Blake v. McClung, 172 U.S. 239 (1898)

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Blake v. McClung

No. 8

Submitted November 8, 1897
Decided December 12, 1898
172 U.S. 239

ERROR TO THE SUPREME COURT

OF THE STATE OF TENNESSEE

Syllabus

Chapter 31 of the Acts of Tennessee of 1877, entitled

An act to declare the terms on which foreign corporations organized for mining or manufacturing purposes may carry on their business, and purchase, hold and convey real and personal property in this state,

provided that corporations organized under the laws of other states and countries for purposes named in the act might carry on within that state the business authorized by their respective charters, but that

creditors who may be residents of this state shall have a priority in the distribution of assets, or subjection of the same, or any part thereof, to the payment of debts over all simple contract creditors, being residents of any other country or countries, and also over mortgage or judgment creditors, for all debts, engagements and contracts which were made or owing by the said corporations previous to the filing and registration of such valid mortgages, or the rendition of such valid judgments.

Held that as the litigation proceeded on the theory that plaintiffs in error were citizens of Ohio, where they resided, did business, and had offices, that question could not now be considered, and as the manifest purpose of the act was to give to all Tennessee creditors priority over all creditors residing out of that state, without reference to the question whether they were citizens or only residents in some other state or country, the act must be held to infringe rights secured to the plaintiff’s in error, citizens of Ohio, by the provision of Sec. 2 of Art. IV of the Constitution declaring that the citizens of each state shall be entitled to all privileges and immunities of citizens in the several states, although, generally speaking, the state has the power to prescribe the conditions upon which foreign corporations may enter its territory for purposes of business.

It is not in the power of one state, when establishing regulations for the conduct of private business of a particular kind, to give its own citizens essential privileges connected with that business which it denies to citizens of other states.

When the general property and assets of a private corporation lawfully doing business in a state are in course of administration by the courts of said state, creditors who are citizens of other states are entitled, under the Constitution of the United States, to stand upon the same plane with creditors of like class who are citizens of such state, and cannot be denied equality of right simply because they do not reside in that state, but are citizens residing in other states of the Union.

While the members of a corporation are, for purpose of suit by or against it in the courts of the United States, to be conclusively presumed to be citizens of the state creating it, the corporation itself is not a citizen within the meaning of the provision of the.Constitution that the citizens of each state shall be entitled to all privileges, and immunities of citizens in the several states.

The said statute of Tennessee, so far as it subordinates the claims of private business corporations not within the jurisdiction of that state (although such private corporations may be creditors of a corporation doing business within the state under the authority of that statute) to the claims against the latter corporation of creditors residing in Tennessee, is not a denial of the equal protection of the laws secured by the Fourteenth Amendment to persons within the jurisdiction of the state, however unjust such a regulation may be deemed.

The case is stated in the opinion.