A benefit association incorporated under a state law and styling
itself a National Council granted charters to various voluntary
organizations in other states, styled State Councils, for similar
purposes under conditions expressed in the charters. A dominant
portion of the members of a State Council procured a charter from
the state legislature granting the corporation so formed under the
same name powers in some respects exclusive in that state to carry
on a similar work, but saving any rights of property possessed by
the National Council. In a suit, brought by the latter,
held that:
Whatever relations may have existed between the National Council
and the voluntary State Council, there was no contract between the
former and the incorporated State Council which was impaired, and
the act of incorporation was not void within the impairment clause
of the federal Constitution.
A state has the right to exclude a foreign corporation and
forbid it from constituting branches within its boundaries, and
this power extends to a corporation already within its
jurisdiction. A single foreign corporation may be expelled from a
state by a special act if the act does not deprive it of property
without due process of law.
The property of which a corporation cannot be deprived without
due process of law under the Fourteenth Amendment does not include
the mere right of a foreign corporation to extend its business and
membership in a state which otherwise may exclude it from its
boundaries.
104 Va. 197 affirmed.
The facts are stated in the opinion.
Page 203 U. S. 158
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a writ of error to reverse a decree in favor of the
defendant in error, the original plaintiff, and hereinafter called
the plaintiff. 104 Va.197. The plaintiffs in error will be called
the defendants. The plaintiff is a Virginia corporation. The
principal defendant is a Pennsylvania corporation. The other
defendants are alleged to be officers of a voluntary association,
calling itself by the plaintiff's name, and are acting under a
charter from the Pennsylvania corporation. The latter was
incorporated in 1893, the articles of association reciting that the
associates comprise the National Council, the supreme head of the
order in the United States (where it previously had existed as a
voluntary association). Its objects were to promote the interests
of Americans and shield them from foreign competition, to assist
them in obtaining employment, to encourage them in business, to
establish a sick and funeral fund, and to maintain the public
school system, prevent sectarian interference with the same, and
uphold the reading of the Holy Bible in the schools. As the result
of internal dissensions, the Virginia corporation was chartered in
1900, with closely similar objects, omitting those relating to the
public schools. It seems to have consisted of the dominant portion
of a former
Page 203 U. S. 159
voluntary State Council of the same name, from which a charter
issued by the Pennsylvania corporation had been withdrawn. The act
of incorporation declared that the new body "shall be the supreme
head of the Junior Order of the United American Mechanics in the
State of Virginia," and provides that it
"shall have full and exclusive authority to grant charters to
subordinate councils, Junior Order United American Mechanics, in
the State of Virginia, with power to revoke the same for
cause."
The plaintiff and the voluntary organization of the defendants
both have granted and intend to grant charters to subordinate
councils in Virginia, and are obtaining members and fees which each
would obtain but for the other, and are holding themselves out as
the only true and lawful State Council of the Virginia Junior Order
of United American Mechanics.
The plaintiff sued for an injunction, and the defendants, in
their answer, asked cross-relief. The plaintiff obtained a decree
enjoining the defendant corporation and the other defendants
(declared to be shown by their answers to be its agents and
representatives) as officers of the Virginia voluntary association,
from continuing within the state the use of the plaintiff's name or
any other name likely to be taken for it, from using the
plaintiff's seal, from carrying out under such name the objects for
which the plaintiff and the Virginia voluntary association were
organized, from granting charters to subordinate councils in the
state as the head of the order in the state, from interfering in
any way with the pursuit of its objects by the plaintiff within the
state, and from designating their officers within the state by
applications set forth as used by the plaintiff. On appeal, the
decree was affirmed, with a modification, merely by way of caution,
providing that nothing therein contained should in anywise
interfere with any personal or property rights that might have
accrued before the date of the Virginia charter. The defendants had
set up in their answer and insisted that the charter impaired the
obligation of the contract existing between the plaintiff
Page 203 U. S. 160
and the principal defendant, contrary to Article I, § 10, of the
Constitution, and also violated section 1 of the Fourteenth
Amendment, and they took a writ of error from this Court.
The bill and answer state the two sides of the difference which
led to the split at length. But those details have no bearing that
needs to be considered here. The only question before us is the
constitutionality of the act of the Virginia legislature granting
the charter. The elements of that question are the appropriation of
the name of the previously existing voluntary society and the
exclusive right of granting subcharters in Virginia conferred by
the words that we have quoted. Whether the persons who were using
that name when they got themselves incorporated were using it
rightly or wrongly does not matter if the legislature had the right
to grant the name to them in either case. On the other hand, we do
not consider the question stated to be disposed of by the
limitation put upon the decree by the Supreme Court of Appeals.
Unless the saving of personal and property rights existing at the
date of the charter be read as a construction of the charter, it
does not affect the scope or validity of the act. And, if so read,
still it cannot be taken to empty the specific prohibitions in the
decree of all definite meaning and to leave only an indeterminate
injunction to obey the law at the defendants' peril. That
injunction remains and imports what the words of the charter import
-- that the plaintiff has been granted certain defined exclusive
rights which the court will enforce.
The decree, however, goes beyond the rights which we have
mentioned as given by the charter. In that respect, the discussion
here must be limited again. Whether the plaintiff is using
paraphernalia, or a ritual, or a seal which it should not be
allowed to use is not before us here. T he charter says nothing
about them, and its validity is not affected by any abuse of rights
of property or of confidence which the plaintiff or its members may
have practiced. This Court, we repeat,
Page 203 U. S. 161
cannot go beyond a decision upon the constitutionality of the
charter granted, and we address ourselves to that.
