XII.

may prohibit the carriage of such tickets from State Chapter to State; and that legislation to that end, and of that character, is not inconsistent with any limitation or restriction imposed upon the exercise of the powers granted to Congress."

So far as State legislation respecting lotteries is concerned, it has been held that a ticket in a lottery, authorized at the place of issue, cannot be regarded as within the protection of the commerce clause. In view of the legislation of Congress, this certainly must be so.3 And even in the absence of any legislation by Congress, the police power of the States would seemingly justify legislation prohibiting the introduction of lottery tickets into the State.

State laws lotteries.

respecting

INSURANCE.

declaration

ance is not

commerce.

In Paul v. Virginia Mr. Justice Field, writing Judicia! the opinion of the court, said: "Issuing a policy that insurof insurance is not a transaction of commerce. The policies are simple contracts of indemnity against loss by fire, entered into between the corporations and the assured, for the consideration paid by the latter." 5 In that case it was held that a statute of Virginia, providing that no insurance company, not

3 Roselle v. Farmer's Bank, (1897) 141 Mo. 36.

When foreign government bonds are coupled with conditions and stipulations which change their character from a simple government bond for the payment of a certain sum of money to a species of lottery ticket, they are not salable within a State which prohibits the sale of any lottery tickets within the State. Ballock v. State, (1890) 73 Md. 1.

4 (1868) 8 Wall. (U. S.) 168.

5 See also Philadelphia F. Assoc. v. New York, (1886) 119 U. S. 110; and see Liverpool Ins. Co. v. Massachusetts, (1870) 10 Wall. (U. S.) 566, as to a statute held to be applicable to an English joint-stock association having the attributes generally found in corporations.

XII.

Chapter incorporated under the laws of the State, should carry on its business within the State without previously obtaining a license, until it had deposited with the treasurer of the State bonds of a specified character varying in amount according to the extent of the capital employed, was valid.

State regulation as an

police

power.

A State statute which in effect annuls the provisions of a policy declaring that the contract shall be construed and interpreted according to the laws of the State in which the company was incorporated, and also a statute making it unlawful for an insurance agent or broker to act in the negotiation of insurance with a foreign insurance company not admitted to do business within the State," have been held to be valid.8

But deprivation of liberty of contract, without exercise of due process of law, in violation of the Fourteenth Amendment, has been held to result from the operation of a statute prohibiting the making of a marine insurance contract by the assured himself and not through a broker, outside the State, on property then in the State. That the regulation of insurance might be the proper subject for the exercise of the police power has been suggested by Mr. Justice Peckham, when, speaking for the court, on the question of the liberty of the citizen to contract for in

• New York L. Ins. Co. v. Cravens, (1900) 178 U. S. 389.

7 Nutting v. Massachusetts, (1902) 183 U. S. 553; Hooper v. California, (1895) 155 U. S. 648.

8 In Lafayette Ins. Co. v. French, (1855) 18 How. (U. S.) 404, it was held that where an insurance company chartered by one State was allowed to do business in another, upon the condition that service of process upon the agent of the corporation should be considered as service upon the corporation itself, a judgment against the company, obtained by means of such process, should be received with like full faith and credit in the State in which it was chartered.

surance, he said that "this does not interfere in Chapter any way with the acknowledged right of the State to enact such legislation in the legitimate exercise of its police or other powers as to it may seem proper.""

Power of to declare

Congress

insurance to be com

The emphatic and repeated declarations of the United States Supreme Court, in the above cases, that insurance is not commerce, would seem to pre-merce clude further inquiry. All the cases, however, arose on State statutes. That Congress has the power to define, by inclusion and exclusion, what are the subjects of commerce subject to the right of the courts to say that the subject declared by Congress to be commerce has no relation to intercourse — has been discussed in the first part of this work in the section on the power to define commerce.1

If, under the principles there outlined, the subject of insurance may be said to be embraced by the term commerce, as generally defined, as understood by economists, or as colloquially used, the courts would probably be constrained to accept the legislative declaration that insurance is commerce, and to permit the operation of federal legislation on interstate and foreign insurance transactions. It is not easily perceivable, however, how Congress can constitutionally legislate on the subject, except indirectly, as by denying mail and interstate transportation facilities to a company which is not, in its interstate business, complying with the regulations prescribed by or under the authority of Congress. The situation would present a condition for which there is no precedent. Sustaining the validity of federal regulations would not necessarily mean the

Allgeyer v. Louisiana, (1897) 165 U. S. 578. 1 See supra, p. 36.

