A statute of North Dakota requires corporations owning farm
land, except such as is reasonably necessary in the conduct of
their business, to dispose of it within 10 years from the effective
date of the Act. Farm land owned by any corporation in violation of
the Act is subject to escheat to the county wherein such land is
located, to be effected by a judicial proceeding to which the
corporation must be a party. The county is required to dispose of
the land at public sale within one year after escheat, and to pay
the proceeds to the corporation. Appellant, a foreign corporation
owning farm land in North Dakota which it had acquired prior to the
effective date of the Act, sought in the state courts a declaratory
judgment of unconstitutionality of the Act as applied to it.
1. A corporation is not a "citizen" within the protection of
Page 326 U. S. 208
privileges and immunities clauses of Article IV, § 2 and the
Fourteenth Amendment of the Federal Constitution. P. 326 U. S.
2. Appellant, by the mere acquisition of land within the State
before the enactment of the statute, did not acquire contract
rights which it could assert against the State. P. 326 U. S.
3. The statute does not violate the due process clause of the
Fourteenth Amendment. P. 326 U. S.
(a) Due process does not prevent a State from excluding a
foreign corporation which has theretofore lawfully entered the
State and acquired immovable property there, though the corporation
will thereby be compelled to sell the property. P. 326 U. S.
(b) The power of a State to exclude a foreign corporation
includes the power to compel the corporation to sell its immovable
property within the State without also requiring it to end all its
activities there. P. 326 U. S.
(c) A state statute, otherwise valid, requiring a foreign
corporation to sell property within the State does not deny due
process notwithstanding that, due to economic conditions prevailing
since enactment of the statute, the corporation will not recoup its
original investment in the property. It is enough that, here, the
corporation, in complying with the lawful command of the State to
part with ownership, is afforded a fair opportunity to realize the
value of the land, and that the sale, when required, is to be under
conditions reasonably calculated to realize its value at the time
of the sale. P. 326 U. S.
4. The statute's exemption of lands of corporations whose
business is dealing in farm lands, and of lands of cooperative
corporations 75% of whose members or stockholders are farmers, did
not deny to appellant the equal protection of the laws. P.
326 U. S.
5. The questions of the constitutionality of the statute because
of its (1) alleged failure to require an accounting of rents and
profits for the period between the judgment of escheat and the
sale, and (2) alleged exemption of farm lands acquired by
corporations by deed or grant subsequent to the date of the statute
-- involve the construction and application of provisions of the
statute which have not been authoritatively construed and applied
by the state courts, and therefore may not appropriately be decided
by this Court. Pp. 326 U. S. 213
326 U. S.
73 N.D. 469, 16 N.W.2d 523, affirmed in part.
Appeal from the affirmance of a judgment in a declaratory
judgment proceeding wherein the constitutionality
Page 326 U. S. 209
of a state statute, as applied to the appellant, was
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
Appellant, a Minnesota nonprofit corporation, sought in the
state district court of North Dakota, a declaratory judgment that
the so-called Initiative Measure of 1932, North Dakota Laws, 1933,
pp. 494-495, as amended by Chap. 89, Laws 1933, and Chap. 111, Laws
1935, is unconstitutional as applied to appellant's North Dakota
The challenged statute declares, §§ 2, 3, that corporations,
both domestic and foreign, which
"now own or hold rural real estate, used or usable, for farming
or agriculture, except such as is reasonably necessary in the
conduct of their business, shall dispose of the same within ten
years from the date that this Act takes effect . . . ,"
"the ten-year limitation provided by this Section shall be
deemed a covenant, running with the title to the land against any
grantee, successor of [or] assignee of such corporation, which is
also a corporation."
Farming land in the state owned by any corporation in violation
of the statute is, by § 5, made subject to escheat to the county in
which it is located, by suit instituted by the county attorney. The
county is required to dispose of the land at public auction to the
highest bidder within one year after escheat, and to pay the
proceeds, less the expenses of sale, to the former corporate
Appellant alleges in its amended complaint that, prior to the
enactment of the statute, it had acquired a tract of
Page 326 U. S. 210
land within Cass County, North Dakota, in satisfaction of a
mortgage indebtedness, and that it has since leased the property
out to farmers who have used it as farm land. The amended complaint
further alleges that, since the enactment of the statute, appellant
has constantly attempted to sell this tract, and that it has been
and will be unable to sell it for an amount equal to the original
mortgage debt before the expiration of the statutory ten-year
period; that any sale which the county, proceeding under the
statute, might be able to make would be for substantially less than
the amount appellant has invested in the land and the costs of
sale. The amended complaint sets up that the statute, as applied to
appellant's tract, violates the privileges and immunities clauses
of Article IV, § 2 and the Fourteenth Amendment of the Federal
Constitution, the contract clause, Article I, § 10, and the due
process and equal protection clauses of the Fourteenth Amendment,
and prays for a judgment that the statute is unconstitutional and
void as applied to appellant, and for an injunction restraining
respondent county from enforcing the statute.
