St. Louis & S.F. Ry. Co. v. James
161 U.S. 545 (1896)

Annotate this Case

U.S. Supreme Court

St. Louis & S.F. Ry. Co. v. James, 161 U.S. 545 (1896)

St. Louis and San Francisco Railway Co. v. James

No. 242

Submitted October 15, 1895

Decided March 2, 1896

161 U.S. 545

Syllabus

There is an indisputable legal presumption that a state corporation, when sued or suing in a circuit court of the United States, is composed of citizens of the State which created it, and hence such a corporation is itself deemed to come within that provision of the Constitution of the United States which confers jurisdiction upon the federal courts in "controversies between citizens of different States."

It is competent for a railroad corporation organized under the laws of one state, when authorized so to do by the consent of the state which created it, to accept authority from another state to extend its railroad into such state and to receive a grant of powers to own and control, by lease or purchase, railroads therein, and to subject itself to such rules and regulations as may be prescribed by the second state, and such legislation on the part of two or more states is not, in the absence of inhibitory legislation by Congress, regarded as within the constitutional prohibition of agreements or compacts between states.

Such corporations may be treated by each of the states whose legislative grants they accept as domestic corporations.

The presumption that a corporation is composed of citizens of the state which created it accompanies such corporation when it does business in another state, and it may sue or be sued in the federal courts in such other state as a citizen of the state of its original creation.

That presumption of citizenship is one of law, not to be defeated by allegation or evidence to the contrary.

The provision in the Arkansas statute of March 13, 1889, that a railroad corporation of another state which had leased or purchased a railroad in Arkansas and filed with the secretary of state of that state, as provided by the act, a certified copy of its articles of incorporation, should become a corporation of Arkansas does not avail to create an Arkansas corporation out of a foreign corporation complying with those provisions in such a sense as to make it a citizen of Arkansas within the meaning of the federal Constitution, and subject it to a suit in the Federal courts sitting in the state of Arkansas brought by a citizen of the state of its origin.

On December 24, 1892, Etta James, defendant in error, brought this action in the Circuit Court for the Western District

Page 161 U. S. 546

of Arkansas against the St. Louis and San Francisco Railway Company, plaintiff in error, for negligence in maintaining a switch target at Monett, in Barry County, in the State of Missouri, so near its tracks that her husband was struck and killed by it on July 3, 1889, while employed as a fireman on one of the company's engines. Her husband resided at Monett and died intestate. The defendant in error was the widow and sole heir at law of her husband, and no administrator of his estate was appointed in Arkansas. She recovered a judgment of $5,000.

Etta James, the defendant in error, resided at Monett, and was a citizen of the State of Missouri. Monett is a station in Missouri, on the railroad of the plaintiff in error, about fifty miles from the southern border of that state.

The St. Louis and San Francisco Railway Company was organized and incorporated under the laws of the State of Missouri in 1876, and soon thereafter became the owner of, and has ever since owned and operated, a railroad in that state extending from Monett southerly to the southern border of the State of Missouri.

Section 11 of Article XII of the Constitution of the State of Arkansas, which was adopted in 1874, provides that:

"Foreign corporations may be authorized to do business in this state under such limitations and restrictions as may be prescribed by law, provided that no such corporation shall do any business in this state except while it maintains therein one or more known places of business and an authorized agent or agents in the same upon whom process may be served, and, as to contracts made or business done in this state, they shall be subject to the same regulations, limitations, and liabilities as like corporations of this state, and shall exercise no other or greater powers, privileges, or franchises than may be exercised by like corporations of this state, nor shall they have power to condemn or appropriate private property."

Section 1 of Article XVII of that constitution provides that:

"All railroads, canals, and turnpikes shall be public highways, and all railroads and canal companies shall be common

Page 161 U. S. 547

carriers. Any association or corporation organized for the purpose shall have the right to construct and operate a railroad between any points within this state and to connect at the state line with railroads of other states. Every railroad company shall have the right with its road to intersect, connect with, or cross any other road, and shall receive and transport each other's passengers, tonnage, and cars, loaded or empty, without delay or discrimination."

