It is established doctrine, to which the Court adheres, that the
constitutional privilege of a grantee or purchaser of property,
being a citizen of one of the states, to invoke the jurisdiction of
a circuit court of the United States for the protection of his
rights as against a citizen of another state -- the value of the
matter in dispute being sufficient for the purpose -- cannot be
affected or impaired merely because of the motive that induced his
grantor to convey, or his vendee to sell and deliver, the property,
provided such conveyance or such sale and delivery was a real
transaction by which the title passed without the grantor or vendor
reserving or having any right or power to compel or require a
reconveyance or return to him of the property in question.
Citizens of Virginia were in possession of lands in that state,
claiming title, to which also a corporation organized under the
laws of Virginia had for some years laid claim. In order to
transfer the corporation's title and claim to a citizen of another
state, thus giving a circuit court of the United States
jurisdiction over an action to recover the lands, the stockholders
of the Virginia corporation organized themselves into a corporation
under the laws of Pennsylvania, and the Virginia corporation then
conveyed the lands to the Pennsylvania corporation, and the latter
corporation brought this action against the citizens of Virginia to
recover possession of the lands. No consideration passed for the
transfer. Both corporations still exist.
Held that these
facts took this case out of the operation of the established
doctrine above stated and made of the transaction a mere device to
give jurisdiction to the circuit court, and that it was a fraud
upon that court, as well as a wrong to the defendants.
This action was brought in the Circuit Court of the United
States for the Western District of Virginia by the Lehigh Mining
& Manufacturing Company, as a corporation organized under the
laws of the Commonwealth of Pennsylvania. Its object was to recover
from the defendants, who are citizens of Virginia, the possession
of certain lands within the territorial jurisdiction of that
court.
Page 160 U. S. 328
The defendants pleaded not guilty of the trespass alleged, and
also filed two pleas, upon which the plaintiff took issue.
The first plea was that
"the Virginia Coal and Iron Company is a corporation organized
and existing under the laws of Virginia. That as such it has been
for the last ten years claiming title to the lands of the defendant
J. J. Kelly, Jr., described in the declaration in this case. And
said defendants say that for the purpose of fraudulently imposing
on the jurisdiction of this court, said Virginia Coal and Iron
Company has, during the year 1893, attempted to organize, form, and
create, under the laws of the State of Pennsylvania, a corporation
out of its (the Virginia Coal and Iron Company's) own members,
stockholders, and officers, to whom it has fraudulently and
collusively conveyed the land in the declaration mentioned, for the
purpose of enabling this plaintiff to institute this suit in this
United States court, and said defendants say that said Lehigh
Mining and Manufacturing Company is simply another name for the
Virginia Coal and Iron Company, composed of the same parties, and
organized alone for the purpose of giving jurisdiction of this case
on [to] this court. Wherefore defendants say that this suit is in
fraud of the jurisdiction of this court, and should be abated."
The second plea was that
"said plaintiff should not further have or maintain said suit
against them, because they say there was no such legally organized
corporation as the plaintiff company at the date of the institution
of this suit, and they say that the real and substantial plaintiff
in this suit is the Virginia Coal and Iron Company, which is a
corporation organized and existing under the laws of Virginia, and
a citizen of Virginia. And said defendants further say that said
Virginia Coal and Iron Company, for the purpose and with the view
of instituting and prosecuting this suit in the United States court
and of conferring an apparent jurisdiction on said court, did, by
prearrangement, fraud, and collusion, attempt to organize said
Lehigh Mining and Manufacturing Company as a corporation of a
foreign state, to take and hold the land in the declaration
mentioned, for the purpose of giving this court jurisdiction of
said suit. Wherefore defendants say that
Page 160 U. S. 329
the said plaintiff has wrongfully and fraudulently imposed
itself on the jurisdiction of this court, has abused its process,
and wrongfully impleaded these defendants in this court. Wherefore
they pray judgment, etc., that this suit be abated and dismissed as
brought in fraud of this court's jurisdiction."
The cause was submitted by the parties upon the two pleas to the
jurisdiction, and upon a general replication to each plea, as well
as upon an agreed statement of facts.
The agreed statement of facts was as follows:
"1. That the land in controversy in this case was prior to March
1, 1893, claimed by the Virginia Coal and Iron Company, and had
been claimed by said last-named company for some twelve years prior
to said date. 2. That said Virginia Coal and Iron Company is a
corporation organized and existing under the laws of the State of
Virginia, and is a citizen of Virginia. 3. That on March 1, 1893,
said Virginia Coal and Iron Company executed and delivered a deed
of bargain and sale to said Lehigh Mining and Manufacturing
Company, by which it conveyed all its right, title, and interest in
and to the land in controversy to said last-named company in fee
simple. 4. That said Lehigh Mining and Manufacturing Company is a
corporation duly organized and existing under the laws of the State
of Pennsylvania; that it was organized in February, 1893, prior to
said conveyance, and is, and was at the date of commencement of
this action, a citizen of the State of Pennsylvania, and that it
was organized
by the individual stockholders and officers of
the Virginia Coal and Iron Company. 5.
That the purpose in
organizing said Lehigh Mining and Manufacturing Company, and in
making to it said conveyance, was to give to this Court
jurisdiction in this case, but that said conveyance passed to
said Lehigh Mining and Manufacturing Company all of the right,
title, and interest of said Virginia Coal and Iron Company in and
to said land, and that, since said conveyance, said Virginia Coal
and Iron Company has had no interest in said land and has not, and
never has had, any interest in this suit, and that it owns none of
the stock of said Lehigh Mining and Manufacturing Company, and has
no interest therein whatever. "
Page 160 U. S. 330
It was also agreed that the two pleas should be tried by the
court, without a jury, upon the above statement of facts, with the
right in either party to object to any fact stated in it on the
ground of irrelevancy or incompetency.
The plaintiff, by counsel, objected and excepted to the
statement in the first part of the fifth clause of the foregoing
statement,
viz.,
"that the purpose of organizing the Lehigh Mining and
Manufacturing Company, and in making to it said conveyance, was to
give to this court jurisdiction in this case,"
because the same was irrelevant and immaterial.
The circuit court, Judge Paul presiding, dismissed the action
for want of jurisdiction in the circuit court. 64 F. 401.
MR. JUSTICE HARLAN, after stating the facts as above reported,
delivered the opinion of the Court.
