## Facts

- Union Brokerage Co., a North Dakota corporation, operated a customhouse brokerage business from Duluth, Minnesota and was federally licensed under the Tariff Act and Treasury regulations.
- Union did not obtain a Minnesota certificate of authority required by Minnesota’s Foreign Corporation Act for foreign corporations “transacting business” in the state.
- The Minnesota statute required a certificate plus modest fees and denied an unqualified foreign corporation “the right to maintain any action” in Minnesota courts.
- Union sued two former employees (Jensen and Rime) in Minnesota state court for breach of fiduciary obligations arising from their employment.
- The defendants asserted that Union lacked capacity to sue because it was doing business in Minnesota without qualifying under the state statute.
- The Minnesota Supreme Court found Union was doing business in Minnesota and dismissed the suit under the statutory bar.
- The U.S. Supreme Court reviewed whether applying the statute conflicted with federal customhouse broker law or violated the Commerce Clause.

## Issues

1. Whether a federal customhouse broker license makes the licensee a federal instrumentality or otherwise preempts application of a state foreign-corporation qualification statute that conditions access to state courts.
2. Whether barring an unqualified foreign corporation from maintaining a state-court action, as applied to a customhouse broker connected to foreign commerce, unconstitutionally burdens interstate or foreign commerce.

## Decision

- The U.S. Supreme Court affirmed the Minnesota Supreme Court.
- Federal licensing of customhouse brokers was aimed at customs administration and revenue protection and did not immunize brokers from generally applicable state corporate regulation.
- Minnesota’s qualification requirement and denial-of-suit sanction did not conflict with federal statutes or Treasury regulations governing customhouse brokers.
- Applying the statute to Union’s localized Duluth operations did not impose a direct or unreasonable burden on interstate or foreign commerce.
- The Court accepted the state court’s determination that Union’s activities constituted “doing business” in Minnesota, bringing it within the statute.

## Legal Principles

- Federal licensing that regulates an occupation for federal administrative purposes does not, without more, withdraw licensees from state laws of local application that do not conflict with federal law.
- A state may require a foreign corporation conducting an ongoing, localized business within the state to obtain a certificate of authority and pay reasonable fees as a condition of doing business there.
- A state may deny an unqualified foreign corporation access to its courts to enforce compliance with its foreign-corporation qualification regime.
- Commerce Clause limits are violated only when state regulation imposes a direct and unreasonable burden on commerce; neutral qualification requirements tied to localized business ordinarily do not.

## Conclusion

Minnesota could constitutionally bar a federally licensed customhouse broker, incorporated elsewhere and operating a localized business in Minnesota, from maintaining a state-court action until it complied with the state’s foreign corporation qualification statute, because the statute did not conflict with federal law and did not impose an impermissible burden on commerce.


Union Brokerage Co. v. Jensen, 322 U.S. 202 (1944)