Source: https://supreme.justia.com/cases/federal/us/322/202/
Timestamp: 2019-04-19 20:19:26+00:00

Document:
A statute of Minnesota denying to all foreign corporations the right to maintain any action in the courts of the State unless they have previously obtained a certificate of authority to do business within the State, for which a filing fee of $5.00 plus an initial license fee of $50.00 is exacted -- held valid as applied to a federally licensed customhouse broker whose business was localized in the State, and not in conflict with existing federal laws and regulations relating to customhouse brokers or with the commerce clause of the Constitution. Pp. 322 U. S. 207, 322 U. S. 212.
215 Minn. 207, 9 N.W.2d 721, affirmed.
Certiorari, 320 U.S. 724, to review a judgment which, reversing a judgment of the trial court, ordered dismissal of a suit brought by a foreign corporation.
and ordered the suit dismissed. 215 Minn. 207, 9 N.W.2d 721. We brought the case here to determine the important question whether enforcement of the Minnesota Foreign Corporation Act in this situation runs counter to federal law pertaining to customhouse brokers or is barred by the Commerce Clause, Const. art. 1, § 8, cl. 3. 320 U.S. 724.
Another claim that state authority must yield to controlling federal authority over interstate and foreign commerce is thus presented. It becomes necessary, therefore, to ascertain precisely what demand the State has here made, in relation to what transactions or activity it is making such demand, in what way federal authority has regulated such transactions or activity, and, finally, whether the Commerce Clause by its own force, in case federal law has not actually taken control, excludes the State from the exercise of the power it has here asserted.
For many years the petitioner, a North Dakota corporation, conducted a customhouse brokerage business at Portal, North Dakota, a port of entry from Canada by way of the Canadian Pacific Railway. In July, 1940, the Canadian Pacific rerouted most of its shipments whereby they no longer entered the United States through Portal, but came through Noyes, Minnesota, with the result that more than 90% of Union's business was diverted from Portal. After November, 1940, at which time respondent Jensen resigned as officer of Union under circumstances giving rise to this suit, Union began to do business at Noyes, and was doing business in Minnesota when it brought this suit. We shall outline the nature of this customhouse brokerage business only so far as is relevant to a consideration of our problem.
them at the office of the collector of customs at Noyes either in person or by an authorized agent, and this must be done within forty-eight hours of the report of the vehicle which carried the goods unless the collector extends the time. Tariff Act of 1930, 46 Stat. 590, 722, 19 U.S.C. § 1484(a). To make entry, the contents and value of the shipment must be declared and the tariff estimated, and the production of a certified invoice and a bill of lading is generally required. 19 U.S.C. § 1484(b)(c)(e)(g). Speed in making entry is vital, because goods cannot proceed to their ultimate destination until its completion. Apart from the fact that importers cannot always or even often make entries in person, the procedure makes demands upon skill and experience. The specialist in these services is the customhouse broker. In addition, he advances the duty in order that the goods may be cleared. 19 U.S.C. § 1505. The competence of the broker also bears on the efficient collection of customs duties in that the likelihood of additional assessment or refund after final determination of the duty is greatly lessened by accuracy in the tentative computation. But, since errors and differences of opinion are inevitable, to insure collection of deficiencies, the Government requires a bond prior to release. 19 U.S.C. § 1499; 19 Code Fed.Reg. § 6.27.
"prescribe rules and regulations governing the licensing as customhouse brokers of citizens of the United States of good moral character, and of corporations, associations, and partnerships, and may require, as a condition to the granting of any license, the showing of such facts as he may deem advisable as to the qualifications of the applicant to render valuable service to importers and exporters."
to importers and exporters." 31A Code Fed.Reg. § 11.3(e)(f). On approval of a favorable report of the subcommittee by the Committee on Enrollment and Disbarment of the Treasury Department, a license issues. 31A Code Fed.Reg. §§ 11.3(f)(g), 11.4.
"A licensed customhouse broker requires no further enrollment under the regulations in this part for the transaction, within the customs districts in which he is licensed, of any business relating specifically to the importation or exportation of merchandise under customs or internal-revenue laws."
31A Code Fed.Reg. § 11.5.
Union's license authorizes it to do business in District No. 34 which embraces both Portal, North Dakota, and Noyes, Minnesota. 19 Code Fed.Reg. § 1.2. The regulations require it to keep records of its financial transactions as customhouse broker, and its books and papers must be kept on file available for at least five years. 31A Code Fed.Reg. § 11.8. Business relations with those who have been denied a license because of moral turpitude or those whose license has been revoked are prohibited, and the licensee is under a duty not to promote evasion of obligations to the Government. Prompt payment and accounting of funds due to the Government or his client are required of the broker, and responsible and ethical conduct is generally enjoined. 31A Code Fed.Reg. § 11.9.
"an additional penalty not exceeding $100.00 for each month or fraction thereof during which it shall continue to transact business in this state without a certificate of authority therefor."
and gross receipts of a foreign corporation are allocated between those derived from within and those derived from without Minnesota, and credit is given for the latter. § 15; cf. Minn.L.1935, c. 230, § 2.
