the subject of the formation of corporations, is one which looks to their ready and easy formation as a means of transacting business with an accumulation of capital and an exemption from personal liability to the largest extent consistent with reasonable supervision by the State. The facilities for incorporation offered by this State are not the result of any desire to promote the formation of corporations here as against their formation in other States. They are offered because of a policy on our part which urges upon the State the propriety of furnishing them as one means of controlling the business done by them and keeping it within our borders. If in any particular case it is thought by those interested in the matter that the business can be done in our own State and by our own citizens with greater facility under the form of a foreign corporation than under that of a domestic one, there is no public policy which forbids its transaction under such form. The supervision of a foreign corporation by this State may easily be exercised by imposing terms as a condition of permitting it to do business here. The absence of any such terms in our legislation forms no reason for refusing to recognize the corporation. The power rests with the legislature to say whether any, and if so what, terms shall be imposed upon such corporations as a condition of granting them permission to do business here. Those terms can only be imposed by the legislature, and in their absence our courts ought not, merely on that account, to refuse to recognize a foreign corporation. In the absence of legislation, our courts must either refuse absolutely, or else they must recognize the right of such corporations to come to this State and do business here. The courts cannot themselves impose terms or conditions. . . . "The truth is, foreign corporations are not properly to be regarded with suspicion, nor should unnecessary restraints be imposed upon their doing business in our midst. They carry no black flag, and the policy of all civilized nations is to grant them recognition in their courts. It seems to me that every reason which urges upon us the recognition of foreign corporations organized with power to do business in our State and composed of citizens of the foreign State, is equally potent when the foreign corporation is composed of our own citizens. It has always been supposed that a State should at least deal as liberally with its own citizens as with those of foreign States. If, therefore, we permit foreign citizens to come within our limits in the form of a foreign corporation organized with power to do business here and recognized by us, why should we not permit our own citizens to avail themselves of the like privilege? If we impose terms and conditions upon foreign corporations, as such, doing business here, those same terms and conditions still and equally apply to a foreign corporation when composed of our own citizens. Why should they not be placed at least upon an equality with the foreign citizen?"1 § 129. What constitutes doing Business on the Part of a Foreign Corporation within the State. There is perhaps no subject of corporation law wherein will be found greater diversity in the opinions of the courts of the several Commonwealths than that relating to the rights of foreign corporations. The growth of corporate organization as well as the vast extension of the business of corporations outside of the State of their origin has made the question of determining what in legal effect constitutes doing business on the part of a foreign corporation in States other than that of its domicile one of great practical importance. As has already been observed, parties may incorporate in one State at the present time for the purpose of transacting their business in another Commonwealth.2 In some of the States, notably South Carolina, the legislatures have attempted to give a statutory definition as to what constitutes doing business on the part of a foreign corporation within the Commonwealth. In most of the States, however, the question is left for judicial determination. A fair example of such statutes is to be found in the New York statute 3 which provides that "no foreign corporation, other than a moneyed corporation, shall do business in the State without having first procured" a proper certificate from the Secretary of State that it has complied with the statutes in such case made and provided. From the foregoing it will appear that the whole question centres upon the meaning of the word "business" as used in the statutes, of which the foregoing is a fair example. It will be impossible within the limits of this work to discuss at any length the conflicting decisions of the courts on the point here referred to. All that it is proposed to do is to present certain rules which a careful reading of the authorities have shown to represent the prevailing and better considered opinions of the various courts on the questions presented. These rules may be enumerated as follows: 1 See also Lancaster v. Amsterdam Improvement Co., 140 N. Y. 576; 35 N. E. 964. 