Some of the paragraphs of the agreed statement of facts are so
drawn as to leave in doubt the precise thought intended to be
expressed in them. But it is clear that the individual stockholders
and officers of the Virginia corporation, in February, 1893,
organized the Pennsylvania corporation; that immediately
thereafter, on the 1st day of March, 1893, the lands in
controversy, which the Virginia corporation had for many years
claimed to own and which, during all that period, were in the
possession of and claimed by the present defendants, who are
citizens of Virginia, were conveyed by it in fee simple to the
Pennsylvania corporation so organized, and that the only object,
for which the stockholders and officers of the Virginia corporation
organized the Pennsylvania corporation, and for which the above
conveyance was made, was to
Page 160 U. S. 331
create a case cognizable by the Circuit Court of the United
States for the Western District of Virginia. In order to accomplish
that object, the present action was commenced on the second day of
April, 1893. Although the parties have agreed that the above
conveyance passed "all of the right, title, and interest" of the
Virginia corporation to the corporation organized under the laws of
Pennsylvania, it is to be taken, upon the present record, and in
view of what the agreed statement of facts contains, as well as of
what it omits to disclose, that the conveyance was made without any
valuable consideration; that when it was made, the stockholders of
the two corporations were identical; that the Virginia corporation
still exists, with the same stockholders it had when the conveyance
of March 1, 1893, was made, and that as soon as this litigation is
concluded, the Pennsylvania corporation, if it succeeds in
obtaining judgment against the defendants,
can be required by
the stockholders of the Virginia corporation, being also its
own stockholders, to reconvey the lands in controversy to the
Virginia corporation without any consideration's passing to the
Pennsylvania corporation.
Was the circuit court bound to take cognizance of this action,
as one that involved a controversy between citizens of different
states within the meaning of the Constitution and the acts of
Congress regulating the jurisdiction of the courts of the United
States? This question can be more satisfactorily answered after we
shall have adverted to the principal cases cited in argument. The
importance of the question before us, to say nothing of the
ingenious and novel mode devised to obtain an adjudication of the
present controversy by a court of the United States, justifies a
reference to those cases.
The first case is that of
Maxfield
v. Levy, 2 Dall. 381, decided in the Circuit Court of
the United States for the Pennsylvania District. That was an action
of ejectment. The lessor of the plaintiff was a resident and
citizen of Maryland, the defendant being a resident and citizen of
Pennsylvania. A bill of discovery was filed against the lessor of
the plaintiff, in which it was alleged that the conveyance of the
premises in controversy was made by one Morris, a citizen of
Page 160 U. S. 332
Pennsylvania, for no other purpose than to give jurisdiction to
the circuit court. The answer to that bill admitted that "the
lessor of the plaintiff
had given no consideration for the
conveyance; that his name had been used
by way only of
accommodation to Morris." Upon a rule to show cause why the
action of ejectment should not be stricken from the docket, Mr.
Justice Iredell held that the conveyance was "colorable and
collusive, and therefore incapable of laying a foundation for the
jurisdiction of the court." The full opinion is reported in 4 Dall.
330 [omitted].
In
Hurst's Lessee v. McNeil, 1 Wash. C.C. 70, 82 --
which was ejectment in a circuit court of the United States, the
parties being alleged to be citizens of different states -- one of
the questions was as to the jurisdiction of the circuit court. Mr.
Justice Washington said:
"By the deed of the 15th January, 1774, from Timothy Hurst,
Charles, Thomas, and John became entitled to the land therein
conveyed, as tenants in common. The deed from Charles Hurst to
Biddle, and the reconveyance to Charles, vested the legal estate in
this land in Charles, but John and Thomas, it is admitted, were not
thereby divested of their rights in equity, though they might be in
law. Now the deed to John Hurst was meant to be a real deed, or was
merely fictitious, and intended to enable John Hurst to sue in this
Court. If the former, it was void, as the assent of the grantee was
not given at the time, nor has it ever been since given, for,
though the assent of a grantee to a deed, clearly for his benefit,
may be presumed, yet if a consideration is to be paid, as in this
(�1,000 is mentioned), the assent must be proved, or nothing passes
by the deed. If it was not meant as a real conveyance, then it may
operate to pass to John Hurst a legal title to his own third, which
had become vested in Charles, but to which John still retained an
equitable title. As to anything more, the deed cannot be supported;
because, as to the rights of Charles and Thomas Hurst and John
Baron, they remain unaffected by the deed to John, and
being
merely a fictitious thing, to give jurisdiction to this Court,
it will not receive our countenance."
McDonald v.
Smalley, 1 Pet. 620,
26 U. S. 624,
was a suit in equity
Page 160 U. S. 333
in the Circuit Court of the United States for the District of
Ohio to obtain a conveyance of a tract of land situated in that
state, the plaintiff McDonald being a citizen of Alabama and
deriving title under one McArthur, a citizen of Ohio, and the
defendants, Smalley and others being citizens of Ohio. The circuit
court dismissed the case for want of jurisdiction, and the judgment
was reversed by this Court. Chief Justice Marshall, speaking for
the Court, said:
"This testimony, which is all that was laid before the court,
shows, we think,
a sale and conveyance to the plaintiff,
which was
binding on both parties. McDonald could not have
maintained an action for his debt, nor McArthur a suit for his
land. His title to it was extinguished, and the consideration was
received. The motives which induced him to make the contract,
whether justifiable or censurable, can have no influence on its
validity. They were such as had sufficient influence with himself,
and he had a right to act upon them. A court cannot enter into them
when deciding on its jurisdiction. The conveyance appears to be
a real transaction, and the real as well as nominal
parties to the suit are citizens of different states. . . . The
case depends, we think, on the question whether the transaction
between McArthur and McDonald was real or fictitious, and we
perceive no reason to doubt its reality, whether the deed be
considered as absolute or as a mortgage."
In
Smith v.
Kernochen, 7 How. 198,
48 U. S. 216,
which was ejectment brought in the Circuit Court of the United
States for the Southern District of Alabama, the plaintiff, a
citizen of New York, was the assignee
for value of a
mortgage upon the premises executed by the owner in fee to an
Alabama corporation to secure a sum of money. It was charged that
the motive of the corporation in making the assignment was to
obtain a decision of the federal courts upon certain matters in
dispute between it and the owner in fee of the premises. One of the
questions to be determined was whether any title passed to the
plaintiff which the circuit court could enforce, if it appeared
that the transfer of the mortgage was for the purpose of giving
jurisdiction to that court, and to enable the
Page 160 U. S. 334
company to prosecute its claim therein, and if it also appeared
that the plaintiff was privy to such purpose when he took the
assignment. This Court, speaking by Mr. Justice Nelson, said:
"But the charge [to the jury], we think, may also be sustained
upon the ground on which it was placed by the court below. For,
even assuming that both parties concurred in the motive alleged,
the assignment of the mortgage, having been properly executed
and founded upon a valuable consideration, passed the
title and interest of the company to the plaintiff. The motive
imputed could not affect the validity of the conveyance. This was
so held in
McDonald v. Smalley, 1 Pet.
