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of Alabama, in Smith v. Railroad Company, 75 Ala. 451, which followed and reaffirmed the doctrine declared in Railroad Company v. Morris, supra. In the Smith Case, Chief Justice Stone, delivering the opinion of the court, said:
"This question, however, would seem to be settled by our own state Constitution (article 14, § 12), carried forward in identical words in section 240 of the present Constitution, which ordains that “all corporations shall have the right to sue, and shall be subject to be sued, in all courts, in like cases, as natural persons.' 'In like cases, as natural persons,' must mean where the cases are alike, the same description of contract or tort; there must be no discrimination between corporations and natural persons in the matter of prosecuting or defending suits. * The sum of these provisions is that no burden can be imposed upon one class, natural or artificial, which is not, in like conditions, imposed on all other classes.”
The same rule was enforced by the Supreme Court of the state in the subsequent cases of L. & N. R. R. Co. v. Baldwin, 85 Ala. 627, 5 South. 311, L. R. A. 266, Brown y. A. G. S. R. R. Co., 87 Ala. 370, 6 South. 295, Randolph v. Builders' & Painters' Supply Company, 106 Ala. 511, 17 South. 721, in each of which statutes making the forbidden discrimination between corporations and other suitors were adjudged unconstitutional. See, also, Durkee v. Janesville, 28 Wis. 464, 9 Am. Rep. 500; Wally's Heirs v. Kennedy, 2 Yerger (Tenn.) 554, 24 Am. Dec. 511; Holden v. James, 11 Mass. 396, 6 Am. Dec. 174; Missouri v. Lewis, 101 U. S. 22, 25 L. Ed. 989; Railroad Company v. Ellis, 165 U. S. 150, 17 Sup. Ct. 255, 41 L. Ed. 666.
The provision now embodied in section 240 of the Constitution appeared for the first time in Alabama in the Constitution of 1875, and is incorporated in identical words in the present Constitution. In Ex parte Roundtree, 51 Ala. 42, the Supreme Court of this state held:
"When a constitutional provision has received a settled construction, and is afterwards incorporated into a new or revised Constitution, it must be presumed to have been retained with a knowledge of that construction, and courts will therefore feel bound to adhere to that construction.”
We have here, not only the settled construction by the highest court of the state of the meaning of a constitutional provision, but the adoption of that construction by the framers of the Constitution themselves. This settled construction of the scope and effect of a constitutional provision, by the highest court of the state, is binding upon every federal court. As said in Gatewood v. North Carolina, 203 U. S. 541, 27. Sup. Ct. 170, 51 L. Ed. 305:
“It is elementary that, under such circumstances, we must follow the construction given by the state court, and test the constitutionality of the statute under that view."
If, therefore, there be any conflict between the courts' holding on this point and the general doctrine declared in Life Ins. Co. v. Prewitt, hereafter cited, the Supreme Court of the United States and all other courts, as to all cases of the kind, arising in Alabama, must follow and apply the views of the highest court of the state, regardless of what might be their own view in the exercise of an independent judgment. Smiley v. Kansas, 196 U. S. 445, 25 Sup. Ct. 289, 49 L. Ed. 546; Armour Packing Co. v. Lacy, 200 U. S. 226, 26 Sup. Ct. 232, 50 L. Ed. 451.
When State May Exercise Sovereign, Political, Prerogative of Ex
pelling Foreign Corporation at Will. The validity of this statute, as applied to complainants, is challenged under several provisions of the Constitution of the United States. Unless the Constitution of the state forbids, or the state, by its laws or dealings with a foreign corporation, has disabled itself from exercising the right, there is no hindrance, arising under the Constitution of the United States, to a state's forbidding any foreign corporation, not engaged in interstate commerce, from coming into the state in the first instance, or from afterwards preventing such corporation from doing a domestic business, though at the time of its entry the state's laws did not forbid, and the state made no objection otherwise. Such corporations have no right to migrate from the state where they were chartered and enter another state, and do business there without its consent. Ordinarily they come and remain as a matter of grace, and their expulsion violates no right secured to them by the Constitution and laws of the United States. All their contracts, save in the exceptional cases stated, are made subject to the right of the state to expel them at pleasure. As "the laws which exist at the time and place of the making of the contract, and where it is to be performed, enter into and form part of it,” their contracts are made subject to • the exercise of the right, and their expulsion after coming into the state and making contracts does not, therefore, deprive them of property without due process, or deny them the equal protection of the laws, or impair the obligation of their contracts, at least so far as they are concerned. The state, ordinarily, having the right, with or without reason, at its uncontrolled pleasure, to expel the foreign corporation, may do so, after the corporation has entered the state, by a law subsequently enacted which gives the resort to the federal court as the reason for the passage of the statute.
