1

2

one of them when the action is transitory; and one meeting of stockholders in one of the States suffices for all." And a single board of directors is permitted to, and does control, manage, and dispose of the entire property in the different States; and the corporation practically enjoys in all the States, all the powers conferred in any of the States. The effect of the practical unity of the corporations in demolishing the theory of divided control by the several States, is shown when the power of a State court is exercised. A court of equity of one State, acting in personam, may entertain jurisdiction of a suit to foreclose a mortgage executed by an interstate consolidated corporation covering, as an entirety, property situated in several States; and may require the defendant to convey to a receiver the property outside its jurisdiction." In Muller v. Dows, Mr. Justice Strong said:

"A vast number of railroads partly in one State and partly in an adjoining State, forming continuous lines, have been constructed by consolidated companies, and mortgaged as entireties. It would be safe to say that more than one hundred millions of dollars (in 1876) have

Graham v. Boston, etc. R. Co., 118 U. S. 161; cf. Aspinwall v. Ohio, etc. R. Co., 20 Ind. 492.

2 Racine, etc. R. R. Co. v. Farmers' L. & T. Co., 49 Ill. 331. Delaware R. R. Tax. Cases, 18 Wall. 206; Trester v. Mo. Pac. R. Co., 33 Neb. 171; Toledo, etc. R. Co. v. Dunlap, 47 Mich. 456; Pittsburgh, etc. R. Co. v. Reich, 101 Ill 174; Mead v. New York, etc. R. Co., 45 Conn. 221; Racine v. Farmers' L. & T. Co., 49 Ill. 331.

See Penn. v. Lord Baltimore, 1 Vesey 444, 2 Lead Cases Eq. 767.

Muller v. Dows, 94 U. S. 449; Mead v. New York, etc. R. Co., 45 Conn. 199; see Eaton, etc. R. Co. v. Hunt, 20 Ind. 464; Pittsburgh, etc. R. Co. v. Rothschild, 4 Cent. Rep. 107.

6 94 U. S. 449.

been invested on the faith of such mortgages. In many cases these investments are sufficiently insecure at the best. But if the railroad, under legal process, can be sold only in fragments; if, as in this case, where the mortgage is upon the whole line, and includes the franchises of the corporation which made the mortgage, the decree of foreclosure and sale can reach only the part of the road which is within the State, it is plain that the property must be comparatively worthless at the sale.1 A part of a railroad may be of little value when its ownership is severed from the ownership of another part. And the franchise of the company is not capable of division. In view of this, before we can set aside a decree which was made it ought clearly to appear beyond the power of the court. Without reference to the English chancery decision, where this objection to the decree would be quite untenable, we think that the powers of courts of chancery in this country are sufficient to authorize such a decree as was here made. It is here undoubtedly a recognized. doctrine that a court of equity sitting in a State and having jurisdiction of the person, may decree a conveyance by him of land in another State, and may enforce the decree by process against the defendant."

§ 49. IT IS IMPOSSIBLE FOR ONE OR MORE States TO CONTROL OR REGULATE THE CAPACITY OR STATUS OF A CORPORATION. In view of the foregoing decisions, there can be no doubt that the only safe solution for the corporation problem is national control, by national

1 The device of the holding company and a sale of franchises makes it possible to exercise franchises in one company after the original separate grantees have ceased to exist. People v. O'Brien, III, N. Y. 1. The old idea that the actual franchise was inseparable from the corporation charter and must be exercised by the original grantee under the "bare corporate organization" was abandoned before the distinction between the corporation contract and the real charter of privileges was clearly seen.

courts, under national laws, leaving to the control of State courts supervision required by laws truly local. It is a familiar experience that actions are brought in State courts to put corporations on the bargain counter in order to buy them in cheap at the expense of the stockholders and bondholders. If a court in one of several States can entertain a motion for a receiver whose functions are greater than those of a State officer should be, a court in any of the States may do so, and the confusion is as great as the impropriety. National incorporation under national laws is necessary to secure to the States legitimate control over the operations of corporations within their borders. Through the increase of consolidated interstate incorporation, the scope of the corporate unity has, to a great extent, become national. The possibility of State control has correspondingly diminished. As a general rule, the internal management of a foreign corporation will not be interfered with on petition of a stockholder.' The theory of State incorporation narrows equitable relief. The stockholder must apply to the courts of the State of charter. The court of a foreign State will not, though it will control property within the State, enjoin the action of the officers of a corporation."

1 Leary v. Colorado River & P. S. Navigation Co., 82 Fed. 775; Sidway v. Mo. Land, etc. Co., 101 Fed. 481; Stockley v. Thomas, 89 Md. 663; State & N. Amer. Land & Timber Co., 106 La. 621; Redmond v. Enfield Mfg. Co., 13 Abb. Pr. (N. S.) 332; Madison v. Penn. El. L. Co., 199 Pa. 454.

Hallenborg v. Greene, 73 N. Y. S. 403, 66 A. D. 590; Wilkins v. Thorne, 60 Md. 253; Taylor v. Mut. Res. Life Ass., 97 Va. 60; Amer. T. N. C. Co. v. Schuler, Tex. Civ. App., 79 S. W. 370; Bill v. Sierra Nevada L. W. & M. Co., 1 De G. E. & J. 177; Hertley v. Welsh, 23 Pa. Co. Ct. 78; Con. v. Leisenring, 15 Phil. 215; Curtis v. McCullogh, 3 Nev. 202; Bishop v. Globe Co., 135 Mass. 132; Kan

To say that a corporation is bound by the State of charter, is, in the United States, the same as to say that it is bound by the law of the country.1 A sister State is incapable even of determining whether a de facto corporation is a corporation under the law of the State or country creating it, or of dissolving it for misuser of powers. The ouster is merely from exercise of franchises in the State."