620. The suit would be free from objection in the state courts. And
the only ground upon which it can be made effectual here is that
the transaction between the company and the plaintiff was
fictitious and not real, and the the suit, in contemplation of law,
between the original parties to the mortgage. The question,
therefore, is one of proper parties to give jurisdiction to the
federal courts, not of title in the plaintiff. That would be a
question on the merits, to decide which the jurisdiction must first
be admitted. The true and only ground to objection in all these
cases is that the assignor, or grantor, as the case may be, is the
real party in the suit, and the plaintiff on the record but nominal
and colorable,
his name being used merely for the purpose of
jurisdiction. The suit is then in fact a controversy between
the former and the defendants, notwithstanding the conveyance, and
if both parties are citizens of the same state, jurisdiction, of
course, cannot be upheld. 1 Pet.
26 U. S.
625;
Maxfield v.
Levy, 2 Dall. 381;
Hurst v. McNeil, 1 Wash.
C.C. 70, 80; 2 Sumner 251."
The next case is
Jones v.
League, 18 How. 76,
59 U. S. 81. The
plaintiff, League, claimed to be a citizen of Maryland. The
defendants were citizens of Texas. The action, which was trespass
to try title to land, was brought in the District Court of the
United States for the District of Texas, in which state the land
was situated. League claimed under a deed by one Power, a citizen
of Texas. This Court, speaking by Mr. Justice McLean, said:
"In this case, jurisdiction is claimed by the citizenship of the
parties. The plaintiff avers that he is a citizen of Maryland, and
that the defendants are citizens of Texas. In one of the pleas, it
is
Page 160 U. S. 335
averred that the plaintiff lived in Texas twelve years and
upwards and that, for the purpose of bringing this suit, he went to
the State of Maryland, and was absent from Texas about four months.
The change of citizenship, even for the purpose of bringing a suit
in the federal court, must be with the
bona fide intention
of becoming a citizen of the state to which the party removes.
Nothing short of this can give him a right to sue in the federal
courts held in the state from whence he removed. If League was not
a citizen of Maryland, his short absence in that state, without a
bona fide intention of changing his citizenship, could
give him no right to prosecute this suit. But it very clearly
appears from the deed of conveyance to the plaintiff by Power that
it was
only colorable, as the suit was to be prosecuted for the
benefit of the grantor, and the one-third of the lands to be
received by the plaintiff was in consideration that he should pay
one-third of the costs, and superintend the prosecution of the
suit. The owner of a tract of land may convey it in order that the
title may be tried in the federal courts, but the conveyance must
be made
bona fide, so that the prosecution of the suit
shall not be for his benefit. The judgment of the district court is
reversed, for want of jurisdiction in that court."
In
Barney v. Baltimore
City, 6 Wall. 280,
73 U. S. 288,
which was a suit in equity in the Circuit Court of the United
States for Maryland for a partition of real estate and for an
account of rents and profits, etc., it appeared that certain
persons, citizens of the District of Columbia, conveyed their
interest in the property to a citizen of Maryland. It was admitted
that the conveyance was made
for the purpose of conferring
jurisdiction, was
without consideration, and that the
grantee,
on the request of the grantors, would reconvey to the
latter. Mr. Justice Miller, speaking for the Court, said:
"If the conveyance by the Ridgeleys of the District to S. C.
Ridgeley of Maryland had really transferred the interest of the
former to the latter, although made for the avowed purpose of
enabling the court to entertain jurisdiction of the case, it would
have accomplished that purpose.
McDonald v. Smalley, and
several cases since, have well established this rule. But in point
of
Page 160 U. S. 336
fact that conveyance did not transfer the real interest of the
grantors.
It was made without consideration, with a
distinct understanding that the grantors retained all their real
interest, and that the deed was to have no other effect than to
give jurisdiction to the court. And it is now equally well settled
that the court will not, under such circumstances, give effect to
what is a fraud upon the court, and is nothing more."
None of these cases sustains the contention of the plaintiffs.
All of them concur in holding that the privilege of a grantee or
purchaser of property, being a citizen of one of the states, to
invoke the jurisdiction of a circuit court of the United States for
the protection of his rights as against a citizen of another state,
the value of the matter in dispute being sufficient for the
purpose, cannot be affected or impaired
merely because of
the motive that induced his grantor to convey, or his vendor to
sell and deliver, the property, provided such conveyance or such
sale and delivery was a real transaction, by which the title passed
without the grantor's or vendor's reserving
or having any
right
or power to compel or require a reconveyance or
return to him of the property in question. We adhere to that
doctrine.
In harmony with the principles announced in former cases, we
hold that the circuit court properly dismissed this action. The
conveyance to the Pennsylvania corporation was without any valuable
consideration. It was a conveyance by one corporation to another
corporation, the grantor representing certain stockholders entitled
collectively or as one body to do business under the name of the
Virginia Coal and Iron Company, while the grantee represented
the same stockholders, entitled collectively or as one
body to do business under the name of the Lehigh Mining and
Manufacturing Company. It is true that the technical legal title to
the lands in controversy is for the time in the Pennsylvania
corporation. It is also true that there was no formal agreement
upon the part of that corporation "as an artificial being,
invisible, intangible, and existing only in contemplation of law,"
that the title should ever be reconveyed to the Virginia
corporation. But
Page 160 U. S. 337
when the inquiry involves the jurisdiction of a federal court,
the presumption in every stage of a cause being that it is without
the jurisdiction of a court of the United States, unless the
contrary appears from the record,
Grace v. American Central
Insurance Co., 109 U. S. 278,
109 U. S. 283;
Boers v. Preston, 111 U. S. 252,
111 U. S. 255,
we cannot shut our eyes to the fact that there exists what should
be deemed an equivalent to such an agreement, namely, the right
and power of those who are stockholders of each
corporation
to compel the one holding the legal title to
convey,
without a valuable consideration, such title to
the other corporation. In other words, although the Virginia
corporation, as such, holds no stock in the Pennsylvania
corporation, the latter corporation holds the legal title, subject
at any time to be divested of it by the action of the
stockholders of the grantor corporation who are also its
stockholders. The stockholders of the Virginia corporation -- the
original promoters of the present scheme, and, presumably, when a
question of the jurisdiction of a court of the United States is
involved, citizens of Virginia -- in order to procure a
determination of the controversy between that corporation and the
defendant citizens of Virginia, in respect of the lands in that
commonwealth which are here in dispute, assumed as a body the mask
of a Pennsylvania corporation for the purpose, and the purpose
only, of invoking the jurisdiction of the circuit court of the
United States, retaining the power, in their discretion, and after
all danger of defeating the jurisdiction of the federal court shall
have passed, to throw off that mask and reappear under the original
form of a Virginia corporation, their right, in the meantime, to
participate in the management of the general affairs of the latter
corporation not having been impaired by the conveyance to the
Pennsylvania corporation. And all this may be done, if the position
of the plaintiffs be correct, without any consideration passing
between the two corporations.
