That this is so with respect to the State government is shown by a number of cases in which it has been held that the several States, in imposing conditions upon the admission of foreign corporations to do local business within their respective borders, can not burden or regulate the interstate commerce of such corporations or otherwise invalidate rights guaranteed by the Federal Constitution.

A familiar line of cases deals.with franchise or license taxes imposed by the State upon foreign corporations, the State claiming the power to impose the tax as a condition to permitting the foreign corporation to do local business within the taxing State. Such a tax assessed by the State of Texas on the entire capital stock of an Illinois corporation doing an interstate business in many parts of the United States and also owning and operating warehouses in Texas and conducting a local business there, was attacked in the case of Looney v. Crane (245 U. S. 178) (decided December 10, 1917). In holding that the tax in question imposed a burden on interstate commerce and was therefore unconstitutional, the Supreme Court said:

In

The sole contention, then, upon which the acts can be sustained is that although they exerted a power which could not be called into play consistently with the Constitution of the United States, they were yet valid because they also exercised an intrinsically local power. But this view can only be sustained upon the assumption that the limitations of the Constitution of the United States are not paramount but are subordinate to and may be set aside by State authority as the result of the exertion of a local power. substance, therefore, the proposition must rest upon the theory that our dual system of government has no existence because the exertion of the lawful powers of the one involves the negation or destruction of the rightful authority of the other. But original discussion is unnecessary since to state the proposition is to demonstrate its want of foundation and because the fundamental error upon which it rests has been conclusively established. Indeed the cases referred to were concerned in various forms with the identical questions here involved and authoritatively settled that the States are without power to use their lawful authority to exclude foreign corporations by directly burdening interstate commerce as a condition of permitting them to do business in the State in violation of the Constitution, or because of the right to exclude, to exert the power to tax the property of the corporaion and its activities outside of and beyond the jurisdiction of the State in disregard, not only of the commerce clause, but of the due-process clause of the fourteenth amendment (pp. 187-188).

In International Paper Co. v. Massachusetts (246 U. S. 135), the following proposition, among others, was laid down as established by previous decisions of the court:

* the State can not require the corporation as a condition of the right to do a local business therein to submit to a tax on its interstate business or on its property outside the State.

Again, in Alpha Cement Co. v. Massachusetts (268 U. S. 203, 218), the court said:

It must now be regarded as settled that a State may not burden interstate commerce or tax property beyond her borders under the guise of regulating or taxing intrastate business. So to burden interstate commerce is prohibited by the commerce clause; and the fourteenth amendment does not permit taxation of property beyond the State's jurisdiction.

An exhaustive review of this line of cases is contained in the comparatively recent decision of Frost Trucking Co. v. R. R. Commission (271 U. S. 583), decided June 7, 1926.

States may not require surrender of constitutional rights as condition to foreign corporation engaging in intrastate business.

Not only are States prohibited from imposing upon foreign corporations, as a condition to doing intrastate business, a burden upon their interstate commerce; they are also prohibited from imposing as such a condition, the requirement that any other right under the Federal Constitution shall be surrendered. For example, a foreign corporation can not be required to surrender its rights of removing suits to the Federal court, Barrow Steamship Co. v. Kane (170 U. S. 100, 111). The limitations on the powers of the State to impose conditions upon foreign corporations are well stated by Mr. Justice Bradley in the following language quoted with approval by the Supreme Court in the opinion in Frost Trucking Co. v. Railroad Commission (271 U. S. 583, 595), where this whole subject was fully reviewed:

Though a State may have the power, if it sees fit to subject its citizens to the inconvenience, of prohibiting all foreign corporations from transacting business within its jurisdiction, it has no power to impose unconstitutional conditions upon their doing so. Total prohibition may produce suffering, and may manifest a spirit of unfriendliness toward sister States; but prohibition, except upon conditions derogatory to the jurisdiction and sovereignty of the United States, is mischievous, and productive of hostility and disloyalty to the general government. If a State is unwise enough to legislate the one, it has no constitutional power to legislate the other.

Thus, the State power with respect to foreign corporations, although embracing the power of absolute exclusion from intrastate business, is decidedly limited by the Federal Constitution. Two of the principal cases cited by Mr. Warrum do not support the principles for which he cites them, as is shown by the Supreme Court's references to them in subsequent opinions. The case of Paul v. Virginia (8 Wall. (U. S.) 168) (cited at p. 3 of Mr. Warrum's brief) was referred to by the Supreme Court with the following comment in the case of Pensacola Telegraph Co. v. Western Union Telegraph Co. (96 U. S. 1, 12-13) some years later:

That (Paul v. Virginia) was not, however, the case of a corporation engaged in interstate commerce; and enough was said by the court to show that, if it had been, very different questions would have been presented.

