law in question imposes a tax upon corporations for the privilege of doing business in Michigan. It is a tax upon the occupation of the corporation, with a provision that all its contracts shall be void until the tax is paid, which, if enforced, would embarrass plaintiff in its commerce with inhabitants of Michigan. It must, therefore, be held that the act in question does not apply to foreign corporations whose business within this state consists merely of selling through itinerant agents, and delivering commodities manufactured outside of this state."

In Cooper Mfg. Co. v. Ferguson, Mr. Justice Matthews used this language:

"It is quite competent, no doubt, for Colorado to prohibit a foreign corporation from requiring a domicile in that state and to prohibit it from carrying on within that state its business of manufacturing machinery. But it cannot prohibit it from selling in Colorado, by contracts made there, its machinery manufactured elsewhere, for that would be to regulate commerce among the states."

In Kindel v. Lithographing Co., Chief Justice Hayt, speaking for this court, said:

"In this case appellee contracted to make the calendars at its place of business in Wisconsin, and deliver them to appellant in Colorado. To give the state constitution and statute the construction claimed by appellant would be to permit a state to regulate commerce among the states, authority for which is conferred exclusively upon congress — U.S. Constitution, art. 1. § 8: see opinion of Mr. Justice Matthews in Cooper ManufacturingCompany v. Ferguson." *311

Under the raling of these cases, which we accept as a correct interpretation of statutes like ours, it must be held that the sale and delivery of the materials and supplies mentioned in the complaint did not constitute doing business within the intendment of the sections of our statute above quoted. It therefore, necessarily follows that, if the plaintiff was not required to comply with the terms of the statute in order to enable it to transact the business complained of, it had a right to invoke the aid of the courts in the collection of the indebtedness accruing to it by reason of such transaction. — Wolff Dryer Co. v.Bigler Co., 192 Pa. St. 446, 471; Spry Lumber Co. v.Chappell, 184 Ill. 539; Miller Co. v. Goodman, supra.

In the latter case it is said: "If the corporation was not required to comply with the terms of article 745, then the prohibition against maintaining a suit contained in article 746 would not apply to it, and it is unnecessary for us to discuss the question raised by counsel for appellants as to the power of the state to prohibit a corporation to sue in the courts of such state."

4. After the commencement of the snit, and before trial, the plaintiff fully complied with all the requirements of our statutes, and established an agency and place of business in the state. If, therefore, it could be held that the transaction under consideration came within the inhibition of the statutes, said subsequent compliance would entitle plaintiff to maintain this action. The statute prohibits the prosecution or defense of an action "until the fee shall have been paid," and the prescribed certificate obtained. The prohibition is, therefore, only provisional, and may be removed at any time under the terms of the act itself. — Caesar v. Capell, 83 Fed. 403; Asphalt Co.v. The Mayor, 155 N.Y. 373; Carson-Rana *312 Co. v. Stern, 120 Mo. 381; Ryan Live-Stock Feeding Co. v.Kelly, 81 P. 470 (71 Kan. 874).

In the latter case, the supreme court of Kansas, deciding the question here presented, said:

"The plaintiff in this case is a private foreign corporation, and it was conceded upon the trial that it had not at the commencement of the action complied with the corporation laws of the state of Kansas; but it was proven that prior to the trial in this case it had complied therewith, and had received a certificate from the secretary of state evidencing that fact. The sole question presented in this case is whether the corporation, not having filed the statement and procured the certificate required by law before the commencement of the action, could comply with the law thereafter, and maintain the action. The court below decided this question in the negative, and dismissed the action. Its judgment is reversed on the authority of Statev. Book Co., 69 Kan. 1, and Decre v. Hayland, 69 Kan. 255;Hamilton v. Recves Co., 69 Kan. 544."

We think that the purpose of the statute is fully accomplished by an actual compliance with its requirements subsequent to the commencement of the action, and renders enforceable a contract theretofore unenforceable by reason of the failure to comply therewith. For the foregoing reasons, the plaintiff was entitled to maintain this action, and the judgment and decree of the court below is therefore affirmed.

Affirmed.

CHIEF JUSTICE STEELE and Mr. JUSTICE BAILEY concur.

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