It is not decisive of the present inquiry that, under the
adjudications of this Court, the stockholders of the Pennsylvania
corporation -- the question being one of jurisdiction -- must be
conclusively presumed to be citizens of that commonwealth.
Page 160 U. S. 338
Nor is it material, if such be the fact, that the Pennsylvania
corporation could not have been legally organized under the laws of
that commonwealth in February, 1893, unless some of the subscribers
to its charter were then citizens of Pennsylvania. We cannot ignore
the peculiar circumstances which distinguish the present case from
all others that have been before this Court. The stockholders who
organized the Pennsylvania corporation were, it is agreed, the same
individuals who at the time were the stockholders of the Virginia
corporation. And under the rule of decision adverted to, the
stockholders of the Virginia corporation, just before they
organized the Pennsylvania corporation, as well as when the
Virginia corporation conveyed the legal title, were presumably
citizens of Virginia. If the rule which has been invoked be
regarded as controlling in the present case, the result, curiously
enough, will be that,
immediately prior to February, 1893,
before the Pennsylvania corporation was organized, the stockholders
of the Virginia corporation were presumably citizens of Virginia;
that a few days thereafter, in February, 1893, when they organized
the Pennsylvania corporation, the same stockholders became,
presumably, citizens of Pennsylvania, and that, on the 1st day of
March, 1893 at the time the Virginia corporation conveyed to the
Pennsylvania corporation, the same persons were presumably
citizens, at the same moment of time, of both Virginia and
Pennsylvania.
It is clear that the record justifies the assumption that there
was no valuable consideration for the conveyance to the
Pennsylvania corporation. Why should a
valuable
consideration have passed at all when the stockholders of the
grantor corporation and the stockholders of the grantee corporation
were, at the time of the conveyance, the same individuals? Could it
be expected that those stockholders, acting as one body under the
name of the Virginia Coal and Iron Company, would take money out of
one pocket for the purpose of putting it into another pocket, which
they had and used only while acting under the name of the Lehigh
Mining and Manufacturing Company? A valuable consideration cannot
be presumed merely because the agreed statement of facts recites
that the
Page 160 U. S. 339
Virginia corporation executed and delivered a deed of "bargain
and sale" conveying all its right, title, and interest to the
Pennsylvania corporation. In view of the admitted facts, that
recital must be taken as meaning nothing more than that the deed
was, in form, one of bargain and sale, conveying the technical
legal title. The deed cannot be regarded even as a deed of gift,
unless we suppose that a body of stockholders, acting under one
corporate name, solemnly made
a gift of property
to
themselves acting under another corporate name. When it is
remembered that the plaintiff in error stipulates that all that was
done had for its sole object to
create a case cognizable in the
federal court which would otherwise have been cognizable only in a
court of Virginia, it is not difficult to understand why the
agreed statement of facts failed to state in terms that a valuable
consideration was paid by the grantee corporation.
The arrangement by which, without any valuable consideration,
the stockholders of the Virginia corporation organized a
Pennsylvania corporation and conveyed these lands to the new
corporation for the express purpose --
and no other purpose is
stated or suggested -- of creating a case for the federal
court must be regarded as a mere device to give jurisdiction to a
circuit court of the United States and as being in law a fraud upon
this Court as well as a wrong to the defendants. Such a device
cannot receive our sanction. The court below properly declined to
take cognizance of the case.
This conclusion is a necessary result of the cases arising
before the passage of the Act of March 3, 1875, c. 137, 18 state.
470. The fifth section of that act provides that if, in any suit
commenced in a circuit court, it shall appear to the satisfaction
of that court at any time after such suit is brought that it
"does not really and substantially involve a dispute or
controversy properly within the jurisdiction of said circuit court
or that the parties have been
improperly or collusively
made or joined, either as plaintiffs or defendants,
for
the purpose of creating a case cognizable . . . under this
act, the said circuit court shall proceed no further therein, but
shall dismiss the suit."
This part of the of 1875 was not superseded
Page 160 U. S. 340
by the act of 1887, amended in 1888, 25 Stat. 434, c. 866. Its
scope and effect were determined in
Williams v. Nottawa,
104 U. S. 209,
104 U. S. 211,
and
Morris v. Gilmer, 129 U. S. 315. In
the first of those cases, the Court, referring to the act of 1875,
said:
"In extending a long way the jurisdiction of the courts of the
United States, Congress was specially careful to guard against the
consequences of collusive transfers to make parties, and imposed
the duty on the court, on its own motion, without waiting for the
parties, to stop all further proceedings and dismiss the suit the
moment anything of the kind appeared. This was for the protection
of the court as well as parties against frauds upon its
jurisdiction."
The organization of the Pennsylvania corporation and the
conveyance of it by the Virginia corporation, for the sole purpose
of creating a case cognizable by the circuit court of the United
States, is in principle somewhat like a removal from one state to
another with a view
only of invoking the jurisdiction of
the federal court. In
Morris v. Gilmer, just cited, the
Court said:
"Upon the evidence in this record, we cannot resist the
conviction that the plaintiff had no purpose to acquire
a
domicile or settled home in Tennessee, and that his sole
object in removing to that state was to place himself in a
situation to invoke the jurisdiction of the circuit court of the
United States. He went to Tennessee without any present intention
to remain there permanently or for an indefinite time, but with a
present intention to return to Alabama as soon as he could do so
without defeating the jurisdiction of the federal court to
determine his new suit. He was therefore a mere sojourner in the
former state when this suit was brought. He returned to Alabama
almost immediately after giving his deposition. The case comes
within the principle announced in
Butler v. Farnsworth, 4
Wash. C.C. 101, 103, where Mr. Justice Washington said:"
"If the removal be for the purpose of committing
a
fraud upon the law, and to enable the party to avail himself
of the jurisdiction of the federal courts, and that fact be made
out by his acts, the court must pronounce that his removal was not
with a
bona fide intention of changing his domicile,
however frequent and public his
Page 160 U. S. 341
declarations to the contrary may have been."