In view of the consideration that no right of a foreign corporation is invaded, save under special circumstances, by the state's refusing to allow it to continue to do business in its borders, the Supreme Court has held in general, in the absence of prohibitions in the Constitution of the state, that the state may compel a foreign corporation “to abstain from the federal court, or cease to do business in the state,” without stating any reasons for its action. “The fact that it may give what some may think a poor reason, or none at all, for a valid act, is immaterial. Life Insurance Company v. Prewitt, 202 U. S. 253, 26 Sup. Ct. 621, 50 L. Ed. 1013. This was held in reference to a statute of Kentucky, which, without requiring any agreement to abstain from the federal court, “merely said to the foreign corporation, if it chose to exercise its rights to resort to the federal court, its right to do further business in the state should cease.” The whole theory and reasoning of that decision is based upon the consideration that the corporation, having acquired no vested right to do business in the state, was subject to the exercise by the state of its arbitrary power of expulsion, whether for a good or bad reason. That case dealt solely with the expulsion of an insurance company, which was doing business in the state simply by the grace of the sovereign, and touched upon no
other phase of the right of the foreign corporation to remain in the state, under other circumstances. It was not treating of any question of the forfeiture of property or vested rights of the foreign corporation, or of the right to use its property in a particular business, when the property was purchased by a corporation under special laws relating to it, whose terms were inconsistent with any reservation of the arbitrary power to expel, and where the carrying on of such business, from the very nature of the property, was the thing which gave it value, and which, when forbidden, impaired the obligation of contracts. State May Abandon or Lose Right to Expel a Foreign Corporation
at Pleasure. Plainly there is nothing in what was actually decided in Insurance Company v. Prewitt, supra, or in its reasoning, which conflicts with the long and unbroken line of decisions, of the Supreme Court, up to its last sitting, that a state may by its course of conduct towards a foreign corporation estop itself from exercising this arbitrary sovereign prerogative, in particular cases, and that by force of contracts and completed transactions, made under the authority of the state's laws, vested rights of property may be created in the foreign corporation, which the Constitution of the United States protects against impairment or defeat, by the arbitrary exercise of the state's sovereign or political right of expulsion, as distinguished from the legal right of expulsion for cause. Do not both conditions concur here? Davis v. Gray, 16 Wall. (U. S.) 232, 21 L. Ed. 447.
To rightly answer these questions, we must recall the circumstances and laws under which the foreign corporations entered the state and acquired the property, the use of which the statute now seeks to prevent. Circumstances and Legislation Under Which Complainants Acquired
Vested Rights to do Local Business in Alabama. Apart from the facts stated in the bills, the court judicially knows that at the close of the war in 1865 our railroad system, then in its infancy, lay in dilapidation and ruin. The building of more railroads was vital to the welfare of the state. Of home capital there was none, and foreign capital would not invest without better security than the new railroads could give. Hence the state lent railroads its credit, and further encouraged their building by allowing counties, cities, and towns to aid them. The disasters and difficulties which this legislation entailed upon the state and people are a part of the history of the times, as well as the conditions existing for many years thereafter, which prostrated all kinds of enterprise.
The operation of these laws left the state and municipalities in debt, with a few important lines of railway built, others partly completed, and all poorly built and equipped. Public opinion discountenanced further state and municipal aid, the laws were repealed, and prohibition put in the Constitution against such aid in the future. As late. as 1894 it appears from Executive Documents, Senate Journal of 1894–95, p. 56, that "many of our railroads are in the hands of receivers, and it has been a struggle on the part of others to pre
vent a like fate.” Three years before the Legislature, in view of the need for more railroads, the completion of the unfinished roads, and the renovation and betterment of existing systems, sought to induce foreign railroad corporations to aid in the development of the state, by holding out to them the promise of the enjoyment of large powers and privileges, if they bought or leased or aided and operated railroads within this state.
