A statute of Wisconsin enacted prior to June 25, 1898, but which
was to go into operation on September 1, 1898, requiring foreign
corporations to file a copy of their charter with the Secretary of
State and to pay a small fee as a condition for doing business
there, does not impair the obligation of a contract made on June
25, 1898, by a foreign corporation to do business in Wisconsin
after September 1, 1898.
The statute, as applied to this case, does not interfere
unlawfully with interstate commerce, notwithstanding the fact that
the business was the production of glue which naturally would be
sold outside the state.
The statute originally included foreign partnerships as well as
that the provision as to partnerships
was separable, and if invalid for any reason did not affect the
remainder of the act.
The facts are stated in the opinion of the Court.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is an action upon a written contract alleging a breach
Page 187 U. S. 612
and claiming damages. It was brought in the United States
Circuit Court for the Eastern District of Wisconsin by an Illinois
corporation against a Wisconsin corporation. On June 25, 1898, the
date when the contract was made, a law had been enacted in
Wisconsin, to go into operation later, on September 1, 1898,
requiring corporations incorporated elsewhere to file a copy of
their charter with the Secretary of State, and to pay a small fee
as a condition of doing business there. Wis.Stat. 1898, §§
, 4978. This it was admitted that the plaintiff had
not done, and the defendant set up that the contract was a contract
to do business in Wisconsin after the statute took effect, and that
the defendant was justified by the statute in declining to go on.
The judge sustained this defense, and the plaintiff excepted,
contending that the statute did not, and could not,
constitutionally affect its rights under the contract in question.
103 F. 838. It brings the case here by a writ of error.
The contract was one by which it was agreed that the plaintiff
should supervise the plans for a glue factory to be built by the
defendant on a site to be selected within sixty days; that it
should have the management of the manufacturing in the same, and
should operate it for the defendant; that its officers should give
the factory such personal supervision as might be necessary, and
give the defendant in the management and operation of the factory
the benefit of their experience and of the plaintiff's; that the
plaintiff should furnish and keep the defendant supplied with a
superintendent; that it should control, handle, and sell the entire
output of the factory; that it should refrain from manufacturing
hide or calf glues at any of its own factories, and that it should
guarantee payment on all sales made by it, and should receive
certain commissions for its services. The contract was to run for
five years from the time that the plant was finished and began
work. It was understood that the proposed factory was to be in
Wisconsin. A site was selected near Milwaukee, and in a little over
a year from the date of the contract, on July 25 or 26, 1899, the
plant was built and put in operation.
The section of the Wisconsin statutes relied on by the
Page 187 U. S. 613
stated more at length, forbade corporations organized otherwise
than under the laws of that state to transact business in the state
until they should have filed a copy of their charter with the
Secretary of State, which act, by the same statute, constituted the
Secretary of State the attorney of the corporation for the service
of process. A failure to comply with any of the provisions of the
section subjected the corporation to a fine. It was provided
further that every contract made by such corporation affecting the
personal liability thereof or relating to property within the state
before compliance with the section should be wholly void on its
behalf, but should be enforceable against it. A fee of twenty-five
dollars was to be paid for filing the charter. See Ashland
Lumber Company v. Detroit Salt Co.,
89 N.W. 904.
According to the undisputed testimony of the plaintiff's
vice-president, who executed the contract, the instrument was
signed in Wisconsin, and at all events, if it was executed with a
view to the carrying on of business in that state by the plaintiff,
the law of Wisconsin must be applied. London Assurance Company
v. Companhia de Moagens do Barreiro, 167 U.
, 167 U. S.
-161; Graves v. Johnson,
156 Mass. 211.
There is no controversy on this point. But it is said that the
contract did not contemplate the carrying on of business by the
plaintiff in Wisconsin, that at most it is ambiguous, and that
practically it was construed in accordance with the plaintiff's
contention. The declaration is on the contract, and by that the
plaintiff must stand or fall. We see no ambiguity in its terms. The
plaintiff was to have the management of the manufacturing, was to
operate the factory, or at least to assist in operating it, and to
keep it supplied with a superintendent. It did assist in operating
by its officers, and did supply a superintendent, and whether, in
his superintendence he in fact acted as agent for the plaintiff or
the defendant, what the contract required is plain. It called for a
carrying on of business in Wisconsin by the plaintiff at a time
when to carry it on without filing a copy of the plaintiff's
charter was forbidden by the laws of the state. See Connecticut
Mutual Life Insurance Co. v. Spratley, 172 U.
, 172 U. S. 611
The only complaint of the plaintiff is that the defendant refused
Page 187 U. S. 614
that contract when the plaintiff had filed no copy of its
charter, and when the performance was forbidden by the law. It is
said, to be sure, that the part refused by the defendant was a
different and lawful portion. But the contract was an entire
contract, as both parties agree, and therefore whatever the
defendant had in mind, if it was justified by the law, in refusing
to perform a material part, it was justified in refusing to perform
any portion. See McMullen v. Hoffman, 174 U.
. It is alleged to have declared the contract at
an end. We may add that it is not a question of election, but of
the legality of performance, and therefore the justification could
not be waived.
It hardly could be contended that the contract was illegal, on
the ground just stated, when it was made. If, indeed, it had
contemplated the plaintiff's going on without complying with the
statute, it would have raised a question which we need not discuss.
