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§ 7447. Early Doctrine that a Corporation was not a “Citizen," under Federal Constitution and Judiciary Act. The constitution of the United States provides that the judicial power of the United States shall extend to all controversies between citizens of different States. Under this provision, the eleventh section of the Judiciary Act of 1789 defined the jurisdiction of Circuit Courts of the United States to be a jurisdiction existing in suits “ between a citizen of the State where the suit is brought, and a citizen of another State.” It was early decided that a corporation, as such, could not be a “citizen ”within the meaning of the Federal constitution. At the same time, the concession was made that corporations might litigate in the Federal courts wben, as between the opposing party and the members of the corporation, there was the requisite diversity of citizenship. Chief Justice Mar. shall said: “That invisible, intangible, and artificial being, that mere legal entity, a corporation aggregate, is certainly not a citizen; and consequently, cannot sue or be sued in the courts of the United States, unless the rights of members, in this respect, can be exercised in their corporate name. If the corporation be considered as a mere faculty, and not as a company of individuals, who, in transacting their joint concerns, may use a legal name, they must be excluded from the courts of the Union."3 Under the rule as thus es. tablished, the members of the corporation, suing or sued in the corporate name, were regarded as joint plaintiffs or defendants, and subject to the rule established in an earlier case, that where there are two or more joint plaintiffs and two or more joint defendants, each of the plaintiffs must be capable of suing each of the defendants in the courts of the United States in order to support the jurisdiction. In other words, in an action by or against a corporation, it was necessary that there should be a diversity of citizenship existing between the
i Const. U. S., art. 3, 2.
* Bank v. Deveaux, 5 Cranch (U. S.), 61; Hope Ins. Co. v. Boardman, 5 Cranch (U. 8.), 57.
s Bank V. Deveaux, 5 Cranch (U.S.), 86.
• Strawbridge v. Curtiss, 3 Cranch (U. S.), 267. See also Ward v. Arredondo, 1 Paine (U. S.), 410.
opposing party and every member of the corporation. This position was reluctantly assented to by the Supreme Court of the United States;1 but when later the position was taken that a corporation created by one State could not be sued in the Circuit Courts of the United States by a citizen of another State, unless all the members of the corporation were citizens of the State in which the suit was brought, — the court, in a weak and inconclusive opinion, reversed a rule of interpretation and of jurisdiction to which it had long adhered, and astonished the country with the proposition that a corporation aggregate is a "citizen.":
§ 7448. New Doctrine that a Corporation is a Citizen" of the State Creating It, for the Purposes of Federal Jurisdiction. That the judges of the Supreme Court of the United States assented reluctantly to the doctrine stated in the preceding section illustrates one of the most pitiable characteristics of judicial administration,- the habitual greed of jurisdiction exhibited by courts and judges, and the insincerity manifested by them in interpreting constitutional provisions and statutes relating to their own jurisdiction. The
1 Commercial &c. Bank v. Slocomb,
. 14 Pet. (U. S.) 60.
· Louisville &c. R. Co. v. Letson, 2 How. (U. S.) 497.
• A majority of the court, although recognizing the authority of the case of Bank v. Deveaux, 5 Oranch (U.S.), 61, from the year 1809 up to the present time, 1844, had done so most reluctantly. Per Mr. Justice Wayne in Louisville &c. R. Co. v. Letson, 2 How. (U. S.) 497, 555. See in this connection Sullivan v. Fulton Steamboat Co., 6 Wheat. (U. S.) 450; Breithaupt v. Bank, 1 Pet. (U. S.) 238; Commercial &c. Bank v. Slocomb, 14 Pet. (U. S.) 60; Irvine v. Lowry, 14 Pet. (U. S.) 293; Bank of Augusta v. Earle, 13 Pet. (U. S.) 519, 586; Kirkpatrick v. White, 4 Wash. C. C. (U.
S.) 595; Bank v. Willis, 3 Sumn. (U. S.) 472; Com. v. Milton, 12 B. Mon. (Ky.) 212, 227 ; 8. c. 54 Am. Dec. 522. Speaking of the case of Bank v. Deveaux, 5 Cranch (U. S.), 61, and that of Strawbridge v. Curtiss, 3 Cranch (U. S.), 267, Mr. Justice Wayne said: By no one was the correctness of them more questioned than by the late Chief Justice who gave them. It is within the knowledge of several of us, that he repeatedly expressed regret that those decisions had been made, adding, whenever the subject was mentioned, that if the point of jurisdiction was an original one, the conclusion would be different." Louisville &c. R. Co. v. Letson, 2 How. (U. S.) 555.