129 U.S.
129 U. S.
328-329.
Other cases in this Court show the object and scope of the above
provision in the act of 1875. In
Farmington v. Pillsbury,
114 U. S. 138,
114 U. S. 139,
114 U. S. 145,
which was a suit upon coupons of bonds issued in the name of
Farmington, a municipal corporation of Maine, the bonds themselves
being owned by citizens of that state, it appeared that the bonds
were purchased and held by such citizens while a suit was pending
in one of the courts of Maine to test their validity. The state
court decided that they were void and inoperative. After that
decision, coupons of the same amount, gathered up and held by
citizens of Maine, were transferred by their agent to Pillsbury, a
citizen of Massachusetts, under an arrangement by which he gave his
promissory note for $500, payable in two years from date, with
interest, and agreed, "as a further consideration for said
coupons," that if he succeeded in collecting the full amount
thereof, he would pay the agent, as soon as the money was gotten
from the corporation, fifty percent of the net amount collected
above the $500. Pillsbury then brought his suit on these coupons,
he being a citizen of Massachusetts, against the Town of
Farmington, in the Circuit Court of the United States for the
District of Maine. Here was, in form, a sale and delivery of
coupons for a valuable consideration. This Court regarded the whole
transaction as a sham, and, speaking by Chief Justice Waite,
said:
"It is a suit for the benefit of the owners of the bonds. They
are to receive from the plaintiff one-half of the net proceeds of
the case they have created by their transfer of the coupons
gathered together for that purpose. The suit is their own in
reality, though they have agreed that the plaintiff may retain
one-half of what he collects for the use of his name and his
trouble in collecting. It is true the transaction is
called a
purchase in the papers that were
executed, and that the plaintiff gave his note for $500, but the
time for payment was put off for two years, when it was no doubt
supposed the result of the suit would be known.
No money was
paid, and, as the note was not negotiable, it is clear the
parties intended to keep the control of the whole
matter
Page 160 U. S. 342
in their own hands, so that if the plaintiff failed to
recover the money, he could be released from his promise to
pay."
The Court, adopting the language of MR. JUSTICE FIELD in
Detroit v. Dean, 106 U. S. 537,
106 U. S. 541,
adjudged the transfer of the coupons to be "a mere contrivance, a
pretense, the result of a collusive arrangement to create," in
favor of the plaintiff, "a fictitious ground of federal
jurisdiction." Referring to the above provision in the act of 1875,
the Court, after declaring it to be a salutary one, said that
"it was intended to promote the ends of justice, and is
equivalent to an express enactment by Congress that the circuit
courts shall not have jurisdiction of suits which do not really and
substantially involve a dispute or controversy of which they have
cognizance,
nor of suits in which the parties have been
improperly
or collusively made or joined
for the
purpose of creating a case cognizable under the act."
P.
114 U. S.
144.
These principles were reaffirmed in
Little v. Giles,
118 U. S. 596,
118 U. S. 603,
in which Mr. Justice Bradley, speaking for the Court, said that
under the act of 1875, where the interest of the nominal party
is
"simulated and collusive,
and created for the very purpose
of giving jurisdiction, the court should not hesitate to apply
the wholesome provisions of the law."
The case before us is one that Congress intended to exclude from
the cognizance of a court of the United States. The Pennsylvania
corporation neither paid nor assumed to pay anything for the
property in dispute, and was invested with the technical legal
title for the purpose only of bringing a suit in the federal court.
As we have said, that corporation may be
required, by
those who are stockholders of its grantor and who are also its own
stockholders at any time, and
without receiving therefor any
consideration whatever, to place the title where it was when
the plan was formed to wrest the judicial determination of the
present controversy from the courts of the state in which the land
lies. It should be regarded as a case of an improper and collusive
making of parties for the purpose of creating a case cognizable in
the circuit court. If this action were not declared collusive
within the meaning of the act of 1875, then the provision making it
the duty of the
Page 160 U. S. 343
circuit court to dismiss a suit, ascertained at any time to be
one in which parties have been improperly or collusively made or
joined, for the purpose of creating a case cognizable by that
court, would become of no practical value, and the dockets of the
circuit courts of the United States will be crowded with suits of
which neither the framers of the Constitution nor Congress ever
intended they should take cognizance.
The judgment is
Affirmed.
MR. JUSTICE SHIRAS, dissenting.
In April, 1893, the Lehigh Mining and Manufacturing Company,
asserting itself to be a corporation organized and existing under
the laws of the State of Pennsylvania and a citizen and resident of
said state, brought in the Circuit Court of the United States for
the Western District of Virginia an action of ejectment for a tract
of land in Wise County, State of Virginia, and within the
jurisdiction of that court, against J. J. Kelly, James C. Hubbard,
and others, all of whom were averred to be citizens of the State of
Virginia, and residents of the Western District thereof.
The defendants filed two special pleas which were traversed by
replications. The record shows that subsequently the cause was
submitted to the court on the issues thus made, and with an agreed
statement of facts, and that the court, on May 30, 1893, sustained
the pleas, found that it had no jurisdiction of the case and
dismissed the action for want of jurisdiction, but without
prejudice. Upon exceptions duly taken, this judgment was brought to
this Court.
It is admitted in the agreed statement of facts that the Lehigh
Mining and Manufacturing Company was, in February, 1893,
duly
organized as a corporation of the State of Pennsylvania, and
was existing as such at the time of the commencement of this
action.
The Constitution of Pennsylvania, of which we take judicial
notice, provides, in the seventh section of article third, that
such
Page 160 U. S. 344
a corporation cannot be created by any local or special law, and
we are thus given to know that the company in question was
organized under a general law of the state. On resorting to that
law, being the Act of April 29, 1874 (Pruden's Digest, vol. 1, page
335), and of the contents of which we also take judicial notice, we
find it provided that, to become duly organized as a mining and
manufacturing company, the charter must be subscribed by five or
more persons, three of whom at least, must be citizens of
Pennsylvania; that the certificate must set forth that ten
percentum of the capital stock has been paid in cash to the
treasurer of the intended corporation, and these facts, as to
citizenship and the payment of the requisite proportion of the
capital in cash, must be sworn to by at least three of the
subscribers. Upon such proof, the governor is authorized to direct
letters patent to be issued, but no corporation shall go into
operation without first having the name of the company, the date of
the incorporation, the place of business, the amount of capital
paid in, and the names of the president and treasurer registered in
the office of the auditor general of the state. While, therefore,
it is stated in the agreed statement of facts that the said company
was organized by the individual stockholders and the officers of
the Virginia Coal and Iron Company, such statement is by no means
inconsistent with the other statement that the Lehigh Mining and
Manufacturing Company was duly organized, and therefore included in
its membership citizens of Pennsylvania.