Section 3 of an Act passed by the General Assembly of the State of Arkansas, entitled "An act in relation to certain railroads," approved March 16, 1881 (Laws Ark. 1881, No. 43, at p. 83), provides:

"That every railroad corporation incorporated under the laws of this state whose road is wholly or in part constructed and operated is hereby authorized to sell, lease, or otherwise dispose of the whole or any part of its roadways and rights of way, with the franchises thereto belonging, and its other property, to any connecting railroad company, or to any railroad corporation now or hereafter organized under the laws of this or any other state, upon such terms and conditions as may be agreed upon by the board of directors of said corporations and ratified by a two-thirds vote of the issued capital stock thereof, and to receive the bonds or stock of the purchasing corporation in whole or in part payment of such purchase, and corporations may be formed for the purpose of purchasing or leasing the whole or any part of any railroad, and such purpose or object shall be stated in articles of association, which shall be executed and filed in the office of the Secretary of State, the same to be as near as may be in accordance with section 4918 of Gantt's Digest. All shares of stock issued in payment of such purchase shall be deemed to be full-paid shares, and the number and amount of shares so to be issued shall be stated in the aforesaid articles of association, and said articles shall be otherwise altered, if necessary, so as to conform to the facts."

Section 5 of the same act provides that:

"Any railroad company incorporated by or under the laws of any other state and having a line of railroad built or

Page 161 U. S. 548

partly built to or near any boundary of this state and desiring to continue its line of railroad into or through this state or any branch thereof may, for the purpose of acquiring the right to build its line of railroad, lease or purchase the property, rights, privileges, lands, tenements, immunities, and franchises of any railroad company organized under the laws of this state, which said lease or purchase shall carry with it the right of eminent domain held and acquired by said company at the time of lease or sale, and thereafter hold, use, maintain, build, construct, own, and operate the said railroad so leased or purchased as fully and to the same extent as the company organized under the laws of this state might or could have done, and the rights and powers of such company, and its corporate name, may be held and used by such foreign railroad company as will best subserve its purpose, and the building of said line of railroad; but before any such lease or sale shall be made by any company organized under the laws of this state, two-thirds in amount of the capital stock issued shall at a meeting of the stockholders thereof -- of which sixty days' notice shall be given in some newspaper published at the City of Little Rock and in such other papers published elsewhere as the president and directors of said company may direct consent thereto, and any railroad company organized under the laws of any state, and having a line of railroad built or partly built to any boundary of this state, and desiring to continue its line of road or any branch thereof into or through this state is hereby authorized and empowered so to do when it shall have acquired by lease or purchase the corporate rights, privileges, and franchises of any railroad corporation in the manner herein provided, formed under the laws of this state, and such railroad company, upon filing a certified copy of its articles of incorporation, or the special act incorporating the same, shall have, possess, and enjoy all the rights, powers, privileges, franchises, and immunities belonging to railroad corporations formed under the general laws of this state which are not in conflict with the constitution or laws of this state; but nothing herein contained shall interfere with or abridge the right of any railroad corporation acquired under

Page 161 U. S. 549

section 4942 of Gantt's Digest. . . . In all other matters said foreign railroad company shall be subject to all the provisions of all acts in relation to railroads, the liabilities and forfeitures thereby imposed, and may sue and be sued in the same manner as other railroad corporations, and subject to the same service of process, and shall keep an office or offices in said state as required by section 11 of article 12 of the constitution of this state, and an agent or agents upon whom process may be served, with the like force and effect as is provided for the service of process in section two of this act."

