are applicable to the transactions of a corporation in a foreign jurisdiction.

§ 6. Comity Between the States of the Union.— For the purposes of their respective jurisdictions, the States of the Union are foreign to each other, and a corporation created by one of them must be regarded, as to its transactions within the limits of the others, as a foreign corporation, and is dependent for its rights and privileges upon the rule of comity. Although the English judges had, at an early date, applied the principle of comity to suits by and against foreign corporations in their courts,' and the doctrine had been recognized in some of the American States, it was not until the decision o the leading case of Bank of Augusta v. Earle, by the Supreme Court of the United States in 1839, that the existence of comity between the States was established. This principle is now so firmly imbedded in our jurisprudence and so essential to our commercial and industrial welfare and progress, and we are so familiar with its many various applications that we can with difficulty realize that, little more than fifty years ago, it was gravely contended that there could be no comity between the States, because whatever attributes of independent sovereignty they had originally possessed had been surrendered to the general government upon the adoption of the constitution. The court, however,

1 Blair v. Perpetual Ins. Co., 10 Mo. 559, 47 Am. Dec. 129; Williams v. Creswell, 51 Miss. 817; Miller v. Ewer, 27 Me. 509, 46 Am. Dec. 619; Newburg Petroleum Co. v. Weare, 27 Ohio St. 343; Wood Hydraulic Hose M. Co. v. King, 45 Ga. 35.

2 Dutch East India Co. v. Enriquez (1729), 2 Ld. Raym. 1532; Dutch East India Co. v. Van Moses, 1 Str. 612.

3 Bank of Marietta v. Pindall (1824), 2 Rand. 465.

4 13 Pet. 590.

thought that "the intimate union of these States, as members of the same great political family, the deep and vital interests which bind them so closely together, should lead us, in the absence of proof to the contrary, to presume a greater degree of comity and friendship and kindness toward one another than we would be authorized to presume between foreign nations."

It

§ 7. Recognition under the Rule of Comity-Valid Organization. The recognition of the corporation in the foreign jurisdiction depends, then, upon its legal organization in the home of its creation. is the prerogative of each sovereign to prescribe the terms upon which the franchise to be a corporation shall be granted. And when once duly granted it will be recognized everywhere.' Thus the New York Court of Appeals, in a recent case in which it was urged against the validity of a West Virginia corporation, that its corporators were citizens of New York; that the company was formed by them in West Virginia for the sole purpose of doing business out of that State and in the State of New York; that in the latter State also, its principal office was located, held that as the policy of West Virginia plainly favored the formation under its laws of such corporations, and as the policy of New York recognized foreign corporations formed for the purpose of doing business in that State, the incorporation was not

1 Hutchins v. New England Coal M. Co., 4 Allen, 580; Seymour v. Sturgess, 26 N. Y. 134; Bank v. Hall, 35 Ohio St. 158; Santa Clara Female Academy v. Sullivan, 116 Ill. 375; Bank of Kentucky v. Schuylkill Bank, 1 Pars. Sel. Eq. Cas. 180; Canada So. R. Co. v. Gebhard, 109 U. S. 527, 537; Relfe v. Rundle, 103 U. S. 226, 12 Cent. L. J. 130; Pierce v. Crompton. 13 R. I. 312; Land Grant Ry. Co. v. Coffey County, 6 Kan. 245.

ors."

invalid.' A misstep or defect in the organization of the company, if it does not affect the corporate life, or go to the extent of dissolving the corporation ipso facto, or of preventing the grant of the franchise from vesting, will not affect the company's right of recognition under the rule of comity. So held, of a failure to adopt a by-law at the first meeting permitting the election of non-resident directBut radical defects in the organization of the company, which affect its legal existence in the State of its creation, will not be cured by its coming into the jurisdiction of another sovereignty. If it is not a corporation at home it cannot be a corporation elsewhere, but its want of power will accompany it. In Smith v. Warden, a Pennsylvania joint-stock company which had been formed without recording a statement in writing, signed and acknowledged by the proposed members, setting forth the character of the business and the location of the same, as required by the statute, proceeded to establish a manufacturing business in Missouri. In an action in the latter State for damages, for personal injuries caused by a boiler explosion, the court held the defect fatal to its corporate character, and that the members were liable individually as partners. In Land Grant Ry. Co. v. Coffey County," the Supreme Court of Kansas declined to recognize the legal existence of a corporation created in Pennsylvania with power to do business everywhere "except in the State of Pennsylvania." "No rule of comity,"

