in the Pacific Railroad Removal cases 42 it was held, on the authority of the case of the United States Bank, that corporations of the United States are entitled to remove suits brought against them in the state courts under the Removal of Causes Act of March 3, 1875,4 on the ground that such suits are "suits arising under the laws of the United States," and this ruling has been followed and applied in a long line of cases, save when the particular suit was withdrawn or excluded from the federal jurisdiction by some specific enactment, as in the case of national banks or railroads." Similar statutes would have the same effect upon suits by or against other corporations incorporated by Congress. Provision might be made that suits should be brought against them in the state courts, or that such suits should not be removed merely because the corporation was created by act of Congress. Corporations created by Congress are not, unless by statute, as in the case of the national banks, citizens for jurisdictional purposes of the state wherein they reside, nor citizens of the United States under the Fourteenth Amendment.45 Within the scope of the powers conferred upon Congress, the powers conferred upon the corporations created by Congress are protected by the laws and constitution of the United States, and these are paramount and must prevail.46 "Within the scope of its powers, as enumerated and defined, it (the government of the United States) is supreme and above the States; but beyond, it has no existence." 47 There is a division of sovereignty within the territory of the several states which is also the territory of the United States. The powers given by Congress to the corporations created by it are the powers which emanate from the sovereignty of the United States and not from that of the states.48 It is not merely a question of filing the certificate of incorporation in Washington or Boston. 42 115 U. S. 1 (1885). 43 18 STAT. AT L. 470 (1875). 44 Bankers' Trust Co. v. Texas & Pacific Ry. Co., 241 U. S. 295 (1916). 22 STAT. AT L. 162 (1882), chap. 290, § 4; 38 STAT. AT L. 804 (1915), chap. 22, § 5. 45 Bankers' Trust Co. v. Texas & Pacific Ry. Co., 241 U. S. 295 (1916). 46 M'Culloch v. Maryland, 4 Wheat. (U. S.) 316 (1819); Cohens v. Virginia, 6 Wheat. (U. S.) 264, 414 (1821); Osborn v. Bank of the United States, 9 Wheat. (U. S.) 738. In re, Quarles and Butler, 158 U. S. 532, 536 (1895). 47 United States v. Cruikshank, 92 U. S. 542, 550 (1875). See also Brennan v. Titusville, 153 U. S. 289 (1894). The charter or certificate of the corporation does not merely create the corporation but also endows it with all the powers and faculties which it possesses. 49 The right to tax the franchises of a corporation created by Congress belongs to Congress alone. As Justice Bradley said in a case on a state tax upon the Pacific Railroad Company,50 "No persons can make themselves a body corporate and politic without legislative authority. Corporate capacity is a franchise;" and it was held in this case and a long line of cases that no franchise granted by Congress can be subject to taxation without the consent of Congress. It was the question of the right to tax the Bank of the United States that was the subject of the controversy over the right of Congress to incorporate the bank and the extent of its incidental powers, and controversies with regard to federal and state taxation will arise when corporations created by Congress exercise powers that may not constitutionally be conferred upon them by Congress. Aside from the national banks acts and acts relating to the District of Columbia, there are, I believe, no general acts of Congress providing for the organization of corporations. Bills for that purpose were introduced on November 9, 1903, and February 7, 1910. The objects for which such corporations might be formed would have to be distinctly limited to those that are appropriate and relevant to carrying out the powers conferred upon Congress, and such as in the judgment of Congress are incidental to assuring the efficiency of the corporations for those purposes. General railroad laws for interstate lines might easily be drafted, and if Congress should determine that the proper regulation of interstate or foreign commerce required it, provision might be made by general law for incorporation of companies for that purpose; but it must be remembered that such companies so formed would not be merely so many companies additional to those now existing. They would be companies created by a different sovereignty, and so far as they acted within their powers they would not be subject to the control of the sovereignty of the state. In view of the decision of the United States Supreme Court that the business of insurance companies is not interstate commerce, such companies could not be 49 Osborn v. Bank of the United States, 9 Wheat. (U. S.) 738 (1824). incorporated under acts of Congress.51 Congress could by general laws provide for the incorporation of companies as means for carrying into execution the powers conferred upon Congress, but it could not permit them to include among the objects the transaction of all lawful business. The question what business is lawful business for companies created by Congress must be determined in each class of cases by reference to the powers conferred upon Congress. The question is a question of the power of the corporation, and it would seem that it would constitute a question involving the application of the doctrine of ultra vires. That doctrine depends upon the extent of the power given to a corporation by the legislature, and in the case of federal corporations this depends upon the power possessed by Congress with regard to the objects for which the corporation is formed and the incidental powers which exist by implication. This doctrine, however, is usually invoked in cases involving the private rights of persons dealing with the corporations. There would seem to be no doubt but that the question of the power of the corporation might be challenged by the AttorneyGeneral of the United States. In the recent case in the Supreme Court relating to the powers conferred upon national banks the court declared that the action was properly brought by the state Attorney-General, but only on the ground that the statute made it a condition that the particular functions in question were given "only when not in contravention of state or local laws." Mr. Justice Vandeventer dissented on the ground that this was not sufficient reason for permitting the state court to take jurisdiction of a suit relating to a power or franchise conferred by act of Congress. It is undoubtedly true that in the absence of such a limitation in the act creating the corporation, any suit to determine the question what powers the corporation may exercise would be a suit arising under the Constitution and laws of the United States.52 In such a case the question would not be whether Congress has or has not the right to create a corporation. Of this there is no question. The right to create a corporation is not one of the sub 51 Paul v. Virginia, 8 Wall. (U. S.) 168 (1868); Hooper v. California, 155 U. S. 648 (1895); New York Life Ins. Co. v. Cravens, 178 U. S. 389 (1900). 52 Osborn v. Bank of the United States, 9 Wheat. (U. S.) 738, 823–25 (1824). stantive powers conferred upon Congress, but it is one of the ordinary incidents of sovereignty and it is one of the means which Congress may employ for the purpose of carrying into effect any of the powers vested in the government of the United States. A corporation so created is, in a broader or a narrower sense, an instrument of the government. Chief Justice Marshall, in speaking of the United States Bank, said "it was not considered as a private corporation whose principal object is individual trade and individual profit, but as a public corporation created for public and national purposes." And again, "It was not created for its own sake or for private purposes. It has never been supposed that Congress could create such a corporation. 1953 The idea of a public corporation attaches also to the interstate railroad company and telegraph company which are themselves instruments of interstate commerce; but it is more difficult to connect it very closely with corporations that are created to carry on business in interstate commerce the regulation of which is quite independent of the fact of incorporation; but in all cases in which the United States creates a corporation for executing any of its powers, the primary purpose is the execution of the powers of Congress, and whatever incidental powers the corporations may have are powers which are applied because they are relevant and appropriate to making it efficient as an instrument for carrying those powers into effect. The decision in the recent case of the First National Bank v. Union Trust Co. 54 has not modified the principles laid down by Chief Justice Marshall in the cases of the United States Bank. The court laid stress upon the fact that Congress must have wide discretion and that this discretion must be exercised by Congress rather than by the court, and that in judging the powers you must take the corporation as an entity and consider the particular functions as connected with the operation of the corporation as a whole for the purposes for which it was created; but it did not intimate that once the corporation was created for a federal purpose it was capable of doing anything that might be done by a corpora 53 Osborn 7. Bank (U. S.), 9 Wheat. (U. S.) 738, 860 (1824). |