XII.

Chapter actual overruling of the foregoing insurance cases. Upon the repeal of the federal legislation, it would be within the province of the court to declare, in the absence of federal legislation, that insurance is not commerce, and again to give effect to State statutes. And even if federal laws were enacted, State regulations governing the conduct of the business of a domestic insurance company with citizens of the same State would not be rendered inoperative. Likewise, provisions of State statutes regulating transactions by citizens of the State with foreign insurance companies, which were not in actual conflict with the federal regulations, would probably be sustained if the suggestion above referred to, that the regulation of insurance partakes of the nature of the exercise of a police power, were followed.

Power to exclude

porations

or admit them on conditions.

STATE REGULATION OF FOREIGN CORPORATIONS.

Article IV, section 2, clause 1, of the Constituforeign cor- tion provides that "the citizens of each State shall be entitled to all privileges and immunities of citi zens in the several States." The term citizens, as there used, applies only to natural persons, not to artificial persons created by the legislature and possessing only the attributes which the legislature has prescribed. Consequently, corporations are not citizens within the meaning of the above clause. Having no legal existence beyond the limits of the State which created it, a corporation cannot enter other States or claim the aid of their laws in the enforcement of its contracts, except upon the comity of those States. Having the absolute power of excluding the foreign corporation, a State may impose such conditions upon permitting the corpora

XII.

tion to do business within its limits as it may judge Chapter expedient.2

to the rule.

Two exceptions or qualifications are attached to Exceptions this rule. One of these qualifications is that the State cannot exclude from its limits a corporation which is engaged in interstate or foreign commerce.3 The other limitation on the power of the State is

2 Diamond Glue Co. v. U. S. Glue Co., (1903) 187 U. S. 611; Waters-Pierce Oil Co. v. Texas, (1900) 177 U. S. 28; Connecticut Mut. L. Ins. Co. v. Spratley, (1899) 172 U. S. 602; Orient Ins. Co. v. Daggs, (1899) 172 U. S. 557; Blake v. McClung, (1898) 172 U. S. 239; New York v. Roberts, (1898) 171 U. S. 658; Allgeyer v. Louisiana, (1897) 165 U. S. 578; Hooper v. California, (1895) 155 U. S. 648; Crutcher v. Kentucky, (1891) 141 U. S. 47; Home Ins. Co. v. New York, (1890) 134 U. S. 594; Fritts v. Palmer, (1889) 132 U. S. 282; Philadelphia F. Assoc. v. New York, (1886) 119 U. S. 110; Doyle v. Continental Ins. Co., (1876) 94 U. S. 540; Home Ins. Co. v. Augusta, (1876) 93 U. S. 116; Liverpool Ins. Co. v. Massachusetts, (1870) 10 Wall. (U. S.) 566; Ducat v. Chicago, (1870) 10 Wall. (U. S.) 410; Paul v. Virginia, (1868) 8 Wall. (U. S.) 168; Lafayette Ins. Co. v. French, (1855) 18 How. (U. S.) 404.

A further application of this principle, with its limitations, is dealt with in a later part of this work in discussing the taxation of the franchises of foreign corporations. See infra, p. 313.

3 Fritts v. Palmer, (1889) 132 U. S. 282; Cooper Mfg. Co. v. Ferguson, (1885) 113 U. S. 727; Pensacola Tel. Co. v. Western Union Tel. Co., (1877) 96 U. S. 1.

A foreign corporation engaged in furnishing milling machinery and adjusting it in position in the mill is engaged in an act of interstate commerce, and need not comply with State laws requiring foreign corporations, before doing business in the State, to register their charters. Milan Milling, etc., Co. v. Gorten, (1894) 93 Tenn. 590.

A foreign corporation engaged in the press-dispatch business is not engaged in interstate commerce. Associated Press v. Com., (Ky. 1901) 60 S. W. Rep. 295.

A loan of money by a foreign corporation to a citizen of the State is not a matter of interstate commerce. Nelms v. Edinburg American Land Mortg. Co., (1890) 92 Ala. 157.

The execution of a canvasser's bond to a foreign corporation is a transaction of interstate commerce. Gunn v. White Sewing Mach. Co., (1892) 57 Ark. 24.