The presumption therefore must be that the Lehigh Mining and
Manufacturing Company was in all respects a corporation regularly
and legally organized, and the concession of the agreed statement
is that,
as matter of fact, at least three of its
corporators are citizens of the State of Pennsylvania. As matter of
law, as we shall presently see, all of its corporators are to be
indisputably deemed, for the purpose of jurisdiction in the circuit
court of the United States, citizens of that state.
The record therefore discloses that a regularly organized body
corporate of the State of Pennsylvania, seeking to assert its title
to a tract of land situated in Wise County, Virginia,
Page 160 U. S. 345
as against certain citizens of Virginia in possession of said
tract, and having brought an action at law in the circuit court of
the United States, has been dismissed from that court for alleged
want of jurisdiction.
Such want of jurisdiction is not apparent on the face of the
record, apart from the allegations contained in the special pleas.
That the circuit court of the United States has jurisdiction of a
dispute about the title to land between a corporation of another
state and citizens of the state where the land is situated is, of
course, now settled beyond controversy. After a long dispute, the
history of which we need not here follow, it was finally decided in
Louisville & Nashville
Railroad v. Letson, 2 How. 497, that
"a corporation, created by and transacting business in a state,
is to be deemed an inhabitant of the state, capable of being
treated as a citizen, for all purposes of suing and being sued, and
an averment of the facts of its creation and the place of
transacting business is sufficient to give the circuit court
jurisdiction."
Accordingly, in that case, a plea to the jurisdiction alleging
that some of the corporators of the defendant company, which was a
corporation of the State of South Carolina, were citizens of New
York, of which latter state the plaintiff was a citizen, was, on
demurrer, overruled. In
Ohio & Mississippi
Railroad Co. v. Wheeler, 1 Black 296, the Court,
speaking by Chief Justice Taney said:
"Where a corporation is created by the laws of a state, the
legal presumption is that its members are citizens of the state
which created the corporate body, that a suit by or against a
corporation, in its corporate name, must be presumed to be a suit
by or against citizens of the state which created the corporate
body, and that
no averment or evidence to the contrary is
admissible for the purpose of withdrawing the suit from the
jurisdiction of a court of the United States. . . . After
these successive decisions, the law upon this subject must be
regarded as settled, and a suit by or against a corporation in its
corporate name as a suit by or against citizens of the state which
created it."
If these cases correctly state the law, was it competent for
Page 160 U. S. 346
the court below, upon the facts agreed upon, to disregard the
corporate character of the plaintiff company and to find that it
was composed, in a jurisdictional sense, of citizens of Virginia?
It is true that the defendants, in their second plea, alleged that
"there was no such legally organized corporation as the plaintiff
company at the date of the institution of this suit." But, as we
have seen, the statement of facts, agreed upon after the pleas were
filed, states that the plaintiff company was a duly organized
corporation of the State of Pennsylvania and was existing as such
at the time of the bringing of the suit.
Assuming, then, as we have a right to do, that the corporate
existence of the plaintiff company is conceded, and that, under the
authorities, the members of the company are to be deemed citizens
of the State of Pennsylvania, and that no averment or evidence to
the contrary is admissible for the purpose of withdrawing the suit
from the jurisdiction of the circuit court, were there any other
facts which justified the action of the court below in dismissing
the action for want of jurisdiction?
It is said that because it is conceded in the agreed statement
of facts that the land in controversy had been claimed by the
Virginia Coal and Iron Company, a corporation organized under the
laws of the State of Virginia, and that said company had executed
and delivered a deed a bargain and sale to the Lehigh Mining and
Manufacturing Company by which it conveyed all its right, title,
and interest in and to the land in controversy to the Lehigh Mining
and Manufacturing Company in fee simple, and because it is admitted
that the Pennsylvania company was organized by the individual
stockholders and officers of the Virginia company, and that the
purpose in organizing said Lehigh Mining and Manufacturing Company,
and in making to it said conveyance, was to give the circuit court
jurisdiction in the case, the legal effect of such a state of facts
would constitute a fraud upon the court, and would justify it in
dismissing the suit.
It is difficult to see, in the first place, how this could be a
case of
fraud. The facts were conceded -- not concealed,
not
Page 160 U. S. 347
falsely stated. It would be one thing to say that an
acknowledged state of facts failed to confer jurisdiction; another
thing to say that such acknowledged state of facts, though formally
conferring jurisdiction, constituted fraud on the court, not
because untrue and pretended, and intended to deprive a court of
jurisdiction, but because intended to bring a legal cause of action
within its jurisdiction. We have seen that,
ex necessitate
and as matter of fact, there were citizens of Pennsylvania who had,
as members of a corporation of that state, an interest in the
subject matter of the suit, and we have seen that, by a well
settled proposition of law, the Pennsylvania company must for
jurisdictional purposes be indisputably deemed to be wholly
composed of citizens of the state that created it. How then, in the
absence of misstatement or suppression of facts, can it be said
that the Pennsylvania company was guilty of any fraud in invoking
the jurisdiction of the federal court?
I submit that the
true question, under the pleading and
statement of facts, was whether the transaction whereby title to
the land in dispute was granted and conveyed by the Virginia
company to the Pennsylvania company was an actual one -- was really
what it purported to be. If the conveyance by the Virginia company
really and intentionally conferred its title on the Pennsylvania
company, so that the latter company could legally assert its title
against the parties in possession in a state court, no reason
existed why the same cause of action might not be asserted in a
federal court. That if the transaction were an actual one, and the
conveyance one intended to vest an absolute title, unqualified by
any trust, the jurisdiction of the circuit court validly attached
has been frequently declared, even if the
purpose was to
make a case cognizable by the federal court.
McDonald v.
