Allen v. Alleghany Company/Opinion of the Court

The defendants, plaintiffs in error here, pleaded that the note upon which suit was brought was executed in the state of New York, and that, under laws of that state, no foreign corporation could do business there without a certificate of the secretary of state that it had complied with all the requirements of law to authorize it to do business there; and that no such corporation could maintain any action in that state unless, prior to the making of such contract, it had procured such certificate; that plaintiff was a foreign corporation within the meaning of the law, and had not procured a certificate.

The third plea was similar in terms, averring the note to have been made in Pennsylvania, whose statutes provided that foreign corporations should do no business in the state without filing a certain statement in the secretary's office and procuring the certificate of the secretary of the commonwealth, and further providing that the agent of any foreign corporation transacting business within the state, without complying with the provisions of the law should be deemed guilty of a misdemeanor. The plea also averred noncompliance with those provisions.

Both the supreme court and the court of errors and appeals held that a contract made in contravention of these statutory regulations, though not enforceable in the courts of New York and Pennsylvania, was not ipso facto void, and might be, notwithstanding such statutes, enforced in New Jersey.

Plaintiffs in error insist that by this ruling full faith and credit was denied by the courts of New Jersey to the statutes of New York and Pennsylvania, in contravention to § 1, article 4, of the Constitution.

By § 709 of the Revised Statutes (U.S.C.omp. Stat. 1901, p. 575), authorizing writs of error to the state courts, it is declared that final judgments, where is drawn in question the validity of a statute of any state, or any authority exercised under any state, on the ground of their being repugnant to the Constitution, etc., and the decision is in favor of their validity, may be re-examined here.

But the validity of these statutes was not denied. The case turned upon their construction and the effect to be given to them in another state. The New York statute directly, and the Pennsylvania indirectly, forbade the maintenance of actions 'in this state.' The Pennsylvania statute made it a misdemeanor to transact business without complying with the law. Neither statute declared the contract so made to be void, and it was apparently upon this ground that the New Jersey courts held that the case did not fall within those decisions wherein it is declared that a contract void by the lex loci contractus is void everywhere.

In several cases we have held that the construction of a statute of another state, and its operation elsewhere, did not necesarily involve a Federal question. The case is practically governed by that of the Chicago %& a. r. c/o. v. Wiggins Ferry Co. 119 U.S. 615, 30 L. ed. 519, 7 Sup. Ct. Rep. 398. In that case suit was brought in a state court by the ferry company against the railroad to recover damages for not employing the ferry company for the transportation of persons and property across the river, as by its contract it was bound to do. The defendant pleaded that it had no power to make the contract; that the same was in violation of the laws of Illinois, contrary to the public policy thereof, and was void. The statutes were put in evidence, but their construction and operative effect were disputed. The supreme court of the state held that the contract was interpreted correctly by the court below, and that it was not ultra vires, contrary to public policy, or in restraint of trade. It was argued here by the railroad company that, by law and usage of Illinois, the charter of the company in that state made the contract ultra vires. We held that the law of Illinois to that effect should have been proved as a fact, eigher by decisions of tis courts or by law or usage in that state; that state courts are not charged with a knowledge of the laws of another state: but they have to be proved, and that, while Federal courts exercising their original jurisdiction are bound to take notice of the laws of the several states, yet this court, when exercising its appellate jurisdiction from state courts, whatever was the matter of fact in that court is matter of fact here (citing Hanley v. Donoghue, 116 U.S. 1, 29 L. ed. 535, 6 Sup. Ct. Rep. 242). We said: 'Whether the charter of this company, in its operation on the contract now in suit, had any different effect in Illinois from what it would have, according to the principles of general law which govern like charters and like contracts in Missouri and elsewhere throughout the country, was, under this rule, a question of fact in the Missouri court, as to which no testimony whatever was offered.'

No proof having been offered to support the averment that the contract was in violation of the laws of Illinois, the defense relying on the general claim that the contract was illegal, it was held that no Federal question was involved, and the case was dismissed. It was said that it should have appeared on the face of the record that the facts presented for adjudication made it necessary for the court to consider the act of incorporation, in view of the peculiar jurisprudence in Illinois, rather than the general law of the land.

Since the above case we have repeatedly held that the mere construction by a state court of a statute of another state, without questioning its validity, does not, with possibly some exceptions, deny to it the full faith and credit demanded by the statute in order to give this court jurisdiction. Glenn v. Garth, 147 U.S. 360, 37 L. ed. 203, 13 Sup. Ct. Rep. 350; Lloyd v. Matthews, 155 U.S. 222, 39 L. ed. 128, 15 Sup. Ct. Rep. 70; Banholzer v. ''New York L. Ins. Co.'' 178 U.S. 402, 44 L. ed. 1124, 20 Sup. Ct. Rep. 972; Johnson v. ''New York L. Ins. Co.'' 187 U.S. 491, 47 L. ed. 273, 23 Sup. Ct. Rep. 194; Finney v. Guy, 189 U.S. 335, 47 L. ed. 839, 23 Sup. Ct. Rep. 558.

The court of errors and appeals, conceding the general rule both in New Jersey and New York to be that a contract, void by the law of the state where made, will not be enforced in the state of the forum (Columbia F. Ins. Co. v. Kinyon, 37 N. J. L. 33, and Hyde v. Goodnow, 3 N. Y. 266), held that the state statute of New York did not declare the contract void, and that there was no decision in that state holding it to be so. In fact, the only case in the court of appeals peals in New York (Neuchatel Asphalt Co. v. New York, 155 N. Y. 373, 49 N. E. 1043) is the other way. The court of appeals in that case held that the purpose of the act was not to avoid contracts, but to provide effective supervision and control of the business carried on by foreign corporations; that no penalty for noncompliance was provided, except the suspension of civil remedies in that state, and none others would be implied. This corresponds with our rulings upon similar questions. Fritts v. Palmer, 132 U.S. 282, 33 L. ed 317, 10 Sup. Ct. Rep. 93.

With respect to the Pennsylvania statute, the court held that, although the Pennsylvania courts had held that a contract made in violation of the Pennsylvania statute was void, yet that the third plea did not contain allegations which showed that the note was given in pursuance of business carried on in Pennsylvania, and not in consummation of a single transaction; and although it was averred that plaintiff did business in that state, it was not averred that the note had nay connection with the business carried on in Pennsylvania, or that it was given for goods sold in Pennsylvania. The admitted averments may be true, and yet the note may have been given for an obligation contracted out of the state of Pennsylvania, and consequently, not in violation of its laws. Construing the third plea most strongly against the pleader, the conclusion was that it disclosed no defense in the action. This was purely a local question, and is not assignable as error here.

Whether, aside from the Federal question discussed, the courts of New Jersey should have sustained this action upon principles of comity between the states, was also a question within the exclusive jurisdiction of the state court. Finney v. Guy, 189 U.S. 335, 47 L. ed. 839, 23 Sup. Ct. Rep. 558.

The writ of error must, therefore, be dismissed.