Case Name: PULLMAN COMPANY v. STATE OF KANSAS EX REL. COLEMAN, ATTORNEY GENERAL
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1910-01-31
Citations: 216 U.S. 56
Docket Number: No. 5
Parties: PULLMAN COMPANY v. STATE OF KANSAS EX REL. COLEMAN, ATTORNEY GENERAL.
Judges: Thío Chief Justice concurs in this dissent.
Reporter: United States Reports
Volume: 216
Pages: 56–77

Head Matter:
PULLMAN COMPANY v. STATE OF KANSAS EX REL. COLEMAN, ATTORNEY GENERAL.
ERROR TO THE SUPREME COURT OF THE STATE OF KANSAS.
No. 5.
Argued March 17, 18, 1909.
Decided January 31, 1910.
The judgment of the court below reversed on the authority of Western Union Telegraph Company v. Kansas, ante, p. 1, and also held that:
A corporation organized in one State and doing an interstate business is not bound to obtain the permission of another State to transact interstate business within its limits, but can go into the latter, for the purposes of that business, without liability to taxation there with respect to such business, although subject to reasonable local regulations for the safety, comfort and convenience of the people which do not, in a real, substantial Sense, burden or regulate'its interstate business nor subject its property interests outside of that State to taxation.
The requirement that such a company, as a condition of its right to do intrastate business, shall, in the form of a fee, pay to the State a specified per cent of its authorized capital, is. a violation of the Constitution of the United States, in that such a single fee, based on all the property, interests and business of the company, within and out of that State, is, in effect, a tax both on the interstate business of that company, and on its property outside of that State, and compels the company, in order that it may do local business in connection with its interstate business, to waive its constitutional exemption from state taxation on its interstate business and on its-property outside of the State.
A State can no more exact such a waiver than it can prescribe as a condition of the company’s right to do local business that it agree to waive the constitutional guaranty of the equal protection of the laws, or the guaranty against being deprived of its property otherwise than by due process of law.
A decree ousting and prohibiting a company- from doing intrastate business within a State for refusing to pay such a tax should not be granted, but the aid of the court should be refused because a decree would, in effect, recognize the validity of a condition which the State could not constitutionally prescribe under the guise of a fefe for permission to do intrastate business.
■75 Kansas, 664, reversed.
The facts, which involve the constitutionality of certain features of the Bush act, which was under consideration in the preceding case, are stated in the opinion.
Mr. Frank B. Kellogg, with whom Mr. Charles Blood Smith, Mr. Francis B. Daniels and Mr. Gustavus D. Fernald for plaintiff in error.
Mr. Rush.Taggart and Mr. Henry D. Estabrook, with whom Mr. John F. Dillon, Mr. George H. Fearons, and Mr. Charles Blood Smith were on the brief, for plaintiff in error in No. 4, argued simultaneously herewith.
Mr. C. C. Coleman, with whom Mr. Fred S. Jackson,. Attorney General of the State of Kansas,, was on the brief, for defendant in error in this case and in No. 4, argued simultaneously herewith.
For abstracts of arguments see ante, pp.'ll to 18.

Opinion:
Mr. Justice Harlan
delivered the opinion of the court.
This is a proceeding in quo warranto, instituted by the State in the Supreme Court of Kansas against the Pullman Company, a corporation of Illinois, in which the State, by its petition, prays that the defendant be required to show by what authority it exercises within Kansas the corporate right and power of charging compensation for the use of reserved seats in its cars by day and sleeping berths during the night and of serving meals in its dining cars within the State of Kansas, such services, it is alleged, being rendered to and said fees being collected from passengers transferring upon railroads from places within the State to other places within the State; and that it be adjudged that-the • defendant has no authority of law for the performance of such Corporate acts, powers, franchises and business in the State of Kansas, and be ousted of and from the exercise within the State of the said corporate rights and franchises and of receiving compensation therefor.