1 Demarest v. Flack, 128 N. Y. 205, 28 N. E. Rep. 645.

2 Demarest v. Flack, 128 N. Y. 205, 28 N. E. Rep, 645.

3 86 Mo. 382.

4 See Montgomery v. Forbes, 148 Mass. 249. 19 N. E. Rep. 342. 56 Kan. 245.

said the court, "will allow one State to spawn corporations and send them forth into other States to be nurtured and do business there, when said first mentioned State will not allow them to do business in its own boundaries. From the only

territory in the whole world over which the State of Pennsylvania has any jurisdiction and control, and in which it could authorize a corporation to have an office or to do business, it excludes this corporation; and the attempt on the part of the State of Pennsylvania to authorize this corporation to have an office or to do business anywhere else except in the State of Pennsylvania is ultra vires, illegal and void."

§ 8. Same-Migration to Foreign Jurisdiction.If the corporation is once legally organized in the domicile of its creation, it does not forfeit its right to legal recognition, under the rule of comity, by removing its principal office into another State and conducting most or even all its ordinary business there. The much quoted dictum of CHIEF JUSTICE TANEY, in Bank of Augusta v. Earle, that a corporation "must dwell in the place of its creation and cannot migrate to another sovereignty," can have no reference to such a migration as this. It is simply a rhetorical statement of the perfectly obvious principle that a corporation, as a legal entity, cannot pass beyond the jurisdiction of the laws which give it being; that while it may make contracts and do business abroad through its agents, it cannot act

1 Land Grant Ry. Co. v. Coffey County, 6 Kan. 245.

2 Merrick v. Van Santvoord, 34 N. Y. 208; Second Nat. Bank v. Lovell, 2 Cin. Sup. Ct. 397; New Hampshire v. Tilton, 19 Fed. Rep. 73; Hanna v. International Petroleum Co., 23 Ohio St. 622; Newburg Petroleum Co. v. Weare, 27 Ohio St. 343.

3 13 Pet. 588.

as a corporation beyond the jurisdiction of its creation.' What would be the effect of a failure on the part of the foreign company to keep up its legal organization in its corporate domicile by holding its annual meetings and keeping an office there, is a question which has been sometimes suggested' but never decided. On principle it is very plain, that whenever, for any reason, the company ceases to be a valid legal organization in the home of its creation, it ceases to be entitled to recognition as such in the foreign jurisdiction, except in so far as is necessary to preserve the rights of persons who have there dealt with it on that basis. But even if a removal of its business should be regarded as a ground for forfeiting its corporate franchise, such a forfeiture can be declared only by the sovereign by which the franchise was granted. Any question of the abuse of the corporate franchise is a matter for the exclusive consideration of the power granting it. So long as that power recognizes its existence, the local sovereign will not concern itself beyond the method and legality of the company's transactions within its own jurisdiction.*

9. Extraterritorial Powers-Legislation of Corporate Domicile-Charter.-Since a corporation can have no existence aside from the law which creates it, much of the statute law of the corporate domicile may be said to accompany it into the foreign jurisdiction and enter into, influence and control all

1 See post, §§ 12-27.

2 Second Nat. Bank v. Lovell, 2 Cin. Sup. Ct. 397.

3 Merrick v. Van Santvoord, 34 N. Y. 222.

4 In Hill v. Beach, 12 N. J. Eq. 31, however the New Jersey court refused to recognize the validity of a corporation organized by citizens of New Jersey, in New York under the general incorporation law of that State, for the purpose of managing a marble quarry in New Jersey.