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 "
brk:
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?"
MR. JUSTICE SHIRAS, after stating the facts in the foregoing
language, delivered the opinion of the Court.
Etta James, as a citizen of the State of Missouri, and having a
cause of action against the St. Louis and San Francisco Railway
Company, a corporation of the State of Missouri, could, of course,
sue the latter in the courts of that state, but equally, of course,
could not sue such state corporation in the Circuit Court of the
United States for the District of Missouri. Can she, as such
citizen of the State of Missouri, lawfully assert her cause of
action in the Circuit Court of the United States for the District
of Arkansas against the St. Louis and San Francisco Railway Company
by showing that the latter had availed itself of the rights and
privileges conferred by the State of Arkansas on railroad
corporations of other states coming within her borders and
complying with the terms and conditions of her statutes?
Before addressing ourselves directly to this question, it must
be conceded that the plaintiff's cause of action, though arising in
Missouri, is transitory in its nature, and that the St. Louis and
San Francisco Railway Company, though denying the plaintiff's right
to sue it in the circuit court of Arkansas, waives its statutory
privilege of being sued only in the district in which it has its
habitat.
It must be regarded, to begin with, as finally settled by
repeated decisions of this Court that, for the purpose of
jurisdiction
Page 161 U. S. 555
in the federal courts, a state corporation is deemed to be
indisputably composed of citizens of such state. It is equally true
that, without objection so far from the federal authority, whether
legislative or judicial, it has become customary for a state
adjacent to the state creating a railroad corporation to
legislatively grant authority to such foreign corporation to enter
its territory with its road -- to make running arrangements with
its own railroads, to buy or lease them, or to consolidate with the
companies owning them. Sometimes, as in the present case, such
foreign corporation is declared, upon its acceptance of prescribed
terms and conditions, to become a domestic corporation of such
adjacent state and to be endowed with all the rights and privileges
enjoyed by similar corporations created by such state.
We have already said that the rule that state corporations are
indisputably composed of citizens of the states creating them is
finally settled. But in view of the question now before us, it may
be well to briefly review some of the cases.
In the case of
Bank v. Deveaux,
5 Cranch 61, where an action had been brought against citizens of
the State of Georgia in the Circuit Court of the United States for
the District of Georgia by a petition of "the president, directors,
and company of the Bank of the United States" wherein it was
alleged that the petitioners were citizens of the State of
Pennsylvania, it was held that a corporation aggregate, composed of
citizens of the state, may sue a citizen of another state in the
circuit court of the United States, and Chief Justice Marshall, in
giving the opinion of the Court, said:
"Substantially and essentially, the parties in such a case,
where the members of the corporation are aliens or citizens of a
different state from the opposite party, come within the spirit and
terms of the jurisdiction conferred by the Constitution on the
national tribunals."
Before leaving this case, it should be noted that the United
States Bank was not a corporation of the State of Pennsylvania, but
of the United States. The decision therefore was to the effect that
where it appeared that a corporation plaintiff, regardless of its
origin, was composed of aliens or of
Page 161 U. S. 556
citizens of a different state from the defendant, the plaintiff,
though suing in its corporate name, could make the averment that
the individuals who composed the corporation were such aliens or
citizens of a different state, and such averment, if not traversed,
would sustain the jurisdiction. The principal of the case makes the
individual corporators the real parties to the suit.
In
Louisville, Cincinnati &c.
Railroad v. Letson, 2 How. 497, an action was
brought, in the Circuit Court of the United States for the District
of South Carolina by a citizen of the State of New York against a
corporation whose members were alleged to be citizens of South
Carolina. A plea to the jurisdiction was set up that there were
members of the defendant company who were not citizens of the State
of South Carolina, but of another state than New York or South
Carolina. In the opinion in this case,
Bank v. Deveaux was
said to have gone too far, and that consequences and inferences had
been argumentatively drawn from it which ought not to be followed,
and it was said that
"a corporation created by a state to perform its functions under
the authority of that state, and only suable there, though it may
have members out of the state, seems to us to be a person, though
an artificial one, inhabiting and belonging to that state, and
therefore entitled, for the purpose of suing and being sued, to be
deemed a citizen of that state,"
and accordingly the judgment of the circuit court overruling the
plea to its jurisdiction was sustained.
