Virginian-pilot. (Norfolk, Va.) 1898-1911, 1899-04-12
COURT DECISIONS.
Notes Of Cases Recently Decided,
Which are Of Interest to
Our People.
DIGESTED BY W. B. MARTIN,
Exclusively for virginian-Pilot.)
BLAKE EFT AIS. ". MCLUNG
EFT AIS.
Supreme Court OF the United States
December 10, 1898.

December IL. 1898.
A LAW OF TENNESSEE WHICH
GIVES RESIDENTS OF THAT
STATE PRIORITY OVER NON
RESIDENTS IN THE DISTRIBU-
TIoN OF ASSETS OF AN INsoLv-
ENT CORPORATION IS INVALID,
so FAR AS 1T DISCRIMINATES
AGAINST CITIZENS OF OTHER
STATES. BEING IN VIOLATION OF
U. s. CONSTITUTION, ART. A..
SUCH LAW IS VALID AS TO A
CORPORATION OF VIRGINIA.;
WHICH IS NOT A "CITIzEN"
WITHIN THE MEANING OF SAID
ARTICLE; NOR IS SUCH DISCRIM-
NATION A TAKING OF ITS PROP
ERTY WITHOUT DUE PROCESS
OF LAW.
An English corporation doing bust
ness in Tennessee became insolvent.
McClung and others filed q general
creditors bill against it in chancerv
for distribution of it's assets, among
these creditors some resided in Ohio,
and one, the Hull Coal & Coke Co.,
was a corporation of Virginia. The
Supreme Court of Tennessee decided
that these nonresident creditors were
to share in the assets ratably, after the
creditors who resided in Tennessee were
first paid in full. This decision was
under statute of that state making
such provision as to resident and
nonresident creditors. and that law
was held valid. The Ohio creditors and
the Virginia corporation appealed.
The court says: We must consider
whether the statute infringes rights Sc
cured to the plaintiffs-in-error citi-
zens of Ohio, by the provision OF the
second section of Article w of the Con-
CT Inv. 80 ~
that the citizeps Of each state shall be
entitled to all privileges and immuni7
ties of citizens in the several states
1.-THE court then refers to and discusses
a number Of authorities and proceeds
1t Is an established rule OF equity that
when corporation becomes insolvcnt
1t Is so far civilly dead that its prop
erty may be administered as q trust
fund for the benefit of it's stockholders
and creditOrs-not simply of stock
holders and creditors residing in a par
ticular state, but all stockholders and
creditors of whatever state they NAV
be citizens. These principles no
doubt prevail in Tennessee, and will be
applied by It's courts in all appropria tie
cases between citizens of that state
without making any distinction BE-
TWEEN THEM. Yet the courts OF that
state are forbidden by the statute in
question to recognize the right in equity
OF citizens residing in other states to
participate upon terms of equality with
citizens of Tennessee in the distribution
of the assets of an insolvent foreign
corporation lawfully doing business in
that state. We hold such discrimination
against citizens of other states to be
repuEnant to the second section or the
fourth article of the Constitution of tho
United States, although generally
speaking, the state has the power to
prescribe the conditions upon which
foreign corporations may enter its ter
ritory for the purposes OF business
such power cannot be cxerted with the
effect Of defeating or impairing rights
secured to citizens of the several states
by the supreme law of the land In
deed all the powers exercised by state
must be exercised consistently with the
privileges and immunities granted or
protected by the Constitution OF the
United States. The individual plaintiffs
INFERIOR We're entitled to contract with
this British corporation. lawfully doing
business in Tennessee. and deemed and
taken to be corporation of that state.
and no rule in the distribution of its as
sets among creditors could be applied
TO them as residents OF Ohio, and be-
cause they were not residents of Ton
hessee, that was not applied by tho
courts OIL tennessee to creditors of like
character who were citizens of Tonnes
see.
AS to the Hull Coal & Coke COMPANY
different considerations must govern
our decision. 1t has long been settled
mat, for purposes of suit by or against
~ IN the courts of the United States,
the members of corporation are to be
concIusiVely presumed to be cltI-ens OF
me state creating such corporation.
But IT is equally we'll settled. and we
now hold. that a corporation Is not n
citizen within the meaning OF the con-
stitutional provision that 1.-The citizens
OF each state are entitled 10 all privi-
leges and immunities OF citizens in the
several states" The Virginia corpora
ton cannot therefore invoke that pro-
vision for protection against the de-
cree OF the state court denying its right
to participate upon terms of equality
with Tennessee creditors in the distrj-
button of the assets Of the British cor
poration in the hands of the Tonnes
see court.
Since. however, a corporation Is n per
son. within the meaning OF the -Four
teenth Amendment. may not tho Viz
Einia corporation invoke for its protec
ton. the clause of the amendment de-
clar!ng that no state shall deprive onv
person of property without due process
nor deny to any person within its jurjs
diction the equal protection Of the Iaws9
We are of opinion that this question
must receive a negative answer That
corporation was not in any legal sense
deprived of its claim. II was only de-
MED the right to participate upon terms
of equality with Tennessee creditors in
the distribution of particular assets OF
another corporation doing business in
that state. 1t is equally clear that the
Virginia corporation cannot rely upon
the clause declaring that no state shall
deny to any person within its jurisdic-
ton the equal protection of the laws"
That prohibition manifestly relates only
to the denial by the state of equal pro-
lection to persons within It's jurisdc-
tion." Certainly when the statute in
question was enacted the Virginia cor