Opinion,
Mb. Justice Clark:
This case came into the Common Pleas of Dauphin county [474]*474upon an appeal from a settlement made by the auditor general, etc., for state taxes on corporate loans, under the fourth section of the act of June 30,1885, for the year 1887. It was tried by the court by agreement of the parties under the act of 1874. The learned judge of the court below found as matter of fact that $2,378,000 of the company’s bonds were owned and possessed by residents of Pennsylvania, of which $852,000 were held by individuals, and the residue by corporations. The principal questions raised on this record are ruled by Commonwealth v. Delaware Div. Canal Co., 123 Pa. 594; Lehigh Valley R. Co. v. Commonwealth, and Commonwealth v. Lehigh Valley R. Co., the last two cases decided at this term and not yet reported [ante, 429] . The only remaining question for our consideration is, whether or not the defendant company, being a foreign corporation, is liable to be charged with state taxes at the rate of three mills on the dollar on their bonds held by individuals and firms resident within the state, as above stated.
The New York, Lake Erie & Western Railroad Company is a corporation of the state of New York. It was originally incorporated in the year 1832, as the New York & Erie Railroad Company, with power to construct a railroad from the city of New York to Lake Erie, through the southern counties of the state of New York. To avoid certain engineering difficulties, the company was afterwards authorized by the legislature of Pennsylvania, under certain restrictions, to build a specific portion of its road through the counties of Pike and Susquehanna, in this state: Acts of February 16, 1841, P. L. 28, and March 26, 1846, P. L. 179 ; the said company, by the act of 1846, being required to pay to the state of Pennsylvania, after the completion of the road, the sum of $10,000 annually. The property and franchises of the New York & Erie Railroad Company afterwards became vested in the Erie Railway Company, and, in 1878, in the New York, Lake Erie & Western Railroad Company. A portion of the defendant’s road was made and is still maintained within the limits of this state, and since the completion and equipment of the road regular payment has been made by the company to the commonwealth of the said sum of $10,000 annually, pursuant to the provisions of the several acts of assembly already referred to. Although [475]*475a corporation of another state, and, therefore, a foreign corporation, the company is doing business in this state. By a certificate filed in the office of the secretary of the commonwealth, pursuant to the act of 22d April, 1874, the defendants have designated a place of business and an agent to represent them ; they are, therefore, not only duly authorized but, in the operation of their road, they are actually engaged in doing business within the limits of this state.
The fourth section of the act of 1885 applies not only to all private corporations, created by and under the laws of this state or of the United States, but to such as are doing business in this commonwealth. The several questions raised by the assignments of error, from the first to the ninth inclusive, as we have already said, have been discussed and decided in the case of Commonwealth v. Delaware Div. Canal Company, 123 Pa. 594, and the ease of the Commonwealth v. The Lehigh Valley Railroad Company, argued at the present term, [ante, 429,] and will not be further considered here.
The only questions raised by the remaining assignments are, first, whether the provision of the fourth section of the act of 1885, so far as it applies to foreign corporations doing business in this' state, is a proper exercise of legislative power; and, second, assuming this to be so, whether there is anything in the said provision by which the defendant road was permitted to pass through the counties of Pite and Susquehanna, which would exempt the company from the obligation of this act.
Upon the first question suggested there can, we think, he but little room for discussion. In the Delaware Div. Canal Company case, already referred to, we said:
“ Foreign corporations, exercising their franchises under the laws of other states and countries, are beyond the reach, of our processes of taxation. We could not require them ordinarily to comply with any such regulation of our law, and, therefore, they are necessarily excluded from the provisions of the act. Such foreign corporations as are engaged in business in the state might doubtless be required to comply as a condition of their right so to do, but this could only embarrass the action of the local assessor, and upon this ground,' doubtless, they were wisely excluded from the operation of the act.”
The last member of the concluding sentence of the paragraph [476]*476quoted is a mere inadvertence. The fourth section of the act of 1885 does in terms embrace such foreign corporations as are engaged in business in this state, and the question now to be considered is, whether or not such a provision as respects the New York, Lake Erie & Western Railroad Company is a proper exercise of the legislative power of the state. The general statement that foreign corporations are ordinarily beyond the reach of our processes of taxation is undoubtedly correct, but when a foreign corporation comes into Pennsylvania and engages in business here, undoubtedly it does so subject to the general policy of, and the course of legislation in the state: Runyan v. Coster, 14 Pet. 122. A foreign corporation can exercise its franchises in Pennsylvania only so far as it may be permitted by the local sovereign. The right rests wholly in the comity of the states: Paul v. Virginia, 8 Wall. 168. A corporation of one state cannot do business in another state without the latter’s consent, express or implied, and that consent may be accompanied with such conditions as the latter may think proper to impose: St. Clair v. Cox, 106 U. S. 350. These conditions will be valid and effectual, provided they are not repugnant to the constitution or laws of the United States, inconsistent with the jurisdictional authority of the state, or inv conflict with the rule which forbids condemnation without opportunity for defence: Lafayette Insurance Co. v. French, 18 How. 404; Doyle v. Insurance Co., 94 U. S. 535; Pembina Mfg. Co. v. Pennsylvania, 125 U. S. 181.
