Full Faith and Credit. A Suggested Approach to the Problem of Recognition of Foreign Corporations

Abstract

A corporation formed under a general statute of state X seeks to conduct in state Y an intrastate business 1 of a kind which Y permits corporations to carry on if created under its own general corporation statute. By this statute requiring corporations wishing to carry on intrastate business of that kind to be associations of its own creation, Y has excluded foreign corporations.2 Our inquiry is: Can Y so secure a monopoly of local business 3 to its own corporations? Even when no claim to immunity from unlimited personal liability is involved, Y might perhaps reserve the use or exploitation of certain of its natural resources to its own citizens,-e. g., the privilege of planting oysters in its tidal waters.4 Perhaps it could reserve to its own citizens even the privilege of disposing in trade of the oysters there raised. However, apart from a few exceptional cases a state may not under the privileges and immunities clause exclude citizens of other states from doing within its borders a local business of a kind which it permits its own citizens to do.5 Nor can it exclude citizens of other states from doing through the agency of other human beings local business of a kind which it permits or would permit its own citizens to do through the same persons as agents.6 When, however, the benefit of limited liability is desired, Y has decreed that it is available only by virtue of the local corporation laws. Although Y holds that the use of the corporate form of organization is dictated by the needs of modern commercial enterprise and permits an indefinite number of domestic corporations to carry on this particu-