As a corporation created by act of Congress derives all its
rights from the law creating it, suits brought against it, on
account of its action, arise under the Constitution and laws of the
United States and are removable into the federal court.
Osborn v. Bank of United
States, 9 Wheat. 738.
This Court will judicially notice that a defendant corporation
was incorporated by an act of Congress, even though the petition
fails so to do.
The right to remove depends upon whether the suit could have
been brought originally in the Circuit Court of the United States.
Cochran v. Montgomery County, 199 U.
S. 260.
Where the Circuit Court has jurisdiction by reason of the fact
that the defendant is a corporation created by an act of Congress,
the joinder of other defendants, citizens of plaintiff's state does
not prevent removal to the Circuit Court if there is no separable
controversy and all the defendants unite in the petition: the
federal character permeates the entire case and affects all parties
defendant.
When this Court is called upon to exercise its own judgment, it
will not be controlled by decisions of state courts.
Page 212 U. S. 375
Notwithstanding that it maintains an office in another state,
the defendant corporation, which was organized under an act of
Congress, is suable in the district designated by it as where its
office is located and in which its agent resides and its directors
meet to affirm their acts adopted in the other state.
The application of § 10 of the Act of March 11, 1902, 32 Stat.
68, c. 183, is not limited to local actions described in § 8 of the
Act of March 3, 1875, c. 137, 18 Stat. 470.
This is an original application to this Court for a rule,
directed to the District Judge of the United States for the
Northern District of Texas, directing him, and also the circuit
court of the United States for that district, to show cause why a
mandamus should not issue commanding that judge and that court, and
each of them, to remand a certain action at law to the District
Court of Dallas County, Texas, and to desist from exercising any
further jurisdiction in the action, except the entering of the
order remanding it to the state court. Upon such application, a
rule was made by this Court that the judge and the court should
show cause, in accordance therewith.
Upon service of the rule being made, a return has been duly
filed by the district judge, acting for himself and as judge of the
circuit court.
In the papers used upon the application for the writ and in the
return of the district judge made thereto the following facts are
set forth:
An action was brought in the state court in the County of Dallas
and State of Texas on the first day of August, 1907, against the
Texas & Pacific Railway Company and two individuals, C. W.
Slayter and Carl Rasmussen, who were, respectively, engineer and
fireman on the Texas & Pacific Railway, to recover damages for
the negligent killing of J. J. Dunn, the husband of one of the
plaintiffs and the father of others. The action was brought against
the company and the individual defendants jointly, and the petition
in the state court alleged that plaintiffs resided in Dallas
County, Texas, of which county the plaintiffs were inhabitants and
residents, and that
Page 212 U. S. 376
the defendant the Texas & Pacific Railway Company was a
corporation duly incorporated, with an office and local agent in
Dallas County, Texas; that the defendant Slayter was a resident and
citizen and inhabitant of Harrison County, in said state, and that
the defendant Rasmussen was also a resident, citizen, and
inhabitant of Harrison County, in the said state. The petition then
alleged that Dunn was killed directly and proximately through the
negligence of the defendants, who were guilty of negligence in
permitting and causing the engine and train to run into, against,
and over the said Dunn, and injuring him so that he was instantly
killed. The petition then averred certain particular acts of
negligence on the part of the defendants and sought to recover from
them on account of such negligent killing the sum of $85,000. All
of the defendants were duly served with process, and within the
time required by law they all joined in a petition to the state
court to remove the cause to the Circuit Court of the United States
for the Northern District of Texas (which included Dallas County),
and presented bonds for such removal. The ground for the removal
was alleged to be that the Texas & Pacific Railway Company was
a corporation organized and existing under the laws of the United
States by virtue of "An Act to Incorporate the Texas & Pacific
Railroad Company, and to Aid in the Construction of Its Road, and
for Other Purposes," approved March 3, 1871, and acts amendatory
thereof and supplemental thereto, by one of which the name and
style of the company was changed to the Texas & Pacific Railway
Company. The petition alleged that the matter in dispute in the
case exceeds, exclusive of interest and costs, the sum of $2,000,
and that the suit arose under the laws of the United States, and
more especially under the law of the United States constituting the
charter of the defendant and under which it was incorporated; that,
under the laws of the United States, the Circuit Court of the
United States for the Northern District of Texas had original
jurisdiction of the suit. To the granting of this application the
plaintiffs objected, among other things, upon the ground that
Page 212 U. S. 377
the plaintiffs had not the right at the time of the commencement
of the suit, to bring it in the Circuit Court of the United States
for the Northern District of Texas against either of the defendants
Slayter and Rasmussen, and that it appears, from the plaintiffs'
petition in the case, that it is not removable to the Circuit Court
of the United States for the Northern District of Texas at the
instance of either of the individual defendants, nor at the
instance of the railway company, and that it also appears from the
defendants' own petition for the removal that the case is not
removable to the Circuit Court of the United States for the
Northern District of Texas at the instance of either the defendants
Slayter or Rasmussen, or even at the instance of the defendant
railway company, or of all of them together.