Marshall v. Baltimore &
Ohio Railroad, 16 How. 314, was a case tried in the
Circuit Court of the United States for the District of Maryland
wherein the plaintiff alleged that he was a citizen of the State of
Virginia and that the Baltimore and Ohio Railroad Company, the
defendant, was a body corporate by an act of the General Assembly
of Maryland, and it was suggested when the case came into this
Court that such an averment was insufficient to show jurisdiction
in the courts of the United States over the suits, and it was
denied that the decision in
Louisville Railroad Company v.
Letson, 2 How. 597, sanctioned it or, if some of
the doctrines there
Page 161 U. S. 557
advanced seemed to do so, it was said that they were
extrajudicial, and therefore not authoritative. Several judges
dissented, but the Court, speaking through Mr. Justice Grier, held
that
"if the declaration set forth facts from which the citizenship
of the parties may be presumed or legally inferred, it is
sufficient. The presumption arising from the habitat of a
corporation in the place of its creation being conclusive as to the
residence or citizenship of those who use the corporate name and
exercise the faculties conferred by it, the allegation that 'the
defendants are a body corporate, by the act of the General Assembly
of Maryland,' is a sufficient averment that the real defendants are
citizens of that state."
In
Covington Drawbridge Co.
v. Shepherd, 20 How. 233, Chief Justice Taney,
speaking for the Court, said:
"The question as to the jurisdiction of the courts of the United
States in cases where a corporation is a party was argued and
considered in this Court for the first time in the cases of
Insurance
Co. v. Boardman and of
Bank v.
Deveaux, 5 Cranch 57,
9 U. S.
61. These two cases were argued at the same term, and
were, as appears by the report, decided at the same time. And in
the last-mentioned case, the Court held that in a suit by or
against a corporation in its corporate name, this Court might look
beyond the mere legal being which the charter created and regard it
as a suit brought by or against the individual persons who composed
the corporation, and an averment that they were citizens of a
particular state (if such was the fact) would be sufficient to give
jurisdiction to a court of the United States although the suit was
in the corporate name and the individual corporators were not named
in the suit or the averment."
"But in the case of
Louisville Railroad Company v.
Letson, the Court overruled as much of this opinion as
authorized a corporation to plead in abatement that one or more of
the corporators, plaintiff or defendants, were citizens of a
different state from the one described, and held that the members
of the corporate body must be presumed to be citizens of the state
in which the corporation was domiciled, and that both parties were
estopped from denying it, and that, inasmuch
Page 161 U. S. 558
as the corporators were not parties to the suit in their
individual characters, but merely as members and component parts of
the body or legal entity which the charter created, the members who
composed it ought to be presumed, so far as its contracts and
liabilities are concerned, to reside where the domicile of the body
was fixed by law, and where alone they could act as one person, and
to the same extent, and for the same purposes, be also regarded as
citizens of the state from which this legal being derived its
existence and its faculties and powers."
The previous cases were reviewed in
Ohio &
Mississippi Railroad v. Wheeler, 1 Black 286. That
was the case of an action brought in the Circuit Court of the
United States for the District of Indiana against Wheeler, a
citizen of that state, to recover the amount due on his
subscription to stock of the Ohio and Mississippi Railroad Company.
The declaration described the plaintiffs as
"the president and directors of the Ohio and Mississippi
Railroad Company, a corporation created by the laws of the States
of Indiana and Ohio and having its principal place of business in
Cincinnati, in the State of Ohio, a citizen of the State of
Ohio."
The defendant pleaded to the jurisdiction by alleging that the
plaintiff company, although a corporation of the State of Ohio in
the first instance, had been incorporated by an act of assembly of
the State of Indiana, and thus had become a body corporate of the
same state whereof he was a citizen.
