WESTERN UNION TELEGRAPH COMPANY v. THE STATE OF KANSAS EX REL. COLEMAN, ATTORNEY GENERAL
No. 4
SUPREME COURT OF THE UNITED STATES
January 17, 1910
216 U.S. 1
Argued March, 17, 18, 1909. ERROR TO THE SUPREME COURT OF THE STATE OF KANSAS.
The right to carry on interstate commerce is not a privilege granted
The power of Congress over interstate commerce is as absolute as it is over foreign commerce.
The rule that a State may exclude foreign corporations from its limits or impose such terms and conditions on their doing business therein as it deems consistent with its public policy does not apply to foreign corporations engaged in interstate commerce; and the requirement that the Telegraph Company pay a given per cent of all its capital, representing all its business, interests and property everywhere, within and outside of the State, operated as a burden and tax on the interstate business of the company in violation of the commerce clause of the Constitution, as well as a tax on its property beyond the limits of the State, which it could not tax consistently with the due process of law enjoined by the Fourteenth Amendment.
Such a requirement imposed a condition on the Telegraph Company forbidden by the Constitution of the United States and violative of the constitutional rights of the company.
The Telegraph Company was no more bound to assent to the condition required of it in order that it might do local business in Kansas, than to a condition requiring it to waive its right to invoke the benefit of the constitutional provision forbidding the denial of the equal protection of the laws or of the provision forbidding the deprivation of property without due process of law.
The disavowal by a State enacting a regulation of intent to burden or regulate interstate commerce cannot conclude the question of fact of whether a burden is actually imposed thereby; and whatever the purpose of a statute it is unconstitutional if, when reasonably interpreted, it does, directly or by necessary operation, burden interstate commerce.
In determining whether a statute does or does not burden interstate commerce the court will look beyond mere form and consider the substance of things.
Consistently with the due process clause of the Fourteenth Amendment a State cannot tax property located or existing permanently beyond its limits.
A court could not give the relief asked by the State without recognizing or giving effect to a condition that was in violation of the Federal Constitution.
75 Kansas, 609, reversed.
THIS action was brought by the State of Kansas in one of its courts against the Western Union Telegraph Company, a New York corporation, to obtain a decree ousting and restraining that corporation from doing, in Kansas, any telegraphic business that was wholly internal to that State, and not pursuant to some arrangement or to meet its contracts with, or obligations to, the Government of the United States. Upon the petition of the Telegraph Company the case was removed to the Circuit Court of the United States for the District of Kansas. But it was thereafter remanded to the state court where, upon a demurrer to the answer, a final decree was rendered prohibiting and enjoining the Telegraph Company from transacting intrastate business in Kansas as a corporation, the decree, however, not to affect the company‘s duties to or contracts with the United States. From that decree the present writ of error was prosecuted.
The State contends that the decree is in exact conformity with certain provisions of the Kansas statutes to be found in the General Statutes of that State of 1901, Title, Corporations, p. 280, and the General Statutes of 1905, p. 284. Those provisions, or the ones directly involved here, originated in an act known as the Bush Act, passed at a special session of the Legislature in 1898. Laws of Kansas, Special Session, p. 27.
The issues raised by the pleadings arise out of the above statutes. Under those statutes a State Charter Board was organized and its powers defined. That Board was authorized to receive applications from corporations of other States, Territories or countries seeking permission to engage in business as foreign corporations in Kansas. Any such corporation was required in its application to set forth a certified copy of its charter or articles of incorporation, the place where its principal office or place of business was to be located, the full nature and character of the business in which it proposed to engage, the names and addresses of its officers, trustees or directors and stockholders, with a detailed statement of its assets and liabilities, and such other information as the Board might require in
Then come these important sections: “Each corporation which has received authority from the charter board to organize shall, before filing its charter with the secretary of state, as provided by law, pay to the state treasurer of Kansas, for the benefit of the permanent school fund, a charter fee of one-tenth of one per cent. of its authorized capital upon the first one hundred thousand dollars of its capital stock, or any part thereof; and upon the next four hundred thousand dollars, or any part thereof, one-twentieth of one per cent.; and for each million or major part thereof over and above the sum of five hundred thousand dollars, two hundred dollars. . . . In addition
By another section it is made the duty of each corporation doing business for profit in Kansas, except banking, insurance and railroad corporations, annually, on or before August 1st, “to prepare and deliver to the secretary of state a complete detailed statement of the condition of such corporation on the 30th day of June next preceding. Such statement shall set forth and exhibit the following, namely: 1st. The authorized capital stock. 2d. The paid-up capital stock. 3d. The par value and the market value per share of said stock. 4th. A complete and detailed statement of the assets and liabilities of the corporation. 5th. A full and complete list of the stockholders, with the postoffice address of each, and the number of shares held and paid for by each. 6th. The names and postoffice addresses of the officers, trustees or directors and mana-
Under this statute the Western Union Telegraph Company made application to the Charter Board for permission to engage in business in Kansas as a foreign corporation stating that the amount of its capital stock, fully paid up in cash, was one hundred million dollars. With that application the company deposited with the Secretary of State the specified fee of twenty-five dollars, and also its written consent, irrevocable, in the prescribed form, as to suits brought against it, in the courts of the State, by service of process on that officer. In reference to that consent the company, in its answer, said: “It made such written submission to service and paid such application fee voluntarily and ex gratia and out of a desire to avoid the appearance of not complying with the reasonable regulations of the State of Kansas made with reference to its own corporations; but denies that said payment and that said written submission were obligatory upon it or were necessary or essential as a condition precedent to its continuing to transact business within the State of Kansas, both state and interstate.”
