Court Opinion

ID: 6836835
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:07:07.699538+00
Date Added: 2024-06-11T16:04:43.728643
License: Public Domain

DIETRICH, Circuit Judge
{concurring).
Defendant’s first contention is that there is no basis for equitable relief, for the reason that plaintiff has a plain, speedy, and adequate remedy at law, in that it could pay the demanded charges under protest and then bring an action to recover them, citing Great Northern Ry. Co. v. Stevens County, 108 Wash. 238, 183 P. 65, in support of the view that such a course is available. If it be assumed that the averments of the bill do not bring the case within the reach of the rule recognized in Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764, Ludwig v. Western Union Tel. Co., 216 U. S. 146, 30 S. Ct. 280, 54 L. Ed. 423, Adams Express Co. v. City of New York, 232 U. S. 14, 34 S. Ct. 203, 58 L. Ed. 483, Ohio Tax Cases, 232 U. S. 576, 587, 34 S. Ct. 372, 58 L. Ed. 737, Looney v. Crane Co., 245 U. S. 178, 38 S. Ct. 85, 62 L. Ed. 230, and Air-Way Co. v. Day, 266 U. S. 71, 79, 45 S. Ct. 12, 69 L. Ed. 169, I am nevertheless of the opinion that the suit is cognizable in equity. “The remedy at law, to be adequate, must be a remedy at law in the federal court where jurisdiction in equity is sought. * * * It is not enough that there be a remedy at law in the state courts. * * n siskin’s Fed. Proe. p. 275. And see, also, Montgomery’s Manual of Federal Jurisdiction (3d Ed.) § 702; 21 C. J. 42, § 17; Smyth v. Ames, 169 U. S. 466, 18 S. Ct. 418, 42 L. Ed. 819; C., B. & Q. R. Co. v. Osborne, 265 U. S. 14, 44 S. Ct. 431, 68 L. Ed. 878; Risty v. Chicago, R. I. & P. R. Co., 270 U. S. 378, 46 S. Ct. 236, 70 L. Ed. 641; Franklin v. Nevada-California P. Co. (9th C. C. A.) 264 F. 643. The Washington case, supra, was brought against a county. Payment here would have to be made to the state, and any action for recovery must be against the state. But without its consent the state of Washington cannot be sued in its own courts, and under the Eleventh Amendment to the Constitution of the United States it is exempt from suit in the federal courts. The only pertinent consent that has come under my notice is found in section 886, Rem. Comp. Stat. Wash., which provides that “any person or corporation having any claim against the state of Washington shall have a right to begin an action against the state in the superior court of Thurston county.” Within the principles above explained, the restricted privilege thus conferred falls far short of providing an adequate remedy at law.
I find no substantial ground for holding invalid the provisions involved in the first cause of action, under which plaintiff is required to pay an initial or filing fee of $1,-180, less certain credits. Without the consent of the state, foreign corporations cannot do business therein, and they may be arbitrarily excluded. Subject to the qualification that such corporations cannot be required to relinquish rights secured to them by the Constitution of the United States, the state may impose upon the privilege of entering its borders and transacting business therein such conditions as it sees fit. The rule is clearly stated in Hanover Ins. Co. v. Harding, 272 U. S. 494, 507, 47 S. Ct. 179, 71 L. Ed. 372, 49 A. L. R. 713, together with illustrative exceptions. The case here is not thought to fall within the range of the exceptions. The fee .is not intended to be a burden upon interstate commerce, or a tax upon property beyond the jurisdiction of the state. It is in fact a relatively small burden, and does not purport to have any relation to the amount of interstate business transacted, and in fact bears none. It is a single charge for the privilege of entering the state and there exercising its corporate functions in the transaction of intrastate business, for an indefinite period. It is imposed alike upon all corporations transacting business in the state, including those which have no interstate transactions at all. True, any exaction from a corporation engaged in both intrastate and interstate business may be said to affect the latter, but by engaging in both classes the corporation cannot in effect nullify the power of the state respecting the class which is otherwise admittedly subject to its control. If, as seems to be conceded, the state would have the power to require outright of all foreign corporations payment of such a fee in the amount of $1,180, why should we regard as invalid a law which less arbitrarily seeks to relate the fee to the magnitude and value of the privilege conferred.
