recognition of State taxation of the "franchise" or right to exist,' and is entirely consistent with an intention on the part of Congress to tax such business for national purposes.

State incorporation makes it impossible for other States properly to exercise their legitimate powers.

"The general proposition that a corporation is to be regarded as a legal entity, existing separate and apart from the persons composing it, is not disputed, but that the statement is a mere fiction is well understood. It has been introduced for the convenience of the company in making contracts, in acquiring property for corporate purposes, in suing and being sued, and to preserve the limited liability of the shareholders, by distinguishing between the corporate debts and the property of the company, and of the stockholders in their capacity of individuals." "A corporation is a collection of many individuals united into one body, under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with the capacity of acting in several respects as an individual, particularly of taking and granting property, of contracting obligations and suing and being sued, of enjoying privileges and immunities in common, and enjoying a variety of political rights, according to its purpose."

13

If a State should by its Constitution declare that no corporation should exist in the State, or should fail to

1 Metropolitan S. R. R. Co. v. Commissioners, 174 N. Y. 714, approved a State tax on "special franchises" as property and was affirmed, 199 U. S. 1.

2 License Tax Cases, 72 Wall. 461.

Taylor on Corporations, chap. 3; Morawetz, sec. 227; Kyd on Corporations, 1-13; Finch, J., in People v. North River Sugar Refining Co., 121 N. Y. 582, 621; see also State v. Standard Oil Co., 49 Oh. St. 137, 177; see also as to the partnership as a legal entity. Bank of Buffalo v. Thompson, 121 N. Y. 280.

provide a method to incorporate, de facto corporations, whether pretending to authorization by another State or not, might exist under the policy of the law, corporations engaged in interstate commerce might have the right to exercise their powers in the State as if a law existed, and under the obligation of equal protection imposed by the Fourteenth Amendment all other corporations might have to be recognized. A State statute making the supposed declaration could be set aside the next day by a statute of incorporation. The attempt to deny the right of association would be a vain effort to retire from civilized society. The corporation as a common-law contract of individuals should not be lost sight of for two opposite reasons, first, the right of incorporating is the oldest and most precious known to civilization, and, second, because the real, dominating, tangible, and responsible factor in modern corporations is the individual. The attempt of the State to grant, revoke, regulate, and impair the mere franchise to be, is not only unconstitutional under the Constitution of the United States as an impairment of the obligation of contract and a futile denial of the rights of citizens of the United States, but results in an absolute default of the power of the State to enforce the common law of corporations as between the members among themselves and with the public.

As to the regulation by the State of the part of the interstate commerce or industry which is transacted within the State, the only regulation permitted to a State is of the exercise of public corporate powers and the use of public or private corporate property and lies in the exercise of the police power, or of the taxing

power, and the taxes must be general and equal. As to any transaction regulated by Congress in the exercise of any of its powers, the power of the State is limited by the necessity of allowing the paramount power to adapt its means, without interference, to the end desired.' There is absolutely no centralization involved in the power of the nation to authorize incorporation under national law, for nothing is thus withdrawn from the control of the States; the exercise of all the powers they now assert is put upon unchallengeable ground and made effective. No new power is assumed by the nation, there being merely a declaration of a social principle which, as it was beyond the power of the nation to create, it is beyond its power to deny.

§ 41. THE EXERCISE OF ANY POWER BY THE STATE IS SUBJECT TO THE CONSTITUTION, WRITTEN AND UNWRITTEN, OF THE UNITED STATES. THE COMMON LAW OF THE UNITED STATES.

"All of the original States in their first constitutions and charters provided for the security of private property as well as of life and liberty. This they did either by adopting in terms the famous 39th article of Magna Charta, which secures the people from arbitrary imprisonment and arbitrary spoliation, or by claiming for themselves, compendiously, all of the liberties and rights set forth in the Great Charter. This statement as to the action of the original States is made after a careful examination of their charters and constitutions. On the admission into the

1 In re Debs, 158 U. S. 564. Mr. Justice Brewer said, in this case, at p. 581: "A State, or an individual within the limits of a State, is impotent to obstruct interstate commerce. Otherwise the interests of the nation would be at the mercy of a portion of the inhabitants of a single State. There is no such impotency in the national government.”

Union of subsequent States, the constitution of each contained similar provisions.1

"When the Federal Constitution was formed there was inserted in it the provision also original and unique, 'that no State shall pass any law impairing the obligation of

"The Fifth Amendment, inter alia, ordained that, 'No person shall be deprived of life, liberty, or property, without due process of law, nor shall private property be taken for public use without just compensation.'

"So likewise, the provisions in the State and National Constitutions protecting private property have up to this time been effective. If disregarded by the legislature, they have been enforced by the courts, the Constitution being the supreme law.

"Then came as a result of the Civil War of 1861-1865, the Fourteenth Amendment of the Federal Constitution, adopted in 1868, which among other things ordained,

"Section 1. 'Nor shall any State deprive any person of life, liberty, or property, without due process of law; nor

1 Dillon, Laws and Jurisprudence of England and America, p. 207. 2 It was asserted in Looker v. Maynard, 179 U. S. 46, and in Durfee v. Old Colony R. R. Co., 5 Allen, 230, under the Dartmouth College Case, that the contract in a corporation charter may be changed by the legislature. The true doctrine was asserted by the New Jersey Court of Errors and Appeals in the case of Berger v. United States Steel Corporation as follows: "It is settled in our jurisprudence that the right reserved to amend, alter, or repeal charters, extends only to the modification or destruction of rights as between the State and the corporation, but that the rights of stockholders inter sese can in no respect be impaired except in so far as impairment may result from an alteration required by the public interest." See Kean v. Johnson, 1 Stockton (N. J.), 401; Zabriskie v. R. R., 18 N. J. Eq. 178; Strong v. Brooklyn Crosstown R. R., 93 N. Y. 426; Currier v. The Slate Co., 56 N. J. 262. These decisions limit the power of the State in controlling corporations to an exercise of the police power. See Brief of Alpha Delta Phi, Vol. IV, 3, p. 215. See also supra, sec. 32.

deny to any person within its jurisdiction the equal protection of the laws.'

"It was of set purpose that its prohibitions were directed to any and every form and mode of State action - whether in the shape of constitutions, statutes, or judicial judgments that deprived any person, white or black, natural® or corporate, of life, liberty, or property, or of the equal protection of the laws.

"The Fourteenth Amendment, while it does not deprive the States of their autonomy or of their power, subject to the Federal Constitution, to regulate their domestic concerns, does nevertheless in the vital matters specified in that amendment operate as an express limitation of the powers of the States. It puts life, liberty, and property upon precisely the same footing of security. It binds each and all indissolubly together. It places each and all of these primordial rights under the ægis and protection of the national government. By this provision they are each and all adopted as national rights. Under the Fifth Amendment they are each protected from invasion by Congress or the Federal government. By the Fourteenth Amendment, they are each protected from invasion by State legislatures, or by the people of the States in any form in which they may attempt to exercise political power. The Fourteenth Amendment in the most impressive and solemn form places life, liberty, contracts, and property, and also equality before the law, among the fundamental and indestructible rights of all the people of the United States."

$42. THE PHRASE "POLICE POWER" DESCRIBES A DUTY IMPOSED BY THE COMMON LAW OF THE UNITED STATES UPON THE STATES. - The great refuge of the State that violates national rights is the police power.1

1 Laws providing for the examination of pilots have been sup ported; and of locomotive engineers who engaged in interstate