The question thus raised was, on a certificate of a division of
opinion between the judges of the circuit court, brought to this
Court, and was answered as follows:
"This suit in the corporate name is, in contemplation of law,
the suit of the individual persons who compose it, and must
therefore be regarded and treated as a suit in which citizens of
Ohio and Indiana are joined as plaintiffs in an action against a
citizen of the last-mentioned state. Such an action cannot be
maintained in a court of the United States where jurisdiction of
the case depends altogether on the citizenship of the parties. And
in such a suit it can make no difference whether the plaintiffs sue
in their own proper names or by the corporate name and
Page 161 U. S. 559
style by which they are described. The averments in the
declaration would seem to imply that the plaintiffs claim to have
been created a corporate body, and to have been endued with the
capacities and faculties it possesses by the cooperating
legislation of the two states, and to be one and the same legal
being in both states. If this were the case, it would not affect
the question of jurisdiction in this case. But such a corporation
can have no legal existence upon the principles of the common law
or under the decision of this Court in the case of
Bank v.
Earle. It is true that a corporation by the name and style of
the plaintiffs appears to have been chartered by the States of Ohio
and Indiana, clothed with the same capacities and powers, and
intended to accomplish the same objects, and it is spoken of in the
laws of those states as one corporate body, exercising the same
powers and fulfilling the same duties in both states. Yet it has
not legal existence in either state, except by the law of the
state. And neither state could confer on it a corporate existence
in the other, nor add to or diminish the powers to be there
exercised. It may indeed be composed of and represent, under the
corporate name, the same natural persons. But the legal entity or
person which exists by force of law can have no existence beyond
the limits of the state or sovereignty which brings it into life
and endues it with its faculties and powers. The president and
directors of the Ohio and Mississippi Railroad Company are
therefore a distinct and separate corporate body in Indiana from
the corporate body of the same name in Ohio, and they cannot be
joined in a suit as one and the same plaintiff, nor maintain a suit
in that character against a citizen of Ohio or Indiana in a circuit
court of the United States. . . . And we shall certify to the
circuit court that it has no jurisdiction of the case on the facts
presented by the pleadings."
Memphis & Charleston Railroad v. Alabama,
107 U. S. 581, was
where an action had been brought by the State of Alabama for the
use of a county of that state in a court of that state against a
railroad corporation whose road passed through that state and
county, to recover the amount of a county tax
Page 161 U. S. 560
assessed upon its property, and the cause was removed into the
Circuit Court of the United States for the Northern District of
Alabama, and, upon motion, the cause was remanded to the state
court, upon the ground that the defendant, although incorporated in
Tennessee, also was a corporation of the State of Alabama. On
error, the judgment of the court below was affirmed, and this
Court, per MR. JUSTICE GRAY, said:
"The defendant, being a corporation of the State of Alabama, has
no existence in this state as a legal entity or person, except
under and by force of its incorporation by this state, and,
although also incorporated in the State of Tennessee, must, as to
all its doings within the State of Alabama, be considered a citizen
of the State of Alabama, which cannot sue or be sued by another
citizen of Alabama in the courts of the United States."
In this case,
Ohio & Mississippi
Railroad v. Wheeler, 1 Black 286, and
Railway Company v.
Whitton, 13 Wall. 270, were cited. The former has
already been noticed, and of the latter it may be said, by way of
distinguishing it from the present case, that while it was held
that a citizen of Illinois might sue the railroad company in the
circuit court of Wisconsin, although the company had been likewise
incorporated in Illinois, yet the cause of action arose in
Wisconsin; nor does it appear in the report of that case what was
the character of the legislation by which the Wisconsin company was
created, nor was the question now before us there considered. It is
also observable that, in the latter case,
Ohio &
Mississippi Railroad v. Wheeler was cited with approval.