The Charter Board granted the application of the Telegraph Company, but its order to that effect, made April 5th, 1905, recited that the application be granted and the applicant au-
The company refused to pay the fee thus required, and continued, as before, to do telegraph business of all kinds in Kansas. Thereupon the present action was brought, the sole ground of complaint being that in consequence of the failure of the Telegraph Company to pay the charter fee of $20,100 it was without authority to continue doing any intrastate or local business in Kansas. The relief sought by the State, as shown by the prayer of its petition, was that the defendant be required to show by what authority it exercised within Kansas the corporate right and power of receiving, transmitting and delivering telegraphic messages within its limits and receiving compensation therefor; that it be adjudged by the court that the defendant had no authority of law for the performance of such corporate acts and the exercise of such corporate powers and franchises and the carrying on of said corporate business within the State; and that it be decreed and adjudged that the
The reasons given by the Telegraph Company for its refusal to pay the required fee are set forth in its answer, to which a demurrer was sustained, and may be summarized as follows: 1. That the company had the right to transact both interstate and local business in Kansas without paying the fee of $20,100. 2. That by the laws of Kansas, enacted while it was a Territory and after it became a State, telegraph companies were invited to come into it and do both domestic and interstate business there, and in consequence of such invitation the company had established between eight hundred and nine hundred offices in Kansas at great expense, all of which was done in the full faith that it would receive the equal protection of the laws under the Constitution of the United States. 3. That it had been doing a general telegraph business in Kansas ever since its organization as a Territory. 4. That on the seventh day of June, 1867, it duly accepted the conditions of the act of Congress of July 24th, 1866, c. 230, 14 Stat. 221, entitled “An act to aid in the construction of telegraph lines, and to secure to the Government the use of the same for postal, military, and other purposes” (Rev. Stat., §§ 5263 et seq.), whereby it became and is now an instrument of interstate commerce and an agency of the United States for the transaction of public business, and subject to all the duties imposed and entitled to all the rights, benefits and privileges conferred by said act of Congress. 5. That its lines were originally constructed in the Territory of Kansas by the authority of an arrangement made with the Secretary of the Treasury in conformity with certain acts of Congress, one of which was enacted June 16th, 1860, c. 137, 12 Stat. 41, and was entitled “An act to facilitate commerce between the Atlantic and Pacific States by electric telegraph,” the other, enacted July 2d, 1864, c. 220, 13 Stat. 373, entitled
Mr. Rush Taggart and Mr. Henry D. Estabrook, with whom Mr. John F. Dillon, Mr. George H. Fearons and Mr. Charles Blood Smith were on the brief, for plaintiff in error:
The Bush Act violates the contract under which the Telegraph Company entered Kansas, constructed its lines and maintained its business in that State and the tax amounts to taking its property without due process of law.
The purpose of the act is to compel a foreign corporation, as a condition precedent to continuing to do business, to pay an additional fee after the State has invited it to come within its limits and construct its plant. This cannot be done. American Smelting Co. v. Colorado, 204 U. S. 103.
The State compels all telegraph companies to maintain offices in all county towns. The act is practically a confiscation of property. 3 Clark & Marshall on Corp., § 845; United States v. Cruikshank, 92 U. S. 542, 555; Seaboard Air Line v. Alabama R. R. Comm., 155 Fed. Rep. 792, 802; Railway Co. v. Ludwig, 156 Fed. Rep. 152, 159; People v. Fire Association, 92 N. Y. 311, 325; S. C., aff‘d 119 U. S. 110.
As to the rights of the Telegraph Company in Kansas see United States v. Central Pacific R. R., 118 U. S. 235; St. Louis v. Western Union Tel. Co., 148 U. S. 103; New Orleans v. Telephone Co., 40 La. Ann. 41. See also, as to vested rights
The fact that no money was paid to the State does not make the contract void for want of consideration, Dartmouth College Case, 4 Wheat. 518, 637; Erie R. R. Co. v. Pennsylvania, 153 U. S. 628.
The Bush Act denies the Telegraph Company equal protection of the laws by discriminating between it and existing domestic corporations who do not have to pay the tax in order to continue to do business. American Smelting Co. v. Colorado, 204 U. S. 103; Yick Wo v. Hopkins, 118 U. S. 356, 369; 3 Clark & Marshall on Corp., § 845; Rock Island R. R. v. Swanger, 157 Fed. Rep. 783.
A State cannot exact from a foreign corporation engaged in interstate commerce, as a condition precedent to its doing business in that State, a tax or license fee based on its entire capital when the greater part of such capital is in use elsewhere than in that State.
A State may exclude foreign corporations; it may impose terms reasonable or unreasonable, but if admitted at all, the terms of admission must not violate the Federal Constitution. Judson on Taxation, § 169; Insurance Co. v. Morse, 20 Wall. 445; Insurance Co. v. French, 18 How. 404; St. Clair v. Cox, 106 U. S. 350, 356; Barron v. Burnside, 121 U. S. 186, 200; Norfolk & Western R. R. v. Pennsylvania, 136 U. S. 114.
The power of a State to exclude, or prescribe the terms of admission of, a foreign corporation is no greater than its general inherent power to tax property within its limits. Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 203; McCulloch v. Maryland, 4 Wheat. 316, 429.
In no case where this court has sustained privilege, license or occupation taxes has the burden been upon capital stock employed in interstate commerce outside the State such as in Cotting v. Stockyards Co., 82 Fed. Rep. 850; United States v. Swift, 122 Fed. Rep. 529; Kehrer v. Stewart, 197 U. S. 60; Armour v. Lacey, 200 U. S. 226.
While a State may, as in Paul v. Virginia, 8 Wall. 168, exclude or prescribe conditions, the exceptions to this rule have always been stated to be corporations engaged in interstate commerce, Pensacola Tel. Co. v. Western Union Tel. Co., 96 U. S. 1; or those engaged in employ of the General Government. Stockton v. B. & N. Y. R. R. Co., 32 Fed. Rep. 9; Horn Silver Mining Co. v. New York, 143 U. S. 305. In fact no conditions repugnant to the Federal Constitution can be imposed. Insurance Co. v. Morse, 20 Wall. 445, 457; Barron v. Burnside, 121 U. S. 186, 200.
A tax on capital stock of a corporation is a tax on the property of the corporation. Cases supra and Pullman Co. v. Pennsylvania, 141 U. S. 18; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Gray on Limitations of Taxing Power; Postal Tel. Co. v. Adams, 155 U. S. 688, 696; Colorado v. Pullman Co., Riner, J., 1905, U. S. Cir. Ct., unreported.