It was competent for the legislature of Pennsylvania to impose as a condition upon foreign corporations doing business in this state that they shall assess and collect the tax upon that portion of their loans in the hands of individuals resident within this state, and otherwise comply with the provisions of the act of 1885. The act imposes no tax upon the company; it simply defines a duty to be performed and fixes a penalty for disregard of that duty. The legislature having so provided, compliance with the act may, in some sense, be said to form one of the conditions upon which corporations may do business within the state, and the corporation continuing its business subsequently would be taken to have assented thereto.
There is, however, a condition, implied even in the case of domestic corporations, that they will be subject to such reasonable [477]
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Opinion,
Mb. Justice Clark:
This case came into the Common Pleas of Dauphin county [474]*474upon an appeal from a settlement made by the auditor general, etc., for state taxes on corporate loans, under the fourth section of the act of June 30,1885, for the year 1887. It was tried by the court by agreement of the parties under the act of 1874. The learned judge of the court below found as matter of fact that $2,378,000 of the company’s bonds were owned and possessed by residents of Pennsylvania, of which $852,000 were held by individuals, and the residue by corporations. The principal questions raised on this record are ruled by Commonwealth v. Delaware Div. Canal Co., 123 Pa. 594; Lehigh Valley R. Co. v. Commonwealth, and Commonwealth v. Lehigh Valley R. Co., the last two cases decided at this term and not yet reported [ante, 429] . The only remaining question for our consideration is, whether or not the defendant company, being a foreign corporation, is liable to be charged with state taxes at the rate of three mills on the dollar on their bonds held by individuals and firms resident within the state, as above stated.
The New York, Lake Erie & Western Railroad Company is a corporation of the state of New York. It was originally incorporated in the year 1832, as the New York & Erie Railroad Company, with power to construct a railroad from the city of New York to Lake Erie, through the southern counties of the state of New York. To avoid certain engineering difficulties, the company was afterwards authorized by the legislature of Pennsylvania, under certain restrictions, to build a specific portion of its road through the counties of Pike and Susquehanna, in this state: Acts of February 16, 1841, P. L. 28, and March 26, 1846, P. L. 179 ; the said company, by the act of 1846, being required to pay to the state of Pennsylvania, after the completion of the road, the sum of $10,000 annually. The property and franchises of the New York & Erie Railroad Company afterwards became vested in the Erie Railway Company, and, in 1878, in the New York, Lake Erie & Western Railroad Company. A portion of the defendant’s road was made and is still maintained within the limits of this state, and since the completion and equipment of the road regular payment has been made by the company to the commonwealth of the said sum of $10,000 annually, pursuant to the provisions of the several acts of assembly already referred to. Although [475]*475a corporation of another state, and, therefore, a foreign corporation, the company is doing business in this state. By a certificate filed in the office of the secretary of the commonwealth, pursuant to the act of 22d April, 1874, the defendants have designated a place of business and an agent to represent them ; they are, therefore, not only duly authorized but, in the operation of their road, they are actually engaged in doing business within the limits of this state.
The fourth section of the act of 1885 applies not only to all private corporations, created by and under the laws of this state or of the United States, but to such as are doing business in this commonwealth. The several questions raised by the assignments of error, from the first to the ninth inclusive, as we have already said, have been discussed and decided in the case of Commonwealth v. Delaware Div. Canal Company, 123 Pa. 594, and the ease of the Commonwealth v. The Lehigh Valley Railroad Company, argued at the present term, [ante, 429,] and will not be further considered here.
The only questions raised by the remaining assignments are, first, whether the provision of the fourth section of the act of 1885, so far as it applies to foreign corporations doing business in this' state, is a proper exercise of legislative power; and, second, assuming this to be so, whether there is anything in the said provision by which the defendant road was permitted to pass through the counties of Pite and Susquehanna, which would exempt the company from the obligation of this act.
Upon the first question suggested there can, we think, he but little room for discussion. In the Delaware Div. Canal Company case, already referred to, we said:
“ Foreign corporations, exercising their franchises under the laws of other states and countries, are beyond the reach, of our processes of taxation. We could not require them ordinarily to comply with any such regulation of our law, and, therefore, they are necessarily excluded from the provisions of the act. Such foreign corporations as are engaged in business in the state might doubtless be required to comply as a condition of their right so to do, but this could only embarrass the action of the local assessor, and upon this ground,' doubtless, they were wisely excluded from the operation of the act.”