Smalley, 1 Pet. 620, was a case where a citizen of
Ohio, under the apprehension that his title to lands in that state
could not be maintained in the state court and being indebted to a
citizen of Alabama, offered to sell and convey to him the land in
payment of the debt, stating in the letter by which the offer was
made that the title would most
Page 160 U. S. 348
probably be maintained in the courts of the United States, but
would fail in the courts of the state. The Alabama citizen accepted
the conveyance and afterwards gave to a third party his bond to
make a quitclaim title to the land on condition of receiving
$1,000. The Circuit Court of the United States for the District of
Ohio, in which the grantee filed, as a citizen of Alabama, a bill
in equity held that upon the above state of facts the court had no
jurisdiction to entertain the suit. But this Court held otherwise
and reversed the judgment. Chief Justice Marshall, for the Court,
said:
"It has not been alleged, and certainly cannot be alleged, that
a citizen of one state having title to lands in another is disabled
from suing for those lands in the courts of the United States by
the fact that he derives his title from a citizen of the state in
which the lands lie. Consequently, the single inquiry must be
whether the conveyance from McArthur to McDonald was real or
fictitious. . . . This testimony shows a sale and conveyance to the
plaintiff which was binding on both parties. . . . McArthur's title
was extinguished, and the consideration was received. The motives
which induced him to make the contract, whether justifiable or
censurable, can have no influence on its validity. They were such
as had sufficient influence with himself, and he had a right to act
upon them. A court cannot enter into them when deciding on its
jurisdiction. The conveyance appears to be a real transaction, and
the real as well as nominal parties to the suit are citizens of
different states. The only part of the testimony which can inspire
doubt respecting its being an absolute sale is the admission that
the plaintiff gave his bond to a third party for a quitclaim deed
to the land, on paying him $1,100. We are not informed who this
third party was, nor do we suppose it to be material. The title of
McArthur was vested in the plaintiff, and did not pass out of him
by this bond. A suspicion may exist that it was for McArthur. The
court cannot act upon this suspicion. But suppose the fact to be
averred, what influence could it have upon the jurisdiction of the
court? It would convert the conveyance which on its face appears to
be absolute into a
Page 160 U. S. 349
mortgage. But this would not affect the question. In a contest
between the mortgagor and mortgagee, being citizens of different
states, it cannot be doubted that an ejectment or a bill in
foreclosure may be brought by the mortgagee, residing in a
different state, in a court of the United States. Why, then, may he
not sustain a suit in the same court against any other person,
being a citizen of the same state with the mortgagor? We can
perceive no reason why he should not. The case depends, we think,
on the question whether the transaction between McArthur and
McDonald was real or fictitious, and we perceive no reason to doubt
its reality whether the deed be considered as absolute or as a
mortgage."
In
Smith v.
Kernochen, 7 How. 198, where a mortgagee, a citizen
of Alabama, assigned the mortgage to a citizen of New York, both
parties concurring in the motive to have the question involved
passed upon by a federal court, it was held that
"
the motive imputed could not affect the validity of the
conveyance. This was so held in
McDonald v.
Smalley, 1 Pet. 620. The suit would be free from
objection in the state courts, and the only ground upon which it
can be made effectual here is that the transaction between the
company and plaintiff was fictitious, and not real, and the suit
still, in contemplation of law, between the original parties to the
mortgage. The question, therefore, is one of proper parties to give
jurisdiction to the federal courts, not of title in the plaintiff.
That would be a question on the merits, to decide which
the jurisdiction must first be admitted. The true and only ground
of objection in all these cases is that the assignor or the
grantor, as the case may be, is the
real party in the
suit, and the plaintiff on the record but nominal and colorable,
his
name being used merely for the purpose of
jurisdiction."
So, in
Barney v.
Baltimore, 6 Wall. 280, the Court said:
"If the conveyance by the Ridegelys of the District to Samuel C.
Ridegely, of Maryland, had really transferred the interest of the
former to the latter,
although made for the avowed purpose of
enabling the court to entertain jurisdiction of the case, it would
have accomplished that purpose. McDonald
Page 160 U. S. 350
v. Smalley, 1 Pet. 620, and several cases since, have
well established this rule."
If, then, anything can be regarded as settled, it is that the
motive or purpose of securing a right of action in a
federal court by a conveyance or assignment will not defeat the
jurisdiction, if the conveyance or assignment be real and not
fictitious.
It therefore follows in the present case that the concession in
the agreed statement of facts that the purpose was to give
jurisdiction to the circuit court will not defeat that jurisdiction
unless it appears that the conveyance was not real, but fictitious.
This presents a question of fact. Stated in direct terms, the
question is this: given a Pennsylvania corporation, indisputably
composed of citizens of that state, and a conveyance in fee simple
to such company of a tract of land, situated in the State of
Virginia, by a corporation of that state, the land being in
possession of citizens of the latter state, was this apparent
jurisdiction defeated by the admitted facts? It has been
established, by the cases cited that the mere purpose or intention
to put the claim into an owner who would be entitled to go into a
federal court would not be objectionable if the conveyance were an
actual one, and where the interest asserted belonged wholly to the
plaintiff.
Hence, the only matter now to determine is what was the
character of the conveyance in the present case? It was in form a
deed of bargain and sale purporting to convey a fee simple. It is
admitted in the agreed statement of facts that
"said conveyance passed to said Lehigh Mining and Manufacturing
Company
all the right, title, and interest of said Virginia
Coal and Iron Company in and to said land, and that since said
conveyance, said Virginia Coal and Iron Company has had no interest
in said land, and has not and never has had any interest in that
suit, and that it owns none of the stock of said Lehigh Mining and
Manufacturing Company, and has no interest therein
whatsoever."
It is contended in the opinion of the majority that
"it appears, in view of what the agreed statement of facts
contains as well as what it omits to disclose, that the
conveyance
Page 160 U. S. 351
was without any valuable consideration, and that as soon as this
litigation is concluded, the Pennsylvania corporation, if it
succeeded in obtaining judgment against the defendants, can be
required by the stockholders of the Virginia corporation, being
also stockholders of the Pennsylvania corporation, to reconvey the
land in controversy to the Virginia corporation."
This contention, and the fate of the case turns upon it, can be
readily met. It assumes two facts, neither of which is found in the
record and both of which, if found, would be immaterial. First, it
is said that the conveyance was without any valuable consideration.
But it is distinctly admitted that the Virginia company
"executed and delivered a deed of bargain and sale to the Lehigh
Mining and Manufacturing Company by which it conveyed all its
right, title, and interest in the land in controversy in fee
simple."
It is not found that no consideration was given, and in the
absence of such a finding, the presumption would be that a deed of
conveyance under seal, and granting an estate in fee simple,
implies a consideration. But it is unnecessary to consider this,
because it is wholly immaterial whether the grantee paid a
consideration or not. The deed, even if it were a deed of gift, was
executed and delivered, and an executed gift is irrevocable. Nor
does it concern the defendants whether the grant by deed was or was
not for a valuable consideration.