The state court, while holding that the petition to remove to a
federal court was in all respects regular, and that it was filed in
due time, and that a good and sufficient bond had been filed, held
that the petition did not show proper grounds for removal of the
suit, and the application for removal was denied.
Thereupon the defendants in the suit in the state court, on
January 13, 1908, filed in the office of the clerk of the Circuit
Court of the United States for the Northern District of Texas at
Dallas, Texas, a copy of the record in that suit. Before any other
proceedings were had in the case in the circuit court of the United
States, and on the twentieth of January, 1908, the plaintiffs filed
in that court a motion to remand the case. While expressly denying
that the circuit court had jurisdiction of the case, the plaintiffs
moved the court to remand it for the reason that the suit did not
properly involve a dispute or controversy properly within the
jurisdiction of the court, because, as was said, it did not appear
from the record or from the defendants' petition to remove the
cause, that any of the defendants were inhabitants of the Northern
District of Texas, and that there was no denial by the defendants
of plaintiffs' allegation that the individual defendants, Slayter
and Rasmussen, were inhabitants of Harrison County, Texas, which
county is in Eastern District
Page 212 U. S. 378
of Texas. It was also averred that it appeared upon the face of
the record that there was no separable controversy as to either or
any of the defendants. The plaintiffs further averred that the
railway company had its principal office in the City of New York,
in the Southern District of New York and State of New York, of
which district it was an inhabitant, and that it was not an
inhabitant of the Northern District of Texas, and could not be sued
by the plaintiff in that district by reason of its being a federal
corporation; hence it had not the right to remove the cause to the
federal court.
The defendants answered the petition to remand, and averred that
the railway company was a resident of and had its domicil in the
Northern District of Texas, and that the individual defendants were
jointly sued with the railway company, a resident of the District
of Dallas. That no claim of separable controversy or diverse
citizenship was made, but the application to remove was based upon
the existence of a federal question as to all of the defendants.
That, although the plaintiffs' petition in the case simply alleged
that the railway company was a corporation duly incorporated, yet
defendants alleged that it had an office and local agent in Dallas
County, Texas, and it was urged that the court would take judicial
notice of the federal character of the defendant, notwithstanding
the plaintiffs had neglected to allege it, and that the record
showed a general liability charged by the plaintiffs as against all
the defendants, and that the federal question as to all of such
defendants was thereby raised.
The motion made by the plaintiffs to remand the cause came on to
be heard by the district judge holding the circuit court, and was
overruled and denied.
No further proceedings have been had in the case in the circuit
court of the United States, and the case also stands upon the
docket of the state court, subject to call and disposition.
Upon application, the circuit court issued an injunction
restraining the plaintiffs from continuing any proceedings in the
state court in the action.
Page 212 U. S. 379
A motion was made to dissolve the injunction, which was denied.
