216 U.S. 1 (1910), 4, Western Union Telegraph Company v. Kansas

Docket Nº:No. 4
Citation:216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355
Party Name:Western Union Telegraph Company v. Kansas
Case Date:January 17, 1910
Court:United States Supreme Court
 
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216 U.S. 1 (1910)

30 S.Ct. 190, 54 L.Ed. 355

Western Union Telegraph Company

v.

Kansas

No. 4

United States Supreme Court

January 17, 1910

Argued March, 17, 18, 1909

ERROR TO THE SUPREME COURT

OF THE STATE OF KANSAS

Syllabus

A statute of Kansas provided among other things, that, before a corporation of another state, even one engaged in interstate business, should have authority to do local business in Kansas, it should pay

to the state Treasurer, for the benefit of the permanent school fund, a charter fee of one-tenth of one percent of its authorized capital, upon the first $100,000 of its capital stock, or any part thereof, and upon the next four hundred thousand dollars or any part thereof, one-twentieth of one percent, and for each million or major part thereof over and above the sum of five hundred thousand dollars, $200.

The Western Union Telegraph Company, a New York corporation, engaged in commerce among the states and with foreign countries, and seeking to do local business in Kansas, had a capital stock of $100,000,000. The fee demanded of it as a condition of its right to do local business in Kansas, was $20,100. It refused to pay the required fee, and continued, as it had done for many years before to do local or intrastate business in Kansas. Thereupon, the state brought a suit in one of its own courts against the Telegraph Company and sought a decree ousting and restraining the company from doing any local business in Kansas. The state court gave the relief asked. Held that:

The right to carry on interstate commerce is not a privilege granted

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by the states, but a constitutional right of every citizen of the United States, and Congress alone can limit the right of corporations to engage therein. Crutcher v. Kentucky, 141 U.S. 47.

The power of Congress over interstate commerce is as absolute as it is over foreign commerce.

The rule that a state may exclude foreign corporations from its limits or impose such terms and conditions on their doing business therein as it deems consistent with its public policy does not apply to foreign corporations engaged in interstate commerce, and the requirement that the Telegraph Company pay a given percent of all its capital, representing all its business, interests and property everywhere, within and outside of the state, operated as a burden and tax on the interstate business of the company in violation of the commerce clause of the Constitution, as well as a tax on its property beyond the limits of the state, which it could not tax consistently with the due process of law enjoined by the Fourteenth Amendment.

Such a requirement imposed a condition on the Telegraph Company forbidden by the Constitution of the United States and violative of the constitutional rights of the company.

The Telegraph Company was no more bound to assent to the condition required of it in order that it might do local business in Kansas than to a condition requiring it to waive its right to invoke the benefit of the constitutional provision forbidding the denial of the equal protection of the laws or of the provision forbidding the deprivation of property without due process of law.

The disavowal by a state enacting a regulation of intent to burden or regulate interstate commerce cannot conclude the question of fact of whether a burden is actually imposed thereby, and whatever the purpose of a statute, it is unconstitutional if, when reasonably interpreted, it does, directly or by necessary operation, burden interstate commerce.

In determining whether a statute does or does not burden interstate commerce, the Court will look beyond mere form and consider the substance of things.

Consistently with the due process clause of the Fourteenth Amendment, a state cannot tax property located or existing permanently beyond its limits.

A court could not give the relief asked by the state without recognizing or giving effect to a condition that was in violation of the federal Constitution.

75 Kan. 609 reversed.

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This action was brought by the State of Kansas in one of its courts against the Western Union Telegraph Company, a New York corporation, to obtain a decree ousting and restraining that corporation from doing, in Kansas, any telegraphic business that was wholly internal to that state, and not pursuant to some arrangement, or to meet its contracts with, or obligations to, the government of the United States. Upon the petition of the telegraph company, the case was removed to the Circuit Court of the United States for the District of Kansas. But it was thereafter remanded to the state court, where, upon a demurrer to the answer, a final decree was rendered, prohibiting and enjoining the telegraph company from transacting intrastate business in Kansas as a corporation, the decree, however, not to affect the company's duties to or contracts with the United States. From that decree the present writ of error was prosecuted.

The state contends that the decree is in exact conformity with certain provisions of the Kansas statutes to be found in the General Statutes of that State of 1901, Title, "Corporations," p. 280, and the General Statutes of 1905, p. 284. Those provisions, or the ones directly involved here, originated in an act known as the Bush Act, passed at a special session of the legislature in 1898. Laws of Kansas, Special Session, p. 27.

The issues raised by the pleadings arise out of the above statutes. Under those statutes, a state Charter Board was organized and its powers defined. That Board was authorized to receive applications from corporations of other states, territories, or countries seeking permission to engage in business as foreign corporations in Kansas. Any such corporation was required in its application to set forth a certified copy of its charter or articles of incorporation, the place where its principal office or place of business was to be located, the full nature and character of the business in which it proposed to engage, the names and addresses of its officers, trustees, or directors and stockholders, with a detailed statement of its assets and liabilities, and such other information as the Board might require in

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order to determine the solvency of the corporation. The statute further provided that the application should be accompanied by a fee of twenty-five dollars, to be known as an application fee, and that it should be a condition precedent to obtaining authority to transact business in the state that the corporation should file in the office of the Secretary of State its written consent, irrevocable, that actions might be brought against it in the proper court of any county in the state (in which the cause of action arose, or in which the plaintiff resided) by service of process on the Secretary of State, and stipulating that such service should be valid and binding as if due service had been made upon the president or chief officer of the corporation. Every foreign corporation then doing business in the state was required, within thirty days from the taking effect of the act, to file with the Secretary of State the specified written consent. Kan.Gen.Stat. 1901, § 1261. If the Charter Board determined that the foreign company seeking to do business in the state was organized in accordance with the laws under which it was created, that its capital was unimpaired, and that it was organized for a purpose for which a domestic corporation might be organized in Kansas, then the Board was directed to grant the application, and by its secretary issue a certificate, setting forth the granting of the application to engage in business in the state, as provided in the statute. Id., § 1263.

Then come these important sections:

Each corporation which has received authority from the Charter Board to organize shall, before filing its charter with [30 S.Ct. 191] the Secretary of State, as provided by law, pay to the State Treasurer of Kansas, for the benefit of the permanent school fund, a charter fee of one-tenth of one percent of its authorized capital, upon the first one hundred thousand dollars of its capital stock, or any part thereof, and upon the next four hundred thousand dollars, or any part thereof, one-twentieth of one percent, and for each million or major part thereof over and above the sum of five hundred thousand dollars, two hundred dollars. . . . In addition

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to the charter fee herein provided, the Secretary of State shall collect a fee of two dollars and fifty cents for filing and recording each charter containing not to exceed ten folios, and an additional fee of twenty-five cents for each folio in excess of ten contained in any charter. The fee for filing and recording a charter shall also entitle the corporation to a certified copy of its charter. All the provisions of this act, including the payment of the fees herein provided, shall apply to foreign corporations seeking to do business in this state, except that, in lieu of their charter, they shall file with the Secretary of State a certified copy of their charter, executed by the proper officer of the state, territory, or foreign country under whose laws they are incorporated, and any corporation applying for a renewal of its charter shall comply with all the provisions of this act in like manner, and to the same extent, as is herein provided for the chartering and organizing of new corporations. . . . Any corporation organized under the laws of another state, territory, or foreign country, and authorized to do business in this state, shall be subject to the same provisions, judicial control, restrictions, and penalties, except as herein provided, as corporations organized under the laws of this state.

Id., §§ 1264, 1267.

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