Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/387

 PART V.] CORPORATE ACTS WITHOUT THE STATE. [§ 384. " Every power which a corporation exercises in another state depends for its validity upon the laws of the sovereignty in which it is exercised, and no corporation can make a valid contract without the sanction, expressed or implied, of such sovereignty ; unless a case should be presented in which the right claimed by the corporation should appear to be secured by the constitution of the United States." 1 § 384. The right, however, of a state to exclude foreign corporations and prevent them from making con- tracts or transacting business within the state is not among ordinarily exercised ; and the general rule may be stated, subject to qualifications hereafter to be mentioned, that the various states of the Union will permit foreign corpora- tions, which are not expressly or impliedly forbidden by their respective constitutions to transact business outside of the state incorporating them, to contract and transact such business as their constitutions authorize them to execute ; and to resort to the state courts for the enforcement of their rights. 2 This general rule was first authoritatively expressed in Bank of Augusta v. Earle, 3 as follows : " We think it is well settled that by the law of comity among nations, a corporation created by one sovereignty is permitted to make contracts in another, and to sue in its courts ; and that the same law of comity pre- vails among the several sovereignties of this Union. The public and well-known and long-continued usages of trade, the general acquiescence of the states, the particular legislation of 1 Runyan v. Coster's Lessee, 14 Pet. 122, 129. A state cannot deny to a corporation any right protected by the Federal constitution ; see Erie R. Co. v. State, 31 N. J. L. 531; State v. American Exp. Co., 7 Biss. 230; and see § 400. Nor can state legisla- tion restrict foreign corporations when by so doing it interferes with Federal powers, as, e. g., the power to regulate interstate commerce. See Pensacola Tel. Co. v. Western Un. Tel. Co., 96 U. S. 1 ; American Un. Tel. Co. v. Western Un.Tel. Co., 67 Ala. 26; Pembina Mining Co. v. Pennsylvania, 125 U. S. 181 ; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530 ; also § 480. 2 A foreign corporation in suing need not set out in its pleading the terms of its charter showing its capacity to maintain the action. Smith v. Weed Sewing Machine Co., 26 Ohio St. 563. But see Savage v. Russell, 84 Ala. 103. It is not against public policy to organize a corporation to act as the agent with- in the state of a foreign corporation. Day v. Postal Telegraph Co., 66 Md. 355. 8 13 Pet. 519, 592, per Taney, C. J. 367