Munday v. Wisconsin Trust Co., 252 U.S. 499 (1920)

U.S. Supreme Court

Munday v. Wisconsin Trust Co., 252 U.S. 499 (1920) Munday v. Wisconsin Trust Company

No. 288

Argued March 25, 1920

Decided April 19, 1920

252 U.S. 499

ERROR TO THE SUPREME COURT

OF THE STATE OF WISCONSIN

Whether a state statute is intended to validate a contract previously unenforceable under the state law is for the state courts finally to decide, and involves no federal question. P. 502.

As applied to transactions subsequent to its enactment, a state law providing that conveyances of local realty taken by sister-state corporations before they have filed their articles with the local secretary of state shall be wholly void on behalf of them or their assigns violates neither the contract clause nor the due process clause of the Fourteenth Amendment. P. 252 U. S. 503.

The power of the state to exact such conditions of outside corporations precedent to acquisition of land within the state, and the rule that conveyances are governed by the lex loci rei sitae are not affected by delivery of the deeds, etc., in another state; the transaction does not thus become a matter of interstate commerce. Id.

168 Wis. 31 affirmed.

The case is stated in the opinion.

Page 252 U. S. 501

MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

The court below declared null and void two separate deeds whereby defendants in error undertook to convey to the Realty Realization Company, a Maine corporation, certain land in Wisconsin upon the ground that the grantee had failed to comply with the statute of the state prescribing conditions under which foreign corporations might acquire title to property therein. The deeds were dated and delivered in Illinois February 28, 1913. A subsequent deed from the Realty Company and a mortgage by its grantee were also declared ineffective, but they need not be separately considered here. Wisconsin Trust Co. v. Munday, 168 Wis. 31.

At the time of the transactions in question, the applicable statutory provisions concerning foreign corporations were subsections 2 and 10 of § 1770b, Wisconsin Statutes 1911, which follow:

Sec. 1770b.

"2. No corporation, incorporated or organized otherwise than under the laws of this state, except railroad corporations, corporations or associations created solely for religious or charitable purposes, insurance companies and fraternal or beneficiary corporations, societies, orders and associations furnishing life or casualty insurance or indemnity upon the mutual or assessment plan, shall transact business or acquire, hold, or dispose of property in this state until such corporation shall have caused to be filed in the office of the secretary of state a copy of its charter, articles of association or incorporation and all amendments thereto duly certified by the secretary of state of the state wherein the corporation was organized. . . ."

"10. Every contract made by or on behalf of any such foreign corporation, affecting the personal liability thereof or relating to property within this state, before it shall have complied with the provisions

Page 252 U. S. 502

of this section, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them."

The original proceeding was instituted March 30, 1913. While it was pending in the circuit court, the Realty Company complied with § 1770b and obtained a license to do business and hold property in Wisconsin -- October, 1915. On May 11, 1917, the legislature enacted c. 211, Laws of 1917, which amended subsection 1 of § 1770j of the statute to read:

"Any corporation organized otherwise than under the laws of this state, having acquired, or attempted to acquire, legal title by deed, or lease to any real property in this state, before complying with the terms of § 1770b of the statutes, and which is now not required to comply with said section or which has thereafter, and before the passage of this section, complied with said section, shall be and is hereby relieved from any disability provided in said statute or prohibition therein contained, so far as said section relates to the acquisition and holding of the property so acquired or attempted to be acquired, and the title so acquired or attempted to be acquired is hereby confirmed."

Plaintiffs in error unsuccessfully challenged the validity of § 1770b upon the ground of conflict with the contract clause, § 10, Article I, of the federal Constitution and the due process clause of the Fourteenth Amendment. They further insisted that if § 1770j as amended by c. 211, Laws of 1917, was not so applied as to validate the deeds in question, rights, privileges, and immunities guaranteed to them by the Fourteenth Amendment would be infringed.

Obviously no impairment of any federal right resulted from the construction placed upon § 1770j as amended in 1917. Whether that section did or did not validate a contract theretofore unenforceable was a question for the

Page 252 U. S. 503

state court finally to decide -- it involved no right under the Constitution or laws of the United States.

Section 1770b was enacted prior to the transactions here in question, and the settled doctrine is that the contract clause applies only to legislation subsequent in time to the contract alleged to have been impaired. Cross Lake Shooting & Fishing Club v. Louisiana, 224 U. S. 632, 224 U. S. 639.

In support of the claim that subsection 10, § 1770b as construed by the court below conflicts with the due process clause, it is said:

"The contract between the defendants in error and the Realty Company and the deeds delivered in compliance therewith were all made in Illinois. They have been declared void in the State of Wisconsin. So applied, the statute deprives plaintiffs in error of their property without due process of law."

Allgeyer v. Louisiana, 165 U. S. 578, 165 U. S. 591, is relied upon as adequate authority to support the point presented, but we think it is wholly irrelevant.

Where interstate commerce is not directly affected, a state may forbid foreign corporations from doing business or acquiring property within her borders except upon such terms as those prescribed by the Wisconsin statute. Fritts v. Palmer, 132 U. S. 282, 132 U. S. 288; Chattanooga National Building & Loan Association v. Denson, 189 U. S. 408; Interstate Amusement Co. v. Albert, 239 U. S. 560, 239 U. S. 568.

No interstate commerce was directly involved in the transactions here questioned. Moreover, this Court long ago declared: "The title to land can be acquired and lost only in the manner prescribed by the law of the place where such land is situate." United States v. Crosby, 7 Cranch 115, 11 U. S. 116.

The judgment of the court below is

Affirmed.