The case of Security Mutual Insurance Co. v. Prewitt (202 U. S. 246) (cited at p. 9 of Mr. Warrum's brief) was expressly overruled by the Supreme Court in Terral v. Burke Construction Co. (257 U. S. 529, 533), where Chief Justice Taft said:

* * * the views of the minority judges in those cases (the Prewitt case and Doyle v. Continental Insurance Co.) (94 U. S. 535) have become the law of this court.

Thus we submit there are limitations upon the powers of both the State and the Federal Governments. Such limitations are essential to the very nature of our dual system of Government. Neither branch can have the broad and unlimited power which was claimed by Mr. Warrum for each. Each branch must so exercise its functions as not to transgress upon matters confided to the other. Neither branch can so exercise its own power as to nullify the power. of the other.

Perhaps Mr. Warrum will reply that he did not intend to assert such broad powers in the States. We are aware that he did recognize certain limitations upon the powers of both the Federal and State Governments; but apparently the only limitations he was

willing to recognize were those arising out of the fifth and fourteenth amendments, respectively. The fourteenth amendment limits the powers of the State în certain specified particulars; additional limitations upon the powers of the State are contained in other provisions of the Constitution, among them the commerce clause. The fifth amendment limits the powers of the Federal Government in certain specified particulars; additional limitations on the powers of the Federal Government are contained in other provisions of the Constitution, among them the tenth amendment. The fourteenth amendment does not contain all the limitations on the powers of the State. The fifth amendment does not contain all the limitations on the powers of the Federal Government.

If it be recognized that the power asserted by Mr. Warrum on hehalf of the State government is subject to limitations arising out of the fourteenth amendment it must likewise be recognized that the State power is also subject to limitations arising out of the commerce clause contained within the articles of the Constitution. Those limitations include, as we have shown, the rule that in admitting foreign corporations to local business within its borders, a State can not impose conditions which result in burdening or regulating the interstate commerce of such a foreign corporation.

If it be recognized that the power asserted by Mr. Warrum on behalf of the Federal Government is subject to the limitations of the fifth amendment, it must likewise be recognized that such power is also subject to the limitations arising out of the tenth amendment, which reserves to the States all powers not delegated to the Federal Government. The limitations imposed by the tenth amendment are, as we have already pointed out, that the Federal Government can not extend its functions into the field of local business.

Therefore, if it be admitted that the powers of the Federal Government are subject to limitations arising out of the fifth amendment, it must likewise be admitted that the exercise of Federal Power in the field of interstate commerce is subject to all the limitations imposed by the Constitution. The tenth amendment has equal standing in the Constitution with the fifth amendment and like the fifth amendment is a limitation upon the powers of the Federal Government. Even if the Federal Government had the power to require corporations engaged in interstate commerce to take out licenses, which we deny, the power to impose conditions upon the licensee corporation is subject not only to the limitations of the fifth amendment but also to the limitations of the tenth amendment and to any other limitations contained in the Constitution. Applying the limitations of the tenth amendment, the conclusion is inescapable that the Federal Government can not, as a condition to admission to interstate commerce, regulate or supervise local business such as the mining of coal.

I understand that on Saturday Mr. Livezey, representing the State of West Virginia, appeared before the committee and made the point that even if the operators and the Federal Government agreed among themselves that the Federal Government might regulate the mining of coal, that that would not be sufficient to confer power on the Federal Government, because that is a power that is given to the States, and reserved to the States, and, as I understand it, he stated

on behalf of the State of West Virginia, that that State would seriously object to thus being ousted of its jurisdiction over the mining of coal by an agreement between operators and the Federal Government, even if the Federal Government should undertake the regulation solely on a voluntary basis.

We also take issue with Mr. Warrum on the proposition that Congress has an absolute power to exclude coal or the corporate shipper thereof from interstate commerce. Even were there absolute power in a State to exclude any foreign corporation from intrastate business, it would not follow that the Federal Government has a like power with respect to State corporations which may desire to engage in interstate commerce.

