Internationalcompany v. Aaron Pigg

CourtUnited States Supreme Court
Citation30 S.Ct. 481,54 L.Ed. 678,18 Ann. Cas. 1103,217 U.S. 91
Docket NumberNo. 15,TEXT-BOOK,15
Decision Date04 April 1910

Messrs. James M. Beck, Seth T. McCormick, and David C. Harrington for plaintiff in error.

[Argument of Counsel from pages 92-99 intentionally omitted] No appearance for defendant in error.

Mr. Justice Harlan delivered the opinion of the court:

This action was brought by the International Text-book Company in one of the courts of Kansas,—the court of Topeka,—to recover from Pigg, the defendant in error, the sum of $79.60, with interest, as due the plaintiff under a written contract between him and that company, made in 1905. The case was tried upon agreed facts, and judgment was rendered in favor of the defendant for his costs. That judgment was affirmed in a state district court, which held that the plaintiff was not entitled to maintain the action, and the latter judgment was affirmed by the supreme court of Kansas.

It is assigned for error that the final judgment—based upon certain provisions of the statutes of Kansas, to be presently referred to—was in violation of the company's rights under the Constitution of the United States.

The facts agreed to—using substantially the language of the parties—make substantially the following case:

The International Text-book Company is a Pennsylvania corporation, and the proprietor of what is known as the International Correspondence Schools at Scranton, in that commonwealth. Those schools have courses in architecture, chemistry, civil, mechanical, electrical, and steam engineering, English branches, French, German, mathematics and mechanics, pedagogy, plumbing, heating, telegraphy, and many other subjects. It has a capital stock, and the profits arising from its business are distributed in dividends, or applied otherwise, as the company may elect. The executive offices of the company, as well as the teachers and instructors employed by it, reside and exercise their respective functions at Scranton. Its business is conducted by preparing and publishing instruction papers, text-books, and illustrative apparatus for courses of study to be pursued by means of correspondence, and the forwarding, from time to time, of such publications and apparatus to students. In the conduct of its business the company employs local or traveling agents, called solicitor-collectors, whose duties are to procure and forward to the company at Scranton, from persons in a specified territory, on blanks furnished by it, applications for scholarships in its correspondence schools, and also to collect and forward to the company deferred payments on scholarships. In order that applicants may adapt applications to their needs, each solicitor-collector is kept informed by correspondence with the company of the fees to be collected for the various scholarships offered, and of the contract charges to be made for cash or deferred payments, as well as the terms of payment acceptable to the company. In conformity with the contract between the company and its scholars, the scholarship and instruction papers, text-books and illustrative apparatus called for under each accepted application are sent by the company from Scranton directly to the applicant, and instruction is imparted by means of correspondence through the mails, between the company, at its office in that city, and the applicant, at his residence in another state.

During the period covered by the present transaction, the company had a solicitor-collector for the territory that included Topeka, Kansas, and he solicited students to take correspondence courses in the plaintiff's schools. His office in Kansas was procured and maintained at his own expense, for the purpose of furthering the procuring of applications for scholarships and the collection of fees therefor. The company had no office of its own in that state. The solicitor-collector was paid a fixed salary by the company and a commission on the number of applications obtained and the collections made. He sent daily reports to the company for his territory, those reports showing that for March, 1906, the aggregate collections on scholarships and deferred payments on subscriptions approached $500.

At the date of the agreement sued on, and at the time this suit was brought, numerous persons in Topeka were taking the plaintiff's course of instruction by correspondence through the mails. The contracts for those courses were procured by its solicitor-collector assigned to duty in Kansas, and, as stated, payments thereon were collected and remitted by him to the plaintiff at Scranton.

The written contract in question, signed by the defendant at Topeka, Kansas, and accepted by the company at Scranton, showed that he had subscribed for a scholarship covering a course of instruction by correspondence in commercial law, and had agreed to pay therefor $84, in instalments. When this suit was brought, there remained unpaid on the principal of that subscription the sum of $79.60.

The present action was brought to recover that sum, with interest, as due the company under the defendant's contract with it. The defendant did not deny making the contract, nor that he was indebted to the company in the amount for which he was sued. But it was adjudged, in conformity with his contention, that by reason of the company's failure to comply with certain provisions of the statutes of Kansas, it was not entitled to maintain this action in a court of Kansas.

We will now refer to the provisions of the Kansas statute under which the Text-book Company was held not to be entitled to maintain the present action in the courts of the state. The statute, the plaintiff alleges, cannot be applied to it without violating its rights under the Constitution of the United States.

By § 1260 of the Kansas General Statutes of 1901 it is provided, among other things, that a corporation organized under the laws of any other state, territory, or foreign country, and seeking to do business in Kansas, may make application to the state charter board, composed of the attorney general, the secretary of state, and the state bank commissioner, for 'per- mission' to engage in business in that state as a foreign corporation. It is necessary that the application should be accompanied by a fee of $25, and as a condition precedent to obtaining authority to transact business in the state, a corporation of another state was required to file in the office of the secretary of state its written consent, irrevocable, that process against it might be served upon that officer. § 1261. In passing upon the application, the charter board is authorized to make special inquiry in reference to the solvency of the corporation, and if they determind that such corporation was properly organized in accordance with the laws under which it was incorporated, 'that its capital is unimpaired, and that it is organized for a purpose for which a domestic corporation may be organized' in Kansas, then its application is to be granted, and a certificate issued, setting forth the fact that 'the application has been granted, and that such foreign corporation may engage in business in this state.' Before filing its charter, or a certified copy thereof, with the secretary of state, the corporation is required to pay to the state treasurer, for the benefit of the 'permanent school fund,' a specified per cent of its capital stock. §§ 1263, 1264. The last-named section was the subject of extended examination in Western U. Teleg. Co. v. Kansas, recently decided (216 U. S. 1, 54 L. ed. ——, 30 Sup. Ct. Rep. 190), and was held to be unconstitutional in its application to the Western Union Telegraph Company, seeking to do local business in Kansas.

But the section which controlled the decision by the state court in the present case is § 1283, which is as follows: 'It shall be the duty of the president and secretary or of the managing officer of each corporation for profit, doing business in this state, except banking, insurance, and railroad corporations, annually, on or before the 1st day of August, to prepare and deliver to the secretary of state a complete detailed statement of the condition of such corporation on the 30th day of June next preceding. Such statement shall set forth and exhibit the following, namely: 1st. The authorized capital stock. 2d. The paid-up capital stock. 3d. The par value and the market value per share of said stock. 4th. A complete and detailed statement of the assets and liabilities of the corporation. 5th. A full and complete list of the stockholders, with the postoffice address of each, and the number of shares held and paid for by each. 6th. The names and postoffice addresses of the officers, trustees, or directors and manager elected for the ensuing year, together with a certificate of the time and manner in which such election was held . . . and the failure of any such corporation to file the statement in this section provided for within ninety days from the time provided for filing the same shall work the forfeiture of the charter of any corporation organized under the laws of this state, and the charter board may, at any time thereafter, declare the charter of such corporation forfeited; and upon the declaration of any such forfeiture, it shall be the duty of the attorney general to apply to the district court of the proper county for the appointment of a receiver to close out the business of such corporation; and such failure to file such statement by any corporation doing business in this state, and not organized under the laws of this state, shall work a forfeiture of its right or authority to do business in this state, and the charter board may at any time declare such forfeiture, and shall forthwith publish such declaration in the official state paper. . . . No action shall be maintained or recovery had in any of the courts of this state by any corporation doing business in...

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