At the time of the accident complained of, the plaintiff in error owned and operated the railroad from the southern border of the State of Missouri to Fort Smith, in the State of Arkansas, in connection with its original line from Monett to the Missouri border, and these roads formed and were operated as a continuous line of railroad from Monett to Fort Smith. That portion of this continuous line of railroad which was situated in Arkansas had been built by corporations organized and incorporated under the laws of that state. In the year 1882, the St. Louis and San Francisco Railway Company purchased from these Arkansas corporations, under the Act of March 16, 1881, the railroad extending from the southern border of Missouri to Fort Smith, Ark., and all the railways, constructed and unconstructed, and all the roads, franchises, and property which these Arkansas corporations had. These Arkansas corporations have since maintained their separate organizations as corporations of that state, but have operated no railroads. From the time of this purchase to the present time, the plaintiff in error has operated this continuous line of railroad from Monett, Missouri, to Fort Smith, Arkansas, and has owned all the rolling stock and other appurtenances used upon this railroad.

An act passed by the General Assembly of the State of Arkansas, entitled

"An act relating to the consolidation of railroad companies and the purchasing, leasing, and operation of railroads, and to repeal sections one, two, three, four, and five of an act entitled 'An act to prohibit foreign corporations from operating railroads in this state,' approved March 22, 1887,

Page 161 U. S. 550

approved March 13, 1889 (Laws Ark. 1889, p. 43), provided as follows:"

"SEC 1. That sections one, two, three, four, and five of an act entitled 'An act to prohibit foreign corporations from operating railroads in this state,' approved March 22, 1887, be and the same are hereby repealed."

"SEC. 2. Any railroad company in this state existing under general or special laws may sell or lease its road, property, and franchises to any other railroad company duly organized and existing under the laws of any other state or territory whose line of railroad shall so connect with the leased or purchased road by bridge, ferry, or otherwise as to practically form a continuous line of railroad, and any railroad company is this state existing under general or special laws may buy or lease or otherwise acquire any railroad or railroads, with all the property, rights, privileges, and franchises thereto pertaining, or buy the stocks and bonds, or guarantee the bonds of any railroad company or companies incorporated or organized within or without this state whenever the roads of such companies shall form in the operation thereof a continuous line or lines, provided that before any such lease or sale is valid, it must be approved and ratified by persons holding or representing two-thirds of the capital stock of each of such companies respectively at a stockholders' meeting called for that purpose, and any railroad company existing under the general or special laws of any other state or territory may buy or lease or otherwise acquire any railroad or railroads the whole or part of which is in this state, with all the rights, privileges, and franchises thereto pertaining, or buy the stock and bonds, or guarantee the bonds of any railroad company incorporated or organized under the laws of this state, whenever the roads of such companies shall form in the operation thereof a continuous line or lines, provided that the road so purchased shall not be parallel or competing with the purchasing road, and any railroad company existing under the laws of any other state or territory may extend and construct its railroad into or through this state; provided further that any agreement of any company existing under

Page 161 U. S. 551

the general or special laws of this state, or of any other state or territory, to lease or buy a railroad and appurtenances, or to buy the stock or bonds, or guarantee the bonds of any railroad company incorporated and organized within this state, heretofore executed by the proper officers of such companies and ratified by the companies parties thereto, by the assent of persons holding two-thirds of the capital stock in each of such companies, expressed at a meeting of such stockholders called for that purpose, shall be taken and held to be binding from the date of its execution, provided further that nothing in the foregoing provisions shall be held or construed as curtailing the right of state or counties through which said consolidated, leased, or purchased road or roads may be located to levy and collect taxes upon the same and the rolling stock thereof, pro rata, in conformity with the provisions of the laws of this state upon that subject, provided further that before any railroad corporation of any other state or territory shall be permitted to avail itself of the benefits of this act or any part thereof, such corporation shall file with the secretary of state of this state a certified copy of its articles of incorporation, if incorporated under a general law of such state or territory or a certified copy of the statute laws of such state or territory incorporating such company, where the charter of such "

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railroad corporation was granted by special statute of such state, and upon the filing of such articles of incorporation or such charter, with a map and profile of the proposed line, and paying the fees prescribed by law for railroad charters, such railroad company shall, to all intents and purposes, become a railroad corporation of this state, subject to all the laws of the state now in force or hereafter enacted, the same as if formally incorporated in this state, anything in its articles of incorporation or charter to the contrary notwithstanding, and such acts on the part of such corporation shall be conclusive evidence of the intent of such corporation to create and become a domestic corporation, and provided further that every railroad corporation of any other state which has heretofore leased or purchased any railroad in this state, shall, within sixty days from the passage of this act,

