Buck Stove & Range Co. v. Vickers

Background

Seven creditors sued to set aside a land transfer and to reach the property to satisfy their judgments. Four of the plaintiffs were corporations organized under other States’ laws and were doing a purely interstate business in Kansas but had not complied with Kansas registration and reporting laws. The defendants raised a plea in abatement relying on Kansas statutes that required out-of-state corporations to obtain permission, pay fees, file consent to service, provide charter copies, contribute to a school fund, and annually file detailed statements including lists of stockholders and financial data. A Kansas court sustained the plea and dismissed the suits against the four corporations, and the case reached this Court.

Reasoning

The central question was whether Kansas may condition an out-of-state corporation’s right to do interstate business and to sue in its courts on filing an extensive annual statement. The Court relied on prior decisions holding that carrying on interstate commerce is a national right, not a state franchise, and concluded the filing requirement imposed a direct burden on interstate business. Because the statute forced foreign corporations to submit information and obtain a certificate before they could maintain actions in Kansas courts, the Court held the provision unconstitutional under the Commerce Clause and reversed the dismissal as to the remaining plaintiffs.

Real world impact

The decision prevents States from using the kind of paperwork and filing requirements at issue to block or condition an out-of-state corporation’s ability to do interstate business or to access state courts. The case was reversed and remanded for further proceedings consistent with this ruling, so the affected suits may continue in the Kansas courts under the federal constitutional rule announced.