"This is an action on account growing out of an alleged breach of contract for the construction of a railway bridge over Green river, in North Carolina, and for relocating the tracks and other work in connection therewith. The trestle is situated on the line of railroad from Spartanburg to Asheville owned by the defendant Southern Railway, Carolina Division, and leased to the defendant Southern Railway Company, under *Page 235 and by virtue of an Act of the Legislature of South Carolina passed in 1902. Volume 23, Statutes, pages 1152 and 1153. The action was begun in the Court of Common Pleas for Spartanburg county by service of summons and complaint. An attempt was made by defendant to move the cause to the District Court of the United States for the Western District of South Carolina, but the case was remanded by his Honor, Judge Watkins, Judge of said District Court, to the Court of Common Pleas for Spartanburg county."
The complaint alleges that certain citizens of Spartanburg, S.C. desiring to establish a plant for the generation and distribution of electric power, secured a charter from the State of North Carolina to dam up and use the waters of Green River in North Carolina; that as they were selling much of their power in Spartanburg they took out a domesticated charter in the State of South Carolina, with its principal place of business in Spartanburg; that they put a dam below the Southern Railway track in North Carolina, and backed the water under the Southern Railway trestle; that this necessitated a new trestle; that the Southern Railway domesticated its charter under the laws of the State of South Carolina, and leased the railroad of the Southern Railway, Carolina Division, which is purely a South Carolina corporation; that the Southern Railway, acting for itself and the Southern Railway Company, Carolina Division, entered into a contract with the plaintiff for the construction of the trestle in North Carolina. The plaintiff alleges a breach of the contract, and this action is brought for the breach. The Southern Railway demurred, and the following is the demurrer:
"The defendant Southern Railway Company, appearing only for the purpose of making this demurrer, demurs to the complaint herein on the ground that it appears upon the face thereof that the Common Pleas Court of Spartanburg County had no jurisdiction of this action or the subject of *Page 236 this action, as against this defendant, in that it appears from the allegations of the complaint that the plaintiff is not a resident of this State, but is a corporation created under the laws of the State of North Carolina, and that this defendant is a corporation created under the laws of the State of Virginia, and that the cause of action did not arise in this State, nor is the subject of the action situate therein, and in that this Court is therefore without jurisdiction over said cause of action."
Upon that demurrer the following older was passed:
"This matter comes before me on a demurrer of the defendant Southern Railway Company to the jurisdiction of the defendant upon the grounds stated in the demurrer. After full argument, it is ordered that the demurrer be, and is hereby, sustained, and the complaint be, and is hereby, dismissed as to the defendant Southern Railway Company on the ground that while both corporations have been domesticated in this State, the cause of action arose in North Carolina, and this Court has no jurisdiction."
From this order this appeal is taken.
It will be observed that the order adjudges that both the plaintiff and the Southern Railway are domesticated corporations. From this finding there is no appeal. A proposed corporation may be domesticated in two ways, i. e., by adoption and by creation. Whatever may be said about other foreign corporations, a railroad corporation under our Constitution can exist in this State only by creation.
The Constitution of this State provides (Article 9):
"Sec. 8. The General Assembly shall not grant to any foreign corporation or association a license to build, operate or lease any railroad in this State; but in all cases where a railroad is to be built or operated, or is now being operated, in this State, and the same shall be partly in this State and partly in another State, or in other States, the owners or projectors thereof shall first become incorporated under the laws of this State; nor shall any foreign corporation or association *Page 237 lease or operate any railroad in this State, or purchase the same or any interest therein. Consolidation of any railroad lines and corporations in this State with others shall be allowed only where the consolidated company shall become a domestic corporation of this State. No general or special law shall ever be passed for the benefit of any foreign corporation operating a railroad under an existing license of this State or under any existing lease, and no grant of any right or privilege and no exemption from any burden shall be made to any such foreign corporation, except upon the condition that the owners or stockholders thereof shall first organize a corporation in this State under the laws thereof, and shall thereafter operate and manage the same and the business thereof under said domestic charter."
"Sec. 17. The General Assembly shall never remit the forfeiture of the franchise of any corporation now chartered, nor alter nor amend the charter thereof, nor pass any general or special law for the benefit of such corporation, except upon the condition that such corporation shall thereafter hold its charter and franchise subject to the provision of this Constitution, and the acceptance by any corporation of any provision of any such laws or the taking of any benefit from the same shall be conclusively held an agreement by such corporation to hold its charter and franchise under the provisions of this article."
It is manifest that no act of the Legislature can be passed by new enactment or repeal of an existing act that can be passed by new enactment or repeal of an existing act that can permit a foreign railroad company to own, lease, or operate a railroad in this State. The term "domesticate" is confusing. It may mean that this State has simply adopted a foreign corporation and permitted it to operate in this State while still retaining its foreign nature. The Constitution of this State clearly precludes that mistake when it says that in order to operate a railroad in this State it shall become a domestic corporation and operate under *Page 238 said domestic charter. There is no question of a paramount authority of the Federal Constitution and laws. Judge Watkins of the Federal Court has settled that question so far as this case is concerned. If this Court shall hold that the Southern Railway is a foreign railroad corporation, operating a railroad in this State, it would amount to a repeal of these constitutional provisions. This Court has no such power. The plaintiff is also a domestic corporation; it may be by adoption, but it is none the less a domestic corporation.
We are presented with this proposition: That one domestic corporation cannot maintain an action against another domestic corporation for the breach of its contract, because the work was to be done outside of the limits of this State. This is manifestly untenable.
The order sustaining the demurrer is reversed, and the case is remanded to the Circuit Court, with leave to the appellant to answer within 20 days after written notice of the filing of the remittitur in the Circuit Court.
MR. CHIEF JUSTICE GARY concurs.