General Railway Signal Company v. Virginia State Corporation Commission/Opinion of the Court

Plaintiff in error seeks reversal of a judgment of the Supreme Court of Appeals of Virginia (118 Va. 301, 87 S. E. 598) which affirmed an order of the Corporation Commission imposing a fine upon it for doing business within the state without first obtaining proper authority.

The essential facts concerning business done as found by the Commission and approved by Supreme Court are these:

'The defendant is a corporation of the state of New York,     having an authorized capital of $5,000,000. Its principal     office and factory is at Rochester, N. Y., where it owns and      operates a large manufacturing plant devoted to the      manufacture of materials chiefly used in the construction of      railway signals which it sells and constructs all over the      world. It has a branch factory at Montreal, Canada, and     maintains branch offices in New York City, Chicago, and San      Francisco.

'By contract dated the 5th day of May, 1914, with the     Southern Railway Company, the defendant agreed to furnish      certain materials, supplies, machinery, devices and      equipment, as well as all necessary labor, and to install,      erect, and put in place certain signals and apparatus shown      on the plans described in the specifications, from Amherst to      Whittles, Virginia, fifty-eight miles, and to 'complete the      entire system and turn same over to the railway company as a      finished job,' subject to inspection and acceptance, for      $85,597. Similar contracts had been previously made and fully     performed, one dated September 6, 1911, covering the lines of      the Southern Railway in Virginia from Monroe to Montview,      Virginia, 13 miles, for $16,015, and one dated July 18, 1913,      from Orange to Seminary, Virginia, 76 miles, for $112,428. The aggregate distance in this state covered by these     contracts being 147 miles, and the total consideration being      $214,040.

'The purpose of these signals is to promote safety of railway     operation and they operate automatically.

'In order to construct these signals as reuired by the     contract it was necessary to employ in this state labor,      skilled and unskilled, to dig ditches in which conduits for      the wires are placed, to construct concrete foundations, and to paint the completed structures. The completed     structures are along the side of the railway track, about 2      miles apart, and are 22 or 23 feet high. In the language of     the witness, Moffett: 'It is necessary to erect the signal      mechanism, the masts supporting the mechanism, the houses for      protecting the relays, reactors, reactants and other similar      electrical devices protected from the weather, then the      transformers, high tension line arresters and low tension      line arrestors.' The completed structures are permanently      attached to the freehold upon concrete bases.'

We think the recited facts clearly show local business separate and distinct from interstate commerce within the doctrine announced and applied in Browning v. Waycross, 233 U.S. 16, 34 Sup. Ct. 578, 58 L. Ed. 828.

It is further insisted that as the amount of prescribed entrance fee is based upon maximum capital stock it constitutes a burden on interstate commerce, contrary to the Federal Constitution.

Section 38a, c. 53, Acts of Virginia 1910 (copied in margin), requires every foreign corporation with capital over one million and not exceeding ten million dollars when it obtains a certificate of authority to do local business to pay a fee of one thousand dollars. Inspection of the statute shows that prescribed fees do not vary in direct proportion to capital stock and that a maximum is fixed. In the class to which plaintiff in error belongs the amount specified is one thousand dollars and, under all the circumstances, we cannot say this is wholly arbitrary or unreasonable.

Considering what we said in Baltic Mining Co. v. Massachusetts, 231 U.S. 68, 34 sup. Ct. 15, 58 L. Ed. 127; St. Louis S. W. Ry. v. Arkansas, 235 U.S. 350, 35 Sup. Ct. 99, 59 L. E.d 265; Kansas City Ry. v. kansas, 240 U.S. 227, 36 Sup. Ct. 261, 60 L. Ed. 617; Kansas City, etc., R. R. Co. v. Stiles, 242 U.S. 111, 37 Sup. Ct. 58, 61 L. Ed. 176-the two characteristices of the statute just referred to must be regarded as sufficient to save its validity. It seems proper, however, to add that the case is on the border line. See Looney v. Crane Co., 245 U.S. 178, 38 Sup. Ct. 85, 62 L. Ed. --, International Paper Co. v. Commonwealth of Massachusetts, 246 U.S. 135, 38 Sup. Ct. 292, 62 L. Ed. --, and Locomobile Co. v. Massachusetts, 246 U.S. 146, 38 Sup. Ct. 298, 62 L. Ed. --, decided March 4, 1918.

Affirmed.