The court will look to substance rather than form, and unless the tax is limited to what is actually within the jurisdiction of taxing power will strike it down. Cases supra and Railway Co. v. Texas, 210 U. S. 217; Steamship Co. v. Pennsylvania, 122 U. S. 326; Postal Tel. Co. v. Taylor, 192 U. S. 64, 73; Insurance Co. v. New York, 134 U. S. 594. In
Protection from state interference with interstate commerce ceases to be of force if the State can do indirectly what it cannot do directly. Brown v. Maryland, 12 Wheat. 419; Insurance Co. v. New York, 134 U. S. 594, 598; Gibbons v. Ogden, 9 Wheat. 1. And see also Pickard v. Pullman Co., 117 U. S. 34; Robbins v. Taxing District, 120 U. S. 489; Leloup v. Mobile, 127 U. S. 640; Asher v. Texas, 128 U. S. 129; Stoutenburgh v. Hennick, 129 U. S. 141; McCall v. California, 136 U. S. 104; Norfolk & Western v. Pennsylvania, 136 U. S. 114; Lyng v. Michigan, 135 U. S. 161, 166; Pembina Co. v. Pennsylvania, 125 U. S. 181; Emert v. Missouri, 156 U. S. 296; Hopkins v. United States, 171 U. S. 578, distinguished in Schollenberger v. Pennsylvania, 171 U. S. 1, 23. And see Brennan v. Titusville, 153 U. S. 289; Bateman v. Milling Co., 1 Tex. Civ. App. 901, 911, 952.
As to the distinction between corporations doing an interstate business and having a quasi-public character and those conducting a strictly private business; see New York v. Roberts, 171 U. S. 658, 664, and as to the right to tax instrumentalities only when subject to jurisdiction by reason of location see cases supra and St. Louis v. The Ferry, 11 Wall. 423; Louisville Ferry v. Kentucky, 188 U. S. 385; Adams Express Co. v. Ohio, 165 U. S. 194.
If one State, other than the home State, can tax instrumentalities of commerce used in other States each State may do the same and the actual burden would become so great as to amount to a prohibition against those corporations which, like the Western Union Telegraph Company and the Pullman Company do business in all the States, and which Congress alone can control. Cases supra and Hayes v. Pacific Mail, 17 How. 596; Morgan v. Parham, 16 Wall. 471; Commonwealth v. Standard Oil Co., 101 Pa. St. 119; Wabash v. Illinois, 118 U. S. 557, 573.
The judgment of the state court deprives the corporation of its rights granted by Congress under the Post-Road Act of 1866.
Mr. Frank B. Kellogg, with whom Mr. Charles Blood Smith, Mr. Francis B. Daniels and Mr. Gustavus S. Fernald were on the brief, for plaintiff in error, the Pullman Company, in case No. 5, argued simultaneously herewith:1
The Bush Act is not a regulation of intrastate commerce of foreign corporations and the judgment of the Supreme Court to that effect cannot make the act such a regulation, nor is the Bush Act an exercise of the police power of the State, nor in a case like this is this court bound by the construction of the statute by the state court. Spraigue v. Thompson, 118 U. S. 90; Yick Wo v. Hopkins, 118 U. S. 356; Stearns v. Minnesota, 179 U. S. 223, 232. This act must be construed as passed by the state legislature and not as amended judicially by the courts. The act relates both to interstate and intrastate business and as such is unconstitutional.
The State cannot exact from a foreign corporation as a condition precedent for doing business in the State a license fee or tax based on capital stock the greater part of which represents property employed outside the State in interstate commerce. Judson on Taxation, § 169; Insurance Co. v. French, 18 How. 404; St. Clair v. Cox, 106 U. S. 350; and cases cited in brief for plaintiff in error in No. 4.
The Bush Act is unconstitutional because it impairs the obligation of contracts, deprives the corporation of its prop-
The Pullman Company had lawful contracts with railroad companies in existence when the Bush Act was passed, all of which will be impaired by its exclusion from the State. Green v. Biddle, 8 Wheat. 1; Van Hoffman v. Quincy, 4 Wall. 535; Fletcher v. Peck, 6 Cranch, 87; Bronson v. Kenzie, 1 How. 311; McCracken v. Hayward, 2 How. 608; Barton v. Van Ripper, 16 N. J. L. 7, 11; Woodruff v. State, 3 Arkansas, 285; Bank v. State, 12 Mississippi, 439.
A State cannot invite a corporation to come into its territory, build up a business and then expel the corporation by unequal taxation. Its right to exclude may be waived. Seaboard Air Line v. Commission, 155 Fed. Rep. 792; Railway Co. v. Ludwig, 156 Fed. Rep. 152.
Mr. C. C. Coleman, with whom Mr. Fred S. Jackson, Attorney General of the State of Kansas, was on the brief for defendant in error in this case and in No. 5, argued simultaneously herewith:
The granting of franchises to corporations is entirely within the control of the State and may be accompanied with such conditions as the legislature thinks suitable for the public policy and therefore this case presents no Federal question as the state court has declared that the Bush Act relates only to local business and that construction controls in this court. Smiley v. Kansas, 196 U. S. 447.
The act applies to all foreign corporations and so there is no discrimination. As to the right of the State to impose conditions on foreign corporations, see Horn Silver Mining Co. v. New York, 143 U. S. 305; People v. Roberts, 171 U. S. 658, 661; Minot v. Railroad Co., 18 Wall. 206.
The action of quo warranto is proper. State v. Wilson, 30 Kansas, 661, 665.
The fact that the corporation was already in the State does not deprive the State of the right to require this license fee.
The fact that the statute causes inconvenience does not render it unconstitutional. St. Louis v. Western Union Tel. Co., 148 U. S. 92; Postal Tel. Co. v. Baltimore, 156 U. S. 210; Western Union Tel. Co. v. New Hope, 187 U. S. 419, 427; People v. Squire, 145 U. S. 175; Pabst Brewing Co. v. Crenshaw, 198 U. S. 17, 30; Lumberville Co. v. Commissioners, 26 Atl. Rep. 711.
The license fee is not a burden on the interstate business of the objecting corporations. It is a local police regulation on local business only, and as it affects only intrastate business falls under Ratterman v. Western Union Tel. Co., 127 U. S. 411; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Western Union Tel. Co. v. New York, 38 Fed. Rep. 552; Minn. & St. L. Ry. Co. v. Beckwith, 129 U. S. 26; Sandford v. Poe, 69 Fed. Rep. 546; Delaware R. R. Tax, 18 Wall. 206; Ashley v. Ryan, 153 U. S. 436; Honduras Com. Co. v. State Board, 54 N. Y. 278; Henderson Bridge Co. v. Kentucky, 166 U. S. 150; Ferry Co. v. Kentucky, 188 U. S. 385; Pembina Co. v. Pennsylvania, 125 U. S. 181, 190; Postal Tel. Co. v. Charleston, 153 U. S. 692; Postal Tel. Co. v. Norfolk, 43 S. E. Rep. 297; and see cases cited in opinions below, 75 Kansas, 609, 664.
