## Facts

- A British corporation qualified to do business in Tennessee under a state statute governing certain foreign corporations.
- The corporation became insolvent, and a Tennessee chancery court proceeding was brought to marshal and distribute the corporation’s Tennessee-based assets through a receiver.
- A Tennessee statute granted Tennessee resident creditors priority over all other creditors in distribution of the insolvent foreign corporation’s in-state assets.
- Nonresident creditors included (1) natural persons who were U.S. citizens residing in other states and (2) foreign creditors, including foreign corporations.
- Nonresident creditors challenged the resident-preference priority as unconstitutional discrimination.

## Issues

1. Whether a state may prefer its own resident creditors over similarly situated creditors who are citizens of other U.S. states when distributing an insolvent debtor’s in-state assets.
2. Whether foreign creditors (including foreign corporations) may invoke the Article IV Privileges and Immunities Clause to invalidate a resident-creditor preference.
3. Whether the resident-creditor preference violates the Fourteenth Amendment’s Due Process or Equal Protection Clauses as applied to foreign creditors.

## Decision

- The Supreme Court held the Tennessee priority invalid insofar as it preferred Tennessee residents over nonresident creditors who were U.S. citizens of other states.
- The Court upheld the statute’s preference as applied against foreign creditors and foreign corporations, who could not claim Article IV Privileges and Immunities protection.
- The judgment was affirmed in part and reversed in part, and the case was remanded for further proceedings consistent with the Court’s holdings.

## Legal Principles

- Article IV, § 2 prohibits a state from discriminating against citizens of other states in access to courts and in participation, on equal terms, in judicial distributions of a debtor’s property within the state.
- A creditor priority based solely on state residence, applied to similarly situated creditors, violates the Privileges and Immunities Clause when it burdens nonresident U.S. citizens.
- The Article IV Privileges and Immunities Clause protects “citizens” of the several U.S. states and does not extend to foreign subjects or foreign corporations.
- A corporation is not a “citizen” for purposes of Article IV Privileges and Immunities, even if it may be treated as a citizen for other constitutional or jurisdictional purposes.
- The Fourteenth Amendment did not require invalidation of a resident preference as to foreign creditors on the record presented.

## Conclusion

The Court required equal treatment of Tennessee residents and nonresident U.S. citizen creditors in distributing an insolvent foreign corporation’s Tennessee assets, but allowed Tennessee to maintain a resident preference against foreign creditors because Article IV’s protections do not extend to them.


Blake v. McClung, 172 U.S. 239 (1898)