President of the Bank v. Montgomery

3 Ill. 422

• Court: Illinois Supreme Court
• Decided: December 15, 1840
• Status: Published

Opinion

Smith, Justice,

delivered the opinion of the Court:

This was an action upon a negotiable promissory note, assigned to the plaintiffs in error.

The defendant, in the Circuit Court, demurred to the declaration, and assigned specially the causes and grounds of demurrer relied on, to wit : First, A private corporation has no power to contract out of the State from which it derived its corporate existence, unless the State in which such contract was made and sought to be enforced, has passed some statute law giving to foreign corporations the right to contract and sue in such State. Secondly, A private corporation has no right to sue out of the State from which it has derived its corporate vitality, for no State can legally or constitutionally delegate contracting powers to a corporation or person to contract without the State, unless to an individual agent to contract for and in behalf of the State sovereignty. Upon these causes, assigned by the defendant in the Circuit Court, it gave judgment for the defendant, sustaining the causes of demurrer.

The correctness of this decision is now presented for review here.

It may be proper to premise, before entering into an investigation of the reasons and principles of the decision of the Circuit Court, that it does not appear from the record, in any way, that the Bank of Washtenaw is a foreign corporation, and unless we are to take judicial notice of the absence of such an incorporation on our books of statutes, we cannot, for the purpose of consideration in this case, know that it is a corporation of foreign birth.

Again there is nothing appearing in the declaration, or in the pleadings, to show whether the note declared on was purchased and assigned to the Bank of Washtenaw, in or out of the State of Illinois.

No evidence whatever exists in the case to show where the transaction took place ; and it may with propriety be inferred, that the note was negotiated and "transferred at the banking house of the company, out of the State, rather than that the transaction took place within the State.

Upon the first ground assumed, it appears, then, that the question attempted to be raised is not really presented by the record. We should, however, have had no difficulty in deciding on this right attempted to be questioned by the demurrer, upon the principles laid down by the Supreme Court of the United States, in the case of the Bank of Augusta v. Earle,

(1) in which that question has been elaborately considered, and decided in favor of the right; but it is deemed not necessary, because the question is not fairly presented for adjudication by the case.

Upon the second ground there can be no doubt. The numerous adjudged cases in which this right has been recognised and settled, as well on principle as on grounds of public policy and comity between the several States of the Union, ought to be conclusive and satisfactory. It is supposed that nothing is better settled, than that corporations may institute suits in the courts of other States and countries than those under whose laws they may have been established. This rule will be found to be recognised in the authorities.(1)

This principle is fully recognised in the case of the Bank of Augusta v. Earle. The Chief Justice, in delivering his opinion, remarked, " In England, from which we have received our general principles of jurisprudence, no doubt appears to have been entertained of the right of a foreign corporation to sue in its courts, since the case of Henriques v. The Dutch West India Company, decided in 1729 ;(2) and it is matter of history, which this Court is bound to notice, that corporations, created in this country, have been in the open practice, for many years past, of making contracts in England of various kinds, and to large amounts, and we have never seen a doubt suggested there, of the validity of those contracts, by any court or jurist.”

In the case of the Silver Lake Bank,(3) the Chancellor of New York held, that a corporation created by the legislature of Pennsylvania, had a right to enforce a mortgage on real property in New York, by a proceeding in the court of chancery of New York.

It cannot well be imagined that the courts of any State would refuse to execute a contract by which a corporation had borrowed money in another State than that by which it was created.

In a case decided in Alabama,(4) it has been held that a corporation of another State may sue in its courts.

The decision is put on the ground of comity between the States.

Unless, then, there should be a prohibition by statute, we can see no possible ground on which to rest the objection to the right of a foreign corporation to maintain an action in our courts.

The judgment of the Circuit Court is reversed, and the cause remanded for further proceedings.

Judgment reversed.

13 Peters 519.

Roll. Abr. 531 ; 2 Bulstrode 32 ; Hobart 113 ; 9 Vesey 347 ; 1 Vesey Jr. 371 ; 2 Ld. Raym. 152 ; 1 Strange 612 ; 10 Mass. 91 ; 5 Cowen 550 ; King of Spain v. Oliver, Pet. C. C. R. 276 ; Bank of Augusta v. Earle, 13 Peters 519.

2 Ld. Raym. 1532.

4 Johns. Ch. R. 370.

2 Stewart 147.