Page 161 U. S. 552

file a duly certified copy of its articles of incorporation or charter with the secretary of state of this state, and shall thereupon become a corporation of this state, anything in its articles of incorporation or charter to the contrary notwithstanding, and in all suits or proceedings instituted against any such corporation, process may be served upon the agent or agents of such corporation or corporations in this state in the same manner that process is authorized by law to be served upon the agents of railroad corporations in this state organized and existing under the laws of this state.

"SEC. 3. Any foreign corporation which has heretofore constructed, purchased, leased, or acquired or now operates any railroad in this state shall, within sixty days after the passage of this act, comply with the provisions thereof by filing a copy of its articles of incorporation or of the special act of the legislature incorporating such company in the office of the secretary of state of this state, and for every day which any such company shall fail to comply with the provisions of this act, it shall pay a penalty of one thousand dollars, which penalty may be recovered by the district attorney in a civil action instituted in the proper court in any county through which such railroad or any part thereof so owned, purchased, leased, acquired, or operated by such foreign company may be located."

"SEC. 4. This act shall take effect and be in force from and after its passage."

On May 6, 1889, the St. Louis and San Francisco Railway Company filed with the Secretary of State of the State of Arkansas a duly certified copy of its articles of incorporation under the laws of Missouri, as required by said Act of March 13, 1889, and has never been otherwise incorporated or organized under the laws of the State of Arkansas.

The plaintiff in error properly and seasonably raised the objection in the circuit court that that court had no jurisdiction of this action, on the ground that the plaintiff in error was not a citizen of the State of Arkansas, but was a citizen of the State of Missouri, of which state the defendant in error was also a resident and citizen; but the plaintiff in

Page 161 U. S. 553

error waived its personal privilege of being sued in the district of which it was an inhabitant. The question raised by that objection was, by proper exception to the ruling below and assignment of error, presented to the circuit court of appeals for determination.

And the said United States circuit court of appeals, to the end that it might properly decide this and other questions arising in this case which are duly presented by exceptions and assignments of error properly taken and filed, the said court, desired the instruction of the Supreme Court of the United States upon the following questions:

"1st. In view of the provisions of the Act of the General Assembly of Arkansas approved March 13, 1889, did the St. Louis and San Francisco Railway Company, by filing a certified copy of its articles of incorporation under the laws of Missouri with the Secretary of State of Arkansas, and continuing to operate its railroad through that state, become a corporation and citizen of the State of Arkansas?"

"2d. In view of the provisions of the Act of the General Assembly of Arkansas approved March 13, 1889, did the St. Louis and San Francisco Railway Company, by filing a certified copy of its articles of incorporation under the laws of Missouri with the Secretary of State of Arkansas, and continuing to operate its railroad through that state, become a citizen of the State of Arkansas so as to give the Circuit Court of the United States for the Western District of Arkansas jurisdiction of this action, in which the defendant in error was and is a citizen of the State of Missouri?"

"3d. In view of the provisions of the Act of the General Assembly of Arkansas approved March 13, 1889, did the St. Louis and San Francisco Railway Company, by filing a certified copy of its articles of incorporation under the laws of Missouri with the Secretary of State of Arkansas, and continuing to operate its railroad through that state, become a citizen of the State of Arkansas so as to give the Circuit Court of the United States for the Western District of Arkansas jurisdiction of this action, in which defendant in error was and is a resident and citizen of the State of Missouri, and the

Page 161 U. S. 554

cause of action accrued in the State of Missouri, and arose from an accident that resulted from the operation of the railroad of the company in that state?"

"4th. In view of the facts hereinbefore set forth, did the Circuit Court of the United States for the Western District of Arkansas have jurisdiction of this action?"

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