Waters-Pierce Oil Co. v. Texas
Headline: Texas statutes restricting foreign corporations’ exclusive-buying, resale, and price-setting contracts are upheld, allowing Texas to cancel permits and limit out-of-state companies’ business within the State.
Holding: The Court affirmed that Texas may enforce laws limiting foreign corporations’ local contracts—including exclusive purchase and price-fixing rules—and may forfeit permits for violations, while excluding interstate commerce from the state judgment.
- Lets States cancel permits of foreign companies that violate local-contract rules.
- Allows states to restrict exclusive purchase and price-fixing contracts by out-of-state firms.
- Interstate or federal transactions here are excluded from state enforcement.
Summary
Background
A foreign oil company licensed elsewhere challenged Texas prosecutions after state courts found that certain local contracts violated Texas law. The agreements required local merchants to buy oils only from the company, or to refuse sales to competitors, or to sell at prices the company set. The jury was instructed to exclude interstate transactions, and the statutes provided that a foreign corporation violating them could be denied the right to do business in Texas and face enforcement by the State’s attorney general.
Reasoning
The Supreme Court limited its review to the company’s right to make contracts within Texas and to the State’s power over foreign corporations. It reiterated that a corporation is created by law and has only the powers its charter and the host State allow. The Court accepted the Texas courts’ interpretation that the statutes apply to local business and that the permit the company held was issued subject to statutory conditions, including forfeiture for violations. The Court also excluded business of federal or interstate character from the judgment.
Real world impact
The decision allows States to enforce conditions on out-of-state corporations doing local business, including limiting contract terms and revoking permits when statutes are broken. It also makes clear that transactions of interstate or federal character are not swept into such state enforcement in this case. The Court noted the company had accepted a ten-year permit under the 1889 statute, and that the 1895 act’s limited changes did not remove those conditions. The judgment against the company was affirmed.
Dissents or concurrances
Mr. Justice Harlan dissented from the judgment.
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