Railway Express Agency, Inc. v. Virginia
Headline: Court upholds Virginia’s refusal to let a Delaware-based express company do intrastate deliveries without a Virginia charter, blocking local express operations unless the company incorporates or complies with state law.
Holding: The Court affirmed Virginia’s denial of authority, holding the state constitutional restriction does not unduly burden interstate commerce or violate the Fourteenth Amendment.
- Requires out-of-state express companies to form a Virginia corporation before doing local deliveries.
- Allows states to refuse a foreign business permit without showing a burden on interstate commerce.
- Leaves the company free to incorporate in Virginia to regain state-based business rights.
Summary
Background
A Delaware corporation formed in December 1928 held a charter to run international, interstate, and intrastate express business. Its stock was owned by railroad companies, and it took over the business of the American Railway Express Company, acting as an agent for railroads. Virginia’s Corporation Commission denied the company a certificate to do intrastate express business in Virginia, and the State’s highest court affirmed, relying on a provision in the Virginia Constitution adopted in 1902 that bars certain foreign corporations from transacting local business without a state charter.
Reasoning
The Court considered whether Virginia’s rule unlawfully burdened interstate commerce or violated the Fourteenth Amendment. It found no evidence that the refusal was an attempt to tax or reach property outside the State and treated Virginia’s denial as a straightforward choice to require local incorporation for local business. The Court held the denial did not substantially burden interstate commerce and is presumed constitutional. The company’s Fourteenth Amendment objection — that it loses the ability to sue in federal courts or remove cases on diversity grounds — was rejected because the company retains its original rights and can choose to form a Virginia corporation if it wants the different legal status.
Real world impact
The decision means an out-of-state express carrier cannot operate local, intrastate express services in Virginia without meeting the State’s requirement to take on a Virginia corporate form or other state authorization. The ruling affirms state power to require local charters for local business and leaves federal constitutional challenges unlikely to succeed without clear evidence of an interstate commerce burden.
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