Dayton Coal & Iron Co. v. Barton

Background

A foreign corporation challenged a Tennessee law that requires companies and other payers who give store orders or scrip as payment for labor to redeem those orders in cash and gives a legal remedy to bona fide holders. The Court reviewed whether that state law violated the Fourteenth Amendment’s protections against improper state action. The Court referred to a companion case, where the same Tennessee law was upheld against a domestic corporation.

Reasoning

The core question was whether the state may require redemption of store orders issued as wages without violating the Constitution. The Court affirmed the Tennessee Supreme Court’s judgment and upheld the state law. The opinion explained that a State may impose such regulations and that treating foreign corporations differently would not necessarily change the result, because a company’s right to do business in a State can be subject to compliance with state laws. The opinion cited prior decisions about state power over corporations but explicitly declined to base its ruling solely on the corporation’s foreign status or to suggest that clearly unconstitutional laws could be forced on businesses as a condition of doing business.

Real world impact

The practical outcome is that companies issuing store orders as payment must redeem them for cash and that people who genuinely hold those orders have a legal remedy under state law. The decision enforces state regulation of wage practices and protects holders of such paper scrip. This opinion affirms the state-court ruling in this record and does not announce a broad new federal rule beyond that result.

Dissents or concurrances

Two Justices (Brewer and Peckham) dissented from the Court’s judgment; the opinion does not detail their objections in this text.