The Supreme Court of North Dakota sustained an order of the
trial court overruling appellee's demurrer to the amended
complaint, 72 N.D. 359, 7 N.W.2d 438. Upon remand of the case for
further proceedings, the trial court found the allegations of fact
set out in the amended complaint to be true, construed the statute
as applicable to appellant's land, which was held not to be
necessary to the conduct of appellant's business, and sustained the
constitutionality of the statute in all respects. The Supreme Court
of North Dakota affirmed. 16 N.W.2d 523. The case comes here on
appeal under § 237(a) of the Judicial Code, 28 U.S.C. 344(a),
appellant repeating in its assignments of error the attack made on
the statute by its complaint.
Appellant does not invoke the commerce clause, and is neither a
citizen of a state nor of the United States
Page 326 U. S. 211
within the protection of the privileges and immunities clauses
of Article IV, § 2 of the Constitution and the Fourteenth
Amendment. Paul v.
8 Wall. 168, 75 U. S. 177
Pembina Consol. Silver Mining & Milling Co. v.
Pennsylvania, 125 U. S. 181
125 U. S. 187
Selover, Bates & Co. v. Walsh, 226 U.
, 226 U. S. 126
State of North Dakota has granted no charter or certificate of
incorporation to appellant, and has issued to it no permit to do
business or own property within the state which could give rise to
contract rights which appellant could assert against the state.
None is to be implied from appellant's mere acquisition of land in
the state, either before or after the enactment of the statute.
Erie R. Co. v.
21 Wall. 492; Connecticut Mutual
Life Ins. Co. v. Spratley, 172 U. S. 602
172 U. S.
-622; Hammond Packing Co. v. Arkansas,
212 U. S. 322
212 U. S.
The Fourteenth Amendment does not deny to the state power to
exclude a foreign corporation from doing business or acquiring or
holding property within it. Horn Silver Mining Co. v. New
York, 143 U. S. 305
143 U. S.
-315; Hooper v. California, 155 U.
, 155 U. S. 652
Munday v. Wisconsin Trust Co., 252 U.
; Crescent Cotton Oil Co. v. Mississippi,
257 U. S. 129
257 U. S. 137
While recognizing the unqualified power of the state to preclude
its entry into the state for these purposes, appellant points out
that the state has permitted it to enter and to invest its money in
obligations secured by mortgage on land within the state, in
consequence of which it lawfully acquired the land free of
restrictions. Appellant argues that the state may not, by later
legislation, force a sale of the land thus innocently acquired,
under conditions which do not allow recovery of the original
investment. But a state's power to exclude a foreign corporation,
or to limit the nature of the business it may conduct within the
state, does not end as soon as the corporation has lawfully entered
the state and there acquired immovable property. Subsequent
Page 326 U. S. 212
legislation excluding such a corporation from continuing in the
state has been sustained as an exercise of the general power to
exclude foreign corporations which does not offend due process.
Hammond Packing Co. v. Arkansas, supra, 212 U. S.
-343; see also Baltic Mining Co. v.
Massachusetts, 231 U. S. 68
231 U. S. 83
Similarly, this Court has upheld legislation imposing burdens
greater than those to which such corporations were subject at the
time of their entry on the ground that the state might exclude them
altogether at a later date. Philadelphia Fire Association v.
New York, 119 U. S. 110
Horn Silver Mining Co. v. New York, supra; see also Crescent
Cotton Oil Co. v. Mississippi, supra; Lincoln National Life Ins.
Co. v. Read, 325 U. S. 673
Appellant, even if its activities in North Dakota are now
restricted to the ownership of farm land within the state, stands
in no better position to invoke the protection of the Fourteenth
Amendment. The total exclusion of a corporation owning fixed
property within a state requires it to sell or otherwise dispose of
such property. Appellant must do no more. While appellant is not
compelled by the present statute to cease all activities in North
Dakota, the greater power includes the less.
Since the state may validly require appellant to sell its farm
land, the contention that the statute is wanting in due process
because conditions have been such since its enactment that
appellant has been and will be unable to salvage an investment made
more than ten years before raises no substantial constitutional
question. The due process clause does not guarantee that a foreign
corporation, when lawfully excluded as such from ownership of land
in the state, shall recapture its cost. It is enough that the
corporation, in complying with the lawful command of the state to
part with ownership, is afforded a fair opportunity to realize the
value of the land, and that the sale, when required, is to be under
conditions reasonably calculated
Page 326 U. S. 213
to realize its value at the time of sale. No reason is advanced
for saying, and we cannot say, that the period of ten years allowed
to appellant to dispose of the property, or its sale after ten
years at public auction held under direction of the court and
comparable generally to a mortgage foreclosure sale, fails to
satisfy either of these conditions. As the North Dakota Supreme
Court pointed out in its opinion, the statutory escheat of
appellant's land is effected by suit to which the corporation must
be a party, with full opportunity to be heard in advance. The
judgment of sale in conformity to the statute is entered by the
court which "has the power to protect the rights of the corporation
as to the notice and conduct of the sale by appropriate provisions
in its judgment." 72 N.D. 359, 7 N.W.2d 438, 454.
