1. A state law restricting venue in transitory actions, if
against a domestic corporation, to a county where it has a place of
business or in which its chief officer resides, or, if against a
natural person, to a county where he resides or is found, but which
permits that such actions, when against a foreign corporation, be
brought in any county of the state, is unreasonable and arbitrary,
and in violation of the equal protection clause of the Fourteenth
Amendment, as applied to a foreign corporation doing business in
the state by her permission and having a fixed place of business
and an agent in one county, but none, and no property or debts, in
the county in which the suit is instituted. P.
274 U. S.
493.
2. A foreign corporation, by seeking and obtaining permission to
do business in a state, does not subject itself to provisions in
the state statutes which conflict with the federal Constitution. P.
274 U. S.
497.
169 Ark. 748 reversed.
Error to a judgment of the Supreme Court of Arkansas which
affirmed a judgment against the above-named company
Page 274 U. S. 491
recovered by Saunders in an action for personal injuries.
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This was an action to recover for a personal injury sustained by
the plaintiff while in the defendant's employ. The plaintiff was a
citizen and resident of Ohio, and the defendant was a corporation
of that state. Besides its activities in Ohio, the defendant
maintained a warehouse at Stuttgart, Arkansas, where it did a local
business. The plaintiff received his injury in that warehouse. The
defendant had complied with the conditions on which Arkansas
permits foreign corporations to do a local business within her
limits, and, as part of its compliance, had named Stuttgart as its
place of business in the state and designated an agent residing
there on whom process against it might be served.
See
Crawford & Moses' Digest 1921, § 1826. It did no business and
had no office, officer, or agent elsewhere in the state. Stuttgart
is in Arkansas County, and is its county seat.
The action was brought in Saline County, Arkansas, service of
the summons being made on the defendant's designated agent at
Stuttgart. The plaintiff obtained a judgment, which the supreme
court of the state affirmed, 169 Ark. 748, and the defendant
brought the case here on writ of error.
The Arkansas statutes require actions of this character, if
against a domestic corporation, to be brought in a county where it
has a place of business or in which its chief officer resides, and,
if against a natural person, in
Page 274 U. S. 492
a county where he resides or may be found; but they broadly
permit such actions, if against a foreign corporation, to be
brought in any county in the state. Crawford & Moses' Digest
1921, §§ 1152, 1171, 1176, 1829;
Jacks v. Central Coal &
Coke Co., 156 Ark. 211.
Another statute (§ 1174) permits both foreign corporations and
persons residing out of the state to be sued in any county in which
they have property or debts owing to them. Attachment and
garnishment proceedings, and some others, may be had under it. But
it concededly is without application here, and may be put aside.
The defendant neither had any property nor owed any debts in the
county where it was sued.
By a timely motion to dismiss, the defendant objected to being
sued in Saline County and assailed the validity of the statutes,
insofar as they permit a foreign corporation to be sued in a county
where it does no business and has no office, officer, or agent, on
the ground that they are unreasonably discriminatory and arbitrary,
and therefore in conflict with the equal protection clause of the
Fourteenth Amendment to the Constitution of the United States. The
court of first instance upheld the validity of the statutes and
accordingly overruled the motion, and the supreme court approved
that ruling.
Thus, the statutes were applied as permitting the defendant, a
foreign corporation doing business in one county, to be sued in
another county, where it did no business and had no office,
officer, or agent, on a cause of action which arose in the former.
Other counties lay between the two, making the distance from the
defendant's place of business to the place of suit 75 miles by
railroad and a few miles less by public roads. This, of course,
tended to increase materially the burden otherwise incident to
presenting a defense.
It is conceded that the statutes neither permit a domestic
corporation to be sued in a county in which it
Page 274 U. S. 493
does no business and has no office, officer, or agent, nor
permit a natural person to be sued in a county in which he does not
reside and is not found. On the contrary, they confine the
admissible venue as to both to counties in which the defendant is
present in one of the ways just indicated. But a foreign
corporation is differently treated. If it be present in a single
county, as by having a place of business there, it is made subject
to suit not merely in that county, but in any of the 74 other
counties, although it be not present in them in any sense.
We think it very plain that the statutes discriminate against
foreign corporations, and in favor of domestic corporations and
individuals, and that the discrimination is not theoretical merely,
but real and substantial.
The clause in the Fourteenth Amendment forbidding a state to
deny to any person within its jurisdiction the equal protection of
the laws is a pledge of the protection of equal laws,
Truax v.