In pursuance of this policy, the Legislature enacted, whenever all the capital stock of a domestic railroad corporation is owned by a foreign corporation, the domestic corporation might sell and convey to the foreign corporation "all of its property, roadbed, rights and franchises,” and that the railroads so purchased “shall be subject, in all respects, to the laws of the state, as if owned by domestic corporations." It was also enacted that any foreign corporation might subscribe to the capital stock of any other company, or otherwise aid it in the construction of its road, for the purpose of forming a connection with it, and that a foreign railroad corporation might lease or purchase any part or all of any railroad constructed by any other corporation, if the lines of such roads were contiguous or connected. Foreign corporations were also authorized to aid railroads chartered under the laws of this state "in the construction, renovation or operation of their railroads," by the indorsement of their bonds, or by guaranteeing the rental in the lease of such railroads, on any terms agreed upon by the respective boards of directors. Foreign corporations owning and operating any railroads here were also authorized “to purchase at judicial sale or otherwise, or lease or hold and use, any domestic railroad, or to acquire the whole or use all or any part of the capital stock, or of the property, roadbed, rights and franchises of any railroad corporation in this state whose railroad, the road of the foreign corporation or its predecessor in interest shall be connected, either directly or by means of an intervening line.” Afterwards the Legislature imposed a license tax upon railroads, and enacted, upon the payment of such tax and producing satisfactory evidence to the auditor that such corporation is prepared to transport passengers and freight, he shall issue a license to the corporation to operate its railroad in this state, and complainants have paid such tax, and received such license.
The Proposal Made by the State's Laws. These laws were a standing invitation to a particular class of per sons, foreign corporations, not to the general public, to become pecuniarily interested in domestic railroads, a peculiar species of property, whose value comes from the exercise of the right to use it in transporting persons and things from point to point within the state, as well as in interstate commerce. Such a use of such property effected objects so important to the welfare of the people that the state as an inducement to foreign corporations to come to Alabama and engage in that business here might well bargain if they did so that their property rights would be protected by all the sanctions which the law throws around like property of domestic corporations. A person who is clearly within the class to whom a proposal is made, and who accepts it, and complies with its conditions, acquires contract rights thereby, as much so as when the proposal is addressed to him by name. Piqua Bank v. Knoop, 16 How. (U. S.) 380, 14 L. Ed. 977; American Smelting Co. v. Colorado, 204 U. S. 103, 27 Sup. Ct. 198, 51 L. Ed. 393.
The right of the foreign corporation to use this property, for both domestic and interstate commerce, was the right to which these statutes related. The state acting through the Legislature, which represents
. . the sovereign as to such matters, proclaimed, in effect, to these foreign railroad corporations :
"If you buy a domestic railroad, the property and franchises of such corporations shall remain subject to the laws of Alabama, in the same manner as if owned by a domestic corporation, and you shall hold and enjoy the franchise of your vendor for the length of time, and upon the conditions, the charter or laws of the state prescribe while he holds it. If you lease a domestic railroad, you shall have the right to operate it, and transport over it all kinds of commerce, local as well as interstate, for the term specified in the laws of Alabama for the duration of leases. If you aid a domestic corporation by indorsement of its bonds, or make other business arrangements with it, you shall acquire such contract rights concerning such property as you and it may agree upon. The state, if you invest under these laws, will make them a part of your chartered rights in Alabama.” Bank v. Knoop, 16 How. 380, 14 L. Ed. 977.
The Acceptance of the Proposal and Acts Done Thereunder. On the faith of these proposals, solemnly made by the state in its own statutes, these foreign corporations came to Alabama, and spent many millions of dollars in the purchase and leases of railroads, and arranged their business accordingly, and now operate several thousand miles of railway here. Did they not acquire some rights thereby? Can the state now lawfully say to them: “You cannot now hold and use this property upon the terms and conditions held out by the statutes. You purchased the mere privilege of using what you bought, in domestic commerce, only so long as the state does not object.”
No Right of Arbitrary Expulsion Reserved. There is no hint in these statutes that the rights to be acquired might in any contingency be less in extent or value than those these laws offered, or that, instead of buying the right to use the property in local commerce for the time, and upon the conditions, prescribed by the existing laws, the purchaser took out only a temporary license to do a local business, revocable at the mere will of the state, at any time, or that the state might forfeit the right to do such business for any cause, which would not forfeit the right of any other property holder, similarly situated, to put his property to any lawful use. The reservation of any such right on the part of the state cannot be raised by implication, except by repudiating alike the plain language of the statutes, the declared objects they had in view, and the obligation of contracts entered into in pursuance of them. “It is against the rules, both of law and of reason, to admit by implication in the construction of a contract a principle which goes in destruction of it.” Murray v. Charleston, 96 U. S. 445, 24 L. Ed. 760.
The mere arbitrary right of the state to expel a foreign corporation trot having been reserved, it was abandoned and waived. It was at