One phase of the subject was before the court in the case of
Pennsylvania Co. v. St. Louis &c. Railroad,
118 U. S. 290. A
suit had been brought in the Circuit Court of the United States for
the District of Indiana, by the St. Louis, Alton and Terre Haute
Railroad Company alleging that it was a corporation organized under
the laws of the State of Illinois and a citizen of that state,
against the Indianapolis and St. Louis Company, a corporation
organized under the laws of the State of Indiana and a citizen of
that state, and against other corporations mentioned in the bill as
citizens of Indiana,
Page 161 U. S. 561
or of other states than Illinois. An objection to the
jurisdiction was made on the ground that the St. Louis, Alton and
Terre Haute Railroad Company was organized under laws of both
Illinois and Indiana, and was therefore a citizen of the latter
state. In treating this question, this Court said, by Mr. Justice
Miller:
"It does not seem to admit of question that a corporation of one
state, owning property and doing business in another state by
permission of the latter, does not become a citizen of this state
also. And so a corporation of Illinois, authorized by its laws to
build a railroad across the state from the Mississippi River to its
eastern boundary may, by permission of the State of Indiana, extend
its road a few miles within the limits of the latter, or indeed
through the entire state, without thereby becoming a corporation or
a citizen of the State of Indiana. Nor does it seem to us that an
act of the legislature conferring upon this corporation of
Illinois, by its Illinois corporate name, such powers to enable it
to use and control that portion of the road within the State of
Indiana as have been conferred on it by the state which created it,
constitutes it a corporation of the State of Indiana. It may not be
easy in all such cases to distinguish between the purpose to create
a new corporation which shall owe its existence to the law or
statute under consideration and the intent to enable the
corporation already in existence under laws of another state to
exercise its functions in the state where it is so received. The
latter class of laws are common in authorizing insurance companies,
banking companies, and others to do business in other states than
those which have chartered them. To make such a company a
corporation of another state, the language must imply creation or
adoption in such form as to confer the power usually exercised over
corporations by the state or by the legislature, and such
allegiance as a state corporation owes to its creator. The mere
grant of powers and privileges to it as an existing corporation,
without more, does not do this, and does not make it a citizen of
the state conferring such powers."
So, in
Nashua Railroad v. Lowell Railroad, 136 U.
S. 356, it was held that railroad corporations created
by two or more
Page 161 U. S. 562
states, though joined in their interests, in the operation of
their roads, in the issue of their stock, and in the division of
their profits so as practically to be a single corporation, do not
lose their identity, but each has its existence and its standing in
the courts of the country only by virtue of the legislation of the
state by which it was created, and the union of name, of officers,
of business, and property does not change their distinctive
character as separate corporations.
To fully reconcile all the expressions used in these cases would
be no easy task, but we think the following propositions may be
fairly deduced from them: 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. 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.
We are now asked to extend the doctrine of indisputable
citizenship so that if a corporation of one state, indisputably
Page 161 U. S. 563
taken, for the purpose of federal jurisdiction, to be composed
of citizens of such state, is authorized by the law of another
state to do business therein and to be endowed for local purposes
with all the powers and privileges of a domestic corporation, such
adopted corporation shall be deemed to be composed of citizens of
the second state in such a sense as to confer jurisdiction on the
federal courts at the suit of a citizen of the state of its
original creation.
We are unwilling to sanction such an extension of a doctrine
which, as heretofore established, went to the very verge of
judicial power. That doctrine began, as we have seen, in the
assumption that state corporations were composed of citizens of the
state which created them; but such assumption was one of fact, and
was the subject of allegation and traverse, and thus the
jurisdiction of the federal courts might be defeated. Then, after a
long contest in this Court, it was settled that the presumption of
citizenship is one of law, not to be defeated by allegation or
evidence to the contrary. There we are content to leave it.
It should be observed that in the present case, the corporation
defendant was not incorporated as such by the State of Arkansas.
The legislation of that state was professedly dealing with the
railroad corporation of other states. The Constitution of Arkansas
provides that "foreign corporations may be authorized to do
business in this state under such limitations and restrictions as
may be prescribed by law," but "they shall not have power to
condemn or appropriate private property."
