Power Mfg Co v. Saunders

Citation47 S.Ct. 678,71 L.Ed. 1165,274 U.S. 490
Decision Date16 March 1927
Docket NumberNo. 258,258
PartiesPOWER MFG. CO. v. SAUNDERS
CourtUnited States Supreme Court

Messrs. George B. Pugh and Thomas S. Buzbee, both of Little Rock, Ark., for plaintiff in error.

Mr. Wm. R. Donhan, of Little Rock, Ark., for defendant in error.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

This was an action to recover for a personal injury sustained by the plaintiff while in the defendant's employ. The plaintiff was a citizen and resident of Ohio, and the defendant was a corporation of that state. Besides its activities in Ohio, the defendant maintained a warehouse at Stuttgart, Ark., where it did a local business. The plaintiff received his injury in that warehouse. The defendant had complied with the conditions on which Arkansas permits foreign corporations to do a local business within her limits, and as part of its compliance had named Stuttgart as its place of business in the state and designated an agent residing there on whom process against it might be served. See Crawford & Moses' Digest 1921, § 1826. It did no business and had no office, officer, or agent elsewhere in the state. Stuttgart is in Arkansas county, and is its county seat.

The action was brought in Saline county, Ark.; service of the summons being made on the defendant's designated agent at Stuttgart. The plaintiff obtained a judgment, which the Supreme Court of the state affirmed (169 Ark. 748, 276 S. W. 599), and the defendant brought the case here on writ of error.

The Arkansas statutes require actions of this character, if against a domestic corporation, to be brought in a county where it has a place of business or in which its chief officer resides, and, if against a natural person, in a county where he resides or may be found; but they broadly permit such actions, if against a foreign corporation, to be brought in any county in the state. Crawford & Moses' Digest 1921, §§ 1152, 1171, 1176, 1829; Jacks v. Central Coal & Coke Co., 156 Ark. 211, 245 § W. 483.

Another statute (section 1174) permits both foreign corporations and persons residing out of the state to be sued in any county in which they have property or debts owing to them. Attachment and garnishment proceedings, and some others, may be had under it. But it concededly is without application here, and may be put aside. The defendant neither had any property nor owed any debts in the county where it was sued.

By a timely motion to dismiss the defendant objected to being sued in Saline county and assailed the validity of the statutes, in so far as they permit a foreign corporation to be sued in a county where it does no business and has no office, officer, or agent, on the ground that they are unreasonably discriminatory and arbitrary, and therefore in conflict with the equal protection clause of the Fourteenth Amendment to the Constitution of the United States. The court of first instance upheld the validity of the statutes and accordingly overruled the motion, and the Supreme Court approved that ruling.

Thus the statutes were applied as permitting the defendant, a foreign corporation doing business in one county, to be sued in another county, where it did no business and had no office, officer, or agent, on a cause of action which arose in the former. Other counties lay between the two, making the distance from the defendant's place of business to the place of suit 75 miles by railroad and a few miles less by public roads. This, of course, tended to increase materially the burden otherwise incident to presenting a defense.

It is conceded that the statutes neither permit a domestic corporation to be sued in a county in which it does no business and has no office, officer, or agent, nor permit a natural person to be sued in a county in which he does not reside and is not found. On the contrary, they confine the admissible venue as to both to counties in which the defendant is present in one of the ways just indicated. But a foreign corporation is differently treated. If it be present in a single county, as by having a place of business there, it is made subject to suit, not merely in that county, but in any of the 74 other counties, although it be not present in them in any sense.

We think it very plain that the statutes discriminate against foreign corporations, and in favor of domestic corporations and individuals, and that the discrimination is not theoretical merely, but real and substantial.

The clause in the Fourteenth Amendment forbidding a state to deny to any person within its jurisdiction the equal protection of the laws is a pledge of the protection of equal laws (Truax v. Corrigan, 257 U. S. 312, 333, 42 S. Ct. 124, 66 L. Ed. 254, 27 A. L. R. 375; Atchison, Topeka & Santa Fe Ry. Co. v. Vosburg, 238 U. S. 56, 59, 35 S. Ct. 675, 59 L. Ed. 1119, L. R. A. 1915E, 953), and extends as well to corporate as to natural persons (Smyth v. Ames, 169 U. S. 466, 522, 18 S. Ct. 418, 42 L. Ed. 819; Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, 165 U. S. 150, 154, 17 S. Ct. 255, 41 L. Ed. 666; Santa Clara County v. Southern Pacific R. R. Co., 118 U. S. 394, 396, 6 S. Ct. 1132, 30 L. Ed. 118). It does not prevent a state from adjusting its legislation to differences in situation or forbid classification in that connection, but it does require that the classification be not arbitrary, but based on a real and substantial difference, having a reasonable relation to the subject of the particular legislation. Truax v. Corrigan, supra, page 337 (42 S. Ct. 131); Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, supra, 155 (17 S. Ct. 256); Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61, 78, 31 S. Ct. 337, 55 L. Ed. 369, Ann. Cas. 1912C, 160; Ft. Smith Light & Power Co. v. Board of Improvement (May 16, 1927) 274 U. S. 387, 47 S. Ct. 595, 71 L. Ed. 1112.

No doubt there are subjects as to which corporations admissibly may be classified separately from individuals and accorded different treatment, and also subjects as to which foreign corporations may be classified separately from both individuals and domestic corporations and dealt with differently. But there are other subjects as to which such a course is not admissible; the distinguishing principle being that classification must rest on differences pertinent to the subject in respect of which the classification is made.

Here the separate classification of foreign corporations is in respect of the venue of place of bringing transitory actions. The statutes mean foreign corporations doing business within the state by her permission, and therefore having a fixed place of business therein and a resident agent on whom process may be served. We speak only of them. So far as their situation has any pertinence to the venue of transitory actions, it is not distinguishable from that of comestic corporations and individuals. Certainly there is no substantial difference. The opinion of the state court does not point to any relevant distinction, nor have counsel suggested any. Of course the restricted venue as to domestic corporations and individuals is prompted by considerations of convenience and economy; but these considerations have equal application to foreign corporations. So far as the plaintiffs in such actions are affected, it is apparent that there is no more reason for a statewide venue when the action is against a foreign corporation than when it is against a domestic corporation or a natural person. So we conclude that the special classification and discriminatory treatment of foreign corporations are without reasonable basis and essentially arbitrary.

The state court put its decision on the ground that venue is a question of procedure which the state may determine; and counsel for plaintiff advance the further ground that the defendant impliedly assented to the venue provisions by seeking and obtaining permission to do business within the state, the provisions being then on the statute book. But neither...

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