Buck Stove Range Company v. Vickers/Opinion of the Court

By suits begun in the district court of Morris county, Kansas, and consolidated for purposes of trial and judgment, seven judgment creditors of one Vickers sought to set aside, as fraudulent, a conveyance by him, and to subject the land included therein to the satisfaction of their several judgments. The plaintiffs were corporations organized under the laws of states other than Kansas, and four of them were doing a purely interstate business in that state, but without complying with its laws presently to be mentioned. The defendants set up this noncompliance by an answer in the nature of a plea in abatement, and the court sustained the plea and dismissed the suits as to the four plaintiffs. As to the other three plaintiffs, relief was denied for other reasons, which need not be stated. The judgment was affirmed by the supreme court of the state, against the contention that the laws of Kansas under which the plea in abatement was sustained are violative of the commerce clause of the Constitution of the United States (80 Kan. 29, 101 Pac. 668), and then the case was brought here.

Some minor questions of appellate practice were urged upon our attention, but their statement and consideration have become unnecessary through the concession of counsel for plaintiffs in error, made during the oral argument and acted upon at the time, that the writ of error might be dismissed as to the Aultman and Miller Buckeye Company, the Consolidated Steel & Wire Company, and the Galveston Rope Company. Therefore, attention need be given only to the ruling upon the plea in abatement.

Our power to review this ruling is challenged, because of the statutory provision that there shall be no reversal in this court upon a writ of error 'for error in ruling any plea in abatement, other than a plea to the jurisdiction of the court.' Rev. Stat. § 1011, U.S.C.omp. Stat. 1901, p. 715. This provision has been part of the judiciary acts from the beginning, and often has been applied upon writs of error to the circuit and district courts, but never to a case coming here from a state court. Piquignot v. Pennsylvania R. Co. 16 How. 104, 14 L. ed. 863, and Stephens v. Monongahela Nat. Bank, 111 U.S. 197, 28 L. ed. 399, 4 Sup. Ct. Rep. 336, illustrate its application in cases brought here from circuit courts, and International Textbook Co. v. Pigg, 217 U.S. 91, 54 L. ed. 678, 27 L.R.A. (N.S.) 493, 30 Sup. Ct. Rep. 481, 18 Ann. Cas. 1103, and International Textbook Co. v. Lynch, 218 U.S. 664, 54 L. ed. 1201, 31 Sup. Ct. Rep. 225, are cases in which it was not applied upon writs of error to state courts. This difference in the treatment of the two classes of cases has not been inadvertent, but deliberate, and the reason for it is at once apparent when § 22 of the original judiciary act (1 Stat. at L. 84, chap. 20) is examined. The provision originated in that section and was there associated with other provisions which unmistakably show that it was intended to embrace only writs of error to the circuit and district courts. At the time of the revision in 1873, § 22 was divided into several shorter sections and included in the revision according to an arrangement, adopted for purposes of convenience only, whereby the several parts of the original section became more or less separated; but that, in the absence of some substantial change in phraseology, did not work any change in their purpose or meaning. Rev. Stat. § 5600, U.S.C.omp. Stat. 1901, p. 3751; Hyde v. United States, 225 U.S. 361, 56 L. ed. 1123, 32 Sup. Ct. Rep. 793; McDonald v. Hovey, 110 U.S. 619, 28 L. ed. 269, 4 Sup. Ct. Rep. 142. This is a writ of error to a state court, and so our power to review the ruling upon the plea in abatement is not affected by § 1011.

The statute of Kansas under which the plea was sustained is embodied in the General Statutes of 1905, and provides, in §§ 1332-1336, that to entitle a corporation organized under the laws of another state to do business in Kansas it must (a) make application to, and obtain the permission of, the charter board of the state, (b) accompany pany its application with a fee of $25, (c) file with the secretary of state its irrevocable consent that process against it may be served upon that officer, (d) be organized for a purpose for which a domestic corporation may be organized, (e) pay to the state treasurer, for the benefit of the permanent school fund, a specified per cent of its authorized capital, and (f) file with the secretary of state a certified copy of its charter. And by § 1358 the statute provides that each corporation for profit, doing business in the state, except banking, insurance, and railroad corporations, shall annually prepare and deliver to the secretary of state a complete and detailed statement, exhibiting: '1st. The authorized capital stock. 2d. The paid-up capital stock. 3d. The par value and the market value per share of said stock. 4th. A complete and detailed statement of the assets and liabilities of the corporation. 5th. A full and complete list of the stockholders, with the postoffice address of each, and the number of shares held and paid by each. 6th. The names and postoffice addresses of the officers, trustees, or directors and manager elected for the ensuing year, together with a certificate of the time and manner in which such election was held.' This section further provides that a failure to file such statement by and corporation doing business in the state, and not organized under its laws, shall work a forfeiture of the right or authority to do business in the state, and that 'no action shall be maintained or recovery had in any of the courts of this state by any corporation doing business in this state without first obtaining the certificate of the secretary of state that statements provided for in this section have been properly made.'

