Hemphill v. Orloff, 277 U.S. 537 (1928)

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Hemphill v. Orloff

No. 343

Argued March 7, 8, 1928
Decided June 4, 1928
277 U.S. 537

ERROR TO THE SUPREME COURT OF MICHIGAN

Syllabus

1. A business association of the kind commonly known as "Massachusetts trusts" or "common law trusts," which, under its organic instrument and the law of the state where it was formed, is a legal entity with other attributes like those of corporations, including exemption of its shareholders and trustees from personal liability for the acts and engagements of the association, cannot carry on local business in another state without that state’s express or implied permission. P. 548.

2. As in the case of a corporation, and for the same general reasons, such an association cannot claim for itself in that regard the privileges and immunities guaranteed to the associates as individuals by Art. IV, § 2, of the Constitution. P. 550.

3. Whether a given association be called a corporation, partnership, or trust is not the essential factor in determining whether a state may forbid or condition the doing of local business; the real nature of the organization must be considered; if clothed with the ordinary functions and attributes of a corporation, it is subject to similar treatment. P. 550.

4. Where such an association was unable to enforce a promissory note in the courts of a foreign state because it had not complied with statutes conditioning its right to do business there, held that the statutes did not deprive the association, its trustees, or members of property without due process of law. P. 551.

5. An investment trust organized in one state was not engaged in interstate commerce when dealing in negotiable notes within another state. P. 550.

238 Mich. 508 affirmed.

Error to a judgment of the Supreme Court of Michigan which affirmed a judgment on a verdict directed for the defendant in an action brought by Hemphill on a promissory note drawn payable to the order of a Massachusetts investment trust, for which he was acting.