State ex rel. Kimberlite Diamond Mining & Washing Company v. Earle W. Hodges, Secretary of State

• Decision Date: 13 July 1914
• Docket Number: 113
• Citation: 169 S.W. 942,114 Ark. 155
• Parties: STATE ex rel. KIMBERLITE DIAMOND MINING & WASHING COMPANY v. EARLE W. HODGES, SECRETARY OF STATE
• Court: Arkansas Supreme Court

169 S.W. 942

114 Ark. 155

STATE ex rel. KIMBERLITE DIAMOND MINING & WASHING COMPANY v. EARLE W. HODGES, SECRETARY OF STATE

No. 113

Supreme Court of Arkansas

July 13, 1914

Appeal from Pulaski Circuit Court; Guy Fulk, Judge; affirmed.

STATEMENT BY THE COURT.

The plaintiff (appellant here) filed its complaint in the Pulaski Circuit Court, alleging that it was a corporation under the laws of Missouri, and that the defendant (appellee here) was the Secretary of State; that the plaintiff, having complied with the requirements of the statutes to that end, was, on the 26th day of May, 1911, granted a license to do business in Arkansas; that thereupon it established a place of business in Pike County, and began the business which it was authorized to do; that since that time, and prior to October 2, 1913, it had expended more than $ 35,000 in establishing its business in Arkansas; that it had acquired large and valuable real property and had erected a large mechanical plant or mill in Arkansas; that on the 2d of October, 1913 the Secretary of State arbitrarily and without warrant of law undertook to cancel and revoke its license to do business in Arkansas, by which act it was deprived of the enjoyment, use and benefit of its property in the State, of the right to make and enforce future contracts, and also the benefit of contracts already made by it; that it was subjected to the alternative of suffering the entire suspension of its business in the State, or incurring the harsh and unreasonable penalty of $ 1,000 per day, for all of which it had no adequate remedy by ordinary procedure; that great prejudice and damage would result to it unless the writ of mandamus was issued compelling the Secretary of State to revoke his act cancelling appellant's license.

The defendant entered his appearance, waived the issuance of the alternative writ and answered, admitting that the plaintiff had been licensed to do business in Arkansas; that it had prosecuted its business in this State and had expended large amounts of money, and had acquired large property interests as alleged in the complaint. He admitted the cancellation of the license, and set up that the same was done under the provisions of Act No. 313, approved May 13, 1907; that in September, 1913, the plaintiff, having been sued in the Pike County Circuit Court by M. M. Mauney, a citizen of Arkansas removed the cause to the United States District Court for the Western District of Arkansas against the wish and consent of the said Mauney, and that defendant, as Secretary of State being so informed, forthwith cancelled and revoked the plaintiff's license to do business in Arkansas.

The act referred to provides, in part, as follows:

"And if any company (foreign corporation) shall, without the consent of the other party to any suit or proceeding brought by or against it in any court of this State, remove said suit or proceeding to any Federal Court, or shall institute any suit or proceeding against any citizen of this State in any Federal Court, it shall be the duty of the Secretary of State to forthwith revoke all authority to such company and its agents to do business in this State and to publish such revocation in some newspaper of general circulation, published in this State; and if such corporation shall thereafter continue to do business in this State, it shall be subject to the penalty of this act for each day it shall continue to do business in this State after such revocation."

The plaintiff demurred to the answer, on the ground that Act No. 313, approved May 13, 1907, p. 744, is void under the Constitution of Arkansas and the Constitution of the United States, and the Fourteenth Amendment thereto. The court overruled the demurrer and entered judgment dismissing the appellant's complaint, and this appeal has been duly prosecuted.

Judgment affirmed.

George B. Webster, for appellant.

1. The sole question is the constitutionality of the "Wingo Act." The act is unconstitutional, because:

It takes and destroys licenses to do business in this State which is a property right; (2) it denies to a foreign corporation the protection and equality guaranteed by § 11, art. 12, Constitution State; (3) it denies due process and equal protection of the laws under Amendment 14, Constitution U. S.; (4) it confines or restricts the jurisdiction of the Federal courts in violation of art. 6, U. S. Constitution. See Constitution 1874, art. 2, § 8; 96 U.S. 101, Brannon, Fourteenth Amendment, p. 8, 167 U.S. 417; 157 Id. 383, 17 Wall. 438; 167 U.S. 417.

