"That a State by becoming interested with others in a banking corporation, or by owning all of the capital stock, does not impart to that corporation any of its privileges or prerogatives; that it lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege in respect to those transactions not derived from the charter, has been repeatedly affirmed by this court."

Conceding that as the State was the sole stockholder the charter could not be deemed such a contract between it and the corporation as was contemplated by the contract clause of the Constitution of the United States, the court say:

"It is a very different question whether that charter does not contain provisions which when acted upon by the State and by third persons constitute in law a binding contract with them, the obligation of which cannot be impaired."

Comparing the relation of the bank to the State as an agency, the court applied to the State the rule applicable to the revocation of an agency by the principal, and held that, although the State might revoke the agency and withdraw the property from the bank at its pleasure, when the rights of depositors had intervened the matter no longer resided in the mere delegation of a revocable authority, but that a contract had arisen between the principal (the State) and third persons (the creditors) from the representations made and the acts done on the faith of it, and the property could not be withdrawn without impairing the obligation of that contract, thus clearly and distinctly placing the ruling on the ground that the State, by its grant to the bank, might and did incur obligations to those who were induced to deal with it that could not be impaired by subsequent legislation or act of the State.

It was further contended that the State occupied the attitude of a creditor of the bank, and could provide by law for the payment of its debt in preference to other creditors. The contention was denied by the court on the ground that the assets placed by the State in the possession of the bank as a part of its capital and as a fund upon the credit of which it was to issue bills, and the capital furnished it by the State, was liable to answer the engagements of the bank contracted to its creditors in the course of the business it was authorized to transact, upon the insolvency of the bank, and became a trust fund for the payment of its debts.

The principles announced in the foregoing rulings have since become familiar to the profession, but many of them were at that time new and were very ably and earnestly contested, and a review of them at this time, I imagine, will not be without interest to the members of this Association.

It was held at the same term of the court that Congress possessed the power to create corporations. The case arose in regard to the power of Congress to incorporate the Bank of the United States. The act of incorporation was passed at the first session of Congress. The power of Congress was not challenged until the case referred to arose in Maryland. Chief Justice Marshall delivered the opinion of the court. His view of the importance of the questions involved is indicated by the following language, used in approaching its discussion:

He said: "The Constitution of our country in its most interesting and vital parts is to be considered; the conflicting powers of the government of the Union and of its members as marked in that Constitution are to be discussed and an opinion given which may essentially influence the great operations of the government."

It was contended that the power to create corporations did not exist because it was not among the enumerated powers of the government. In response to that contention, the great chief justice expounded the doctrine upon which the implied powers of the government rest, and maintained its authority to exercise all powers that are necessary to carry those that are enumerated into effect. In concluding upon this subject, he said:

"We admit, as all must admit, that the powers of the government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the national Legislature that discretion with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. That a corporation must be considered as a means not less usual, not of higher dignity, not more requiring a particular specification than other means, has been sufficiently proved. If we look to the origin of corporations, to the manner in which they have been framed in that government from which we have derived most of our legal principles and ideas, or to the uses to which they have been applied, we find no reason to suppose that a constitution, omitting and wisely omitting, to enumerate all the means for carrying into execution the great powers vested in government, ought to have specified this."

The reasoning of the court, though familiar to students of our Constitution, is still interesting to all who take an interest in the development of the Constitution and institutions of our country through the application and adaptation to new conditions of the general powers enumerated in the Constitution.

It was later contended that the Territorial Legislatures created by Congress were not invested with power to create corporations because they were not sovereign bodies. That contention was also overruled by the courts, and the power of Congress and of the Territories organized under its legislation to create corporations was firmly established. It was under this power that the national banking system now in force throughout the country was created, and charters for constructing interstate railroads were granted by Congress.

The question as to the status of a corporation for the purpose of the jurisdiction of the Federal courts, under the Constitution and laws of the United States, arose at an early day. It was held in the case of Bank of the United States v. Deveaux, 5 Cranch, 61, following the ruling in Strawbridge v. Curtis, 3 Cranch, 267, that the capacity of a corporation to sue in those courts depended upon the citizenship of its members; that the controversy was between the persons suing in their corporate character, by their corporate name, and the individual against whom the suit might be instituted.

