75 U.S. 168, 19 L. Ed. 357 (1868)
The case involved a challenge to a Virginia statute that included provisions discriminating between the state's own corporations and corporations chartered in other states.1 On the trial in the court below, the validity of these discriminating provisions was assailed.2
It was contended that the statute conflicted with the Privileges and Immunities Clause, which provides that the citizens of each State shall be entitled to all the privileges and immunities of citizens in the several States, and with the Commerce Clause, granting Congress power to regulate commerce among the several States.3 The same grounds were urged in the Supreme Court for reversal of the judgment.4
The dispute centered on insurance companies of New York, whose policies were issued through agents in Virginia.5 These policies did not take effect until delivered by the agent in Virginia, making them local transactions governed by local law.6 The judgment of the Supreme Court of Appeals of Virginia was brought before the United States Supreme Court for review.7
Whether corporations are citizens within the meaning of the Privileges and Immunities Clause?8
The Privileges and Immunities Clause applies only to natural persons and does not extend to corporations, which are artificial entities created by state law and possessing only the attributes the legislature has prescribed.9
No. The term citizens as there used applies only to natural persons, members of the body politic, owing allegiance to the State, not to artificial persons created by the legislature, and possessing only the attributes which the legislature has prescribed.10
In this case the Virginia statute contained discriminating provisions between the state's own corporations and corporations chartered in other states.11 The validity of those provisions was assailed on the ground that they conflicted with the Privileges and Immunities Clause.12 The court has never held a corporation to be a citizen within the meaning of that clause.13
Corporations are not citizens within the meaning of the Privileges and Immunities Clause.14
Whether the Privileges and Immunities Clause prevents states from imposing discriminatory requirements on out-of-state corporations?15
The Privileges and Immunities Clause does not prevent states from imposing discriminatory requirements on out-of-state corporations.16 A corporate charter is a grant of special privileges that has no extraterritorial operation. Other states may recognize such charters only on such terms as those states choose to impose.17
No. A grant of corporate existence is a grant of special privileges to the corporators, enabling them to act for certain designated purposes as a single individual, and exempting them from individual liability.18 The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created.19
The recognition of its existence even by other states depends purely upon the comity of those states.20 Having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows that such assent may be granted upon such terms and conditions as those States may think proper to impose.21 In this case the validity of the discriminating provisions of the statute of Virginia between her own corporations and corporations of other States was assailed, yet because the clause secures only privileges common to citizens by virtue of their citizenship and does not give extraterritorial effect to local corporate charters, the statute does not violate the clause.22
The Privileges and Immunities Clause does not prevent states from imposing discriminatory requirements on out-of-state corporations.
Whether the issuance of insurance policies constitutes a transaction of commerce under the Commerce Clause?23
Issuing a policy of insurance is not a transaction of commerce because the policies are simple contracts of indemnity against loss by fire that are not articles of commerce, not subjects of trade and barter, and not commodities shipped from one state to another.24
No. The policies are simple contracts of indemnity against loss by fire, entered into between the corporations and the assured, for a consideration paid by the latter.25 These contracts are not articles of commerce in any proper meaning of the word.26 They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them.27
They are not commodities to be shipped or forwarded from one state to another, and then put up for sale.28 In this case the insurance companies of New York issued policies that did not take effect until delivered by the agent in Virginia.29 They are, then, local transactions, and are governed by the local law.30 They do not constitute a part of the commerce between the States any more than a contract for the purchase and sale of goods in Virginia by a citizen of New York whilst in Virginia would constitute a portion of such commerce.
The issuance of insurance policies does not constitute a transaction of commerce under the Commerce Clause.31