Furst & Thomas v. Brewster

Background

A pair of partners who sold goods from Freeport, Illinois, entered into a continuing contract with a buyer in Warren, Arkansas. The sellers took orders in Illinois and shipped goods from their Memphis branch warehouse to the buyer in Arkansas. The goods came from an Illinois manufacturing company that had not filed the paperwork Arkansas law required of foreign corporations. Arkansas law said foreign corporations that failed to file could not enforce contracts in the State, and plaintiffs sued in Arkansas state court to collect money owed under the contract.

Reasoning

The Court asked whether the ordering from Illinois and the shipping into Arkansas were part of interstate commerce and whether Arkansas could block a suit to enforce those interstate contracts by imposing local filing requirements. The Court said the ordering and shipment were interstate commerce and that state rules that directly burden the privilege of engaging in that commerce cannot stand. Although a state may require a foreign party to follow ordinary local court procedures (like paying costs or giving security), the Court found Arkansas’s filing and registration penalties had no reasonable relation to the right to sue and were unduly burdensome. For those reasons the Court held the statute, as applied here, conflicted with the Constitution’s commerce power and reversed the state-court judgment.

Real world impact

The ruling means sellers who send goods across state lines cannot be prevented from suing in Arkansas merely because the out‑of‑state corporation did not file the challenged registration papers; ordinary local procedural rules may still apply.