2 State ex rel. v. Cook (Mo.), 80 S. W. 929; Oakhill Mfg. Co. v. Garst, 18 R. I. 484; 28 Atl. 973; Hanna v. Company, 23 O. St. 622. 8 New York Session Laws of 1890, chap. 563, sec. 150; amended by Laws of 1901, chaps. 96, 538. (1) In order to constitute the transaction of business by a foreign corporation within the foreign State, it is not indispensable that it should do the greater part of its business therein. If it does any part of its ordinary business therein and the same cannot properly be styled purely interstate commerce, the same constitutes the transaction of business therein within the meaning of the statute.1 (2) Generally speaking, the making of a single contract within the foreign State does not constitute the transaction of business therein.2 There must be more or less continuity in the matter. (3) The institution and prosecution of actions not arising out of previous transactions had within the foreign State does not constitute the transaction of business within the meaning of the statute.3 (4) Sales of merchandise by foreign trading corporations made by means of non-resident travelling salesmen, or by correspondence had between the foreign corporation at the domiciliary office and customers in the foreign State, or upon unsolicited orders from customers in the foreign State, do not constitute transaction of business within the meaning of the statute regulating the transaction of business by foreign corporations.* Aside from the question of the nature of the act, there are constitutional grounds upon which it would be held that corporations were not, under the circumstances here referred to, subject to the statutes in such foreign State compelling foreign corporations to obtain a permit to do business therein. The constitu 1 Lamb v. Lamb, 6 Biss. 420; Fed. Co., 72 Miss. 809; 17 So. 769; Kilgore v. Cas. No. 8018. Smith, 122 Pa. St. 48; 15 Atl. 698; United States v. Company, 29 Fed. 17. 2 Cooper Mfg. Co. v. Ferguson, 113 U. S. 727; Gilchrist v. Helena H. S. & S. R. Co., 47 Fed. 593; Colorado Iron Works Co. v. Company, 15 Col. 499; 25 Pac. 325; Commonwealth v. Standard Oil Co., 101 Pa. St. 119; Florsheim Co. v. Lester, 60 Ark. 120; 29 S. W. 34; Miller v. Williams (Col.), 59 Pac. 740; Tabor v. Company, 11 Col. 419; 18 Pac. 537; Creteau v. Foote Co., 40 Ap. Div. (N. Y.) 215; Sec. Co. v. Panhandle Nat. Bank, 93 Texas, 575; 57 S. W. 22; Missouri Coal Mining Co. v. Ladd, 160 Mo. 435; 61 S. W. 191; Payson v. Withers, 5 Biss. 269; Fed. Cas. No. 10864; Hope Mut. Life Ins. Co. v. Perkins, 38 N. Y. 404; Hart v. Livermore 8 Mandel v. Company, 154 Ill. 177; 40 N. E. 462; Smith ". Little, 67 Ind. 549. 4 T. L. Co. v. Holbert, 5 N. Y. Ap. Div. 559; Novelty Mfg. Co. v. Connell, 88 Hun, 254; M. I. W. C. & S. Co. v. Mosher, 114 Mich. 64; 72 N. W. 117; F. & J. M. Co. v. Foster, 4 Dak. 329; J. S. L. Co. v. Chappell, 184 Ill. 539; 56 N. E. 539; Gale Mfg. Co. v. Finkelstein, 22 Tex. Civ. Ap. 241; 54 S. W. 619; Toledo Commercial Co. v. Company, 55 O. St. 217; Wolff Dryer Co. v. Bigler, 192 Pa. St. 466; 43 Atl. 1092; Droege v. Company, 163 N. Y. 466; 57 N. E. 747. tional grounds here referred to have reference to those trading or quasi-public corporations engaged wholly in interstate trade and commerce and therefore not subject to regulation by State enactments. The same rule applies where the corporation is in the employ of the general government.2 (5) Foreign corporations may take mortgages by way of investment or as security, or may take real estate as security or otherwise without coming within the prohibition of the statute, provided such acts are not within the express purposes for which such corporations were created, as for example where they are engaged in the mortgage loan or real estate business.3 (6) Foreign corporations may take property by devise in foreign jurisdictions, if their charter authorizes it, either expressly