A statute of Minnesota denying to all foreign corporations the
right to maintain any action in the courts of the State unless they
have previously obtained a certificate of authority to do business
within the State, for which a filing fee of $5.00 plus an initial
license fee of $50.00 is exacted -- held
valid as applied
to a federally licensed customhouse broker whose business was
localized in the State, and not in conflict with existing federal
laws and regulations relating to customhouse brokers or with the
commerce clause of the Constitution. Pp. 322 U. S. 207
322 U. S.
215 Minn. 207, 9 N.W.2d 721, affirmed.
Certiorari, 320 U.S. 724, to review a judgment which, reversing
a judgment of the trial court, ordered dismissal of a suit brought
by a foreign corporation.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
This is a suit brought in one of the lower courts of Minnesota
by the Union Brokerage Company against Jensen and Rime for breach
of fiduciary obligations in relation to Union's business, that of
customhouse brokerage. The only defense to the suit with which we
are concerned is the alleged disability of Union to resort to
Minnesota's courts for want of compliance with her laws governing
the transaction of business in the State as a foreign corporation.
Minn.L.1935, c. 200, Minn.Stat. 1941, c. 303. The Supreme Court of
Minnesota sustained this defense, reversed the judgment in favor of
Page 322 U. S. 203
and ordered the suit dismissed. 215 Minn. 207, 9 N.W.2d 721. We
brought the case here to determine the important question whether
enforcement of the Minnesota Foreign Corporation Act in this
situation runs counter to federal law pertaining to customhouse
brokers or is barred by the Commerce Clause, Const. art. 1, § 8,
cl. 3. 320 U.S. 724.
Another claim that state authority must yield to controlling
federal authority over interstate and foreign commerce is thus
presented. It becomes necessary, therefore, to ascertain precisely
what demand the State has here made, in relation to what
transactions or activity it is making such demand, in what way
federal authority has regulated such transactions or activity, and,
finally, whether the Commerce Clause by its own force, in case
federal law has not actually taken control, excludes the State from
the exercise of the power it has here asserted.
For many years the petitioner, a North Dakota corporation,
conducted a customhouse brokerage business at Portal, North Dakota,
a port of entry from Canada by way of the Canadian Pacific Railway.
In July, 1940, the Canadian Pacific rerouted most of its shipments
whereby they no longer entered the United States through Portal,
but came through Noyes, Minnesota, with the result that more than
90% of Union's business was diverted from Portal. After November,
1940, at which time respondent Jensen resigned as officer of Union
under circumstances giving rise to this suit, Union began to do
business at Noyes, and was doing business in Minnesota when it
brought this suit. We shall outline the nature of this customhouse
brokerage business only so far as is relevant to a consideration of
On goods shipped from Canada into this country, the consignee of
imported merchandise must "make entry" of
Page 322 U. S. 204
them at the office of the collector of customs at Noyes either
in person or by an authorized agent, and this must be done within
forty-eight hours of the report of the vehicle which carried the
goods unless the collector extends the time. Tariff Act of 1930, 46
Stat. 590, 722, 19 U.S.C. § 1484(a). To make entry, the contents
and value of the shipment must be declared and the tariff
estimated, and the production of a certified invoice and a bill of
lading is generally required. 19 U.S.C. § 1484(b)(c)(e)(g). Speed
in making entry is vital, because goods cannot proceed to their
ultimate destination until its completion. Apart from the fact that
importers cannot always or even often make entries in person, the
procedure makes demands upon skill and experience. The specialist
in these services is the customhouse broker. In addition, he
advances the duty in order that the goods may be cleared. 19 U.S.C.
§ 1505. The competence of the broker also bears on the efficient
collection of customs duties in that the likelihood of additional
assessment or refund after final determination of the duty is
greatly lessened by accuracy in the tentative computation. But,
since errors and differences of opinion are inevitable, to insure
collection of deficiencies, the Government requires a bond prior to
release. 19 U.S.C. § 1499; 19 Code Fed.Reg. § 6.27.