But it must be taken to have contemplated legal action, and if
filing a copy of its charter was a condition precedent of the
plaintiff's right to carry out its undertakings, then a promise
might be implied on its part to take the necessary steps. But if,
when the time came, the plaintiff did not take those steps, the
defendant had the legal right to refuse to go on, whether its right
be put on the ground of the plaintiff's breach of its implied
undertaking or of the illegality of the proposed continuance of the
work. The plaintiff contends, however, as we have said, that the
statute did not and could not apply to the performance of the
contract in suit. It will be remembered that, while enacted before
the contract was made, it did not go into effect until afterwards,
although before the time when the factory was or could have been
built in the ordinary course of business. It is said that, if the
statute is taken to govern the present contract, it impairs the
obligation of that contract, and encounters the United States
Constitution, Article I, Section 10. It is assumed that to allow
the statute any operation upon the contract is to give it a
retroactive effect, and it is said that for that reason also
plaintiff is not barred.
A prohibition of the doing of business after a statute goes into
effect is not retroactive with regard to that business, even though
the business be done in pursuance of an earlier contract.
Page 187 U. S. 615
The suggestion needing discussion is whether the statute impairs
the obligation of the contract. We are of opinion that it is not
open to that objection. We leave on one said the question how the
obligation of a contract can be impaired by a law enacted before
the contract was made. Pinney v. Nelson, 183 U.
, 183 U. S. 147
Again, we need not consider in its full breadth whether or how far,
notwithstanding Security Savings & Loan Association v.
153 Ind.198, a corporation, by making a contract
reaching years into the future, can exonerate itself from all
police or license laws, on the ground that, by indirection, they
make performance of the contract more difficult to an infinitesimal
degree. Compare 80 U. S.
13 Wall. 68,
80 U. S. 71
; Bedford v. Eastern Building & Loan
Association, 181 U. S. 227
181 U. S. 241
We shall advert to parallel considerations in connection with the
alleged interference with commerce between the states. The
prohibition in this case is not absolute, but is only conditional
on the failure to deposit a copy of the plaintiff's charter and to
pay a small fee. It is merely incident to a regulation which, but
for the contract, unquestionably would be proper, and which is
familiar in the laws of the state. It can be avoided by compliance
with the regulation. We are not prepared to say that the regulation
would be unreasonable or invalid as to such a contract as this,
even if enacted after the contract was made. But we rest our
decision upon the narrower ground of the foregoing considerations
taken in connection with what we are about to say.
The suspension clause of § 4978 was of immediate operation, and
therefore was notice to the plaintiff and defendant of itself and
of what was suspended and for how long. If with that notice they
contracted for the transaction of business within the jurisdiction
of the statute and after the statute should have gone into effect,
they did so with notice that, if nothing changed, the contemplated
business would be unlawful by force merely of present conditions
and the lapse of time, unless the plaintiff should comply with the
regulation. In such circumstances, at least, it seems to us
impossible to say that the obligation of the contract is impaired
within the meaning of the Constitution by the Wisconsin law.
Statements made with a
Page 187 U. S. 616
different intent in some decisions, to the effect that suspended
statutes are to be read as if passed on the day when they go into
operation, do not apply to a case like this. Such statutes are to
be read in that way for the purposes of the operation which is
suspended, but not for all. Stine v. Bennett,
153, 157; Smith v. Morrison,
22 Pick. 430, 432; Ford
v. Chicago Milk Shippers' Association,
155 Ill. 166, 181.
It is said that the contract in suit, as carried out, was
concerned in part with interstate commerce, and therefore was free
from the operation of the Wisconsin statute. The portion of the
contract that called for the carrying on of business in Wisconsin
was not so concerned, and the inseparable provisions as to selling
left it to chance or extrinsic business considerations whether the
contemplated traffic should go outside the state or not. The
foundation of the commerce outside the state was doing business
within it. The superintendence and manufacture had to come before
the sale. The small requirements of this act before allowing the
plaintiff to do business in the state, if good as to that business
taken by itself, are not made bad by the presence in the contract
of an ulterior term which the plaintiff might or did intend to
carry out by transporting the products of the business elsewhere.
United States v. E. C. Knight Co., 156 U. S.
, 156 U. S. 13
Hopkins v. United States, 171 U.
, 171 U. S.
-594. The interference with the regulation of
commerce between the states is more remote than when a bridge
between two states, or the franchise of a domestic corporation
created with the intent to carry on such commerce, is taxed.
See Henderson Bridge Co. v. Henderson, 173 U.
, 173 U. S.
-623; Central Pacific Railroad Co. v.
California, 162 U. S. 91
162 U. S. 119
162 U. S.
-126. In modern societies every part is related so
organically to every other that what affects any portion must be
felt more or less by all the rest. Therefore, unless everything is
to be forbidden and legislation is to come to a stop, it is not
enough to show that, in the working of a statute, there is some
tendency, logically discernible, to interfere with commerce or
existing contracts. Practical lines have to be drawn, and
distinctions of degree must be made. See further
Page 187 U. S. 617
Kidd v. Pearson, 128 U. S. 1
128 U. S. 21
Coe v. Errol, 116 U. S. 517
116 U. S.
-527; Tredway v. Riley,
32 Neb. 495.
Yet another objection to the statute remains to be mentioned. At
the date of the contract, the section applied to partnerships as
well as to corporations. It is argued that the act, so far as it
applied to the former, was contrary to Article II, Section 4, of
the Constitution of the United States, and to the Fourteenth
Amendment, and therefore was invalid throughout. We shall not
consider the validity of the law as applied to unincorporated
associations, because, in our opinion, the application of the
provision to corporations was severable from, and independent of,
its application to partnerships, so that, even if in the latter
aspect the section was bad, it remained unaffected and valid so far
as this case is concerned. The independence seems to us obvious on
reading the statute, and is emphasized by the fact that the next
year after the enactment, before the completion of the factory,
partnerships were struck out of the act. Laws of 1899, c. 351, §
27. We are of opinion that the ruling of the circuit court was
right, and that the judgment should be affirmed.