Madisonville &c. v. St. Bernard &c., 196 U.
S. 239.
The plaintiffs insist that mandamus is the only adequate remedy
under the facts stated, by which they can obtain relief and proceed
with the trial of their cause in the state court.
Page 212 U. S. 383
MR. JUSTICE PECKHAM, after making the foregoing statement,
delivered the opinion of the Court.
It is agreed by all that there is in this case no separable
controversy, and the important question is whether, upon the facts
stated, a removal can be ordered, notwithstanding the individual
defendants were made parties to the suit, and were not residents or
inhabitants of the Northern District of Texas when sued.
The question arises under the act of Congress of 1888, relative
to the removal of cases from state to federal courts. 25 Stat. 433,
c. 866. This act, as its title shows, was passed for the purpose of
correcting the enrollment of the Act approved March 3, 1887, 24
Stat. 552, c. 373, which amended the Act approved March 3, 1875, 18
Stat. 470, c. 137. The first clause of the first section of the act
of 1888 gave to the circuit courts of the United States
"original cognizance, concurrent with the courts of the several
states, of all suits of a civil nature at common law or in equity,
where the matter in dispute exceeds, exclusive of interest and
costs, the sum or value of two thousand dollars, and arising under
the Constitution or laws of the United States, or treaties made, or
which shall be made, under their authority."
The second clause of that section of the act provided
"that any suit of a civil nature at law or in equity, arising
under the Constitution or laws of the United States, or treaties
made, or which shall be made, under their authority, of which the
circuit courts of the United States are given original jurisdiction
by the preceding section, which may now be pending, or which may
hereafter be brought, in any state court, may be removed by the
defendant or defendants therein to the circuit court of the United
States for the proper district."
If the question were as to the right to remove a case to the
federal court where the sole defendant was a corporation created by
an act of Congress, there can be no dispute as to the right of such
a defendant to claim the removal. As the corporation
Page 212 U. S. 384
derives all its rights from the law of Congress, a suit brought
against it on account of its action arises under the Constitution
or laws of the United States.
Osborn v. Bank of United
States, 9 Wheat. 738,
22 U. S. 817,
22 U. S. 828;
Pacific Railroad Removal Cases, 115 U. S.
1.
See also act of incorporation of the Texas
& Pacific Railroad Company, 16 Stat. 573, c. 122, giving the
right to the corporation (p. 574, § 1) to sue and be sued in all
the courts of law and equity within the United States.
The right to remove, under the statute, depends upon whether the
suit could originally have been brought in the circuit court of the
United States.
Traction Company v. Mining Company,
196 U. S. 239,
196 U. S. 245;
Cochran v. Montgomery County, 199 U.
S. 260.
The question, then, is whether the United States circuit court
for the proper district (Northern District of Texas) would have had
jurisdiction of a suit commenced in that district by the plaintiffs
against the railway company and the two individual defendants. A
suit against the company would, as we have seen, be one arising
under the Constitution or laws of the United States, and as the
individual defendants resided in the State of Texas (the same state
as the plaintiffs) the ground of jurisdiction of the federal court
as to them must be that, by joining all as defendants in a joint
action for the same wrong done by all of them, the plaintiffs
thereby made the suit against the individual defendants also one
which arises under the Constitution or laws of the United
States.
The plaintiffs themselves have made the act of which they
complain a joint one, and, being one which arises under the
Constitution and laws of the United States as to one of the
defendants, it becomes so as to all, because it is joint. The
federal character permeates the whole case, including the
individual defendants as well as the corporation. The case which
plaintiffs make in their petition in the suit must determine the
character of the cause of action.
Alabama Great Southern
Railway v. Thompson, 200 U. S. 206,
200 U. S. 216.
The acts of the
Page 212 U. S. 385
individual defendants were not necessarily, in and of
themselves, inherently of a federal nature.
