A state law which revokes the license of a foreign corporation
to do business within the state because, while doing only a
domestic business within the state, it resorts to the federal court
sitting in the state, is unconstitutional. P.
257 U. S. 532.
Doyle v. Continental Insurance Co., 94 U. S.
535, and
Security Mutual Life Insurance Co. v.
Prewitt, 202 U. S. 246,
held to have been overruled.
Affirmed.
Error to a decree of the district court enjoining the appellant
from revoking the license of the appellee corporation to do
business in Arkansas.
Page 257 U. S. 530
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
This is an appeal from the district court under § 238 of the
Judicial Code in a case in which the law of a state is claimed to
be in contravention of the Constitution of the United States.
The Burke Construction Company, a corporation organized under
the laws of the State of Missouri, filed its bill against Terral,
Secretary of State of Arkansas, averring that it has been licensed
to do business in the State of Arkansas under an act of the
Arkansas Legislature approved May 13, 1907 (Laws 1907, p. 744);
that it was organized for the purpose of doing construction work,
and carrying on interstate commerce, and was actually so engaged in
Arkansas; that the right to do business in the state was a valuable
privilege, and the revocation of the license would greatly injure
it; that it had brought an original suit in the Federal Court of
Arkansas and had removed a suit brought against it to the same
federal court; that the Secretary of State was about to revoke the
license because of such suit and such removal, acting under the
requirement of § 1 of the act of the Legislature of Arkansas of May
13, 1907, reading as follows:
Page 257 U. S. 531
"If any company shall, without the consent of the other party to
any suit or proceeding brought by or against it in any court of
this state, remove said suit or proceeding to any federal court, or
shall institute any suit or proceeding against any citizen of this
state in any federal court, it shall be the duty of the Secretary
of State to forthwith revoke all authority to such company and its
agents to do business in this state, and to publish such revocation
in some newspaper of general circulation published in this state,
and if such corporation shall thereafter continue to do business in
this state, it shall be subject to the penalty of this act for each
day it shall continue to do business in this state after such
revocation."
The penalty fixed is not less than $1,000 a day. The
Construction Company avers that this act is in contravention of §
2, Article III --
i.e., the judiciary article of the
federal Constitution, and of § 1 of the Fourteenth Amendment.
The defendant filed an answer in which there were many denials.
One was that the complainant was engaged in interstate commerce.
The answer did not deny, however, that the complainant was a
foreign corporation, that it had been duly granted a license to do
business in the State of Arkansas, that its right to do business in
the state thus licensed was a valuable right, that the complainant
had brought suit in the federal district court and removed another
case to that court, that such suit and removal were violations of
the license granted by the State of Arkansas, or that the defendant
intended to cancel the plaintiff's license. The case was heard on
bill and answer, and is to be considered on the averments of the
bill which are not denied by the answer.
Iowa v. Illinois,
147 U. S. 1,
147 U. S. 7.
The sole question presented on the record is whether a state law
is unconstitutional which revokes a license to a foreign
corporation to do business within the state because,
Page 257 U. S. 532
while doing only a domestic business in the state, it resorts to
the federal court sitting in the state.
The cases in this Court in which the conflict between the power
of a state to exclude a foreign corporation from doing business
within its borders and the federal constitutional right of such
foreign corporation to resort to the federal courts has been
considered cannot be reconciled. They began with
Home
Insurance Co. v. Morse, 20 Wall. 445, which was
followed by
Doyle v. Continental Ins. Co., 94 U. S.
535;
Barron v. Burnside, 121 U.
S. 186;
Southern Pacific Co. v. Denton,
146 U. S. 202;
Martin v. Baltimore, 151 U. S. 673,
151 U. S. 684;
Barrow Steamship Co. v. Kane, 170 U.
S. 100,
170 U. S. 111;
Security Mutual Life Ins. Co. v. Prewitt, 202 U.
S. 246;
Herndon v. Chicago, Rock Island & P. Ry.
Co., 218 U. S. 135;
Harrison v. St. Louis & San Francisco R. Co.,
232 U. S. 318, and
Wisconsin v. Philadelphia & Reading Coal Co.,
241 U. S. 329.
The principle established by the more recent decisions of this
Court is that a state may not, in imposing conditions upon the
privilege of a foreign corporation's doing business in the state,
exact from it a waiver of the exercise of its constitutional right
to resort to the federal courts, or thereafter withdraw the
privilege of doing business because of its exercise of such right,
whether waived in advance or not. The principle does not depend for
its application on the character of the business the corporation
does, whether state or interstate, although that has been suggested
as a distinction in some cases. It rests on the ground that the
federal Constitution confers upon citizens of one state the right
to resort to federal courts in another, that state action, whether
legislative or executive, necessarily calculated to curtail the
free exercise of the right thus secured is void because the
sovereign power of a state in excluding foreign corporations, as in
the exercise of all others of its sovereign powers, is subject to
the
Page 257 U. S. 533
limitations of the supreme fundamental law. It follows that the
cases of
Doyle v. Continental Insurance Co., 94 U. S.
535, and
Security Mutual Life Ins. Co. v.
Prewitt, 202 U. S. 246,
must be considered as overruled, and that the views of the minority
judges in those cases have become the law of this Court. The
appellant, in proposing to comply with the statute in question and
revoke the license, was about to violate the constitutional right
of the appellee. In enjoining him, the district court was right,
and its decree is
Affirmed.