or by implication, without coming within the purview of the statute.1 (7) The mere fact that a corporation pays rent for offices for its agent employed to solicit orders in the foreign State does not in itself prove that the corporation is transacting business within the foreign State.5 The question in all such cases is whether it is actually transacting business within the foreign State, and not whether some incident preliminary to the transaction of such business is to be performed there. The maintenance of an office within the State may be considered as a circumstance done in connection with others to show that a foreign corporation is transacting business in the State, but it is by no means conclusive of the question.7 (8) Where a foreign corporation consigns goods to persons in a foreign State to sell, and sales are made there by the factor in his own name and the proceeds collected by him, this does not 1 Robbins v. Shelby County Tax District, 120 U. S. 489; Brennan v. Titusville, 153 U. S. 289. L. E. 1137; F. B. D. G. Co. v. Lester, 60 4 Am., etc. Christian Union v. Yount, 2 Horn Silver Mining Co. v. New York, 101 U. S. 352; Santa Clara Female Acad143 U. S. 305. 3 C. U. A. Co. v. Scammon, 102 Ill. 46; Bard v. Poole, 12 N. Y. 495; A. M. L. I. Co. v. Owen, 15 Gray (Mass.), 491; Black v. Colwell, 83 Fed. 880; C. O. L. I. Co. v. Sawyer, 44 Wis. 387; Fritts v. Palmer, 132 U. S. 288; Bank v. Sherman, 28 Ore. 577; 43 Pac. 658; Simplex Dairy Co. v. Cole, 86 Fed. 739; Gilchrist v. Company, 47 Fed. 593; C. P. E. Co. v. Company, 152 Mass. 432; 28 N. E. 300; Cooper Mfg. Co. v. Ferguson, 113 U. S. 727; 28 emy. Sullivan, 116 Ill. 375; 6 N. E. 183; Lewisburg Baptist University v. Tucker, 31 W. Va. 621; 8 S. E. 410; Chamberlain v. Chamberlain, 43 N. Y. 444. 5 People ex rel. Brewing Co. v. Roberts, 22 N. Y. Ap. Div. 284. 6 Tallapoosa Lumber Co. v. Holbert, 5 N. Y. Ap. Div. 516. 7 People v. Company, 175 N. Y. 76; American Broom & Brush Co. v. Addicks, 19 N. Y. Misc. Rep. 36. constitute doing business within the foreign State within the meaning of the statute.1 (9) The renting of an office in a foreign jurisdiction in charge of a selling agent who distributes therefrom samples to customers and to travelling agents whose salaries are paid therefrom, together with the keeping of a bank account in such jurisdiction, does not necessarily constitute doing business within the foreign State within the meaning of the statute.2 Finally, in addition to the foregoing rules, it may not be without value in this connection to call particular attention to a few cases which seem to throw considerable light upon the general subject of what constitutes the transaction of business within a foreign State within the meaning of the Statutes already referred to. Attention is first called to the case of People ex rel. Kellogg Paper Co. v. Roberts. Here an Illinois corporation furnished printed matter to local publishers in the State of New York. It kept solicitors in the State of New York to secure advertising patronage for a newspaper published by it in Chicago. For this purpose it had an office in the State of New York with a manager and five clerks. It also kept a New York bank deposit from which rent and salaries were paid amounting to an annual expense of $13,000. It had office furniture in the State of New York valued at $700. It was held that the corporation had no capital employed in the State of New York which rendered its capital stock liable to assessment for taxation. The court in its opinion stated: "Office conveniences are permitted here to a foreign corporation doing business in another State to solicit orders to be executed in the other States without liability to our franchise tax. In People ex rel. Smith Co. v. Roberts, the court held that office leases, bank accounts, and the keeping of samples within the State by foreign corporations were nominally incidental to the business of soliciting orders and making sales which the relator could carry on in the foreign State without being liable to taxation. It also observed that the machinery `with which an interstate business is carried on is to some extent erected within the State and does not make such business taxable there." 1 Bertha Zinc & Mining Co. v. Clure, Ap. Div. 13; People ex rel. v. Roberts, 29 N. Y. Ap. Div. 585. 7 N. Y. Misc. Rep. 128. 2 Washington Mills Co. v. Roberts, 8 N. Y. Ap. Div. 201; affirmed in 151 N. Y. 619; People ex rel. v. Roberts, 25 N. Y. 8 30 N. Y. Ap. Div. 150. |