172 U.S. 239 (1898)
In 1877, the Tennessee legislature enacted a statute whose chief object was to secure the development of the mineral resources of the State and to facilitate the introduction of foreign capital.1
The statute permitted corporations chartered under the laws of other states or countries for mining and manufacturing purposes to become incorporated in Tennessee and carry on business there upon specified terms.2 Section 5 of the statute provided that creditors who were residents of Tennessee would have priority in the distribution of assets of such corporations over simple contract creditors residing in other countries.3
The Embreeville Freehold Land, Iron and Railway Company, Limited, a corporation organized under the laws of Great Britain and Ireland for mining and manufacturing purposes, registered its charter under the Tennessee statute in 1890.4 It established a manager’s office in Tennessee, purchased property, and conducted mining and manufacturing business from that office.5 The company maintained its home office in London, where its managing director resided.6
On June 20, 1893, C. M. McClung & Company and other Tennessee residents filed an original general creditors’ bill in the Chancery Court of Washington County, Tennessee, against the Embreeville Company and others.7 The bill alleged the company’s insolvency and default on obligations, charged a fraudulent conveyance, and sought appointment of a receiver and administration of affairs as an insolvent corporation.8 The court took jurisdiction, appointed a receiver for the company’s Tennessee property, and administered its affairs in the state.9
Creditors included C. G. Blake and Rogers, Brown & Company, both residents and citizens of Ohio with places of business in Cincinnati, and the Hull Coal & Coke Company, a Virginia corporation.10 These out-of-state creditors filed intervening petitions asserting claims and challenging the constitutionality of the statute’s priority provisions.11 There were also holders of debenture bonds totaling $625,000 and trade creditors in Great Britain, all non-residents of Tennessee or the United States.12
The Chancery Court upheld the statute’s constitutionality and granted Tennessee resident creditors priority over creditors from other states or countries.13 On appeal, the Chancery Court of Appeals modified parts of the decree.14
The Supreme Court of Tennessee affirmed the validity of the statute.15
It ruled that Tennessee resident creditors were entitled to priority of payment out of the company’s assets over all other creditors residing outside the state, whether from other states or Great Britain.16
Whether the Tennessee statute granting resident creditors priority over non-resident creditors in the distribution of assets of an insolvent foreign corporation violates the Privileges and Immunities Clause of Article IV of the Constitution with respect to citizens of other states?17
The Privileges and Immunities Clause of Article IV provides that the citizens of each State shall be entitled to all privileges and immunities of citizens in the several States.18
Yes. The Ohio citizens C. G. Blake and Rogers, Brown & Company contracted with the Embreeville Company, which the statute deemed a Tennessee corporation.19 The statute gave Tennessee residents priority over these Ohio citizens in asset distribution.20 This discrimination denies the Ohio citizens the privileges and immunities enjoyed by Tennessee citizens in matters of business and creditor rights.21
The Tennessee statute violates the Privileges and Immunities Clause with respect to citizens of other states.22
Related opinions on this issue
Joined by Mr. Chief Justice Fuller
Justice Brewer dissented on the ground that the statute discriminates on the basis of residence rather than citizenship.23 He noted that the statute, pleadings, and decrees refer only to residents of Tennessee receiving priority over creditors who do not reside in the state.24 Justice Brewer argued that the record does not establish the plaintiffs in error were citizens of other states rather than Tennessee citizens temporarily residing in Ohio.25
He maintained that a state has power to protect all persons within its limits by conditioning a foreign corporation's entry on giving priority to local creditors regarding assets within the state.26
Whether the Tennessee statute denies a Virginia corporation equal protection of the laws or due process under the Fourteenth Amendment by subordinating its claims to those of Tennessee resident creditors?27
The Fourteenth Amendment protects persons, including corporations, from deprivation of property without due process and denial of equal protection of the laws to persons within the jurisdiction of the state.28 A corporation not created by the state and not doing business there under conditions subjecting it to process is not within the jurisdiction for equal protection purposes, and adjudication after notice satisfies due process.29
No. The Hull Coal & Coke Company was a Virginia corporation whose claim arose from coke sold and shipped from Virginia.3031 It was not doing business in Tennessee under the statute or any statute subjecting it to Tennessee process.32 The company received notice, became a party, and had its rights adjudicated in the state court proceedings.33 The statute's subordination of its claim therefore did not deprive it of property without due process or deny it equal protection within the meaning of the Fourteenth Amendment.34
The Tennessee statute does not deny the Virginia corporation due process or equal protection under the Fourteenth Amendment.35