The four corporations against which the plea was sustained were corporations for profit, organized under the laws of states other than Kansas, were not banking, insurance, or railroad corporations, were doing business in Kansas,-a purely interstate business,-and had not complied with the statute just described. There can be no douby, therefore, that if the statute, especially § 1358, is valid as against such corporations, the plea was rightly sustained; otherwise, it should have been overruled. So, the question for decision is whether, consistently with the commerce clause of the Constitution of the United States, a state may thus restrict and burden the right to do interstate business within its limits. This precise question was presented to this court and decided in the negative in the case of International Textbook Co. v. Pigg, 217 U.S. 91, 54 L. ed. 678, 27 L.R.A.(N.S.) 493, 30 Sup. Ct. Rep. 481, 18 Ann. Cas. 1103,-a case in which the supreme court of Kansas had applied the provisions of § 1358 (§ 1283, Gen. Stat. 1901) to a corporation of another state, doing an interstate business in Kansas. And the decision of this court in that case was shortly thereafter followed in the similar case of International Textbook Co. v. Lynch, 218 U.S. 664, 54 L. ed. 1201, 31 Sup. Ct. Rep. 225, brought here on error to the supreme court of Vermont. It is due to the supreme court of Kansas to observe that this court's decision in the Pigg Case had not been made when that court's decision in the present case was given; but in saying this we would not be understood as implying that this case announced any new doctrine in the Pigg Case, for it but reiterated and applied principles which were already well recognized, as was shown in the earlier cases of Paul v. Virginia, 8 Wall. 168, 182, 19 L. ed. 357, 360; Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 734, 28 L. ed. 1137, 1139, 5 Sup. Ct. Rep. 739, and Crutcher v. Kentucky, 141 U.S. 47, 56, 35 L. ed. 649, 652, 11 Sup. Ct. Rep. 851.

As accurately reflecting what was held in the Pigg Case, we excerpt the following from the opinion of the court, delivered by Mr. Justice Harlan (pp. 109, 112):

"To carry on interstate commerce is not a franchise or a privilege granted by the state; it is a right which every citizen of the United States is entitled to exercise under the Constitution and laws of the United States; and that the accession of mere corporate facilities, as a matter of convenience in carrying on their business, cannot have the effect of depriving them of such right, unless Congress should see fit to interpose some contrary regulation on the subject'

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'How far a corporation of one state is entitled to claim in another state, where it is doing business, equality of treatment with individual citizens in respect of the right to sue and defend in the courts, is a question which the exigencies of this case do not require to be indefinitely decided. It is sufficient to say that the requirement of the statement mentioned in § 1283 [§ 1358, Gen. Stat. 1905] of the statute imposes a direct burden on the plaintiff's right to engage in interstate business, and therefore is in violation of its constitutional rights. It is the established doctrine of this court that a state may not, in any form or under any guise, directly burden the prosecution of interstate business. But such a burden is imposed when the corporation of another state, lawfully engaged in interstate commerce, is required, as a condition of its right to prosecute its business in Kansas, to make and file a statement setting forth certain facts which the state, confessedly, could not control by legislation. It results that the provision as to the statement mentioned in § 1283 [§ 1358, Gen. Stat. 1905] must fall before the Constitution of the United States, and with it-according to the established rules of statutory construction-must fall that part of the same section which provides that the obtaining of the certificate of the secretary of state that such statement has been properly made shall be a condition precedent to the right of the plaintiff to maintain an action in the courts of Kansas.'

Following the decision in that case, we held that the statute upon which the plea in abatement was rested is unconstitutional and void, and that the plea should not have been sustained, but overruled.

The judgment is reversed as to the remaining plaintiffs in error, and the case is remanded for further proceedings not inconsistent with this opinion.

Reversed.

Mr. Justice Pitney did not hear the argument or participate in the decision of this case.