172 U.S. 239 (1898), 8, Blake v. McClung

Docket Nº:No. 8
Citation:172 U.S. 239, 19 S.Ct. 165, 43 L.Ed. 432
Party Name:Blake v. McClung
Case Date:December 12, 1898
Court:United States Supreme Court
 
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Page 239

172 U.S. 239 (1898)

19 S.Ct. 165, 43 L.Ed. 432

Blake

v.

McClung

No. 8

United States Supreme Court

December 12, 1898

Submitted November 8, 1897

ERROR TO THE SUPREME COURT

OF THE STATE OF TENNESSEE

Syllabus

Chapter 31 of the Acts of Tennessee of 1877, entitled

An act to declare the terms on which foreign corporations organized for mining or manufacturing purposes may carry on their business, and purchase, hold and convey real and personal property in this state,

provided that corporations organized under the laws of other states and countries for purposes named in the act might carry on within that state the business authorized by their respective charters, but that

creditors who may be residents of this state shall have a priority in the distribution of assets, or subjection of the same, or any part thereof, to the payment of debts over all simple contract creditors, being residents of any other country or countries, and also over mortgage or judgment creditors, for all debts, engagements and contracts which were made or owing by the said corporations previous to the filing and registration of such valid mortgages, or the rendition of such valid judgments.

Held that as the litigation proceeded on the theory that plaintiffs in error were citizens of Ohio, where they resided, did business, and had offices, that question could not now be considered, and as the manifest purpose of the act was to give to all Tennessee creditors priority over all creditors residing out of that state, without reference to the question whether they were citizens or only residents in some other state or country, the act must be held to infringe rights secured to the plaintiff's in error, citizens of Ohio, by the provision of Sec. 2 of Art. IV of the Constitution declaring that the citizens of each state shall be entitled to all privileges and immunities of citizens in the several states, although, generally speaking, the state has the power to prescribe the conditions upon which foreign corporations may enter its territory for purposes of business.

It is not in the power of one state, when establishing regulations for the conduct of private business of a particular kind, to give its own citizens essential privileges connected with that business which it denies to citizens of other states.

When the general property and assets of a private corporation lawfully doing business in a state are in course of administration by the courts

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of said state, creditors who are citizens of other states are entitled, under the Constitution of the United States, to stand upon the same plane with creditors of like class who are citizens of such state, and cannot be denied equality of right simply because they do not reside in that state, but are citizens residing in other states of the Union.

While the members of a corporation are, for purpose of suit by or against it in the courts of the United States, to be conclusively presumed to be citizens of the state creating it, the corporation itself is not a citizen within the meaning of the provision of the.Constitution that the citizens of each state shall be entitled to all privileges, and immunities of citizens in the several states.

The said statute of Tennessee, so far as it subordinates the claims of private business corporations not within the jurisdiction of that state (although such private corporations may be creditors of a corporation doing business within the state under the authority of that statute) to the claims against the latter corporation of creditors residing in Tennessee, is not a denial of the equal protection of the laws secured by the Fourteenth Amendment to persons within the jurisdiction of the state, however unjust such a regulation may be deemed.

The case is stated in the opinion.

HARLAN, J., lead opinion

MR. JUSTICE HARLAN delivered the opinion of the Court.

This writ of error brings up for review a final judgment of the Supreme Court of Tennessee sustaining the validity of certain provisions of a statute of that state passed March 19, 1877, c. 31.

The chief object of the statute was declared to be to secure the development of the mineral resources of the state, and to facilitate the introduction of foreign capital. § 7.

It provides, among other things, that

corporations chartered or organized under the laws of other states or countries for the purpose of mining ores or coals, or of quarrying stones

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or minerals, of transporting the same, or erecting, purchasing, or carrying on works for the manufacture of metals, or of any articles made of or from metal, timber, cotton, or wool, or of building dwelling houses for their workmen and others, or gas works, or water works, or other appliances designed for the promotion of health, good order, or general utility, in connection with such mines, manufactories, and dwelling houses, may become incorporated in this state, and may carry on in this state the business authorized by their respective charters, or the articles under which they are or may be organized, and may enjoy the rights and do the things therein specified, upon the terms and conditions, and in the manner and under the limitation herein declared.

§ 1.

The second section provides for the filing in the office of the Secretary of State by

each and every corporation created or organized under or by virtue of any government other than that of this state, of the character named in the first section of this act, desiring to carry on its business

in the state, of a copy of its charter or articles of association, and the recording of an abstract of the same in the office of the register of each county in which the corporation proposes to carry on its business or to acquire any lands. § 2.

The third section declares that

such corporations shall be deemed and taken to be corporations of this state, and shall be subject to the jurisdiction of the courts of this state, and may sue and be sued therein in the mode and manner that is, or may be, by law directed in the case of corporations created or organized under the laws of this state.

§ 3.

The fifth section provides:

§. 5. That the corporations, and the property of all corporations coming under the provisions of this act, shall be liable for all the debts, liabilities and engagements of the said corporations, to be enforced in the manner provided by law, for the application of the property of natural persons to the payment of their debts, engagements, and contracts. Nevertheless, creditors who may be residents of this state shall have a priority in the distribution of assets, or subjection of the same, or any part thereof, to the payment of debts over all simple

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contract creditors, being residents of any other country or countries, and also over mortgage or judgment creditors, for all debts, engagements and contracts which were made or owing by the said corporations previous to the filing and registration of such valid mortgages, or the rendition of such valid judgments. But all such mortgages and judgments shall be valid and shall constitute a prior lien on the property on which they are or may be charged as against all debts which may be incurred subsequent to the date of their registration or rendition. The said corporations shall be liable to taxation in all respects the same as natural persons resident in this state, and the property of its citizens is or may be liable to taxation, but to no higher taxation, nor to any other mode of valuation, for the purpose of taxation, and the said corporations shall be entitled to all such exemptions from taxation which are now or may be hereafter granted to citizens or corporations for the purpose of encouraging manufacturers in this state, or otherwise.

Acts of Tennessee 1877, p. 44.

The case made by the record is substantially as follows:

The Embreeville Freehold Land, Iron and Railway Company, Limited (to be hereafter called the "Embreeville Company"), was a corporation organized under the laws of Great Britain and Ireland for mining and manufacturing purposes. In 1890, it registered its charter under the provisions of the above statute and established a manager's office in Tennessee. It purchased property and did a mining and manufacturing business there, transacting its affairs in this country at and from its Tennessee office.

On the 20th day of June, 1893, C. M. McClung & Co. and others filed an original general creditors' bill in the Chancery Court of Washington County, Tennessee against this company and others, alleging its insolvency and default in meeting and discharging its current obligations, charging that it had made a conveyance in trust of certain personal [19 S.Ct. 167] property in fraud of the rights of its other creditors, and asking the appointment of a receiver and the administration of its affairs as an insolvent corporation. The court took jurisdiction of the corporation, sustained the bill as a general creditors' bill, appointed

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a receiver of its property in Tennessee, administered its affairs in that state, and passed a decree adjudicating the rights and priorities of certain creditors.

No question is made in respect of the amount due to any one of the creditors whose claims were presented.

The company maintained its home office in London, its managing director resided there, and, after this suit was instituted, liquidation under the Companies' Acts of Great Britain was there ordered and begun.

There were holders of debentures executed by the British company whose claims were not specifically adjudicated in the decree below. The original debenture issue amounted to $500,000, and another issue, subsequent in time, and...

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