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that, although a corporation is not itself a citizen, yet for all the purposes of Federal jurisdiction founded 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 Federal 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 engaging 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.
actions by and against them, and to place such actions exclusively within the cognizance of the Federal tribunals.'
§ 7450. Effect of This Rule on Domestic Corporations. Where a corporation, created by one State, has been domesticated by another State, the true principle seems to be that it does not become a "citizen" of the State domesticating it, unless it is re-endowed, so to speak, by such State with the franchise of being a corporation, so as to become, to all intents and purposes, a domestic corporation of that State, subject to its laws, and to the jurisdiction of its courts, as such. Since the decision of the Supreme Court of the United States in the leading case of Bank of Augusta v. Earle, it has been a doctrine constantly repeated by judges, that a corporation can have no legal existence out of the territorial limits of the sovereignty by which it was created. "Its place of residence is there," observed Mr. Justice Davis, "and can be nowhere else. Unlike a natural person, it cannot change its domicile at will, and, although it may be permitted to transact business where its charter does not operate, it cannot on that account acquire a residence there." And this is the law as settled by the highest court of England."
1 We allude to the Southern Pacific [Railroad] Company. See United States v. Southern Pac. R. Co., 49 Fed. Rep. 297; Southern Pac. Co. v. Denton, 146 U. S. 202.
Post, § 7890.
13 Pet. (U.S.) 587.
Insurance Co. v. Francis, 11 Wall. (U.S.) 210, 216. See also Ohio &c. R. Co. v. Wheeler, 1 Black (U.S.), 286; Hatch v. Chicago &c. R. Co., 6 Blatchf. (U. S.) 105; Pomeroy v. New York &c. R. Co., 4 Blatchf. (U. S.) 120; Day v. Newark India Rubber Co., 1 Blatchf. (U. S.) 628.
Carron Iron Co. v. MacLaren, 5 H. L. Cas. 416; 8. c. 35 Eng. L. & Eq.
Lord St. Leonards dissented, holding that a company may have two domiciles, and places of business may, for the purpose of founding jurisdiction, be treated as places of domicile, and service of process upon the corporate agents there is sufficient. Perhaps his Lordship meant by this nothing more than that a foreign corporation, having a place of business in England and trading there, might be sued there. Later decisions clearly settle this to be the law. Newby v. Von Oppen, L. R. 7 Q. B. 293. Compare Mackereth v. Glasgow &c. R. Co., L. R. 8 Ex. 149; post, § 7881, et seq.
§ 7451. Further of This Rule.—The artificial rule of jurisdiction which we are now considering is such that a corporation cannot acquire a residence within a particular State for the purposes of Federal jurisdiction, founded on diverse citizenship, unless it is reincorporated in such State. The mere fact that the statutes of a State allow foreign corporations, under certain circumstances, to be sued in the courts of the State, has no application to courts of the United States, and no influence upon this rule of jurisdiction. So, for the purposes of this rule of jurisdiction, a corporation organized in one State does not become a citizen of another State, by reason of establishing its principal place of business there, and appointing, under a statute of such State, an attorney or agent upon whom process in actions against it may be served. On the other hand, the fact that a corporation has established an agency in another State, and is doing business there, under statutes of the latter State requiring it to receive service of process made upon such agency, and to comply with State regulations as to its mode of doing business, does not impair its right to appear in the national courts as a citizen of the State of its creation, or to remove to a court of the United States an action brought against it in a court of the State where it has thus acquired a domicile for the purposes of its business. But, as already seen, whenever the effect of the legislation of a State is to adopt or re-create a foreign corporation as one of its own, it becomes a citizen of the State adopting it, as well as of the State to which it owes its original creation."
§ 7452. Rule where the Corporation is Created by the Concurrent Legislation of Two States. We have already had occasion several times to consider the status of this species of corporation, with the conclusion, universally acquiesced in,
1 Southern Pac. Co. v. Denton, 146 U. S. 202.
St. Louis R. Co. v. Pacific R. Co., 52 Fed. Rep. 770.
Hatch v. Chicago &c. R. Co., 6 Blatchf. (U. S.) 105.
♦ Ibid.; Stevens v. Phoenix Ins. Co., 41 N. Y. 149; Hobbs v. Manhattan Ins. Co., 56 Me. 417; 8. c. 96 Am. Dec. 472.