On the petition of the company-the case was removed to the Circuit Court of the United States, but that court remanded it to the state court, where the defendant filed an answer resisting the relief asked on various grounds, one of which was that such relief could not be granted consistently with the power of Congress to regulate commerce among the several States, or with rights belonging to the defendant under the Constitution of. the United States. A demurrer to the-answer was sustained, and a decree rendered by which it was adjudged that the Pullman Company be ousted, prohibited, restrained and enjoined from transacting, as a corporation, any business of a domestic or intrastate character within the State of Kansas. The decree declared that it should in nowise affect or restrict the interstate business of the company, nor affect any of its contracts, obligations or corporate duties with or to the Government of_the United States.
The business of the Pullman Company, under its charter, was that of furnishing sleeping, parlor and tourist cars on railroads, the company reserving to itself the right to charge a certain price for the use of reserved seats in such cars during the day time and sleeping berths during the night. The company's business extended throughout the United States, where any trunk line railroad was operated. It is not necessary to go into detail as to the mode in which that business was conducted, further 'than to say that the business was and is principally that of interstate commerce.
This case arises under the statute of Kansas, which was examined in Western Union Telegraph Company v. Kansas, recently decided, ante, p. 1. Laws of Kansas, Special Session, 1898, p. 27; Gen. Stat. Kansas, 1901, Title, Corporations, p. 280; lb. 1905, same Title, p. 284. The only provisions of that statute which need be recalled for the purposes of this opinion are these: "Each corporation which has received authority from the [State] charter board to organize shall, before filing its charter with the secretary of state, as provided by law, pay to .the state' treasurer of Kansas, for the benefit of the permanent school fund, a charter fee of one-tenth of one per cent of its authorized capital, upon the first one hundred thousand dollars of its capital stock, or-any part thereof; and upon the next four hundred' thousand dollars, or any part thereof, one-twentieth of one per cent; and for each million or major part thereof, over and above the sum of five hundred thousand dollars, two hundred dollars. . In addition to the charter fee herein provided the secretary of state shall collect a fee of two dollars and fifty cents for filing and recording each charter containing not' to exceed ten folios, and an additional fee of twenty-five cents for each folio in excess df ten contained in any charter. The fee for filing and recording a charter shall also entitle the corporation'to a certified copy of its charter. All the provisions of this act, including the payment of the fees herein.provided, shall apply to foreign corporations seeking to do business in this State, except that, in lieu of .their charter, they shall file with the secretary of state a certified copy of their charter, executed by the proper officer of the State, Territory or foreign country under whose laws they are incorporated; and any corporation applying for a renewal of its charter shall comply with all the provisions of this act in like manner and to the same extent as is herein provided for the chartering and organizing of new corporations." " § 1267. Any corporation organized under the laws of another State, Territory or foreign country and authorized to do business in this State shall be subject to the same provisions, judicial control, restrictions, and penalties, except as herein provided, as corporations organized under the laws of this State." Ib., § 1264, 1267.
Proceeding under the statute of Kansas, the Pullman Company made written application to the Charter- Board for permission to engage in business in that State. The application was granted, and the Board made the following order: "The board having under consideration the. application of The Pullman Company,-a foreign corporation organized under the laws, of the State of Illinois, for leave to transact the business of a sleeping car company in the State of Kansas; and it-appearing that said foreign corporation has; in "due form of law, filed with the secretary of state' a certified copy of its charter, executed by the proper officers of the State of its dpmicile, and the. written consent, irrevocable, of said corporation that actions may be commenced against it in the proper court of any county in this State in which the cause of action may arise, accompanied by a duly certified copy of the resolution of the board of directors of said corporation authorizing the .proper officers to execute the same, it is, upon motion, thereupon ordered that said application be granted, and that said applicant be authorized and empowered to transact the business of operating sleeping cars, dining cars, tourist cars and other cars within the State of Kansas, and receiving money for such services, and transacting within the State its business of a sleeping car and transportation company, provided, that this order shall not take effect and no certificate of such authority shall 'issue or be delivered to said company until such applicant shall have paid to the State Treasurer of Kansas for the benefit of the permanent school fund the sum of fourteen thousand eight hundred dollars, being the charter fees provided by law, necessary to be paid by the corporation with a capital of $74,000,000, seeking to transact business within this State. It is further understood, ordered and provided that nothing herein contained shall apply to nor be construed as restricting in anywise the transaction, by said applicant, of .its interstate business; but that this grant of authority and requirement as to payment relate only to the business transacted wholly within the State of Kansas."