The last member of the concluding sentence of the paragraph [476]*476quoted is a mere inadvertence. The fourth section of the act of 1885 does in terms embrace such foreign corporations as are engaged in business in this state, and the question now to be considered is, whether or not such a provision as respects the New York, Lake Erie & Western Railroad Company is a proper exercise of the legislative power of the state. The general statement that foreign corporations are ordinarily beyond the reach of our processes of taxation is undoubtedly correct, but when a foreign corporation comes into Pennsylvania and engages in business here, undoubtedly it does so subject to the general policy of, and the course of legislation in the state: Runyan v. Coster, 14 Pet. 122. A foreign corporation can exercise its franchises in Pennsylvania only so far as it may be permitted by the local sovereign. The right rests wholly in the comity of the states: Paul v. Virginia, 8 Wall. 168. A corporation of one state cannot do business in another state without the latter’s consent, express or implied, and that consent may be accompanied with such conditions as the latter may think proper to impose: St. Clair v. Cox, 106 U. S. 350. These conditions will be valid and effectual, provided they are not repugnant to the constitution or laws of the United States, inconsistent with the jurisdictional authority of the state, or inv conflict with the rule which forbids condemnation without opportunity for defence: Lafayette Insurance Co. v. French, 18 How. 404; Doyle v. Insurance Co., 94 U. S. 535; Pembina Mfg. Co. v. Pennsylvania, 125 U. S. 181.
It was competent for the legislature of Pennsylvania to impose as a condition upon foreign corporations doing business in this state that they shall assess and collect the tax upon that portion of their loans in the hands of individuals resident within this state, and otherwise comply with the provisions of the act of 1885. The act imposes no tax upon the company; it simply defines a duty to be performed and fixes a penalty for disregard of that duty. The legislature having so provided, compliance with the act may, in some sense, be said to form one of the conditions upon which corporations may do business within the state, and the corporation continuing its business subsequently would be taken to have assented thereto.
There is, however, a condition, implied even in the case of domestic corporations, that they will be subject to such reasonable [477]*477regulations, in respect to the general conduct of their affairs, as the legislature may from' time to time prescribe, and such as do not materially interfere with or obstruct the substantial enjoyment of the privileges the state has granted: Chicago v. Needles, 113 U. S. 574. If this be so as to corporations who are entitled to their charter privileges upon the footing of a contract, how much the more is it so as to corporations who are merely permitted by the legislature to do business within this state as a matter of grace and not of right ? But it is said that the enforcement of the fourth section of the act of 1885 against the defendant corporation would impair the obligation of the contract existing between the commonwealth and the company, as set forth in the private statutes of 1841 and 1846 already referred to. Apart from these statutes the defendant had the right by the comity of the states to contract and to sue within the state of Pennsylvania, but could exercise no extraordinary franchises or special privileges granted by the state incorporating it, as, for instance, the right to eminent domain, or the privilege of exemption from taxation: State v. Boston etc. R. Co., 25 Vt. 433; Middle Bridge Co. v. Marks, 26 Me. 326 ; Taylor on Corp., 386. It was for the exercise of this ex traordinary privilege and power of the state, the annual payment of §10,000 was stipulated. There is nothing in the act to indicate that this sum was paid in lieu of taxes, or for exemption from any duty which might otherwise be imposed upon the company, but for the privilege of exercising the right of eminent domain in the location of their road through the counties mentioned, under restrictions particularly specified. The effect of these acts of 1841 and 1846 was not to declare the company a corporation of the commonwealth, but, as Mr. Justice Thompson said in New York & Erie R. Co. v. Young, 33 Pa. 175, “ for the purposes of these acts the rights involved are to be tested and judged by the same rules of law as if the company had been primarily incorporated by this commonwealth. So far as the road runs through this state under the privileges granted to it, the company is a quasi Pennsylvania corporation. The right of eminent domain, within the restrictions of the grant, was as fully conferred on them by the act of February 16, 1841, as it ever is conferred on corporations exclusively within the state, and their rights and duties under the privileges granted [478]*478must be ruled by the same principles.” One state may make a corporation of another state, as there organized and conducted, a corporation of its own, quoad property within its territorial jurisdiction : Railroad Co. v. Harris, 12 Wall. 65-82; Graham v. Railroad Co., 118 Pa. [?] 168. Thus it will be seen that the defendant exercises powers and franchises which they have received directly from the legislation of Pennsylvania; that a part of their property is actually within the limits of this state, and receives the protection of our laws, and there is no good reason why the company should not be held subject to the same regulations as corporations of our own state. We are of opinion that on this branch of the case the court was right.
The judgment is affirmed.