The business of customhouse brokers, it is apparent, demands a
sense of responsibility and skill. To protect importers as well as
the Treasury, Congress has authorized the Secretary of the Treasury
"prescribe rules and regulations governing the licensing as
customhouse brokers of citizens of the United States of good moral
character, and of corporations, associations, and partnerships, and
may require, as a condition to the granting of any license, the
showing of such facts as he may deem advisable as to the
qualifications of the applicant to render valuable service to
importers and exporters."
46 Stat. 759, 19 U.S.C. § 1641(a). Elaborate regulations define
the investigation to be made of the character and reputation of the
applicant and his experience in customs matters. 31A Code Fed.Reg.
§ 11.3(b). The applicant is then directed to appear before an
examining subcommittee, which determines the "applicant's knowledge
of customs law and procedure and his fitness to render valuable
Page 322 U. S. 205
to importers and exporters." 31A Code Fed.Reg. § 11.3(e)(f). On
approval of a favorable report of the subcommittee by the Committee
on Enrollment and Disbarment of the Treasury Department, a license
issues. 31A Code Fed.Reg. §§ 11.3(f)(g), 11.4.
"A licensed customhouse broker requires no further enrollment
under the regulations in this part for the transaction, within the
customs districts in which he is licensed, of any business relating
specifically to the importation or exportation of merchandise under
customs or internal-revenue laws."
31A Code Fed.Reg. § 11.5.
Union's license authorizes it to do business in District No. 34
which embraces both Portal, North Dakota, and Noyes, Minnesota. 19
Code Fed.Reg. § 1.2. The regulations require it to keep records of
its financial transactions as customhouse broker, and its books and
papers must be kept on file available for at least five years. 31A
Code Fed.Reg. § 11.8. Business relations with those who have been
denied a license because of moral turpitude or those whose license
has been revoked are prohibited, and the licensee is under a duty
not to promote evasion of obligations to the Government. Prompt
payment and accounting of funds due to the Government or his client
are required of the broker, and responsible and ethical conduct is
generally enjoined. 31A Code Fed.Reg. § 11.9.
Does this scheme of federal regulation of the business of
customhouse brokers preclude the requirement of Minnesota
Page 322 U. S. 206
legislation which the Supreme Court of that State has enforced
against Union? This brings us to a consideration of the precise
demand against which Union protests. Minnesota has not singled out
the customhouse brokerage business for legislation, nor has she
made requirements of foreign corporations doing customhouse
brokerage business. What is in controversy is the applicability of
a general law of Minnesota dealing with all foreign corporations.
More specifically, § 20 of the Minnesota Foreign Corporation Act
requires a certificate of any foreign corporation doing business in
the State as a prerequisite for maintaining an action in a court of
that State. In addition, a filing fee of five dollars and initial
license fee of fifty dollars is exacted on making application for a
certificate of authority. §§ 21(a)(1), 6. Such an application must
contain the name of the corporation, its home state or country, the
address of its principal office and that of its proposed registered
office in Minnesota, the names and addresses of its directors and
officers, a statement of its aggregate number of authorized shares
and kindred information. § 5. The applicant must furthermore
consent to the service of process upon it and appoint an agent upon
whom service can be made, and in lieu of such appointment or if the
agent cannot be found, service may be made upon the Secretary of
State. §§ 5(6), 13(a)(2). A foreign corporation doing business in
Minnesota without a certificate of authority is subject to a
penalty not exceeding $1,000 and
"an additional penalty not exceeding $100.00 for each month or
fraction thereof during which it shall continue to transact
business in this state without a certificate of authority
§ 20(c). Having obtained such a certificate, the corporation is
required to file annual reports on the basis of which an annual fee
is assessed. The measure of the fee is substantially the same as
that set for domestic corporations, but, in its computation, the
Page 322 U. S. 207
and gross receipts of a foreign corporation are allocated
between those derived from within and those derived from without
Minnesota, and credit is given for the latter. § 15; cf.
Minn.L.1935, c. 230, § 2.
We have before us only one narrow aspect of this Minnesota
legislation -- namely the power of Minnesota to deny to Union
access to its courts because it has not obtained a certificate
required of all foreign corporations doing business in the State.
We have not before us the taxing power of Minnesota over such a
business as that of Union, for we do not know the extent or nature
of the power to tax that Minnesota would claim against Union.