No grounds exist for the claim that a contract existed between the corporations and the State, or for the assumption that the present law impaired the obligation of any contract between themselves and the State, or between themselves and their patrons. No foreign companies having been admitted to the State prior to the passage of the Bush law, a claim of discrimination under the terms of that law against such corporations seeking to comply with its terms and domestic corporations is clearly without foundation. Foreign companies are given the dignity and privileges of domestic corporations exactly upon the same terms that the same things are granted to domestic corporations. The State
MR. JUSTICE HARLAN, after making the above statement, delivered the opinion of the court.
The above extended statement would seem to be justified by the importance of this case.
The contentions of the company, to which particular attention will be directed, are, in substance, that the requirement that it pay, for the benefit of the permanent school fund of the State, a given per cent of its authorized capital, wherever and however employed, as a condition of its right to continue to do domestic business in Kansas, is a regulation which, by its necessary operation, directly burdens or embarrasses interstate commerce, and, therefore, is illegal under the commerce clause of the Constitution; further, that such a requirement involves the taxation not only of the company‘s interstate business everywhere, but equally the property employed by it beyond the limits of the State, a thing which could not be done consistently with the due process of law enjoined by the Fourteenth Amendment.
It will be well to inquire, at the outset, as to the state of the law in respect of local regulations that materially burden and interfere with the freedom of commerce among the States. A review of some of the cases will throw light on the questions now before us, and enable us the better to ascertain the scope and effect of the statute.
In McCall v. People of California, 136 U. S. 104, 109, a municipal ordinance of San Francisco imposing a license tax of a specified amount upon “every railroad agency” was held to be violative of the commerce clause of the Constitution
A leading authority on the general subject, and which has an important bearing on more than one question in the present case, is that of Crutcher v. Kentucky, 141 U. S. 47, 51, 57, 59, 62. That case involved the constitutional validity of a statute of Kentucky regulating the agencies of foreign express companies. The statute made it unlawful for the agent of a foreign express company to set up, establish or carry on the business of transportation in Kentucky without first obtaining a license from the Auditor of Public Accounts to carry on such business, and that officer was forbidden to issue the license until the copy of the express company‘s charter was filed with him, and a statement, verified by oath, showing its assets and liabilities, the amount of its capital stock and how paid, of what its assets consisted, the amount of its losses due and unpaid, and that the company was possessed of an actual capital of at least $150,000, either in cash or safe investments, exclusive of stock
Speaking by Mr. Justice Bradley, this court, among other things, said (p. 56): “The law of Kentucky, which is brought in question by the case, requires from the agent of every express company not incorporated by the laws of Kentucky a license from the auditor of public accounts, before he can carry on any business for said company in the State. This, of course, embraces interstate business as well as business confined wholly within the State. It is a prohibition against the carrying on of such business without a compliance with the state law. . . . If a partnership firm of individuals should undertake to carry on the business of interstate commerce between Kentucky and other States, it would not be within the
province of the state legislature to exact conditions on which they should carry on their business, nor to require them to take out a license therefor. To carry on interstate commerce is not a franchise or a privilege granted by the State; it is a right which every citizen of the United States is entitled to exercise under the Constitution and laws of the United States; and the accession of mere corporate facilities, as a matter of convenience in carrying on their business, cannot have the effect of depriving them of such right, unless Congress should see fit to interpose some contrary regulation on the subject.
“It has frequently been laid down by this court that the power of Congress over interstate commerce is as absolute as it is over foreign commerce. Would any one pretend that a state legislature could prohibit a foreign corporation, - an English or a French transportation company, for example, - from coming into its borders and landing goods and passengers at its wharves, and soliciting goods and passengers for a return voyage, without first obtaining a license from some state officer, and filing a sworn statement as to the amount of its capital stock paid in? And why not? Evidently because the matter is not within the province of state legislation, but within that of national legislation. Inman Steamship Co. v. Tinker, 94 U.S. 238” - citing Telegraph Co. v. Texas, 105 U.S. 460; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 205, 211; Phila. Steamship Co. v. Pennsylvania, 122 U.S. 326, 342; McCall v. California, 136 U.S. 104, 110; Norfolk & Western Railroad v. Pennsylvania, 136 U.S. 114, 118. Again: “As was said by Mr. Justice Lamar, in the case last cited, ‘It is well settled by numerous decisions of this court, that a State cannot under the guise of a license tax, exclude from its jurisdiction a foreign corporation engaged in interstate commerce, or impose any burdens upon such commerce within its limits.’
“We have repeatedly decided that a state law is unconstitutional and void which requires a party to take out a license for carrying on interstate commerce, no matter how specious the pretext may be for imposing it” - citing Pickard v. Pullman Southern Car Co., 117 U.S. 34; Robbins v. Shelby County Taxing District, 120 U.S. 489; Leloup v. Mobile, 127 U.S. 640; Asher v. Texas, 128 U.S. 129; Stoutenburgh v. Hennick, 129 U.S. 141; McCall v. California, 136 U.S. 104; Norfolk & Western Railroad Co. v. Pennsylvania, 136 U.S. 114. Further, in the Crutcher case (p. 59): “We do not think that the difficulty is at all obviated by the fact that the express company, as incidental to its main business, (which is to carry goods between different States,) does also some local business by carrying goods from one point to another within the State of Kentucky. This is, probably, quite as much for the accommodation of the people of that State as for the advantage of the company. But whether so or not, it does not obviate the objection that the regulations as to license and capital stock are imposed as conditions on the company‘s carrying on the business of interstate commerce, which was manifestly the principal object of its organization. These regulations are clearly a burden and a restriction upon that commerce. Whether intended as such or not they operate as such. But taxes or license fees in good faith imposed exclusively on express business carried on wholly within the State would be open to no such objection.” The decisions, the court said (p. 62), “are clear to the effect that neither licenses nor indirect taxation of any kind, nor any system of state regulation, can be imposed upon interstate any more than upon foreign commerce; and that all acts of legislation producing any such result are, to that extent, unconstitutional and void. And as, in our judgment, the law of Kentucky now under consideration, as applied to the case of the plaintiff in error, is open to this objection, it necessarily follows that the judgment of the Court of Appeals must be reversed.”