The contract of which the obligation is alleged to have been
violated is a contract between the plaintiff and the principal
defendant. What that contract is supposed to have been is not
stated, but manifestly there was none. It would have had to be a
contract not to come into existence, at least with the plaintiff's
present functions and name. There have been cases where
administration was taken out on a prematurely born child and a suit
brought for causing it to be born,
per quod it died, but
they have failed.
Dietrich v. Northampton, 138 Mass. 14.
See Walker v. Great Northern Ry. Co. of Ireland, 28
L.R.Ir. 69. An antenatal contract presents greater difficulties
still. Even if we should substitute an allegation of a contract
with the members of the plaintiff, the contention would fail. The
contract, if any there was, was not that they would not become
incorporated, but must be supposed to be that they would retain
their subordination to the National Council or something of that
sort. It is going very far to say that they contracted not to
secede, but whether they did so or not, it was a matter outside the
purview of the charter. There was nothing in that to hinder their
returning to their allegiance. Whether any, and if any, what,
contract was made (
National Council, Junior Order United
American Mechanics v. State Council, 64 N.J.Eq. 470, 473), and
whether, if made, it must not be taken to have been made subject to
the powers of the state, with which we are about to deal, are
questions which we may pass.
See Pennsylvania College
Cases, 13 Wall. 190,
80 U. S. 218;
Bedford v. Eastern Building & Loan Association,
181 U. S. 227.
The most serious aspect of the defense is presented by the
matter of the plaintiff's name. If the legislation of a state
undertook to appropriate to the use of its own creature a trade
name of known commercial value, of course, the argument would be
very strong that an act of incorporation could not interfere with
existing property rights. And, no doubt,
Page 203 U. S. 162
within proper limits, the argument would be as good for a
foreign corporation as for a foreign person. But that is not what
has been done in this case.
The name in question is not the name of the principal defendant,
but distinguished from that name as state and National Councils no
doubt generally are distinguished by members of similar
institutions. It is the name of a voluntary association of which
the officers are defendants. But it is not used even by that
association in its own right, but only under a charter from, and in
the right of, the Pennsylvania corporation. Furthermore, the name
is not associated with a product of any kind. Its only value to the
defendants in a property sense is as tending to invite membership
in a club which professes to derive its existence and its powers
from the Pennsylvania company. It does not seem likely that anyone
would join the plaintiff, and certainly no member could be
retained, in ignorance of its alienation from the National Council.
As the National Council has its branches elsewhere, and as the
plaintiff is, on its face, a state organization, competition
outside the state appears improbable. So that the claim of the
defendants comes down to a claim of right to compete within the
state, and a right, as we have said, of or in behalf of the
Pennsylvania corporation, which controls the existence of its
subordinate Virginia councils. Thus, the question as to the grant
of the name passes over into the question as to the exclusive right
of the plaintiff to issue charters, which was the other legislative
grant.
The Supreme Court of Appeals was right, therefore, in treating
the constitutional question as depending on the power of the state
with regard to foreign corporations. That must decide the case. Now
it is true, of course, that an unconstitutional law no more binds
foreign corporations than it binds others.
Carroll v. Greenwich
Ins. Co., 199 U. S. 401,
199 U. S. 409.
And no doubt a law specially directed against a foreign corporation
might be unconstitutional, for instance, as depriving it of its
property without due process of law.
See Blake
v.
Page 203 U. S. 163
McClung, 172 U. S. 239,
172 U. S. 260.
But when the so-called property consists merely in the value that
there might be in extending its business or membership into a
state, that property, it hardly needs to be said, depends upon the
consent of the state to let the corporation come into the state.
The State of Virginia had the undoubted right to exclude the
Pennsylvania corporation and to forbid its constituting branches
within the Virginia boundaries. As it had that right before the
corporation got in, so it had the right to turn it out after it got
in.
Security Mutual Life Ins. Co. v. Prewitt, 202 U.
S. 246. It follows that the state could impose the more
limited restriction that simply forbade the granting of charters to
"subordinate Councils, Junior Order United American Mechanics, in
the State of Virginia."
It is argued that the power of the state in this case was less
than it otherwise might have been, because it did not turn the
Pennsylvania corporation out. The Supreme Court of Appeals says
that the plaintiff's charter leaves the whole order of things as it
existed unaffected except by the exclusive right of the plaintiff
to issue subordinate charters. It is said that the general statutes
recognized the defendant and authorized such associations to
continue within the state. A subordinate Council of the order had
been granted a special charter, which is not revoked. The
conclusion is drawn that the restrictions upon the defendant which
flow from the charter to the plaintiff amount to a denial of the
equal protection of the laws of Virginia to a person within its
jurisdiction. But the power of the state as to foreign corporations
does not depend upon their being outside of its jurisdiction. Those
within the jurisdiction, in such sense as they ever can be said to
be within it, do not acquire a right not to be turned out except by
general laws. A single foreign corporation, especially one unique
in character like the National Council, might be expelled by a
special act. It equally could be restricted in the more limited
way.
There were many difficult questions presented to the state
Page 203 U. S. 164
court which cannot be reviewed here. As to the constitutionality
of the plaintiff's charter, we are of opinion that the court was
right.
Decree affirmed.