In
Landers v. Felton, 73 F. 311, the question arose
whether an action brought against the receiver of a United States
court, and others who were citizens of the same state as that of
the plaintiff, to establish a joint liability of all the
defendants, was a suit arising under the laws or Constitution of
the United States. The court held that it was, saying:
"No separate liability could be asserted against the receiver .
. . except by virtue of the same laws. Therefore the joint
liability of the defendants with the receiver arises under the laws
and Constitution of the United States. If the plaintiff wished to
sue the other defendants without joining the receiver, he had his
election to do so, because the liability of joint tortfeasors is
also several. He might therefore have maintained his action against
the resident defendants in a state court, without any possibility
of removal to a federal court. He elected, however, to join the
resident defendants with a person against whom he could establish
no liability, in the capacity in which he sues him, except by
virtue of the laws of the United States. Therefore the joint cause
of action which he asserts against all the defendants must find its
sanction in the federal statutes. Hence, the cause of action is
removable. The state court was in error in denying the petition of
the receiver, and the motion to remand is overruled."
In
Lund v. Chicago &c. Railway Co., 78 F. 385, a
suit was brought in the state court against that company, together
with the Union Pacific Railroad Company and its receivers. One was
a state and the other a United States corporation. The Union
Pacific, by its receivers, filed a petition for removal of the
cause, and a motion to remand was made, and it was urged that the
cause was not removable because the state corporation was joined
with the Union Pacific, and that, as to the state corporation, no
federal law was involved, and it could not remove the cause to the
federal court. The court held the defense was not well taken; that
the statute organizing the
Page 212 U. S. 386
Union Pacific Railway necessarily involved a federal law, and,
as it was a joint cause of action, it was clear that the whole case
arose under the federal law; that, while a suit against the Rock
Island company, the state corporation, could have been maintained
without reference to the federal laws, yet, as it was sought to
hold the Union Pacific Railway Company and its receivers jointly
with the state company, then a new character was given to the
action and a new element was introduced, to-wit, the laws of the
United States; therefore, as it was necessary, in order to maintain
the action against the defendants jointly, to invoke the federal
law, the case was one arising under the laws of the United States,
and hence the whole case was removable under the statute. In such
case, it was said, the federal question affects all parties
defendant in the suit, entitling it to be removed where all the
parties unite in the petition.
Martin v. St. Louis &c.
Ry., 134 F. 134, is to same effect.
And see Fisk v. Union
Pacific Railroad Company, 8 Blatchf. 243, per Circuit Justice
Nelson and Judge Blatchford, opinion by Justice Nelson, upon
question of removal where the case arises out of the Constitution
or laws of United States, although some of the defendants could not
themselves apply to remove it.
We are aware that a different view has been taken of the rights
of defendants situated like those in this case by the Supreme Court
of the State of Texas in
Texas & Pacific &c. Co. v.
Huber, 100 Tex. 1,
s.c., 92 S.W. 838, but, as this is
a case where we are called upon to exercise our own judgment, we
have come to a different conclusion, notwithstanding our great
respect for the decisions of the courts of that state.
Although the plaintiffs, in their original petition in the state
court, state that the railway company was a corporation, duly
incorporated, with an office and local agent in Dallas County,
Texas, the fact that the corporation was incorporated by an act of
Congress will be noticed by the Court, even without an averment of
that fact in the petition.
Texas & Pacific Ry.
Co.
Page 212 U. S. 387
v. Cody, 166 U. S. 606,
166 U. S. 610;
Texas & Pacific Railway v. Barrett, 166 U.
S. 617.
In
Chicago, Rock Island & Pacific Railway v.