Section 5 of the Act of March 16, 1881, as shown in the
preliminary statement, provides that
"any railroad company incorporated by or under the laws of any
other state, and having a line of railroad built, or 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
Page 161 U. S. 564
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. . . . 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 of offices in said state as required by .
. . the constitution of this state."
It was under the provisions of this section that the St. Louis
and San Francisco Railroad Company, in 1882, purchased from
corporations of Arkansas the railroad already built by them,
extending from the southern boundary of Missouri to Fort Smith, in
Arkansas. These Arkansas corporations have since maintained their
separate organizations as corporations of that state, but do not
operate railroads. It is therefore obvious that such purchase by
the Missouri corporation of the railroad and franchises of the
Arkansas companies did not convert it into an Arkansas corporation.
The terms of the statute show that it merely granted rights and
powers to an existing foreign corporation, which was to continue to
exist as such, subject only to certain conditions -- among others,
that of keeping an office in the state so as to be subject to
process of the Arkansas courts.
It is true that by the subsequent act of 1889, by the proviso to
the second section, it was provided that every railroad corporation
of any other state which had theretofore leased or purchased any
railroad in Arkansas, should, within sixty days from the passage of
the act, file a certified copy of its articles of incorporation or
charter with the secretary of state, and shall thereupon become a
corporation of Arkansas, anything
Page 161 U. S. 565
in its articles of incorporation or charter to the contrary
notwithstanding, and it appears that the defendant company did
accordingly file a copy of its articles of incorporation with the
secretary of the state. But whatever may be the effect of such
legislation in the way of subjecting foreign railroad companies to
control and regulation by the local laws of Arkansas, we cannot
concede that it availed to create an Arkansas corporation out of a
foreign corporation in such a sense as to make it a citizen of
Arkansas within the meaning of the federal Constitution, so as to
subject it as such to a suit by a citizen of the State of its
origin. In order to bring such an artificial body as a corporation
within the spirit and letter of that constitution, as construed by
the decisions of this Court, it would be necessary to create it out
of natural persons, whose citizenship of the state creating it
could be imputed to the corporation itself. But it is not pretended
in the present case that natural persons, resident in and citizens
of Arkansas, were, by the legislation in question, created a
corporation, and that therefore the citizenship of the individual
corporators is imputable to the corporation.
It is further contended on behalf of the defendant in error, the
plaintiff below, that as the plaintiff described herself as a
citizen of Missouri, and the defendant company as a citizen of
Arkansas, and as the cause of action, though arising in Missouri,
was transitory in its nature, jurisdiction was thus formally
conferred upon the Circuit Court of the United States for the
District of Arkansas, and that the only question left for inquiry
was whether the defendant company, alleged to be a citizen of
Arkansas, was legally responsible for the conduct of the Missouri
company of the same name, and such responsibility is supposed to be
found in the fact that the railroad running through both states was
under the common management of both companies.
But even if it be admitted that a common management of a
railroad running through two states, and participation in its
earnings and losses, by two companies, might make both responsible,
jointly and severally, for a tortious cause of action, and that
such cause of action might be maintained
Page 161 U. S. 566
in the courts of either state, the question of the jurisdiction
of the federal court still remains. The defendant was not content
to leave that question to be decided by the plaintiff's
allegations, but pleaded that it was in law a corporation of the
State of Missouri, and that therefore an action could not be
maintained against it in the federal court by a citizen of that
state. In other words, the defendant company claimed that while it
had voluntarily subjected itself to the laws of Arkansas, as
interpreted and enforced by the courts of that state, it still
remained a corporation of the State of Missouri, disabled from
suing or being sued by a citizen of that state in a federal court,
and that such disability was not, and could not be, removed by
state legislation.
The result of these views is that we answer the second
question put to us by the circuit court of appeals in the negative,
and to render it unnecessary to answer the other
questions.
MR. JUSTICE HARLAN, dissenting.