Appellant makes the further objection that the statute denies
due process because it deprives him of the possession of the
property during the period from the time of escheat to the date of
public sale, and makes no provision for any accounting for the
rents and profits of the land during that period. The state's
Attorney General argues that, in the escheat proceeding, the court
has power to require and will require such an accounting. The
record does not disclose that this objection was raised or
considered by any court in the course of the present suit, or that
any state court has construed the statute so as to determine
whether a corporation whose land has been escheated will be
deprived of the rents and profits pending the sale.
We are thus asked to pass on the constitutionality of a possible
application of the state statute in advance of its application to
appellant, and of its authoritative construction by the state
courts. Lacking such construction, without which no constitutional
question can arise, the issue is not an appropriate one for
adjudication by the declaratory judgment procedure. This Court is
without power to give advisory opinions. It will not decide
constitutional issues which are hypothetical, or in advance
Page 326 U. S. 214
of the necessity for deciding them, or without reference to the
manner in which the statute whose constitutional validity is drawn
in question is to be applied. Federation of Labor v.
McAdory, 325 U. S. 450
Only two of the equal protection contentions which appellant
presses here appear to have been presented to or considered by the
state courts. The North Dakota Supreme Court held that the
statute's exception from its operation of lands owned and held by
corporations whose business is dealing in farm lands (§ 2) and of
the lands belonging to cooperative corporations, seventy-five
percent of whose members or stockholders are farmers residing on
farms or depending principally on farming for their livelihood (§
4), did not deny the equal protection claimed. We agree.
The legislature is free to make classifications in the
application of a statute which are relevant to the legislative
purpose. The ultimate test of validity is not whether the classes
differ, but whether the differences between them are pertinent to
the subject with respect to which the classification is made.
Metropolitan Casualty Co. v. Brownell, 294 U.
, 294 U. S. 583
and cases cited. We cannot say that there are no differences
between corporations generally and those falling into the excepted
classes which may appropriately receive recognition in the
legislative application of a state policy against the concentration
of farming lands in corporate ownership.
The North Dakota Legislature may have thought that its policy
with reference to corporate owned agricultural lands would be
advanced by permitting corporations engaged in the business of
dealing in farm lands to acquire and sell without restriction lands
forced upon the market by the statute. It could have thought that
its policy would be in part defeated by withholding authority from
farm cooperatives to acquire and use farm lands for
Page 326 U. S. 215
purposes. Cf. United States v. Rock Royal Co-op.,
307 U. S. 533
307 U. S.
-564. Statutory discrimination between classes which
are in fact different must be presumed to be relevant to a
permissible legislative purpose, and will not be deemed to be a
denial of equal protection if any state of facts could be conceived
which would support it. Rast v. Van Deman & Lewis Co.,
240 U. S. 342
240 U. S. 357
Carmichael v. Southern Coal & Coke Co., 301 U.
, 301 U. S. 509
and cases cited.
Appellant also asserts that the statute imposes an
unconstitutional discrimination because §§ 2, 3 provide that any
corporation which acquired farm land in any manner prior to 1932,
the effective date of the Act, or by judicial process or operation
of law thereafter, is required to dispose of it within the ten-year
period, while a corporation which acquired land by deed or grant
after 1932 may hold it without restriction. But § 4 of Chapter 89
of the North Dakota Laws of 1933 provides:
"That the title and ownership of any real estate acquired in any
manner by any domestic or foreign corporation since the approval
and adoption of the aforesaid initiated law is hereby declared to
be legal and valid for all purposes, notwithstanding any provisions
in said initiated law contained, but subject however, to all of the
provisions now contained in said initiated law as hereby amended
This section was not construed by any state court in the present
litigation, and we are not advised why farming lands acquired in
conformity to § 4 are not, as the section declares, made "subject .
. . to all of the provisions now contained" in the Act as amended,
including those relating to the escheat and sale of farming lands.
Nor does it appear that any such discrimination is in fact made in
the enforcement of the statute. As we have already pointed out in
this opinion, a constitutional question which turns on the
construction and application of a statute which has neither been
authoritatively construed nor applied by the state courts may not
appropriately be decided by this
Page 326 U. S. 216
Court. Federation of Labor v. McAdory, supra,
The North Dakota Supreme Court, in its opinion, and counsel, in
brief and argument here, confined their discussion to the question
whether the state's powers over a foreign corporation as such
justify the compulsory disposition of its farm land within the
state. We need not, for present purposes, have recourse to other
possible sources of state power to control the ownership and
disposition of property lying within its borders. We have
considered, but find it unnecessary to discuss, other arguments of
We dismiss the appeal insofar as it draws in question the
constitutionality of the act for its alleged failure to require an
accounting for rents and profits of the land in the interval
between the judgment of escheat and the sale of the land, and
insofar as North Dakota farming lands acquired by corporations by
deed or grant subsequent to 1932 are said to be exempted from the
operation of the statute. In all other respects, the judgment is
MR. JUSTICE BLACK is of the opinion that the appeal should be
dismissed for want of a substantial federal question.
MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.