Martin, 178 U. S. 254,
the action was brought by the administrator of William Martin
against the Chicago, Rock Island & Pacific Railroad Company (a
state corporation), Clark and others, and the receivers of the
Union Pacific Railway Company, in the District Court of Clay
County, Kansas, to recover damages for the death of decedent. The
Union Pacific Railway was a federal corporation, and its receivers
were appointed by the federal court. Application to remove the
cause to the federal court was made by the receivers of the Union
Pacific, which application was not joined in by the state
corporation, and the application was denied because all the
defendants were charged with jointly causing the death of
plaintiff's intestate, and all did not join in the petition for
removal. The case was tried and judgment obtained for the plaintiff
in the state court, and was taken on error to the Supreme Court of
Kansas and there affirmed. 59 Kan. 437. In this Court, THE CHIEF
JUSTICE, speaking for the Court, said:
"Assuming that, as to the receivers, the case may be said to
have arisen under the Constitution and laws of the United States,
the question is whether it was necessary for the Chicago, Rock
Island & Pacific Railroad Company, defendant, to join in the
application of its codefendants, the receivers of the Union Pacific
Railway Company, to effect a removal to the circuit court."
Upon consideration of the removal statutes, it was held that it
was necessary for the state corporation to join in the application.
Here, all of the defendants have joined, and, as we have seen, they
are all, under the circumstances, able to assert and claim the
right of removal of the cause to a federal court. It was held in
the
Martin case,
supra, that there was no
separable controversy, and so failure of all the defendants to join
could not be excused.
Some further objections are taken to the right of plaintiffs to
maintain this suit in the federal court, and therefore to the right
of the defendants to remove from a state court. The
Page 212 U. S. 388
objection is that the defendants Slayter and Rasmussen were not
residents of the Northern District of Texas, but, on the contrary,
were residents of the eastern district, and consequently could not
be sued in the former district, and also that the railway company
was not a resident of the State of Texas, but was a resident of the
Southern District of the State of New York. Upon the latter
question, the facts on deposition before the United States district
judge in Texas showed that the company maintained an office in
Dallas County, Texas, and that the senior vice-president lived in
Dallas, and that for many years the company had designated Dallas
as its general office, and that all the acts of the board of
directors taken in New York city are subsequently affirmed by the
meeting of the board at Dallas before they are considered
effective. We are of opinion that the defendant company was liable
to suit in the northern district.
By § 10 of the act of Congress entitled "An Act to Divide the
Texas into Four Judicial Districts," approved March 11, 1902, 32
Stat. 68, c. 183, provision is made for the service of process
against defendants, and, if there be more than one defendant, and
they reside in different divisions of the district or in different
districts, the plaintiff can sue in either division or in either
district in which one or more of the defendants may reside, sending
a duplicate writ or writs to the other defendant or defendants,
upon which the clerk shall indorse that the writ thus sent is a
copy of a writ sued out of the court of the proper division of said
district.
Articles 1222 and 1223 of the Civil Statutes of Texas provide
for the service of process in suits against incorporated companies
or foreign public or private corporations.
Under these various statutes, the plaintiffs would have had the
right to sue the Texas & Pacific Railway Company in the
Northern District of Texas, because it was a resident of and doing
business in that district and had an agent there upon whom service
could properly be made.
The individual defendants, Slayter and Rasmussen, being
Page 212 U. S. 389
residents of the Eastern District of Texas, could, under § 10 of
the act above mentioned, be served with duplicate writs, and so the
circuit court would obtain jurisdiction over them also.
We do not think that the tenth section of the act of 1902,
supra, should be limited so as to apply only to local
actions of the class described in § 8 of the act of 1875. 18 Stat.
470, c. 137. That section relates to suits commenced to enforce any
legal or equitable lien or claim to or to remove any encumbrance or
cloud upon real or personal property in the district where such
suit is brought. The first part of § 10 does not so limit its
application, while the latter part makes special provision for
suits and actions affecting the title to real estate, which directs
that the action must be brought where such real estate is in whole
or in part situated.
We are of opinion that the circuit court of the United States
obtained jurisdiction by the proceedings for the removal of the
case to that court, and the rule to show cause is therefore
discharged and the proceedings in this Court to obtain a mandamus
are dismissed.
MR. JUSTICE HARLAN dissented.