I am of opinion that this action is one of which the Circuit
Court of the United States for the Western District of Arkansas
could properly take cognizance, and that the fourth question
propounded by the circuit court of appeals should be answered in
the affirmative, in which case it will become unnecessary to answer
the other questions.
The statement of the case, to which the certified questions are
appended, does not distinctly show whether the railway company is
described in the complaint or declaration as a corporation of
Missouri or as a corporation of Arkansas, but I take it that the
able judges who joined in the certificate did not intend to ask
this Court whether the court below had jurisdiction of an action
brought by a citizen of Missouri against a corporation of that
state. It must be assumed that the defendant company, the St. Louis
and San Francisco Railway Company, is sued as a corporation of
Arkansas.
Is there an Arkansas corporation by the name of the St. Louis
and San Francisco Railway Company? The Missouri
Page 161 U. S. 567
corporation of the same name complied with the Arkansas statute
of March 13, 1889, by filing in the office of the Secretary of
State of Arkansas a certified copy of its articles of
incorporation, and therefore, if effect be given to the statute as
a valid enactment, it became also a corporation of Arkansas. This
is made clear by the last proviso of section 2 of the Arkansas
statute, declaring:
"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, 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."
We have, then, two distinct corporations -- one being the St.
Louis and San Francisco Railway Company, a Missouri corporation;
the other, the St. Louis and San Francisco Railway Company, an
Arkansas corporation. If a citizen of Tennessee, being a passenger
on the St. Louis and San Francisco Railway, as operated in
Arkansas, be injured by the negligent conduct of those who operated
the road in Arkansas, it is clear, if the amount in dispute be
sufficient, that he could sue the St. Louis and San Francisco
Railway Company,
as a corporation organized under the laws of
Arkansas, in the federal circuit court sitting in that state.
The right to maintain such a suit shows that there is an Arkansas
corporation distinct as to its corporate existence from the
Missouri corporation of the same name, and having, for purposes of
suit, a citizenship in Arkansas.
In the particular just mentioned, the present case is not
substantially different from that of
Ohio &
Mississippi Railroad v. Wheeler, 1 Black 286,
66 U. S.
297-298. The report of that case
Page 161 U. S. 568
shows that a corporation by the name of the Ohio and Mississippi
Railroad Company was chartered by the states of Indiana and Ohio.
Chief Justice Taney said:
"The president and directors of the Ohio and Mississippi
Railroad Company is therefore a distinct and separate corporate
body in Indiana from the corporate body of the same name in Ohio,
and they cannot be
joined in a suit as one and the same
plaintiff, nor maintain a suit
in that character against a
citizen of Ohio or Indiana in a circuit court of the United
States."
If the present suit had been brought against the St. Louis and
San Francisco Railway Company, as incorporated both in Missouri and
Arkansas, the complaint, under the decision in the
Wheeler
case, would have disclosed upon its face a want of jurisdiction,
for one of the defendant corporations and the plaintiff in such a
case would be citizens of the same state. In
Railroad
Co. v. Harris, 12 Wall. 65,
79 U. S. 82, the
Court said:
"Nor do we see any reason why one state may not make a
corporation of another state, as there organized and conducted, a
corporation of its own,
quoad any property within its
territorial jurisdiction. That this may be done was distinctly held
in
Ohio & Mississippi Railroad v.
Wheeler, 1 Black 297."
The same point arose and was decided in
Railway
Company v. Whitton, 13 Wall. 270. It appears from
the report of that case, but more distinctly from the original
record, which I have examined, that the Chicago and Northwestern
Railway Company was a corporation of Wisconsin, and also of
Illinois and Michigan, respectively. The plaintiff sued, in a court
of Wisconsin, as a citizen of Illinois. The defendant was the
Chicago and Northwestern Railway Company, incorporated in
Wisconsin. The question was whether that case was removable to the
federal court, sitting in Wisconsin, upon the ground of diverse
citizenship. That question was decided in the affirmative. It was
objected that the Chicago and Northwestern Railway Company,
although a corporation of Wisconsin, was also a corporation under
the laws of Illinois, of which state the plaintiff was a citizen.
