Western Union Telegraph Co. v. Andrews

• Decision Date: 22 June 1907
• Parties: WESTERN UNION TELEGRAPH CO. v. ANDREWS et al.
• Court: U.S. District Court — Eastern District of Arkansas

154 F. 95

WESTERN UNION TELEGRAPH CO. v. ANDREWS et al.

United States Circuit Court, E.D. Arkansas, Western Division.

June 22, 1907

Rose Hemingway, Cantrell & Loughborough, Henry D. Estabrook, and Rush Taggart, for complainant.

William F. Kirby, Atty. Gen., and Lewis Rhoton, Pros. Atty., for defendants.

TRIEBER District Judge.

The complainant, a corporation existing under the laws of the state of New York and engaged in the business of conveying messages by telegraph, seeks by this bill to enjoin the defendants, who are the prosecuting attorneys of the 17 judicial circuits of the state of Arkansas, from instituting against it any proceedings for penalties for its failure or refusal to comply with the provisions of an act of the General Assembly of the state entitled 'An act to permit foreign corporations to do business in Arkansas, and fixing fees to be paid by all corporations,' approved May 13 1907. The act is as follows:

'Section 1. Every company or corporation incorporated under the laws of other states, territory or country, including foreign railroad and foreign fire and life insurance companies, now or hereafter doing business in this state, shall file in the office of the Secretary of State of this state a copy of its charter or articles of incorporation or association or a copy of its certificate of incorporation, duly authenticated and certified by the proper authority, together with a statement of its assets and liabilities, and the amount of its capital employed in this state, and shall also designate its general office or place of business in this state, and shall name an agent upon whom process may be served: Provided, before authority is granted to any foreign corporation to do business in this state, it must file with the Secretary of State a resolution adopted by its board of directors, consenting that service of process upon any agent of said company in this state, or upon the Secretary of State in this state in any action brought of pending in this state, shall be valid service upon said company; and if process is served upon the Secretary of State it shall be his duty to at once send it by mail, addressed to the company at its principal office; and if any company shall, without 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 of said 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 any 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 the state after such revocation.

'Sec. 2. Any foreign corporation which shall fail to comply with the provisions of this act, and shall do any business in this state, shall be subject to a fine of not less than $1,000 to be recovered before any court of competent jurisdiction, and all such fines so recovered shall be paid into the general revenue fund of the county in which the cause of action shall accrue, and it is hereby made the duty of the prosecuting attorneys to institute said suits in the name of the state for the use and benefit of the county in which the suit is brought, and such prosecuting attorney shall receive, as his compensation, one-fourth of the amount recovered; and, as an additional penalty, any foreign corporation which shall fail or refuse to file its articles of incorporation or certificate as aforesaid, cannot make any contract in this state which can be enforced by it either in law or equity, and the complying with the provisions of this act after suit is instituted shall in no way validate said contract.

'Sec. 3. That all corporations hereafter incorporated in this state, and all foreign corporations seeking to do business in this state, shall pay into the treasury of this state for the filing of said articles a fee of $25 where the capital stock is $50,000 or under; $75 where the capital stock is over $50,000 and not more than $100,000, and $25 additional for each $100,000 of capital stock. Any foreign mutual corporation having no capital stock shall be required to pay to the Secretary of State for filing its articles of incorporation the sum of $500: Provided, however, nothing in this section shall apply to fraternal orders that write insurance.

'Sec. 4. That Act No. 185, approved April 17, 1907, and entitled 'An act to provide a manner in which foreign corporations may become domestic corporations, and for other purposes,' and all laws and parts of laws in conflict herewith, be and the same are hereby repealed.'

The bill, so far as it is necessary to set it out for the purpose of the demurrer to the jurisdiction, charges that the complainant is now, and has been for years, engaged in the telegraph business throughout the United States, and within the state of Arkansas, having fully complied with the acts of Congress which are set out in the bill, and also the valid laws of the state of Arkansas; that it has invested over $160,000 in building and maintaining its lines and offices in this state, and that for certain reasons unnecessary to mention in this statement this act is unconstitutional as to complainant; that for this reason it does not deem itself bound to pay the fees attempted to be exacted from it by this act for the purpose of continuing its business in this state, and which fees, it is alleged, exceed $25,000; that the various prosecuting attorneys of the state in whose districts complainant is carrying on its business, unless restrained by the order of the court, will, as they have threatened to do, institute numerous actions for the recovery of the penalties prescribed by the act, which is no less than $1,000 for each alleged violation. Defendants challenge the jurisdiction of this court upon two grounds: First, that an action for the penalties is a criminal prosecution, and for this reason it is not within the jurisdiction of this court, sitting as a court of chancery, to enjoin actions for their recovery; second, that the action is one against the state, which is not the real party to be affected thereby, and for that reason within the prohibition of the eleventh amendment to the Constitution of the United States.

1. As the act merely provides for the recovery of a penalty, it is, under the laws of the state of Arkansas, as construed by the decisions of its highest court, a civil suit, and not a criminal prosecution, within the meaning of the Constitution and laws of the state of Arkansas. Railway Co. v. State, 56 Ark. 166, 19 S.W. 572; Kansas City & C.R.R. Co. v. State, 63 Ark. 134, 37 S.W. 1047; St. L., I.M. & S. Ry. Co. v. State, 68 Ark. 561, 60 S.W. 654; C., O. & G., etc., Ry. v. State, 75 Ark. 369, 87 S.W. 631. In those cases the actions were instituted for alleged violations of section 6595, Kirby's Dig., digested in Mansfield's Digest as section 5478, and in Sandels & Hill's Digest as section 6196. That act provided for a penalty of $200 for the failure of any railroad company to blow its whistle or ring its bell when at least 80 rods from the place where the train crosses a road. Following the construction of the highest court of the state in the interpretation of its Constitution and statutes, the court holds that this is not an action to restrain criminal prosecutions, but an action to enjoin civil suits for the recovery of penalties.

2. Is this an action against the state, within the prohibition of the eleventh amendment to the Constitution? Counsel for both parties have cited numerous cases to sustain their respective contentions. A careful examination of these cases shows that the supposed conflicting views of the Supreme Court of the United States, as well as those of the national courts inferior to that tribunal, are not real, and that, considering carefully the facts in each case, there is little trouble in reconciling these supposed divergent views and arriving at a correct conclusion as to what is now the settled law as declared by the Supreme Court of the United States. The principle as laid down by Chief Justice Marshall in Osborn v. Bank of the United States, 9 Wheat. 738, 856, 6 L.Ed. 204, that a state is not sued unless it is named as a defendant upon the record, may be said to have been abandoned long ago. To review all the cases determined by the Supreme Court of the United States and the numerous inferior national courts on that subject since Osborn v. Bank of the United States would serve no useful purpose, as the later decisions review all these cases and formulate what must now be considered the law on that subject.

A leading case on that question is In re Ayers, 123 U.S. 443, 487, 502, 503, 8 Sup.Ct. 164, 31 L.Ed. 216. In that case Mr. Justice Matthews, delivering the opinion of the court, said:

'It must be held as the settled doctrine of this court, established by its recent decisions, 'that the question whether a suit is within the prohibition of the eleventh amendment is not always determined by reference to the nominal parties on the record.' This, it is true, is not in harmony with what was said by Chief Justice Marshall in Osborn v. Bank of the United States. ' The state not being a party on the record, and the court having jurisdiction over those who are parties on the record, the true question is not one of jurisdiction, but whether, in the exercise of its jurisdiction, the court ought to make a decree against the defendants-- whether they are to be

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