A corporation is a person within the meaning of the due process clause. 164 U.S. 578; 86 Ark. 412; 94 Id. 27. Property includes the right to own and dispose of property and to make contracts. 169 U.S. 391; 165 Id. 591. A corporate franchise is property. 24 Ark. 96; 50 O. St. 568; 9 Gill & J. (Md.) 366.

Foreign corporations can not be subjected to any different liabilities than those imposed upon domestic corporations. 204 U.S. 113 l. c.; 155 F. 797.

2. The equality clause protects corporations as well as natural persons. 169 U.S. 466; 165 Id. 154; 118 Id. 396; 216 Id. 400; 94 Ark. 27; Constitution U.S. art. 6, P 2, and art. 2, § 2; 25 Stat. at Large, 434. States can not restrict or limit the jurisdiction of the Federal courts. 170 U.S. 100; 156 F. 15; 171 Id. 487; 34 U.S. S.Ct. 333; 218 U.S. 135.

Wm. L. Moose, Attorney General, and Jno. P. Streepey, Assistant, J. C. Pinnix and W. C. Rodgers, for appellee.

The act, May 13, 1907, is not unconstitutional. "Due process of law" "equal protection of the law," "confiscation," etc., have been repeatedly construed by our highest courts. 94 U.S. 535; 29 S.Ct. 527; 119 Ky. 321-7; 72 U.S. 475; 123 U.S. 123; 148 Id. 657; 18 Wall. 29. The courts hold that a State may impose upon foreign corporations as a condition of coming into or doing business within its borders such terms, conditions and restrictions as it may deem proper, not repugnant to the Constitution or laws of the United States. 94 U.S. 535, and cases supra. A mere license is always revocable. Ib.; 72 U.S. 475.

The mere fact that some property right may be injured does not change the rule. 123 U.S. 123; 148 Id. 657; 18 Wall. 29.

It is provided in the organic law that even the charters of all corporations may be altered or repealed. Art. 12, §§ 6-11, Const.; 58 Ark. 407; 202 U.S. 248. The mere licensing a foreign corporation to do business is not a contract. 203 U.S. 151; 212 Id. 322. Our law does not take away the right of removal to a Federal Court, it simply reserves the right to revoke the license. 34 S.Ct. 15-18, 333.

To pursue a statute is due process of law. 81 Ark. 519-544; 62 U.S. 25; 105 Id. 470. The State can exclude foreign corporations entirely or permit them to enter on terms. Cases supra. By accepting the license, the corporation agreed to abide by and obey our laws.

OPINION

WOOD, J., (after stating the facts).

1. The appellant contends that the part of the act quoted violates that part of the due process clause of the State and Federal Constitutions which provides that "no person shall be deprived of property without due process of law."

The act itself is due process. It does not deprive the appellant of any property right or deny to the appellant the right to be heard in court as to any of its property rights. The act only requires the Secretary of State to revoke the authority of a foreign corporation or company to do business in the State when the facts exist making it his duty to exercise the power conferred upon him to revoke. If he exercises or attempts to exercise this power in the absence of the actual existence of the facts authorizing him to do so, his acts would be void and would not affect the authority of the foreign corporation to do business in the State. Such corporations could ignore all such unauthorized acts on his part, and the courts would be open to them to restrain him from any threatened revocation or to annul as void any pretended revocation that he might make that was not based upon the existence of facts calling for the exercise of the authority. The act, therefore, does not deprive any foreign corporation of an opportunity to be heard concerning any right of property, and is not violative of the due process clause.

The demurrer admitted the existence of the facts alleged in the answer which made it the duty of the appellee, under the statute, to revoke appellant's license. Therefore, if it be conceded that appellant's license to do business is in the nature of a property right, if the statute is otherwise valid, appellee was authorized and required by it to revoke appellant's license to do business in this State, and in doing so has not deprived the appellant of any right of property without due process of law.

2. Section 11, article 12, of the Constitution of Arkansas, provides that foreign corporations "as to contracts made or business done in this State shall be subject to the same regulations, limitations and liabilities as like corporations of this State."

This provision of the Constitution has reference, of course, to foreign corporations who have been licensed to do business and who are making their contracts and conducting their business in pursuance of this license. In other words, to foreign corporations who are properly within the State in pursuance of its laws, and who have not forfeited their right to do business in the State by a violation of the law under which they were admitted. When a foreign corporation has ignored or violated the conditions of the act under which it is admitted, and under which it is permitted to conduct any business in the State, and for which violation its license is required to be forfeited under the statute, then such corporation in...