Blake v. Clung

• Decision Date: 12 December 1898
• Docket Number: No. 6,6
• Citation: 19 S.Ct. 165,172 U.S. 239,43 L.Ed. 432
• Parties: BLAKE et al. v. McCLUNG et al
• Court: U.S. Supreme Court

172 U.S. 239

19 S.Ct. 165

43 L.Ed. 432

BLAKE et al.

v McCLUNG et al.

No. 6.

December 12, 1898.

Heber J. May and Tulley R. Cornick, for plaintiffs in error.

Henry H. Ingersoll, John W. Green, and Charles Seymour, for defendants in error.

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. 42 S. W. 53.

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. Section 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 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.' Section 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. Section 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.' Section 3.

The fifth section provides:

'Sec. 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 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 Tenn. 1877, p. 44, c. 31.

The case made by the record is substantially as follows:

The Embreeville Freehold Land, Iron & 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, Tenn., 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 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 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 in respect of which priority in right was claimed, amounted to $125,000. All the holders of those issues are nonresidents of Tennessee and of the United States. There was also a general trade indebtedness, aggregating about $90,000, due by the company to residents of Great Britain. Those claims were specifically adjudicated by the decree.

Among the creditors of the company at the time this suit was instituted were the plaintiffs in error, namely: C. G. Blake, whose residence and place of business was in Ohio; Rogers, Brown & Co., the members of which also resided in Ohio, and carried on business in that state; and the Hull Coal & Coke Company, a corporation of Virginia. In the intervening petitions filed by those creditors it was averred that the plaintiffs in the general creditors' bill, residents of Tennessee, claimed priority of right in the distribution of the assets of the insolvent corporation over other creditors of the corporation, 'citizens of the United States, but not of the state of Tennessee,' and that the said statute was unconstitutional so far as it gave preferences and benefits to the plaintiffs or other citizens of Tennessee over the petitioners or other citizens of the United States.

By the final decree of the chancery court of Washington county, it was, among other things, adjudged that the act of 1877 was constitutional; that all of the creditors of the Embreeville Company residing in Tennessee were entitled to priority of satisfaction out of its assets (after the payment out of the proceeds of the real estate of the claim of the Pittsburgh Iron & Steel Engineering Company) as against its other creditors, who were 'residents and citizens of other states of the United States or other countries'; that the creditors who were 'citizens of other states of the United States, and who contracted with the company as located and doing business in Tennessee, are entitled to share ratably in its assets, being administered in this cause, next after the payment of the Pittsburgh Iron & Steel Engineering Company and the Tennessee creditors.'

Upon appeal to the chancery court of appeals, the decree of the chancery court was reversed in certain particulars. In the findings of the chancery court of appeals it was stated that the chancery court of Washington county adjudged, among other things, that, 'under the act of 1877 (which was adjudged constitutional), all the creditors of said Embreeville Company residing in Tennessee are entitled to priority of satisfaction out of the assets of the Embreeville Company (after the payment out of the proceeds of the real estate of the claim of the Pittsburgh Iron & Steel Engineering Company) as against the other creditors of said company who are nonresidents and citizens of other states of the United States or other countries; that the other creditors of the Embreeville Company who are citizens of other states of the United States, and who contracted with the said Embreeville Company as located and doing business in the state of Tennessee, are entitled to share ratably in the assets of the defendant Embreeville Company being administered in this cause after the payment of the Pittsburgh Iron & Steel Engineering Company and the Tennessee creditors (except the coke stopped in transitu).' And the decree in the chancery court of appeals contained, among other provisions, the following: 'That all of the holders and owners of the debenture bonds of the company are simple contract creditors of said company, and stand upon the same footing in reference to the distribution of the assets of the company as all other of its creditors residing out of the state of Tennessee;' and that the 'portion of the chancellor's decree giving priority of payment to such of the creditors of said company who reside in the United States of America, but not in the state of Tennessee, and to such...