Touching the -objection that authorized, but unissued, stock is not a reasonable factor to be considered, it is to be noted that the license secured upon the payment of the fee is for all time and under it the corporation may without further payment employ its entire authorized capital. True, the power to issue stock is derived from the state where the corporation is organized; but the right to use the proceeds of stock so issued in carrying on business in another state is the grant of that state. Were issued stock adopted as the measure of the charge, the corporation might issue but a nominal amount, procure entrance in a foreign state upon that basis, and thereupon issue all of *132its authorized capital stock, thus evading the payment of án adequate fee. But, however that may be, the measure, though imperfect in operation, as are all systems of taxation and license, is more equitable than a uniform charge for all corporations, which the Legislature had the power to impose. And, it may be added, the plaintiff does not suggest a more reasonable substitute.
Because of certain distinct considerations the,validity of the tax assailed in the second cause of action is not so free from doubt. To escape the charge that it is an unwarranted burden upon interstate commerce, or a tax upon property without the jurisdiction of the state, it should bear some reasonable relation to the extent of the intrastate business and the value of the right to transact such business, and, when available, a standard should be adopted in harmony with that idea. These taxes are collected annually, and there would seem to be no substantial reason, other than that of convenience, why they should not be computed on the volume of actual intrastate business for the current year.
However, as noted in the opinions of my associates, the question in various aspects has frequently been considered by the Supreme Court, and'we are to find guidance in its decisions. In the analysis of these decisions by Judge CUSHMAN and in his conclusion I concur, with some additional comments. Admittedly, under the doctrine of the Baltic Mining Co. Case, the Washington statute is valid. In the nine cases arising in Massachusetts and decided four years later, reported as International Paper Co. v. Mass., 246 U. S. 135, 38 S. Ct. 292, 62 L. Ed. 624, Ann. Cas. 1918C, 617, Locomobile Co. v. Mass., 246 U. S. 146, 38 S. Ct. 298, 62 L. Ed. 631, and Cheney Brothers Co. et al. v. Mass. (seven cases) 246 U. S. 147, 38 S. Ct. 295, 62 L. Ed. 632, clearly the doctrine of the Baltic Case is not overruled or qualified, but reaffirmed. In the Paper Company and the Locomobile Cases the taxes were held invalid for the reason alone that prior to their imposition the state statute had been amended by removing therefrom the maximum limit of the exaction, and in the Cheney Case because the plaintiff was engaged exclusively in interstate business. In the other six eases, where the corporations were engaged in both classes of business and the statute had not been amended prior to the imposition of the tax, the court, .following the rule of the Bal tic Case, denied relief. The court regarded the presence or absence of a reasonable maximum, or the fact that the corporation was engaged exclusively in interstate business, as a controlling consideration.
In the Air-Way Corporation Case, 266 U. S. 71, 45 S. Ct. 12, 69 L. Ed. 169, apparently the statute provided no maximum, and in other respects was unlike the Washington law. That the rule of the Baltic Case was not thought to be involved is -to be inferred from the fact that neither party cited it upon any substantive issue and it is not referred to in the opinion. In the Alpha Cement Case, 268 U. S. 203, 45 S. Ct. 477, 69 L. Ed. 916, 44 A. L. R. 1219, after explaining the issue the court thus stated the question for decision: “May a state impose upon a foreign corporation which transacts only interstate business within her borders an excise tax measured by a combination of two factors — the proportion of the total value of capital shares attributed to transactions therein, and the proportion of net income attributed to such transactions,” adding that “Cheney Brothers Co. v. Massachusetts, 246 U. S. 147, 153, 154, 38 S. Ct. 295, 62 L. Ed. 632, necessitates a negative reply.” And in summing up its decision the court further said: “The excise challenged by plaintiff in error is not materially different from the one declared unconstitutional in Cheney Brothers Co. v. Massachusetts and cannot be enforced against a foreign corporation which •does nothing but interstate business within the state.” It will thus be seen that the decision was regarded as being strictly within the rule of the Cheney Brothers Case, but, as we have seen, that ease cannot be deemed out of harmony with the Baltic Case, for the reason that in the six other cases decided at the same time the court expressly applied, without qualification or limitation, the doctrine of the Baltic Case.
I therefore concur in Judge CUSHMAN’S general conclusion.