Of course, Minnesota could not deny access to its courts to
Union merely because it is engaged in the customs brokerage
business. See Second Employers' Liability Cases,
223 U. S. 1
Douglas v. New York, New Haven & H. R. Co.,
279 U. S. 377
the limited and defined control which federal authority has thus
far seen fit to assert over customhouse brokers does not deny to
Minnesota the power to subject Union to the same demand which it
makes of all other foreign corporations seeking the facilities of
Minnesota's courts. The federal requirements and this state
requirement can move freely within the orbits of their respective
purposes without impinging upon one another. The federal
regulations are concerned solely with the relations of the
customhouse broker to the United States and to the importer and
exporter. The limited federal supervision of the financial
activities of Union is restricted to these federal interests. Such
supervision does not touch the interest of the State in the
protection of those who have other dealings with Union, and
therefore does not preempt appropriate means for their
In a situation like the present, where an enterprise touches
different and not common interests between Nation
Page 322 U. S. 208
and State, our task is that of harmonizing these interests
without sacrificing either. The proper attitude of mind for making
such an accommodation is illustrated by Federal Compress Co. v.
McLean, 291 U. S. 17
Tariff Act of 1930 in this case, as the Warehousing Act in that
case, confers upon licensees certain privileges, and secures to the
Federal Government by means of these licensing provisions a measure
of control over those engaged in the customhouse brokerage
business. But such circumscribed control by the Federal Government
does not imply immunity from control by the State within the sphere
of its special interests.
"The government exercises that control in the furtherance of a
governmental purpose to secure fair and uniform business practices.
But the appellant, in the enjoyment of the privilege, is engaged in
its own behalf, not the government's, in the conduct of a private
business for profit."
Federal Compress Co. v. McLean, supra,
at 291 U. S. 22
The state and federal regulations here applicable have their
separate spheres of operation. The Federal Government has dealt
with the manner in which customhouse brokerage is carried on.
Minnesota, however, is legitimately concerned with safeguarding the
interests of its own people in business dealings with corporations
not of its own chartering, but who do business within its borders.
Union's business is localized in Minnesota, it buys materials and
services from people in that State, it enters into business
relationships, as this case, a suit against its former president,
illustrates, wholly outside of the arrangements it makes with
importers or exporters. To safeguard responsibility in all such
dealings, dealings quite outside transactions immediately connected
with import and export, Minnesota has made the same exactions of
Union as of every other foreign corporation engaged in similar
transactions. The Federal Government has recognized that there is
Page 322 U. S. 209
proper field for state regulation complementary to federal
regulation, for the Treasury has provided that
"a licensee having a license in force in one district may on
application to the Committee be granted a license to transact
business in another district without further examination, provided
it appears on investigation that the licensee is authorized to do
business in the State or States in which such other district is
31A Code Fed.Reg. § 11.6. Those who are responsible for
protecting the interests of the revenue, as well as of commerce,
have thus given emphatic indication that a State has a legitimate
interest in the regulation of those engaged in the brokerage
business within its borders. Where the Government has provided for
collaboration, the courts should not find conflict. See Savage
v. Jones, 225 U. S. 501
Kelly v. Washington, 302 U. S. 1
This brings us to the final question. Does the Minnesota
legislation do that which the Commerce Clause was designed to
prevent -- does it express hostility toward those engaged in
foreign commerce, or practically obstruct its conduct? What we have
said makes it abundantly clear that the business of Union is
related to the process of foreign commerce. As the trial court
found, the customhouse broker, in clearing the shipments, "aids in
the collection of customs duties and facilitates the free flow of
commerce between a foreign country and the United States." The fees
exacted by customhouse brokers "are charges upon the commerce
itself;" they are charges for services afforded in the movement of
goods beyond the boundaries of a State. See Hopkins v. United
States, 171 U. S. 578
171 U. S.
-592; Wickard v. Filburn, 317 U.
, 317 U. S.
But the Commerce Clause does not cut the States off from all
legislative relation to foreign and interstate commerce.
South Carolina Highway Dept.
v. Barnwell Bros.,
Page 322 U. S. 210
303 U. S. 177
625; Western Live Stock v. Bureau of Revenue, 303 U.