Any claim of Federal power by analogy to State power leads to false conclusions. The two governments are entirely different in nature and origin. The Federal Government never was an independent complete sovereignty; the State governments originally were complete and independent sovereignties and all powers appropriate to the abstract conception of sovereignty were lodged in each State, and continue so to be except in so far as affirmately delegated to the Federal Government. The Federal Government in its origin was a union of sovereign States, created as an agency for united action on certain specified and limited subjects. It was never created as an independent supreme sovereignty to which the States became subject but as a limited agency of enumerated powers.

The Federal Government never did have and does not now have the absolute power to exclude from its field of action corporations created by the several States similar to the asserted power of one State to exclude the corporations created by another State. Such power of exclusion is the attribute of a supreme and complete sovereignty which the Federal Government never had. The only power of the Federal Government with respect to interstate commerce, is the power to regulate; that is what the Constitution says, to regulate interstate commerce. That does not comprise the power to exclude. Exclusion may be at times an appropriate and necessary method of regulation. But unless so regulated, the power of exclusion does not independently exist in the Federal Government as an absolute separate and independent power.

All the cases upholding the Federal power to exclude commodities from interstate commerce have dealt with commodities which were objectionable in and of themselves because deleterious to health or good morals or as likely to result in deception or to assist in the commission or concealment of crime. In such cases exclusion is an appropriate means of regulations necessary to accomplish an end legitimately within the field of congressional power. None of those cases supports any power on the part of Congress to exclude from interstate commerce an article like coal which is not objectionable in and of itself and which is not likely to cause harm to health or morals. The case of Hammer v. Dagenhart (247 U. S. 251), previously cited, expressly held that Congress did not have power to exclude from interstate commerce articles merely because they were made by child labor, they being ordinary articles of commerce.

The distinction between the class of cases in which exclusion is recognized as an appropriate regulation of interstate commerce and

those in which Congress has no power to exclude is pointed out in Brooks v. United States (267 U. S. 432). Chief Justice Taft, in delivering the opinion in that case, first cited and briefly described a number of cases in which the power of exclusion had been upheld such as in the case of diseased stock (Reid v. Colorado, 187 U. S. 137), lottery tickets (The Lottery Case, 188 U. S. 321), adulterated food products (Hipolite Egg Company v. United States, 220 U. S. 45), transportation of women for immoral purposes (Hoke v. United States, 227 U. S. 308, and Caminetti v. United States, 242 U. S. 470), intoxicating liquors (Clark Distilling Co. v. Western Maryland Railway Co., 242 U. S. 311), and motion pictures of prize fights designed for public exhibition (Weber v. Freed, 239 U. S. 325). He then said:

In Hammer v. Dagenhart (247 U. S. 251) it was held that a Federal law forbidding the transportation of articles manufactured by child labor in one State to another was invalid, because it was really not a regulation of interstate commerce but a congressional attempt to regulate labor in the State of origin, by an embargo on its external trade. Articles made by child labor and transported into other States were harmless, and could be properly transported without injuring any person who either bought or used them. In referring to the cases already cited, upon which the argument for the validity of the child labor act was based, this Court pointed out that, in each of them, the use of interstate commerce had contributed to the accomplishment of harmful results to people of other States, and that the congressional power over interstate transportation in such cases could only be effectively exercised by prohibiting it (p. 438).

That it must be beyond the power of Congress to exclude ordinary articles, or admit them upon arbitrary conditions, is shown by the history of the Constitution and the evils which the delegation of the power to regulate commerce were designed to eliminate. Before the adoption of the Constitution, each of the independent States had numerous regulations relating to commerce passing over State lines. These numerous diverse and oftentimes burdensome regulations and imposts rendered intercourse among the several States difficult and uncertain. It was for the purpose of eliminating all such burdensome regulations and for promoting and insuring a free and unrestricted interstate commerce that the power to regulate such commerce was delegated to the Federal Government. Were the courts to recognize the power in Congress of absolute exclusion from interstate commerce or a power to admit to interstate commerce only on such terms as Congress sees fit to prescribe, the result would be to destroy the very freedom of commerce which it was the purpose of the Constitution to preserve and foster.

On the above principles and on the authority of the cases heretofore cited, we submit that the Federal Government does not have the right to exclude corporations created by the State and that the Federal Government does not have the right to exclude from interstate commerce an article such as coal, or to forbid corporations created by the several States from shipping in interstate commerce, coal or other ordinary articles of commerce, and, further, even if the power of exclusion did exist, Congress could not exercise it by imposing as conditions upon engaging in interstate commerce, regulation of intrastate business, a matter exclusively within the jurisdiction of the States and reserved to them by the tenth amendment.

28181-29-PT 2--11