Corrigan, 257 U. S. 312,
257 U. S. 333;
Atchison, Topeka & Santa Fe Ry. Co. v. Vosburg,
238 U. S. 56,
238 U. S. 59,
and extends as well to corporate as to natural persons,
Smyth
v. Ames, 169 U. S. 466,
169 U. S. 522;
Gulf, Colorado & Santa Fe Ry. Co. v. Ellis,
165 U. S. 150,
165 U. S. 154;
Santa Clara County v. Southern Pacific R. Co.,
118 U. S. 394,
118 U. S. 396.
It does not prevent a state from adjusting its legislation to
differences in situation or forbid classification in that
connection, but it does require that the classification be not
arbitrary, but based on a real and substantial difference, having a
reasonable relation to the subject of the particular legislation.
Truax v. Corrigan, supra, p.
257 U. S. 337;
Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, supra,
165 U. S. 155;
Lindsley v. Natural Carbonic Gas Co., 220 U. S.
61,
220 U. S. 78;
Ft. Smith Light & Power Co. v. Board of Improvement,
ante, p.
274 U. S. 387.
No doubt there are subjects as to which corporations admissibly
may be classified separately from individuals and accorded
different treatment, and also subjects as to
Page 274 U. S. 494
which foreign corporations may be classified separately from
both individuals and domestic corporations, and dealt with
differently. But there are other subjects as to which such a course
is not admissible, the distinguishing principle being that
classification must rest on differences pertinent to the subject in
respect of which the classification is made.
Here, the separate classification of foreign corporations is in
respect of the venue of place of bringing transitory actions. The
statutes mean foreign corporations doing business within the state
by her permission, and therefore having a fixed place of business
therein and a resident agent on whom process may be served. We
speak only of them. So far as their situation has any pertinence to
the venue of transitory actions, it is not distinguishable from
that of domestic corporations and individuals. Certainly there is
no substantial difference. The opinion of the state court does not
point to any relevant distinction, nor have counsel suggested any.
Of course, the restricted venue as to domestic corporations and
individuals is prompted by considerations of convenience and
economy; but these considerations have equal application to foreign
corporations. So far as the plaintiffs in such actions are
affected, it is apparent that there is no more reason for a
statewide venue when the action is against a foreign corporation
than when it is against a domestic corporation or a natural person.
So we conclude that the special classification and discriminatory
treatment of foreign corporations are without reasonable basis and
essentially arbitrary.
The state court put its decision on the ground that venue is a
question of procedure which the state may determine, and counsel
for plaintiff advance the further ground that the defendant
impliedly assented to the venue provisions by seeking and obtaining
permission to do business within the state, the provisions being
then
Page 274 U. S. 495
on the statute book. But neither ground can be sustained.
It, of course, rests with the state to prescribe the venue of
actions brought in her courts. But the exercise of this power, as
of all others, must be in keeping with the limitations which the
Constitution of the United States places on state action.
Procedural statutes are not excepted, but must fall like others
when in conflict with those limitations. This is illustrated in a
recent case where a statute of Arizona forbidding the granting of
injunctions in certain situations was held to be in conflict with
the equal protection clause of the Fourteenth Amendment and
invalid, notwithstanding a contention that it was merely a
procedural provision excluding a particular remedy in equity but
leaving remedies at law open.
Truax v. Corrigan, supra,
pp.
257 U. S. 322,
257 U. S. 330.
Further illustration is found in a still later case, where a
Wisconsin statute subjecting foreign corporations to a burdensome
procedural requirement not laid on other litigants was pronounced
invalid under the same constitutional provision.
Kentucky
Finance Corp. v. Paramount Auto Exchange Corporation,
262 U. S. 544.
And, on turning to state decisions, we find direct rulings that
venue provisions must conform to the equal protection clause and
are invalid where they discriminate arbitrarily against either
individuals or corporations.
Grocers' Fruit Growing Union v.
Kern County Land Co., 150 Cal. 466, 474, 475;
McClung v.
Pulitizer Publishing Co., 279 Mo. 370.