The court had previously adjudged in Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 204, 211, that a statute of Pennsylvania, requiring both domestic and foreign corporations doing business in that Commonwealth to pay an annual tax rated by the dividends declared and imposed upon the capital stock of the corporation at a named rate for every dollar of
In Leloup v. Port of Mobile, 127 U.S. 640, 645, the court, speaking by Mr. Justice Bradley, said (p. 645): “The question is squarely presented to us, therefore, whether a State, as a condition of doing business within its jurisdiction, may exact a license tax from a telegraph company, a large part of whose business is the transmission of messages from one State to an
“Ordinary occupations are taxed in various ways, and, in most cases, legitimately taxed. But we fail to see how a State can tax a business occupation when it cannot tax the business itself. Of course, the exaction of a license tax as a condition of doing any particular business, is a tax on the occupation; and a tax on the occupation of doing a business is surely a tax on the business.”
In the recent case of Galveston, Harrisburg &c. Ry. Co. v. Texas, 210 U.S. 217, 227, which involved the validity of a Texas statute imposing an annual tax “equal to one per cent of its gross receipts” on each railroad lying wholly within that State. The railroads there concerned lay wholly within Texas, but, this court said, they connected with other lines, and a part, and in some instances much the larger part, of their gross receipts, were derived from the carriage of passengers and freight coming from, or destined to, points without the State. The contention by the railroad company was that the tax was a burden on interstate commerce, and invalid, so far as it was based on or was measured by receipts derived from interstate transportation. That view was sustained. The court said: “Neither the state courts nor the legislatures, by giving the tax a particular name or by the use of some form of words, can take away our duty to consider its nature and effect. If it bears upon commerce among the States so directly as to amount to a regulation in a relatively immediate way, it will not be saved by name or form. Stockard v. Morgan, 185 U.S. 27, 37; Asbell v. Kansas, 209 U.S. 251, 254, 256.
“We are of opinion that the statute levying this tax does amount to an attempt to regulate commerce among the States. The distinction between a tax ‘equal to’ one per cent of gross receipts and a tax of one per cent of the same, seems to us nothing, except where the former phrase is the index of an actual attempt to reach the property and to let the interstate traffic and the receipts from it alone. We find no such attempt or anything to qualify the plain inference from the statute taken by itself. On the contrary, we rather infer from the judgment of the state court and from the argument on behalf of the State that another tax on the property of the railroad is upon a valuation of that property taken as a going concern. This is merely an effort to reach the gross receipts, not even disguised by the name of an occupation tax, and in no way helped by the words ‘equal to.’
“Of course, it does not matter that the plaintiffs in error are domestic corporations or that the tax embraces indiscriminately gross receipts from commerce within as well as outside of the State.”
So in Brennan v. Titusville, 153 U.S. 289, 303, which involved the validity of an ordinance imposing a license tax on those engaged in the business of soliciting orders on behalf of manufacturers of goods, the court said (p. 303): “It is clear, therefore, that this license tax is not a mere police regulation, simply inconveniencing one engaged in interstate commerce, and so only indirectly affecting the business, but is a direct charge and burden upon that business; and if a State may lawfully exact it, it may increase the amount of the exaction until all interstate commerce in this mode ceases to be possible. And notwithstanding the fact that the regulation of interstate commerce is committed by the Constitution to the United States, the State is enabled to say that it shall not be carried on in this way, and to that extent to regulate it.” Again, in Ashley v. Ryan, 153 U.S. 436, 440, the court said (p. 440): “Whether this charge be viewed as a tax, a license, or a fee, if its exaction violated the interstate com
The authorities cited show that this court has guarded with both diligence and firmness the freedom of interstate commerce against hostile state or local action, as such action has been manifested by regulations operating, in some instances, directly, in others indirectly, upon the means or instruments employed in that commerce. This has been done without violating the principle that an interstate carrier, entering a State for purposes of its business, is subject to local regulations that in their essence and purpose only incidentally affect interstate commerce, but are established in good faith for the protection, safety, comfort and convenience of the people, are not in themselves in any real, just sense an obstruction to or in conflict with the substantial rights of those engaged in interstate commerce, but are referable to the police powers of the State, and to be respected until Congress covers the subject by legislation. Cooley v. Port Wardens, 12 How. 299, 320; Sherlock v. Alling, 93 U.S. 99, 104; Morgan‘s Louisiana & T. R. & S. S. Co. v. Board of Health, 118 U.S. 455, 463; Smith v. Alabama, 124 U.S. 465; Nashville, C. & St. L. R. Co. v. Alabama, 128 U.S. 96, 100; N. Y. & N. H. & H. R. R. Co. v. New York, 165 U.S. 628, 631, 632; Missouri, Kansas & Texas Ry. Co. v. Haber, 169 U.S. 613, 626; Lake Shore & M. S. R. Co. v. Ohio, 173 U.S. 285, 297. We are aware of no decision by this court holding that a State may, by any device or in any way, whether by a license tax, in the form of a “fee,” or otherwise, burden the interstate business of a corporation of another State, although the State may tax the corporation‘s property regularly or permanently located within its limits, where the ascertainment of the amount assessed is made “dependent
But it is said that none of the authorities cited are pertinent to the present case, because the State expressly disclaims any purpose by the statute in question to obstruct or embarrass interstate commerce, but seeks only to prevent the Telegraph Company from entering the field of domestic business in Kansas without its consent and without conforming to the requirements of its statute. But the disavowal by the State of any purpose to burden interstate commerce cannot conclude the question as to the fact of such a burden being imposed, or as to the unconstitutionality of the statute as shown by its necessary operation upon interstate commerce. If the statute, reasonably interpreted, either directly or by its necessary operation, burdens interstate commerce, it must be adjudged to be invalid, whatever may have been the purpose for which it was enacted, and although the company may do both interstate and local business. This court has repeatedly adjudged that in all such matters the judiciary will not regard mere forms, but will look through forms to the substance of things. Such is an established rule of constitutional construction as the adjudged cases abundantly show.