This Court, speaking by MR. JUSTICE FIELD, said:
"The answer to this position is obvious. In Wisconsin, the laws
of Illinois have no operation.
Page 161 U. S. 569
The defendant is a corporation, and as such a citizen of
Wisconsin by the laws of that state. It is not
there a
corporation or a citizen of any other state. Being there used, it
can only be brought into court as a citizen of that state, whatever
its status of citizenship may be elsewhere. Nor is there anything
against this view, but, on the contrary, much to support it, in the
case of
Ohio & Mississippi Railroad v.
Wheeler, 1 Black 286."
Referring to the decision of the
Wheeler case, the
Court held that the Chicago and Northwestern Railroad Company must
be regarded, for all purposes of jurisdiction in the federal
courts, as a distinct corporation
in each of the States of
Wisconsin, Illinois, and Michigan.
So, in
Nashua Railroad v. Lowell Railroad, 136 U.
S. 356,
136 U. S.
372-373, it was held that a corporation created by the
laws of Massachusetts, bearing the same name, composed of the same
stockholders, and designed to accomplish the same purposes as a New
Hampshire corporation was not the same corporation with the one in
New Hampshire. The Court said:
"Identity of name, powers, and purposes does not create an
identity of origin or existence, any more than other statutes,
alike in language, passed by different legislative bodies, can
properly be said to owe their existence to both. To each statute
and to the corporation created by it there can be but one
legislative paternity."
To the same effect are
Muller v. Dows, 94 U. S.
444,
94 U. S. 447;
Railroad Co. v. Vance, 96 U. S. 450,
96 U. S. 453,
96 U. S. 457;
Clark v. Barnard, 108 U. S. 436,
108 U. S. 448,
108 U. S. 452;
Farnum v. Blackstone Canal Co., 1 Sumner 46;
St.
Louis, Alton & Terre Haute Railroad v. Indianapolis & St.
Louis Railroad, 9 Bissell 144.
I submit with confidence that if the defendant company is a
corporation of Arkansas, and wholly distinct, as a corporate body,
from the corporation in Missouri of the same name, the jurisdiction
of the court below to determine the controversy between the present
parties is not defeated by the fact that the Missouri corporation
and the plaintiff are both citizens of Missouri. If this view be
sound, it results that the plaintiff, a citizen of Missouri, can
invoke the jurisdiction of the United States circuit court, sitting
in Arkansas, to determine a controversy
Page 161 U. S. 570
between her and the St. Louis and San Francisco Railway Company,
a corporation of Arkansas.
We are here met with the suggestion that the cause of action
arose in Missouri, and that the injuries of which the plaintiff
complains were committed in Missouri by the Missouri corporation
bearing the same name as that of the present defendant. But the
question still remains whether, in view of the relations of the
Arkansas corporation to the St. Louis and San Francisco Railway in
Missouri, the Arkansas corporation could be separately sued in the
federal court sitting in Arkansas. The jurisdiction of the court
below existed by reason of the diverse citizenship of the parties.
If, upon the facts disclosed at the trial, the court was of opinion
that the Arkansas corporation was not liable to the plaintiff upon
a cause of action arising in Missouri, it would not dismiss the
action for want of jurisdiction, but would direct the jury to
return a verdict for the defendant.
Was not the Arkansas corporation liable to the plaintiff, albeit
the cause of action arose in Missouri? It appears from the record
that the road from Monett, Missouri, to Fort Smith, Arkansas, is
and for many years has been operated as one continuous line. The
entire line is under the joint management of the Missouri and
Arkansas corporations. In other words, the St. Louis and San
Francisco Railway Company, as a Missouri corporation, manages the
property situated in Missouri, and, as an Arkansas corporation,
manages the property situated in Arkansas.
Are not both corporations liable to the plaintiff under the
authority of
Pennsylvania Railroad v. Jones and
Pennsylvania Railroad v. Stewart, 155 U.