These rulings were followed until the case of Louisville Railroad Co. v. Letson, reported in 2 Howard, decided at the January term, 1844. In that case the former rulings were modified, and it was held that the members of a corporation would be conclusively presumed to be citizens of the State in which the corporation was created, without any averment of citizenship. That case affirmatively established the doctrine which has ever since been followed, that for the purpose of jurisdiction a corporation would be treated as a citizen of the State of its creation. It is not sufficient, however, in pleading, to aver that a corporation is a citizen of a particular State. Such averment does not show jurisdiction. The averment should be that it is a corporation created by the laws of a particular State. The Federal courts also have jurisdiction of corporations created by Congress, on the ground that they arise under the laws of

the United States. An amendment of the act creating national banks, however, expressly excludes Federal jurisdiction and puts them upon the same footing as the banks of the State where they are located for all the purposes of jurisdiction of the Federal

courts.

Many of the States have passed statutes tending to domesticate corporations, and to require them, as a condition of doing business in the State, to file certified copies of their articles of incorporation, or charter, and providing that they shall thereupon become corporations of the State. A statute containing provisions of that character as a prerequisite to the right of a foreign railroad corporation to extend its line into the State was passed in this State several years ago. The St. Louis & San Francisco Railway Company, a corporation organized under the laws of Missouri, complied with the provisions of the statute by filing its charter in this State. It was subsequently sued by a citizen of Missouri, in the United States Circuit Court. Objection was raised to the jurisdiction of the court on the ground that the railroad company was not a citizen of this State, but was a citizen of the State of Missouri, of which plaintiff was also a citizen. The case went to the Supreme Court of the United States, and it was held that the statute did not create an Arkansas corporation out of a Missouri corporation in such a sense as to make it a citizen of this State within the meaning of the Federal Constitution, so as to subject it to the jurisdiction of the United States courts. That in order to bring a corporation within the spirit and letter of the Constitution it would be necessary to create it out of natural persons whose citizenship of the State creating it could be imputed to the corporation itself. A question later arose in the courts of this State as to the effect of the statute in domesticating a foreign corporation for the purpose of enabling it to exercise the right of eminent domain, in view of the provision of our Constitution that foreign corporations should not exercise that right, and it was held in Russell v. St. Louis Southwestern Railway Company, 71 Ark. 451, that a railroad corporation organized in another State, on complying with the act, becomes a domestic corporation for the purpose of exercising the right of eminent domain. The court referred to the ruling of the Supreme Court of the United States in St. Louis &

San Francisco Railway Co. v. James, and distinguished that case on the ground that it was based upon the legal presumption that the corporation is composed of citizens of the State which created it, and that presumption could not be applied to an existing foreign corporation. It said the It said the Supreme Court of the United States did not hold in that case that the railroad company was not a corporation of this State, but, on the contrary, had often held that a foreign corporation might be domesticated in regard to property and acts within the territorial jurisdiction.

The leading case on the limitations imposed by the Federal Constitution upon the power of the States to exclude foreign corporations is Paul v. Virginia, 8 Wall, 168. It was contended in that case that foreign corporations were within the provisions of the Constitution, which declare that "the citizens of each State shall be entitled to all the privileges and immunities of citizens of other States," and that Congress shall have power "to regulate commerce with foreign nations and among the several States." The court held that a corporation was not a citizen within the meaning of either clause, and that the power of the States was unrestricted by anything contained in the Constitution. The power of the States, however, to exclude foreign corporations has its limitations. It can not be applied to a corporation created by Congress for the purpose of exercising governmental functions, or where it is an instrumentality of commerce, or its business constitutes interstate commerce. In such cases, foreign corporations are protected by the Federal Constitution against interference by the States.

The opinion of the court and the dissenting opinion of the Chief Justice in Gunn v. White Sewing Machine Co., 57 Ark. 24, contain a very interesting and instructive review of the authorities on this subject.

A State can not, by imposing conditions upon a foreign corporation, prevent it from removing a suit brought against it to the Federal courts. Numerous cases have arisen on this subject, and, after some apparent conflict, it was decided in Security Mutual Life Insurance Co. v. Prewitt, 202 U. S. 246, that while a State can not control foreign corporations within its limits in the matter referred to, it yet has the power to re