In Henderson &c. v. Mayor, 92 U.S. 259, 268, which involved the question whether a statute of New York was in any real sense a regulation of commerce with foreign nations, the court said that in whatever language a statute may be framed, its purpose must be determined by its natural and
In Brimmer v. Rebman, 138 U.S. 78, 81, the question arose as to the validity of a Virginia statute making it unlawful to offer for sale, within the limits of that State (p. 80) “any fresh meats (beef, veal, or mutton) which shall have been slaughtered one hundred miles or over from the place at which it is offered for sale, until and except it has been inspected and approved” as provided in the statute. The preamble of the statute recited that unwholesome meats were being offered for sale in Virginia. Such recital was held not to conclude the question as to the conformity of the statute with the Constitution. Despite the avowal by the State that its object, by the statute, was to prevent the offering of unwholesome meats for sale in Virginia, this court adjudged it to be unconstitutional, saying (p. 81): “Is the statute now before us liable to the objection that, by its necessary operation, it interferes with the enjoyment of rights granted or secured by the Constitution? This question admits of but one answer.” “The fees exacted, under the Virginia statute, for the inspection of beef, veal and mutton, the product of animals slaughtered one hundred miles or more from the place of sale, are, in reality, a tax; and ‘a discriminating tax imposed by a State, operating to the disadvantage of the products of other States when introduced into the first-mentioned State, is, in effect, a regulation in restraint of commerce among the States, and, as such, is a usurpation of the powers conferred by the Constitution upon the Congress of the United States.’ Walling v. Michigan, 116 U.S. 446, 455. Nor can this statute be brought into harmony with the Constitution by the circumstance that it purports to apply alike to the citizens of
Looking, then, at the natural and reasonable effect of the statute, disregarding mere forms of expression, it is clear that the making of the payment by the Telegraph Company, as a charter fee, of a given per cent of its authorized capital, representing, as that capital clearly does, all of its business and property, both within and outside of the State, a condition of its right to do local business in Kansas, is, in its essence, not simply a tax for the privilege of doing local business in the State, but a burden and tax on the company‘s interstate business and on its property located or used outside of the State. The express words of the statute leave no doubt as to what is the basis on which the fee, specified in the state statute, rests. That fee, plainly, is not based on such of the company‘s capital stock as is represented in its local business and property in Kansas. The requirement is a given per cent of the company‘s authorized capital, that is, all its capital, wherever or however employed, whether in the United States or in foreign countries, and whatever may be the extent of its lines in Kansas as compared with its lines outside of that State. What part of the fee exacted is to be attributed to the company‘s domestic business in Kansas and what part to interstate business, the State has not chosen to ascertain and declare in the statute. It strikes at the company‘s entire business wherever conducted and its property wherever located, and, in terms, makes it a condition of the telegraph
In Western Union Tel. Co. v. Massachusetts, 125 U.S. 530, 549, 552, a tax nominally upon the shares of the capital stock of the company was held to be in effect a tax only on property owned and used by the company in Massachusetts, because and only because the basis established for the ascertainment of the value of such property was the proportion of the company‘s lines in the State to their entire length throughout the whole country. Such a tax was held not to be forbidden by the Constitution, because based on the company‘s stock representing only its business and its property inside the State. In Ratterman v. Western Union Tel. Co., 127 U.S. 411, it was held that a single tax on the receipts of a telegraph company, some of which were derived from interstate commerce and some from intrastate commerce, but capable of separation, was invalid to the extent that the receipts were derived from interstate commerce. The court was confronted with the same situation in Leloup v. Port of Mobile, 127 U.S. 640, 647, which case involved the validity of a city ordinance imposing, generally, a specified license tax, “on telegraph companies.” The ordinance was held invalid because the tax had reference to the entire business of the Telegraph Company, interstate and domestic, without any distinction being made between the different kinds of business. It was urged in that case that a portion of the Telegraph Company‘s business was wholly internal to the State and, therefore, was taxable by the State. To this view the response of the court was: “But that fact does not remove the difficulty. The tax affects the whole business without discrimination. There are sufficient modes in which the internal business, if not already taxed in some other way, may be subjected to taxation, without the imposition of a tax which covers the entire operations of the company.” So, in the case now before us, the exaction,
But it is said to be well settled that a State, in the exercise of its reserved powers, may prescribe the terms on which a foreign corporation, whatever the nature of its business, may enter and do business within its limits.
It is true that in many cases the general rule has been laid down that a State may, if it chooses to do so, exclude foreign corporations from its limits, or impose such terms and conditions on their doing business in the State as in its judgment may be consistent with the interests of the people. But those were cases in which the particular foreign corporation before the court was engaged in ordinary business and not directly or regularly in interstate or foreign commerce. In Paul v. Virginia, 8 Wall. 168, which sustained the power of the State to exclude foreign insurance companies from its limits, or to impose conditions upon their entering the State for purposes of its business, the court said (p. 182): “It is undoubtedly true, as stated by counsel, that the power conferred upon Congress to regulate commerce includes as well commerce carried on by corporations as commerce carried on by individuals. . . . This state of facts forbids the supposition that it was intended in the grant of power to Congress to exclude from its control the commerce of corporations. The language of the grant makes no reference to the instrumentalities by which commerce may be carried on; it is general, and includes alike commerce by individuals, partnerships, associations, and corporations. . . . The defect of the argument lies in the character of their business. Issuing a policy of insurance is not a transaction of commerce. . . . Such contracts are not inter-state transactions, though the parties may be domiciled in different States.” In Pensacola Tel. Co. v. Western Union Tel. Co., 96 U.S. 1, 12, 13, the case of Paul v. Virginia was referred to and the above extract made from its opinion. And the court, speaking by Chief Justice Waite in the Pensacola case, said (p. 12): “We are aware that, in Paul v. Virginia (8 Wall. 168), this court decided that a State might exclude a corporation of another State from its jurisdiction, and that corporations are not within the clause of the Constitution which declares that ‘the citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.’ Art. 4, sect. 2. That was not, however, the case of a corporation engaged in inter-state commerce; and enough was said by the court to show, that, if it had been, very different questions would have been presented.”
Whatever may be the extent of the State‘s authority over intrastate business, was it competent for the State to require that the Telegraph Company - which surely had the right to enter and remain in the State for interstate business - as a condition of its right to continue doing domestic business in
We repeat that the statutory requirement that the Telegraph Company shall, as a condition of its right to engage in local business in Kansas, first pay into the state school fund a given per cent of its authorized capital, representing all its business and property everywhere, is a burden on the company‘s interstate commerce and its privilege to engage in that commerce, in that it makes both such commerce, as conducted by the company, and its property outside of the State, contribute to the support of the State‘s schools. Such is the necessary effect of the statute, and that result cannot be avoided or concealed by calling the exaction of such a per cent of its capital stock a “fee” for the privilege of doing local business. To hold otherwise is to allow form to control substance. It is easy to be seen that if every State should pass a statute similar to that enacted by Kansas not only the freedom of interstate commerce would be destroyed, the decisions of this court nullified and the business of the country thrown into confusion, but each State would continue to meet its own local expenses not only by exactions that directly burdened such commerce, but by taxation upon property situated beyond its limits. We cannot fail to recognize the intimate connection which, at this day, exists between the interstate business done by interstate companies and the local business which, for the convenience of the people, must be done or can generally be better and more economically done by such interstate companies rather than by domestic companies organized to conduct only local business. It is of the last importance that the freedom of interstate commerce shall
We need not stop to discuss at length the specific question whether the State can by any regulation make the property of the company, outside of Kansas, contribute directly to the support of its schools; such being the effect of the requirement that it pay into the state treasury, for the benefit of the state school fund, a given per cent of all its capital stock as a condition of its doing local business in Kansas. It is firmly established that, consistently with the due process clause of the Constitution of the United States, a State cannot tax property located or existing permanently beyond its limits. Louisville &c. v. Kentucky, 188 U.S. 385, 398; Union Transit Co. v. Kentucky, 199 U.S. 194, 209.