. Such commerce interpenetrates the States, and no
undisputed generality about the freedom of commerce from state
encroachment can delimit in advance the interacting areas of state
and national power when Congress has not by legislation foreclosed
state action. The incidence of the particular state enactment must
determine whether it has transgressed the power left to the States
to protect their special state interests although it is related to
a phase of a more extensive commercial process.
The information here sought of all foreign corporations by
Minnesota as a basis for granting them certificates to do business
within her borders is a conventional means of assuring
responsibility and fair dealing on the part of foreign corporations
coming into a State. Apart from any question of interference with
foreign commerce, such a requirement is plainly within the
regulatory power of a State. But, as we have noted, while the
business of Union is that of a customhouse broker, its activities
are not confined to its services at the port of entry. It has
localized its business, and, to function effectively, it must have
a wide variety of dealings with the people in the community. The
same considerations that justify the particular regulatory measure
alone before us -- namely the requirement of a certificate of
authority in the case of foreign corporations carrying on business
other than customhouse brokerage -- apply to the carrying on of
Union's business in Minnesota. The burden, such as it is, falls on
foreign businesses that commingle with Minnesota people, and the
burden, a fee of fifty dollars, is sufficiently small fairly to
represent the cost of governmental supervision of foreign business
enterprises coming into Minnesota. In short, it is a supervisory,
and not a fiscal, measure. As such, it imposes costs upon the State
Page 322 U. S. 211
those who are supervised must, as is often the case, themselves
pay. See Clyde Mallory Lines v. Alabama, 296 U.
, 296 U. S.
We have considered literally scores of cases in which the States
have exerted authority over foreign corporations and, in doing so,
have dealt with aspects of interstate and foreign commerce.
Whatever may be the generalities to which these cases gave
utterance and about which there has been, on the whole, relatively
little disagreement, the fate of state legislation in these cases
has not been determined by these generalities, but by the weight of
the circumstances and the practical and experienced judgment in
applying these generalities to the particular instances. To review
them to any extent would be writing the history of the adjudicatory
process in relation to the Commerce Clause. Suffice it to say that
we have not here a case of a foreign corporation merely coming into
Minnesota to contribute to or to conclude a unitary interstate
transaction, see International Text-Book Co. v. Pigg,
217 U. S. 91
Dahnke-Walker Milling Co. v. Bondurant, 257 U.
, nor of the State's withholding
"the right to sue even in a single instance until the
corporation renders itself amenable to suit in all the courts of
the state by whosoever chooses to sue it there."
Sioux Remedy Co. v. Cope, 235 U.
, 235 U. S. 205
The business of Union, we have seen, is localized in Minnesota, and
Minnesota, in the requirement before us, merely seeks to regularize
its conduct. Nor is there here an attempt to tax property or gross
receipts earned outside the State, as was the case in Looney v.
Crane Co., 245 U. S. 178
the absence of applicable federal regulation, a State may impose
nondiscriminatory regulations on those engaged in foreign
"for the purpose of insuring the public safety and convenience;
. . . a license fee no larger in amount than is reasonably
Page 322 U. S. 212
required to defray the expense of administering the regulations
may be demanded."
Sprout v. South Bend, 277 U. S. 163
277 U. S.
The Commerce Clause does not deprive Minnesota of the power to
protect the special interest that has been brought into play by
Union's localized pursuit of its share in the comprehensive process
of foreign commerce. To deny the States the power to protect such
special interests when Congress has not seen fit to exert its own
legislative power would be to give an immunity to detached aspects
of commerce unrelated to the objectives of the Commerce Clause. By
its own force, that Clause does not imply relief to those engaged
in interstate or foreign commerce from the duty of paying an
appropriate share for the maintenance of the various state
governments. Nor does it preclude a State from giving needful
protection to its citizens in the course of their contacts with
businesses conducted by outsiders when the legislation by which
this is accomplished is general in its scope, is not aimed at
interstate or foreign commerce, and involves merely burdens
incident to effective administration. And so we conclude that, in
denying Union the right to go to her courts because Union did not
obtain a certificate to carry on its business as required by the
Foreign Corporation Act, Minnesota offended neither federal
legislation nor the Commerce Clause.
MR. JUSTICE JACKSON and MR. JUSTICE RUTLEDGE dissent.