South-Western Legal Studies in Business

Foreign Corporation Need Not Have Authority to Do Business in State to Sue in State
Description

Maine high court held that a firm in interstate commerce from another state has the right to make use of state courts for litigation without any specific approval to do business in the state as a condition of using the state courts.

Topic Court Procedure
Key Words

Foreign Corporation; Interstate Commerce

C A S E   S U M M A R Y
Facts

Clearwater, a New Hampshire corporation, sued LaGrandeur in state court in Maine to recover $2,850, which it claimed she owed for a well pump installed on her property. LaGrandeur contended the suit should be set aside because Clearwater, a foreign corporation, was not licensed to do business in Maine. Clearwater responded that it needed no particular authority to transact business in Maine. The district court held that suit could proceed. LaGrandeur appealed.

Decision

Affirmed. Maine law holds that a "foreign corporation may not transact business in this State until the foreign corporation files an application for authority to transact business with the Secretary of State." However, the statute further states, "Transacting business in interstate commerce" does not mean transacting business in Maine. Thus, a foreign corporation may transact business in interstate commerce without authorization from the State of Maine and so may maintain legal proceedings in the state. To require corporations to assert and then prove their capacity to sue in Maine's courts would needlessly complicate civil practice because a corporation's authority to sue is not a contested issue in most cases.

Citation

Clearwater Artesian Well Co. v. LaGrandeur, ---A.2d--- (2007 WL 92814, Sup. Jud. Ct., Maine, 2007)

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