It is said that the conclusions here announced are not in harmony with some cases heretofore decided by this court. This suggestion is one of serious import, and cannot be passed without consideration, although the careful examination of the cases may greatly extend this opinion. In support of the view just stated reliance is placed particularly on Osborne v. Florida, 164 U.S. 650; Pullman Co. v. Adams, 189 U.S. 420; Allen v. Pullman Palace Car Co., 191 U.S. 171; and Security Mutual Life Ins. Co. v. Prewitt, 202 U.S. 246, 248.
What was the case of Osborne v. Florida? A certain statute of that State made it a misdemeanor for one to act as agent in the State of an express company doing business there without the payment of a license tax, the amount of which depended upon the number of inhabitants in the city, town or village where the
As to Pullman Co. v. Adams, 189 U.S. 420, 429, we perceive nothing in the judgment in that case that conflicts with what is herein said. That case involved the validity of a tax of a certain amount imposed by Mississippi on each sleeping and palace car company carrying passengers “from one point to another within the State,” and so many cents per mile “for each mile of railroad track over which the company runs its cars in this State.” It was contended that this tax was an interference with commerce among the States. It is stated in the opinion that the sleeping cars of the Pullman Company, an Illinois corporation, “were carried by various railroad companies, and all of them were carried into the State from another State, or out of the State to another State, or both. But such cars in their passage also carried passengers from point to point within the State, and a specific fare was collected by the servants of the Pullman Company.” It was contended by the company that the state constitution made it a common carrier, and, in effect, compelled it to assume the burden of carrying local passengers, although its receipts from purely local business were less than the expense incurred in carrying it on. But the State Supreme Court held that view of the state constitution to be fallacious. And this court said: “If the clause of the State constitution referred to were held to impose the obligation supposed and to be valid, we assume, without discussion, that the tax would be invalid. For then it
Nor is there any conflict between the views we have expressed and the decision in Allen v. Pullman Palace Car Co., 191 U.S. 171, 178, 179. One of the questions in that case was as to the constitutional validity of a Tennessee statute, passed in 1887, which required every company operating sleeping cars and doing business in that State to pay, as a privilege tax, on each car, per annum, $500. The Pullman Car Company operated sleeping cars in Tennessee under a contract with railroad companies traversing the State. The gross receipts of the companies from lines running into the State were, annually, about $500,000, and only about $25,000 annually from pas
We come now to the case of Security Mutual Life Insurance Co. v. Prewitt, 202 U.S. 246, 257, which case, it is contended, necessarily determines the present question in favor of the State of Kansas. In the Prewitt case this court sustained the constitutional validity of a Kentucky statute providing, among other things, that if a foreign insurance company should bring a suit in a Federal court against a citizen of Kentucky, or being itself sued in a state court should remove the suit to the Federal court, without the consent of the other party, any permit previously granted to it to do business in Kentucky should be forthwith revoked by the State Insurance Commissioner and the fact of such revocation published in some newspaper of general circulation in the State. No other question was determined. The court regarded the question as concluded in favor of the State by the decision in Insurance Company v. Morse, 20 Wall. 445. It said (p. 257): As a State has power to refuse permission to a foreign insurance company to do business at all within its confines, and as it has power to withdraw that permission when once given, without stating any reason for its action, the fact that it may give what some may think a poor reason or none for a valid act is immaterial. The vital difference between the Prewitt case and the one now before us is that the business of the
It results that a decree of ouster, such as the State asks, could not be granted without recognizing the validity of and giving effect to the unconstitutional requirement that the Telegraph Company, as a condition of its being allowed to do intrastate business in Kansas, should pay into the state school fund a given per cent of its authorized capital in the form of a fee based, as in effect it is, on all its property, business and interests everywhere, including both its interstate and intrastate business and property. Such a decree is asked on the ground that the company has refused to pay such fee. The state court ought to have refused the affirmative relief asked and dismissed the petition upon the ground that the condition sought to be enforced by a decree of ouster was in violation of the commerce and due process clauses of the Constitution and of the company‘s rights under that instrument. The right of the Telegraph Company to continue the transaction of local business in Kansas could not be made to
There are other aspects of the case involving constitutional questions that might be considered, and which, it is contended, would lead to the same conclusion as is herein indicated. But it is unnecessary to pass on any of the grounds urged by the Telegraph Company in its defense other than those made the basis of the decision now rendered. In order to dispose of this case we need not now go further than to hold, as we do, that for the reasons stated the State was not entitled to the aid of the court in this case; that the affirmative relief asked by it could not have been granted without practically compelling the Telegraph Company as a condition of its doing local business in Kansas that it should surrender rights belonging to it under the Constitution of the United States and secured by that instrument against hostile state action; that any such condition was unconstitutional and void; and that the right of the Telegraph Company to continue doing business in Kansas is not and cannot be affected by that condition.
MR. JUSTICE MOODY heard the argument in this case, participated in its decision, and approves the opinion of the court.
The judgment of the Supreme Court of Kansas is reversed and the cause remanded for such proceedings as may be consistent with this opinion.
Reversed.
MR. JUSTICE WHITE concurring.
It is shown that the Telegraph Company, many years ago, went into the State of Kansas, constructed its lines, established
Nor, I submit, is there force in the suggestion that under the facts here disclosed the company cannot be heard to complain, because, as it was in the State without express authority, it must be assumed to have gone into the State and made its investment subject to the exertion by the State of its authority. I concede the proposition to be sound in so far as it includes the right of the State to exert its lawful powers. That is to say, I concede that the corporation in going in and investing its property within the State did so subject to the right of the State to exert, as to the property thus in the State, all lawful powers which might be called into play as to property so situated, of the character of that under consideration. But I cannot assent to the correctness of the contention in so far as it asserts that the State may suffer a corporation to come into its borders, invest in property therein, and then, after having allowed, by acquiescence or implied invitation, such a situation to arise, the State may treat the corporation as if it had never come in and its property within the State as if it were wholly out of the State, and despoil the corporation of its rights and property upon such false assumption.