3

But a State cannot exclude a foreign corporation engaged in any way in the service of the government

sas & E. R. R. Co. v. Topeka, S. & W. R. R., 135 Mass. 34, 40; Smith v. Mutual L. I. Co., 14 Allen, 336, 341; Gregory v. N. Y. L. E. & W. R. R., 40 N. J. Eq. 38; American Grease Co. v. Vogellus, 23 Pa. Co. Ct. 664; Sudlow v. Dutch Rhenish Ry., 21 Beav. 43: Ernst v. Elmira M. I. Co., 24 Misc. 583; Harper v. Smith, 87 N. Y. S. 516; Scottish S. Co. v. Starks, 87 S. W. 455; North v. Weaver E. M. B. M. Co., 3 Pa. Co. Ct. 316; Taylor v. Mutual R. F. L. Ass'n, 97 Va. 60; Berford v. N. Y. Iron Mine, 56 N. Y. Super. 236, 4 N. Y. S. 836; Howell v. C. & N. W. Ry., 51 Barb. 378; Prouty v. Michigan So. & N. I. R. R., 1 Hun. 655; Fisher v. Charter Oak L. I. Co., N. Y. Super. 179; Ernst v. Rutherford, etc. Co., 56 N. Y. S. 403, 38 A. D. 388; Richardson v. Clinton Wall Trunk Mfg. Co., 181 Mass. 580; Miller v. Quincy, 88 A. D. 529, 85 N. Y. S. 310; Barclay v. Thalman, 4 Ed. Oh. (N. Y.) 123; Madden v. P. E. L. Co., 181 Pa. 617; but see Harding v. American Glucose Co., 182 Ill. 551; Nash v. Hall, 11 Misc. 468, 34 N. Y. S. 701; Pickering v. Stephenson, L. R. 14 Eq. 322.

52

1 Nashua Savings Bank v. Anglo-Am. Land Mtg. & Agency Co., 189 U. S. 221.

2 Oregonian Co. v. Oregon Ry. & Nav. Co., 27 Fed. 277; Lancaster v. Amsterdam Improvement Co., 180 N. Y. 576; Hudson v. Green Hill Seminary, 113 Ill. 618; Importing & Exporting Co. v. Locke, 50 Ala. 332; Clark v. Turner, 73 Ga. 1; Liverpool Ins. Co. v. Mass., 10 Wall. 566, 576, s. c. 100 Mass. 531; Ingate v. Austrian Lloyds Co., 27 L. J. C. P. 323.

Society for Propagation of the Gospel v. New Haven, 8 Wheat. 464; Republican Mountain Silver Mines v. Brown, 58 Fed. 644.

State v. W. U. M. Life Ins. Co., 47 Oh. St. 167; Silver Lake Bank v. North, 4 Johns. Ch. 370.

1

or in interstate commerce, and upon this principle practically no corporation can be actually excluded. from any State, since different States 1 are not different countries. The exclusion of a corporation is a violation of a common law right. The admission of this common law right makes it impossible to deny that a corporation is a contract which is subject to the law of the place under which the corporation acts. A company registered in London to carry on jute mills in India or a sulphur mine in Italy, is located in London, where its meetings are held and its directors give their orders. And it is held that a shareholder assents to the laws of the State granting the charter and chooses a domicil in said State. Thus the shareholders may

5

1 The law of the State of charter is said to govern the right of a married woman to dividends irrespective of the law of her domicil. Graham v. First National Bank, 84 N. Y. 393; but this is in States where the right is given to married women and a well-established principle is broken in order to preserve a right. The confusion would be greater and would conflict substantially as well as in principle with the law and the Constitution if the rule were applied to take away the right.

Bank of Augusta v. Earle, 13 Pet. 519; Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U. S. 112; Stockton v. R. R. Co., 32 Fed. 9, 14; Maine v. Grand Trunk Ry., 142 U. S. 217; Horn Silver Mining Co. v. New York, 143 U. S. 305; Postal Tel. Cable Co. v. Adams, 155 U. S. 688; Atl. & Pac. Tel. Co. v. Phila., 190 U. S. 160; W. U. Tel. Co. v. Taggart, 163 U. S. 1; Adams Express Co. v. Ohio State Auditor, 165 U. S. 194.

Bateman v. Service, 6 App. Cases, 386; Bank of Augusta v. Earle, 13 Pet. 519; Tombigbee R. R. v. Kneeland, 4 How. 16; Am. Waterworks Co. v. Farmers' L. & T. Co., 73 Fed. 956; Oregonian Ry. v. Oregon Ry. & Nav. Co., 27 Fed. 277, 280.

Casena Sulphur Co. v. Nicholson, 1 Ex. Div. 428; but see Colquhon v. Brooks, 14 App. Cas. 493, 510.

Nashua Savings Bank v. Anglo-Am. Land Mtg. & Agency Co., 189 U. S. 22; Keystone Driller Co. v. Superior Ct., 138 Cal. 738; McKim v. Glenn, 66 Md. 479; Allen v. Fairbanks, 45 Fed. 445;