The case of
Cincinnati Street Ry. Co. v. Snell,
193 U. S. 30, is
cited as if venue provisions were there held to be beyond the reach
of the equal protection clause. But this is a strained and
inadmissible interpretation. That was an action by an individual
against a corporation which was begun, conformably to a general
statutory requirement, in the county where the defendant had its
principal office and was engaged in business. Another statute
Page 274 U. S. 496
authorized the court to change the venue in such an action "to
the adjacent county most convenient to both parties" if it appeared
that the corporation had more than 50 local stockholders and if it
was also shown by the affidavit of the other party, supported by 5
credible citizens, that he could not have a fair and impartial
trial in the county where the suit was begun. A showing was made
which brought the case within the statute, and the court changed
the venue over the defendant's objection that the statute operated
unequally, and was invalid in that it permitted the other party,
but not the corporation, to secure the change. The statute
doubtless proceeded on the assumption, first, that a corporation
with many local stockholders might have such influence in the
county that the other party would be at a serious disadvantage
unless provision were made whereby the court, on an adequate
showing, might change the place of trial to another county free
from such influence and as convenient as might be to both parties,
and, secondly, that the corporation was not likely to suffer any
prejudice in its home county through having many stockholders
there. At all events, the difference in the situation of the
parties and the relation of that difference to the matter of
changing the place of trial were such that it could not be said of
such discrimination as was shown in the statute that it was without
a reasonable and adequate basis. The opinion affirmatively shows
that the defendant was not objecting to the place designated by the
court for the trial, but only that the statute did not accord it an
equal opportunity to secure a change from the county where the
action was begun. When the opinion is examined with the actual
situation in mind, it has little bearing on the case now before
us.
The contention advanced by counsel for the plaintiff that the
defendant impliedly assented to the venue provisions
Page 274 U. S. 497
is answered and refuted by repeated decisions holding that a
foreign corporation, by seeking and obtaining permission to do
business in a state, does not thereby become obligated to comply
with, or estopped from objecting to, any provision in the state
statutes which is in conflict with the Constitution of the United
States. The principal cases are cited and reviewed in
Hanover
Insurance Co. v. Harding, 272 U. S. 494,
272 U. S. 507,
et seq., and
Frost Trucking Co. v. Railroad Commission
of California, 271 U. S. 583,
271 U. S. 594,
et seq. To them may be added the case of
W. W. Cargill
Co. v. Minnesota, 180 U. S. 452,
180 U. S. 468,
where it was held that:
"the acceptance of a license, in whatever form, will not impose
upon the licensee an obligation to respect or to comply with any
provisions of the statute . . . that are repugnant to the
Constitution of the United States."
We accordingly reach the conclusion that the defendant's
objection before stated to the validity of the venue provisions was
well taken, and should have been sustained under the equal
protection clause of the Fourteenth Amendment.
Judgment reversed.
MR. JUSTICE HOLMES, dissenting.
In order to enter into most of the relations of life, people
have to give up some of their Constitutional rights. If a man makes
a contract, he gives up the Constitutional right that previously he
had to be free from the hamper that he puts upon himself. Some
rights, no doubt, a person is not allowed to renounce, but very
many he may. So we must go further than merely to point to the
Fourteenth Amendment. I see nothing in it to prevent a foreign
corporation's agreeing with the state that it will be subject to
the general law of torts and will submit to a transitory action
wherever it may be sued. That the
Page 274 U. S. 498
venue for suits against domestic corporations is limited by
statute seems to me not enough to invalidate its assent. Every
contract is the acceptance of some inequality -- and, under our
decisions, I think it cannot be denied that the plaintiff in error
did contract.
Pennsylvania Fire Insurance Co. v. Gold Issue
Mining & Milling Co., 243 U. S. 93,
243 U. S. 96.
The jurisdiction of the court would have been unquestionable if it
had not been objected to, and I do not see why consent could not be
manifested by contract as well as by silence. While we adhere to
the rule that a state may exclude foreign corporations altogether,
it seems to me a mistake to apply the inequality clause of the
Fourteenth Amendment with meticulous nicety. The Amendment has been
held not to overthrow ancient practices even when hard to reconcile
with justice. I think there are stronger grounds for not reducing
the power of the states to attach conditions to a consent that they
have a right to refuse, when there is no attempt to use the
conditions to invade forbidden fields.
Apart from the contract of the corporation, there seems to me a
ground for discrimination that ought to be respected when it has
satisfied the state. A statute has to be drawn with reference to
what is usual and probable. A foreign corporation merely doing
business in the state and having its works elsewhere will be more
or less inconvenienced by being sued anywhere away from its
headquarters, but the difference to it between one county and
another is likely to be less than it will be to a corporation
having its headquarters in the state. So I repeat that, in my
opinion, the plaintiff in error cannot complain if the state holds
it liable to a transitory action wherever it may be served and
sued, as it would have been liable at common law.
MR. JUSTICE BRANDEIS concurs in this opinion.