We have seen, from the provisions of the statute', as set forth in Western Union Telegraph Company v. Kansas, ante, p. 1, that it is made a condition of the right of a foreign corporation, seeking to do local business in Kansas, that it should apply to the State Charter Board for permission to do so. It is also prescribed as a condition of the right of a foreign corporation to do intrastate business in Kansas that it shall pay not only an application fee of $25; but a charter fee " of one per cent of its authorized capital upon the first one hundred thousand dollars of its capital stock or any part thereof; and upon the next four hundred thousand dollars or any part thereof, orie-hventieth of one per cent; and for each million or major part thereof over and above the sum of five hundred thousand dollars', two hundred dollars."
The Pullman Company is admittedly engaged, as it has been'continuously for many years,,in commerce among all the States of the Union, as well as in intrastate business in Kansas. The Charter Board, we have seen, gave it permission- to engage in intrastate business in Kansas on condition that it should pay to the State Treasurer for the benefit of the permanent school fund of the State, as a charter fee, the sum of $14,800, which is the prescribed statutory per cent of the company's authorized capital, representing all of its property and interests everywhere, in and out of the State, and all its business, both interstate and intrastate. It does not appear how much of the single "fee',' demanded by the State is to be referred to the interstate business of the company nor how much to its property outside of the State, nor what part has reference to its intrastate business or to its property within-the State.
The Pullman Company refused to pay the fee so demanded, upon the general ground, among others, that the State could not, consistently with the Constitution of the United States or with the company's rights under the Constitution, make it a condition of its doing intrastate business-in Kansas, that the company should pay-, - in the form- of a fee, a specified per cent of all its authorized capital; that such a fee necessarily operated as a burden on the company's interstate business as • well as a tax on its property interests outside of the State, and was hostile to its constitutional right of exemption from local taxation in reference to its property beyond the jurisdiction of the State.
For the reasons, and under the limitations, expressed in the opinion delivered in Western Union Telegraph Company v. Kansas, ante, p. 1, and without expressing any opinion upon questions raised by the pleadings but not covered by this opinion, we hold, .1. That the Pullman Company was not bound to obtain the permission of the State to transact interstate business within its limits, but could- go into the State, for the purposes of that business, without liability to taxation there with respect to such business, although subject to reasonable local regulations for the safety;' comfort and convenience of the people which did not, in a real, substantial -sense, burden or regulate its interstate business nor subject its property interests outside of .the State to taxation in Kansas. 2. That the requirement that the company, as. a condition of its- right to do intrastate business in Kansas, should, in the form of a fee, pay to -the State a specified per cent of its authorized capital, was - a violation of the Constitution of the United States, in that such a single fee, based as it was on all the property, interests and business of the company, within and out of the State, was, in effect, a tax both on the interstate business of that company, and on its property outside of Kansas, and compelled the company, in. order that it might do local business in Kansas in connection .with its interstate business, to waive its constitutional exemption fi;om state taxation on its interstate business and on its property outside of the State and contribute from its capital to the support of the public schools of Kansas; that the State could no more exact such a waiver, than it could prescribe as a condition of the company's right to do local business in Kansas that it agree to waive the constitutional guaranty of the equal protection of the laws, or the guaranty against being deprived of its property otherwise than by due process of law. 3.- That a decree ousting and prohibiting the company from doing intrastate business in Kansas was improperly granted, the aid of the court should have-been refused and the- bill dismissed, because a decree such as the State asked would, in effect, have recognized the validity of a condition which the State could not constitutionally prescribe under the guise of a fee for permission to do intrastate business.
Mr. Justice Moody heard the argument of' this case, participated in its decision, and approves this opinion.
On the authority of Western Union Tel. Co. v. Kansas, ante, p. 1, and for the reasons and with the reservations therein set forth in the opinion in that case, the decree must be reversed and the cause remanded for such further proceedings as may be'consistent with this opinion.
It is so ordered.