James v. St. Louis R. Co., 46 Fed. Rep. 47; ante, § 7438.
that it is a domestic corporation of each of the two States by whose concurrent legislation it is created, in so far as it can exercise its franchises within such State. This doctrine, as already seen, has been always recognized by the Supreme Court of the United States; and yet that court, extending its artificial rule of jurisdiction still further, has held that it may be regarded as a foreign corporation for the purpose of suing a domestic citizen or corporation of either of the States by which it is created.2
§ 7453. All the Substantial Parties must be of Diverse Citizenship. — In a suit by or against a corporation, if one of the parties opposed to the corporation is a citizen of the same
1 Ante, §§ 47, 319, 320, 688, 7438; post, §§ 7472, 7490, 7799, 7817, 8012, 8020, 8128.
Nashua &c. R. Corp. v. Boston &c. R. Corp., 136 U. S. 356; 8. c. 42 Am. & Eng. Rail. Cas. 688. This decision reversed a decree of the Circuit Court of the United States for the District of Massachusetts, and three of the judges of the Supreme Court (Fuller, C. J., and Gray and Lamar, JJ.), dissented. Blatchford, J., did not sit, or take any part in the decision. It was therefore a decision of a bare majority of the court, and cannot be regarded as settling the proposition of jurisdiction involved therein. The theory of the decision is that railroad corporations thus created, although joined in their interests, and in the operation of their roads, in the issuing of their stock, and in the division of their profits, so as practically to be a single corporation, do not lose their identity; that each one has its existence and its standing in the courts of the country only by virtue of the legislation of the State by which it is created; and that the union of name, of officers, of business, and of property does not change their distinctive character as separate cor
porations. Ibid., 136 U. S. 382. Thus, the corporation has an existence as a domestic corporation in each one of the States, and at the same time it is endowed by the Federal judiciary with the additional faculty of being a foreign corporation for the purpose of suing a citizen or corporation in either one of the States under whose laws it exists as a domestic corporation. The case was that of a railroad corporation extending its railroad from a place in New Hampshire to a place in Massachusetts. It was allowed, on the ground of diverse citizenship, to maintain an action in a Federal tribunal in the State of Massachusetts. Such a corporation may thus fire across the line from either of its domiciles. Perched upon either of its eyries, it may be either and at once both a domestic and a foreign corporation. It may sue a citizen of Massachusetts in a Federal tribunal in that State on the ground of its being a citizen of New Hampshire; and it may sue a citizen of New Hampshire in a Federal tribunal in that State on the ground of its being a citizen of Massachusetts. Compare Minot v. Philadelphia &c. R. Co., 2 Abb. (U. S.) 323.
State wherein the corporation has its legal existence, there is not that requisite diversity of citizenship between the parties to the controversy, which is necessary to give a Federal court jurisdiction of the case. So, in an action by a corporation against several other corporations, one of which has its legal existence in the same State as the plaintiff, the Federal court has not jurisdiction. But a Federal court will not suffer its jurisdiction to be ousted by the joinder or non-joinder of merely formal parties. It will decide upon the merits of the case between the substantial parties to the suit, whenever this can be done without prejudice to the rights of others. A plaintiff bringing an action in a State court against a corporation created under the laws of a State other than that in which the suit is instituted, cannot prevent the removal of the cause to the Federal court by joining as parties defendant certain directors or officers of the corporation, citizens of the same State as the complainant, against whom no specific relief is prayed in the nature of a personal liability, nor any discovery sought in regard to matters peculiarly within their knowledge. "The test of this is," said Blatchford, J., "that, if any one of the directors or the treasurer were to resign his office, he would necessarily cease, ipso facto, to be a proper party to the suit, and the plaintiff would be obliged to make his successor in office a party, and so on with every change. The reason for this would be that, there being no relief prayed against the individual in his individual capacity, and the injunction asked being to restrain him merely from doing or not doing what his official relation to the company alone enables him to do, or to refrain from doing, when such official
1 Coal Co. v. Blatchford, 11 Wall. (U.S.) 172; Dormitzer v. Illinois &c. Bridge Co., 6 Fed. Rep. 217; Walsh v. Memphis &c. R. Co., 6 Fed. Rep. 797; Donohoe v. Mariposa L. & M. Co., 5 Sawy. (U. S.) 163. See also Myers v. Dorr, 13 Blatchf. (U.S.) 22.
* The Sewing Machine Companies' Case, 18 Wall. (U. S.) 553.
Wormley v. Wormley, 8 Wheat.
(U. S.) 421; Carneal v. Banks, 10 Wheat. (U. S.) 181.
Hatch v. Chicago &c. R. Co., 6 Blatchf. (U. S.) 105. Thus, the directors and treasurer of a railroad corporation are merely nominal parties to a bill seeking to restrain the corporation from extending its line and from using any of its moneys or property for that purpose.