question was one of extreme simplicity. It related solely to the meaning with which the framers of the constitution and of the Judiciary Act had used one of the plainest, simplest, and best-understood words in our language, the word “citizen.” Never before had it been regarded as referring other than to a single person endowed with the ordinary political privileges and franchises of the country of which he was a resident. Never before had it been used to designate a body of persons, collected or organized in any manner, or with any faculty whatever. The judges knew this. They knew that the men who used the word "citizen" in those instruments had no idea that they were describing an artificial collection of persons. The Federal courts were courts of limited jurisdiction. It was the true office of interpretation, in doubtful cases, to repel rather than absorb jurisdiction, on the well-understood priuciple that presumptions are against the jurisdiction of courts whose powers are limited. It is to be borne in mind that the question did not involve the mere question of the jurisdiction of the national courts; it involved something more. All jurisdiction had been apportioned between the national and the State judicatories; and hence the Federal judicatories, in seizing upon a jurisdiction which had not been conferred upon them by the constitution or the Judiciary Act, seized a portion of the jurisdiction belonging to the States, and defrauded the State tribunals of a portion of their rightful jurisdiction. It was a plain case of a theft of jurisdiction. It illustrated a charge which Mr. Jefferson in one of his letters, written some years before, had made against the tendencies of the Federal judiciary, “working like gravity, by night and by day, gaining a little today and a little tomorrow, and advancing its noiseless step like a thief, over the field of jurisdiction, until all shall be usurped from the States, and the government of all be consolidated into one."Overruling their former decisions, and under a miserable pretext which involved the distortion of a plain word from its natural meaning to
Letter of Mr. Jefferson to Mr. Hammond, Aug. 18, 1821; reprinted in 28 Am. Law Rev. 148.
a meaning which had never before been assigned to it, the court now announced the following rule: “A corporation created by and doing business in a particular State, is to be deemed, to all intents and purposes, as a person, although an artificial person, an inhabitant of the same State, for the purposes of its incorporation, capable of being treated as a citizen of that State, as much as a natural person. Like a citizen it makes contracts, and though in regard to what it may do in some particulars, it differs from a natural person, and in this especially, the manner in which it can sue and be sued, it is substantially, within the meaning of the law, a citizen of the State which created it, and where its business is done, for all the purposes of suing and being sued." This statement of the law was probably extra-judicial, but its authority was established by later decisions against the vigorous dissent of a minority of the court.
8 7449. Conclusively Presumed to be a Citizen of the State Creating It. — The jurisdiction thus seized upon, to continue in the language of Mr. Jefferson,' continued to “advance its stealthy step like a thief,” until the court had reached the doctrine that, for the purposes of Federal jurisdiction, a corporation is conclusively presumed to be a citizen of the State under whose laws it is created,' and conversely that it cannot be a citizen of a State other than the State under whose laws it has been created. Stated in another way, this doctrine is
I Louisville &c. R. Co. v. Letson, 2 How. (U. S.) 558.
* Rundle v. Delaware &c. Canal Co., 14 How. (U. S.) 80; Marshall v. Baltimore &c. R. Co., 16 How. (U. S.) 314. See also Nashua &c. Corp. v. Boston &c. Corp., 136 U. S. 356; Booth v. St. Louis Fire Engine Man. Co., 40 Fed. Rep. 1; Maltz v. American Express Co., 1 Flip. C. C. (U. S.) 611; Covington Drawbridge Co. v. Shepherd, 20 How. (U. S.) 227; Ohio &c. R. Co. v. Wheeler, 1 Black (U. S.), 286; West
ern Union Tel. Co. v. Dickinson, 40 Ind. 444; 8. c. 13 Am. Rep. 295; Herryford v. Ætna Ins. Co., 42 Mo. 148.
3 Letter to Mr. Hammond, Aug. 18, 1821; reprinted 28 Am. Law Rev. 148.
• Steamship Co. v. Tugman, 106 U. S. 118; Fish v. Chicago &c. R. Co., 53 Barb. (N. Y.) 472; Park Bank v. Nichols, 4 Biss. (U. S.) 315; Williams v. Missouri &c. R. Co., 3 Dill. (U. S.) 267.
6 Southern Pac. Co. v. Denton, 146 U. S. 202; Williams v. Missouri &c. R. Co., 3 Dill. (U. S.) 267.
that, although a corporation is not itself a citizen, yet for all the purposes of Federal jurisdiction founóled upon diverse citizenship, the stockholders who compose the corporate body by and under the name given them by the statutes of a State, are to be treated as citizens of that State, and are estopped from denying that they are such. And this is so, although all of its business may be prosecuted elsewhere, and all of its offices and places of business may be outside of the State by whose laws it has been created, and all its stockholders may be residents of the State in which it is impleaded in the Fed. eral court as a “citizen" of such other State. The most striking commentary which can be made upon the impropriety, if not the criminality, involved in the seizure of this jurisdiction, is found in the manner in which it operates in respect of what is now known as the "tramp corporation.” Under the rule thus established, a number of citizens of one State can organize themselves into a corporation under the laws of another State, through the mere aid of an attorney employed there, without acquiring a residence, or even temporarily coming within such State, for the purpose of engag- . ing in business in their own State, and can thus succeed in bringing all actions by and against them within the jurisdiction of the Federal courts, ousting the jurisdiction of their own State courts over such actions. A shameful illustration of the manner in which this usurped jurisdiction has been perverted and corrupted is found in the case where certain co-adventurers organized a corporation in the State of Kentucky, none of them being citizens of that State, their purpose not being to build any railroad in that State, or to own or operate any property whatever there, but their sole apparent purpose being to build, lease, and operate railroads in other States and Territories, and at the same time to defraud the courts of the various States and Territories through which their roads should lie, of jurisdiction of all important
I See Fargo v. McVicker, 55 Barb. (N. Y.) 437.
: Pacific R. Co. v. Missouri Pac.
R. Co., 23 Fed. Rep. 565; Booth v.