It is to be observed that the view taken by me does not deprive the State of power to exert its authority over the corporation and its property in the amplest way subject to constitutional limitations. It simply prevents the State from driving out the corporation which is in the State by imposing upon it arbitrary and unconstitutional conditions, when upon no possible theory could the right to exact them exist, except upon the assumption that the corporation is not in the State, and that the illegal exactions are the price of the privilege of allowing it to come in.
MR. JUSTICE HOLMES, with whom concurred THE CHIEF JUSTICE and MR. JUSTICE MCKENNA, dissenting.
I think that the judgment of the Supreme Court of Kansas was right, and it will not take me long to give my reasons. I assume that a State cannot tax a corporation on commerce carried on by it with another State, or on property outside the jurisdiction of the taxing State, and I assume further that for that reason a tax on or measured by the value of the total stock of a corporation like the Western Union Telegraph Company is void. But I also assume that it is not intended to deny or overrule what has been regarded as unquestionable since Bank of Augusta v. Earle, 13 Pet. 519, that as to foreign corporations seeking to do business wholly within a State, that State is the master, and may prohibit or tax such business at will. Security Mutual Life Ins. Co. v. Prewitt, 202 U.S. 246, 249. Waters-Pierce Oil Co. v. Texas, 177 U.S. 28. Paul v. Virginia, 8 Wall. 168. I make the same assumption as to what has been decided twice at least since I have sat on this Bench, that the right to prohibit, regulate or tax foreign corporations in respect of business done wholly within a State is not taken away by the fact that they also are engaged there in commerce among the States. Pullman Co. v. Adams, 189 U.S. 420. Allen v. Pullman‘s Palace Car Co., 191 U.S. 171.
If it should be said that the corporation had a right to enter the State for commerce with other States, and being there had the same right to use its property as others, I reply that this begs the question, if the premises be granted. If the corporation has the right to enter for one purpose and the State has
Now what has Kansas done? She has not undertaken to tax the Western Union. She has not attempted to impose an absolute liability for a single dollar. She simply has said to the company that if it wants to do local business it must pay a certain sum of money, just as Mississippi said to the Pullman Company that if it wanted to carry on local traffic it must pay a certain sum. It does not matter if the sum is extravagant. Even in the law the whole generally includes its parts. If the State may prohibit, it may prohibit with the privilege of avoiding the prohibition in a certain way. I hardly can suppose that the provision is made any the worse by giving a bad reason for it or by calling it by a bad name. I quite agree that we must look through form to substance. The whole matter is left in the Western Union‘s hands. If the license fee is more than the local business will bear it can stop that business and avoid the fee. Whether economically wise or not, I am far from thinking that the charge is inherently vicious or bad. If the imposition were absolute, or if the attempt were to oust the corporation from the State if it did not pay, the arguments that prevail would be apposite. But the State seeks only to oust the corporation from that part of its business that the corporation has no right to do unless the State gives leave.
Of course the suggestion on the other side is that this is an attempt by indirection to break the taboo on the Telegraph Company‘s business with other States. The local and the interstate business may be necessary each to the other to make the whole pay. Or the Telegraph Company might carry on the
What I have said shows, I think, the fallacy involved in talking about unconstitutional conditions. Of course, if the condition was the making of a contract contrary to the policy of the Constitution of the United States, the contract would be void. That was all that was decided in Southern Pacific Co. v. Denton, 146 U.S. 202. But it does not follow that, if keeping the contract was made a condition of staying in the State, the condition would be void. I confess my inability to understand how a condition can be unconstitutional when attached to a matter over which a State has absolute arbitrary power. This court was equally unable to understand it in Horn Silver Mining Co. v. New York, 143 U. S. 305, 315. In that case it was said: Having the absolute power of excluding the foreign corporation the State may, of course, impose such conditions upon permitting the corporation to do business within its limits as it may judge expedient; and it may make the grant or privilege dependent upon the payment of a specific license tax, or a sum proportioned to the amount of its capital.
The consequence is the measure of the condition. When the only consequence of a breach is a result that the State may bring about directly in the first place, the condition cannot be unconstitutional. If after this decision the State of Kansas,
Finally, in the absence of contract, the power of the State is not affected by the fact that the corporation concerned already is in the State or even has been there for some time. Waters-Pierce Oil Co. v. Texas, 177 U.S. 28. National Council of the Junior Order of United American Mechanics v. State Council of Virginia, 203 U.S. 151, 163. Whatever the corporation may do or acquire there is infected with the original weakness of dependence upon the will of the State. This is a general principle illustrated by many cases. Thus a water company cannot take away the power of a city to establish rates by making contracts with its customers. Knoxville Water Co. v. Knoxville, 189 U.S. 434, 438. Private individuals cannot cut down the police power by their arrangements together. Manigault v. Springs, 199 U.S. 473, 480. A city cannot limit the power of the legislature over property by making a lease. Browne v. Turner, 176 Massachusetts, 9, 15. Or, to pass at once to the most recent and most conspicuous example, the power of Congress to regulate a commerce among the States cannot be affected by the acquisition of property or growth of values dependent upon the continuance of its assent. United States v. Delaware & Hudson Co., 213 U.S. 366, 405, 406. In that case an enormous amount of property had been built up under direct encouragement from the States in which it was situated, and was saved from destruction only by the restricted meaning given to the act of Congress. The unrestricted power of Congress was affirmed in strong terms. See also Union Bridge Co. v. United States, 204 U.S. 364, 394. In Horn Silver Mining Co. v. New York, 143 U.S. 305, the corporation showed by its answer that it had employed part of its capital in manufacturing in New York. It had got into the State and was at work there, yet it was held liable to pay a percentage of its entire capital, although the greater part was outside the State.—But furthermore it is a short answer to this part of the argument that in the present case, according to decisions relied upon by the majority, the State could not have prevented the entry of the corporation, because it entered for the purpose of commerce with other States.
THE CHIEF JUSTICE and MR. JUSTICE MCKENNA concur in this dissent.
The late MR. JUSTICE PECKHAM took part in the consideration of the case and agreed with the minority.