S. 333? The facts in that case were these: the
plaintiffs were personally injured by a railroad collision between
a train of the Virginia Midland Railway Company and a train of the
Alexandria and Fredericksburg Railway Company. The injury occurred
near Washington, but in Virginia, on the tracks of the Alexandria
and Washington Railroad Company. The suit was brought against the
latter company, which was then in the hands of a receiver, as well
as against several other companies. One
Page 161 U. S. 571
of the questions in the case was whether any company was liable
except the one whose negligence was the immediate cause of the
injury. This Court, speaking by MR. JUSTICE SHIRAS, said:
"Our views respecting the exceptions urged on behalf of the
other plaintiffs in error are briefly expressed as follows: there
was evidence from which the jury might properly infer that the
railroad between the cities of Alexandria and Washington was
managed and controlled for the common use of the Baltimore and
Potomac Railroad Company (owning that portion of the route that
lies between Washington and the south end of the Long Bridge), the
Alexandria and Washington Railroad Company (owning that portion
between the south end of the Long Bridge and St. Asaph's Junction),
and the Alexandria and Fredericksburg Railway Company (owning the
line between St. Asaph's Junction and Alexandria);
that the
gross earnings of these companies, derived from this line between
Alexandria and Washington, including what the Virginia Midland
Railway Company paid for the privilege of running its trains over
these tracks, and what was received for transportation of mails,
went into the hands of a common treasurer, and were by
him, after paying operating expenses,
divided among the three
companies according to some rule not very definitely shown,
but apparently in proportion to the miles of track of each road;
that the operating and accounting officers of the three companies
were the same; that the freight train in question was, at the time
of the collision, on that portion of the road which belonged to the
Alexandria and Washington Company; that the engineer and fireman
were employees of the Baltimore and Potomac Railroad Company; that
the engine was that of the Alexandria and Fredericksburg Railway
Company; that the conductor and brakemen were employees of that
company, and that the passenger train was in charge of a pilot
employed and paid by the three companies in pursuance of an
arrangement to that effect."
These facts, the Court said, if proved, would warrant a finding
of joint liability of the three companies to the plaintiff.
Consequently, either company can be sued. I am unable to perceive
why, under the principles of
Page 161 U. S. 572
that case, the Arkansas corporation is not liable to the
plaintiff for personal injuries received through the negligence of
the Missouri corporation. The two corporations have a common
management and a common Treasury, and they unite in operating the
lines of road, situated in Missouri and Arkansas, as one continuous
road.
At first blush, it may seem strange that the plaintiff did not
sue the Missouri corporation in one of the courts of Missouri. But
that cannot affect the jurisdiction of the court below if the
defendant is an Arkansas corporation. And her right to a judgment
cannot be denied if the Arkansas corporation is liable for injuries
caused in Missouri by the negligence of the Missouri corporation.
It may be that the line in Missouri is covered by mortgages for
very large amounts, so that a judgment against the Missouri
corporation would be of no real value. That perhaps is the reason
why the plaintiff brought suit against the Arkansas corporation.
But, as already said, this view is not at all material on the
present hearing.
To sum up: there is an Arkansas corporation by the name of the
St. Louis and San Francisco Railway Company. That corporation,
being a citizen of Arkansas, can be sued in the court below by a
citizen of Missouri. The court below has, consequently,
jurisdiction to determine any controversy between those parties,
citizens of different states (the amount in dispute being
sufficient), which has been raised by the plaintiff's complaint.
The Arkansas corporation, by reason of its relation to the Missouri
corporation in the operation, as one continuous road, of the lines
connecting Monett, Missouri, with Fort Smith, Arkansas, is liable
for the acts and defaults of the Missouri corporation in the
management of that part of the continuous road which lies in
Missouri, and even if the Arkansas corporation is held under the
evidence not to be liable, the case should not be dismissed for
want of jurisdiction in the court below, but the jury should be
instructed to find for the defendant.
For these reasons, I am unable to concur in the opinion of the
majority.