We have before us only one narrow aspect of this Minnesota legislation -- namely the power of Minnesota to deny to Union access to its courts because it has not obtained a certificate required of all foreign corporations doing business in the State. We have not before us the taxing power of Minnesota over such a business as that of Union, for we do not know the extent or nature of the power to tax that Minnesota would claim against Union.
Of course, Minnesota could not deny access to its courts to Union merely because it is engaged in the customs brokerage business. See Second Employers' Liability Cases, 223 U. S. 1, and Douglas v. New York, New Haven & H. R. Co., 279 U. S. 377. But the limited and defined control which federal authority has thus far seen fit to assert over customhouse brokers does not deny to Minnesota the power to subject Union to the same demand which it makes of all other foreign corporations seeking the facilities of Minnesota's courts. The federal requirements and this state requirement can move freely within the orbits of their respective purposes without impinging upon one another. The federal regulations are concerned solely with the relations of the customhouse broker to the United States and to the importer and exporter. The limited federal supervision of the financial activities of Union is restricted to these federal interests. Such supervision does not touch the interest of the State in the protection of those who have other dealings with Union, and therefore does not preempt appropriate means for their protection.
and State, our task is that of harmonizing these interests without sacrificing either. The proper attitude of mind for making such an accommodation is illustrated by Federal Compress Co. v. McLean, 291 U. S. 17. The Tariff Act of 1930 in this case, as the Warehousing Act in that case, confers upon licensees certain privileges, and secures to the Federal Government by means of these licensing provisions a measure of control over those engaged in the customhouse brokerage business. But such circumscribed control by the Federal Government does not imply immunity from control by the State within the sphere of its special interests.
"The government exercises that control in the furtherance of a governmental purpose to secure fair and uniform business practices. But the appellant, in the enjoyment of the privilege, is engaged in its own behalf, not the government's, in the conduct of a private business for profit."
"a licensee having a license in force in one district may on application to the Committee be granted a license to transact business in another district without further examination, provided it appears on investigation that the licensee is authorized to do business in the State or States in which such other district is situated."
31A Code Fed.Reg. § 11.6. Those who are responsible for protecting the interests of the revenue, as well as of commerce, have thus given emphatic indication that a State has a legitimate interest in the regulation of those engaged in the brokerage business within its borders. Where the Government has provided for collaboration, the courts should not find conflict. See Savage v. Jones, 225 U. S. 501, and Kelly v. Washington, 302 U. S. 1.
This brings us to the final question. Does the Minnesota legislation do that which the Commerce Clause was designed to prevent -- does it express hostility toward those engaged in foreign commerce, or practically obstruct its conduct? What we have said makes it abundantly clear that the business of Union is related to the process of foreign commerce. As the trial court found, the customhouse broker, in clearing the shipments, "aids in the collection of customs duties and facilitates the free flow of commerce between a foreign country and the United States." The fees exacted by customhouse brokers "are charges upon the commerce itself;" they are charges for services afforded in the movement of goods beyond the boundaries of a State. See Hopkins v. United States, 171 U. S. 578, 171 U. S. 591-592; Wickard v. Filburn, 317 U. S. 111, 317 U. S. 122.
303 U. S. 177, 625; Western Live Stock v. Bureau of Revenue, 303 U. S. 250. Such commerce interpenetrates the States, and no undisputed generality about the freedom of commerce from state encroachment can delimit in advance the interacting areas of state and national power when Congress has not by legislation foreclosed state action. The incidence of the particular state enactment must determine whether it has transgressed the power left to the States to protect their special state interests although it is related to a phase of a more extensive commercial process.
those who are supervised must, as is often the case, themselves pay. See Clyde Mallory Lines v. Alabama, 296 U. S. 261, 296 U. S. 267.
"the right to sue even in a single instance until the corporation renders itself amenable to suit in all the courts of the state by whosoever chooses to sue it there."
required to defray the expense of administering the regulations may be demanded."
Sprout v. South Bend, 277 U. S. 163, 277 U. S. 169.
The Commerce Clause does not deprive Minnesota of the power to protect the special interest that has been brought into play by Union's localized pursuit of its share in the comprehensive process of foreign commerce. To deny the States the power to protect such special interests when Congress has not seen fit to exert its own legislative power would be to give an immunity to detached aspects of commerce unrelated to the objectives of the Commerce Clause. By its own force, that Clause does not imply relief to those engaged in interstate or foreign commerce from the duty of paying an appropriate share for the maintenance of the various state governments. Nor does it preclude a State from giving needful protection to its citizens in the course of their contacts with businesses conducted by outsiders when the legislation by which this is accomplished is general in its scope, is not aimed at interstate or foreign commerce, and involves merely burdens incident to effective administration. And so we conclude that, in denying Union the right to go to her courts because Union did not obtain a certificate to carry on its business as required by the Foreign Corporation Act, Minnesota offended neither federal legislation nor the Commerce Clause.

References: art. 1
 § 8
 § 1484
 § 1484
 § 1505
 § 1499
 § 6
 § 11
 § 11
 § 1
 § 11
 § 11
 § 15
 § 2
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