This very question came up in the case of
De Laveaga v.
Williams, 5 Sawyer 573, in the Circuit Court of the District
of California, and where it was urged that no consideration was
ever paid, and that the deed was executed to enable the suit to be
brought in the circuit court of the United States. But the court
said, by MR. JUSTICE FIELD:
"There is no doubt that the sole object of the deed to the
complainant was to give jurisdiction, and that the grantor has
borne and still bears the expenses of the suit. But neither of
these facts renders the deed inoperative to transfer the title. The
defendants are not in a position to question the right of the
grantor to give away the property if he chooses so to do. And the
court will not, at the suggestion of a stranger to the title,
inquire into the motives which induced the grantor to
Page 160 U. S. 352
part with his interest. It is sufficient that the instrument
executed is valid in law, and that the grantee is of the class
entitled under the laws of Congress to proceed in the federal
courts for the protection of his rights. It is only when the
conveyance is executed to give the court jurisdiction, and is
accompanied with an agreement to retransfer the property at the
request of the grantor upon the termination of the litigation, that
the proceeding will be treated as a fraud upon the court. Here
there was no such agreement, and it will be optional with the
complainant to retransfer or to retain the property. He is, by the
deed, the absolute owner of the interest conveyed, and can only be
deprived of it by his own will, and upon such considerations as he
may choose to exact."
The only operation that could be given to the absence of proof
of an actual consideration would be to create a suspicion of a
secret trust. But this is negatived in the present case by the
admission that a deed in fee simple was executed and delivered, and
that by it the entire title, interest, and right of the grantor
company passed to the Pennsylvania corporation, and that, "since
said conveyance, said Virginia Coal and Iron Company has had no
interest in said land, and has not and never has had any interest
in this suit."
It is admitted in the opinion of the majority that
"the legal title to the lands in controversy is in the
Pennsylvania corporation, and that there was no formal agreement or
understanding upon its part that the title shall ever be reconveyed
to the Virginia corporation."
But it is said that
"there exists what should be deemed an equivalent to such an
agreement -- namely, the right and power of those who are
stockholders of each corporation to compel the one holding the
legal title to convey, without a valuable consideration, that title
to the other corporation."
This seems to me to be a strained conjecture. Stock in a
corporation is continually changing hands, and to suppose that, at
the end of a pending litigation, the holders will be the identical
persons who held it at the beginning is too uncertain and fanciful
to form a basis for a judicial action. As was well said by Mr.
Justice Grier, in
Marshall v.
Baltimore
Page 160 U. S. 353
& Ohio Railroad, 16 How. 327:
"The necessities and conveniences of trade and business require
that such numerous associates and stockholders should act by
representation, and have the faculty of contracting, suing, and
being sued in a factitious or collective name. . . . It is not
reasonable that representatives of
unknown and ever-changing
associates should be permitted to allege the different
citizenship of one or more of these stockholders"
in order to defeat the jurisdiction of federal courts.
Some expressions used in the opinion of the court below and
likewise in the majority opinion seem to imply that the Act of
March 3, 1875, c. 137, 18 Stat. 470, has operated to change the law
in respect to the jurisdiction of the circuit courts of the United
States. I do not so understand the purpose of that enactment. I
have supposed that it only operates as a rule of practice. As the
law previously stood, if the face of the record disclosed a suit
between citizens of different states, and thus within the
jurisdiction of the circuit court, it was necessary to traverse the
averment of citizenship by a plea in abatement, and if the
defendant went to trial on a plea to the merits, he could not
afterwards question the truth of such averment.
Smith v.
Kernochen, 7 How. 198;
Barney v.
Baltimore, 6 Wall. 280.
But since the passage of the Act of March 3, 1875,
"it is competent for the court at any time during the trial of
the case, without plea and without motion, to stop all further
proceedings and dismiss the suit the moment a fraud on its
jurisdiction is discovered."
Hartog v. Memory, 116 U. S. 588.
It is not perceived that the legal rights of owners of property
are in any wise affected by this law, and it is still true, as was
said in
Barry v. Edmunds, 116 U.
S. 550, that
"the order of the circuit court dismissing the cause for want of
jurisdiction is reviewable by this Court on writ of error by the
express words of the act. In making such an order, therefore, the
circuit court exercises a legal, and not a personal, discretion,
which must be exerted in view of the facts sufficiently proven and
controlled by fixed rules of law. It might happen that the judge,
on the trial or hearing of a cause, would receive
Page 160 U. S. 354
impressions amounting to a moral certainty that it does not
really and substantially involve a dispute or controversy within
the jurisdiction of the court. But upon such a personal conviction,
however strong, we would not be at liberty to act unless the facts
on which the persuasion is based, when made distinctly to appear on
the record, create a legal certainty of the conclusion based on
them. Nothing less than this is meant by the statute when it
provides that the failure of its jurisdiction on this account shall
appear to the satisfaction of the court."
As, then, the plaintiff company is conceded to be a duly
organized and existing body corporate of the State of Pennsylvania,
as the land in dispute is within the jurisdiction of the court, and
the defendants in possession thereof are citizens of the State of
Virginia, and as it is conceded that, by a deed of conveyance in
fee simple, the Virginia company passed all its right, title, and
interest in said land, and has since had "no interest in said land
or in the suit," I think the jurisdiction of the circuit court
ought not to be defeated by the conjecture that the persons owning
the stock of the corporation when the deed of conveyance was made
might continue to own it years afterwards when the suit should
terminate and might choose as such owners to cause another transfer
and conveyance of the land to be made. Such conjectures are very
far from furnishing for judicial action that "legal certainty"
which, in
Barry v. Edmunds, is said to be the proper basis
upon which to deprive parties of their right of access to the
national tribunals.
If we are permitted to enter into the realm of supposition, it
is easy to suggest that the present stockholders, so far as they
are citizens of Virginia, might dispose of their stock in good
faith and absolutely to citizens of Pennsylvania. Then, upon
another action brought in the same court, the same pleas being
interposed, it would be competent, according to the views which
prevail in the present case, to meet the pleas by a replication
averring that the individual stockholders are citizens of
Pennsylvania, and thus the jurisdiction would be sustained. What,
in such a case, would have become of the long settled
Page 160 U. S. 355
rule that the status as to citizenship of the individual
stockholders is not a matter of allegation and proof? Has the Court
retraced its steps, and can state corporations be turned out of the
federal courts on a plea that one or more of the stockholders is a
citizen of the same state in which the litigation is pending?
MR. JUSTICE FIELD and MR. JUSTICE BROWN concur in this
dissent.