216 F. 199 | W.D. Wis. | 1914
Application for similar injunctions in both of these cases were heard together, under section 266 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1162 [U. S. Comp. St. Supp. 1911, p. 236]), before Christian C. Kohlsaat, United States Circuit Judge, and Ferdinand A. Geiger and Arthur E. Sanborn, District Judges, November 24, 1913; preliminary injunctional orders having been previously entered in both cases, restraining the Secretary of State from revoking the respective licenses to do business in Wisconsin theretofore issued to complainants, respectively.
These corporations have always been rightfully in the state, because they are engaged in interstate and foreign commerce; the telegraph company being also a government agent under certain acts of Congress. They were lawfully in the state, engaged in such business, long before 1898, when the first statute was passed requiring foreign corporations to take out local licenses under penalty of being unable to make contracts relating to local business, or to acquire or dispose of title to property in such business. As to other than local business they are lawfully in the state, since the statute referred to does not relate to interstate or foreign commerce transactions. Elwell v. Adder Machine Co., 136 Wis. 82, 116 N. W. 882.
In 1905 the Wisconsin Legislature passed an act providing as follows :
“Sec. 1770f. Whenever any foreign corporation doing business in this state shall remove or make application to remove into any District or Circuit Court of the United States any action or proceeding commenced against it by any citizen of this state, upon any claim or cause of action arising within this state, it shall bo the duty of the Secretary of State, upon such fact being made to appear to him, to revoke the license of such corporation to do business within this state.” Laws 1905, c. 506.
Each of these corporations has removed to the federal court a case against it of the kind referred to in the statute. The Secretary of State having threatened to revoke their licenses, these applications for temporary injunctions were made, and heard as already stated.
It is argued by counsel' for the state that the mere revocation of the license of a foreign corporation doing both a local and interstate business will in no way affect its right to continue the transaction of business in interstate and foreign commerce. If, however, it makes a contract or acquires property wholly in its local business, then it comes within the disabilities and penalties prescribed in section 1770b.
The Supreme Court of the United States has laid down certain rules in deciding cases similar to these, and, so far as that court has settled
The rulings referred to seem decisive of this application, so that it is unnecessary to consider other points.
The only discrimination we are able to perceive in the Wisconsin law, in favor of domestic and against foreign corporations, is a very narrow one. Eoreign corporations are not allowed to remove cases against them by citizens of Wisconsin, on causes of action there arising. The same rule applies to domestic corporations, under section 28 of the Federal Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1094 [U. S. Comp. St. Supp. 1911, p. 140]), which does not allow defendants to have removal for diverse citizenship unless they are nonresidents of the state. Hence domestic corporations cannot exercise such a right. If, however, the suit against the domestic corporation presents a federal question, and more than $3,000 is in dispute, it may remove the case, though a citizen and resident of the state, and though the plaintiff is a citizen of the same state and the cause of action arose therein. To this limited degree there is discrimination; but instances of such cases would be very fare. The question of the right to remain in the state may also be litigated by the foreign corporation in the-state courts, with ■ a final right of review in the Supreme Court by writ of error to the highest state court. It is unnecessary on thege motions for injunctions to pass on this narrow question, because a consideration of the second point referred to seems to require the court to direct the temporary injunctions prayed.
'The question is whether-section 1770f is substantially'a command or prohibition to refrain from taking a removal. It is evident that such a stipulation in the ordinary private contract would not be a prohibition, but merely a condition. But contracts such as those here in question are not between citizens or subjects, but between a political superior and a subject — between the state as a local sovereignty and a citizen or subject of another state. 'The object of such statutes is public policy. The corporation cannot elect whether it will stay out, being practically coerced to come in by threatened’ loss of contract and property rights. The parties are by no means on equal terms. One is a sovereign, dictating what the subject, in these cases lawfully in the state for some purposes, shall do if it remains therein for other purposes closely related. So when the state enacts that, if the subject does something it has a perfect abstract right to do, it shall be punished, it is thereby substantially prohibited. The federal Penal Code of 1909 (Act March 4, 1909, c. 321, 35 Stat. 1088 [U. S. Comp. St. Supp. 1911, p. 1588]) contains very .few express commands. Most of its sections provide that whoever shall do certain acts shall be punished. This is the same as enacting that these are unlawful and prohibited. No one would contend that these were not commands to refrain from those acts. They are prohibitions from a political superior to a subject, enacted for the public welfare. The state says to the telegraph company or coal company:
“You are in the state lawfully for interstate and government business. If, however, you do any other kind of business, you must have a local license. If you remove to a federal court any case, whether in your interstate or local business, brought against you by a citizen of Wisconsin on a cause of action arising therein, your license to do a local business will be revoked. Any contract not in interstate commerce you may thereafter make will be void in your favor but valid against you, and any conveyance of land for local purposes which you may take will not vest any title.”
This is a substantial command or prohibition. It is the same as saying, “You shall not remove such a case.”
In the Morse Case, 20 Wall. 445, 22 L. Ed. 365, there was an express stipulation not to remove actions against the company. But in the Burnside Case, 121 U. S. 186, 7 Sup. Ct. 931, 30 L. Ed. 915, 1 Interst. Com. Rep. 295, the prohibition was implied, as it is here. The application of the foreign corporation to be permitted to do business in Iowa was required to contain a stipulation “that said permit shall be subject to each of the provisions” of the foreign corporation statute. A removal to a federal court by the corporation was made a forfeiture of the permit. No application had ever been made by the company to be permitted to do business in the state, and one of its servants was arrested for running an interstate train in Iowa. The court said:
“The locomotive engineer is arrested for acting as such in the employment ■of the corporation, because it has refused.to stipulate that it will not remove into the federal court suits brought against it in the state court, as a condition of obtaining a permit, and consequently has not obtained such permit. •* * * As the-Iowa statute makes the right to a permit dependent upon the surrender by the foreign corporation of a privilege secured to it by the*205 Constitution and laws of tlie United States, the statute requiring the permit must he held to be void.”
This decision has been many times approved by the Supreme Court and Circuit Courts of Appeals. The citing cases are discussed by Mr. Justice Day in the dissenting opinion in the Prewitt Case, supra.
Being unable to distinguish these cases from the Burnside decision, the duty to grant the applications for a preliminary injunction is plain. The case of Harrison v. San Francisco Co., 232 U. S. 318, 34 Sup. Ct. 333, 58 L. Ed. 621, decided since the hearing, seems to strengthen our position.