1. A corporation exists only in contemplation of law, and by
force of law, and can have no legal existence beyond the bounds of
the sovereignty by which it is created. It must dwell in the place
of its creation.
2. A corporation is not a citizen within the meaning of the
Constitution of the United States, and cannot maintain a suit in a
court of the United States against the citizen of a different state
from that by which it was chartered unless the persons who compose
the corporate body are all citizens of that state.
3. In such case, they may sue by their corporate name, averring
the citizenship of all the members, and such a suit would be
regarded as the joint suit of individual persons, united together
in the corporate body and acting under the name conferred upon them
for the more convenient transaction of business, and consequently
entitled to maintain a suit in the courts of the United States
against a citizen of another state.
4. Where a corporation is created by the laws of a state, the
legal presumption is that its members are citizens of the state in
which alone the corporate body has a legal existence.
5. 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 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.
6. A corporation endued with the capacities and faculties it
possesses by the cooperating legislation of two states cannot have
one and the same legal being in both states. Neither state could
confer on it a corporate existence in the other nor add to or
diminish the powers to be there exercised.
7. The two corporations, deriving their powers from distinct
sovereignties, and exercising them within distinct limits, cannot
unite as plaintiffs in a suit in a court of the United States
against a citizen of either of the states which chartered them.
This was assumpsit brought in the Circuit Court of the United
States for the District of Indiana against Wheeler, a
Page 66 U. S. 287
citizen of that state, to recover the amount due on his
subscription to the stock of the Ohio & Mississippi Railroad
company. The declaration described the plaintiffs as
"The President and Directors of the Ohio & 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 as follows:
"And the said Henry D. Wheeler, in his own proper person, comes
and defends &c., and says that this Court ought not to have or
take further cognizance of the action aforesaid; because, he says,
that at the time of the commencement of this suit, and ever since,
he was and has been a citizen of the State of Indiana, and is now
such citizen; that the plaintiff, before and at the time of the
commencement of this action, was, and ever since has been and now
is a citizen of the same State of Indiana, in this, to-wit, that
then, and during all that time, and now, the plaintiff was, has
been, and is a body politic and corporate, created, organized, and
existing in the same state, under and by virtue of an act of the
General Assembly of the State of Indiana, entitled 'An act to
incorporate the Ohio & Mississippi Railroad company,' approved
February 14, 1848, and an act of said general assembly, entitled
'An act to amend an act to incorporate the Ohio & Mississippi
Railroad company,' approved January 15, 1849; and that under and by
virtue of said acts, the railroad therein mentioned, so far as the
same was by said acts contemplated to be situate in the State of
Indiana, was long before the commencement of this suit, to-wit, on
the first day of January, 1856, built and completed, and has been
ever since that time, and now is, used and operated in said
district by the plaintiff. And this the said defendant is ready to
verify. Wherefore he prays judgment whether this Court can or will
take further cognizance of the action aforesaid."
This plea was sworn to. The plaintiff filed a general demurrer,
and the defendant joined in demurrer.
"And thereupon the judges of the court were opposed in
Page 66 U. S. 288
opinion on the following question presented by the said
pleadings: has this court, on the facts presented by said
pleadings, jurisdiction of this case?"
This was, of course, the only question before the Supreme
Court.
Page 66 U. S. 295
MR. CHIEF JUSTICE TANEY.
This action was brought in the circuit court of the United
States for the District of Indiana to recover $2,400, with ten
percent damages, which the plaintiffs alleged to be due for fifty
shares of the capital stock of the company, subscribed by the
defendant.
The declaration state that the plaintiffs are "a corporation,
created by the laws of the states of Indiana and Ohio, having its
principal place of business in Cincinnati, in the State of Ohio;
that the corporation is a citizen of the State of Ohio, and Henry
D. Wheeler, the defendant, is a citizen of the State of
Indiana."
The defendant pleaded to the jurisdiction of the court, averring
that he was a citizen of the State of Indiana, and that the
plaintiffs were a body politic and corporate, created, organized,
and existing in the same state under and by virtue of an act of
assembly of the state.
The plaintiffs demurred to this plea, and the judges being
opposed in opinion upon the question whether their court had
jurisdiction, ordered their division of opinion to be certified to
this Court.
A brief reference to cases heretofore decided will show how the
question must be answered. And as the subject was fully considered
and discussed in the cases to which we are about to refer, it is
unnecessary to state here the principles and rules of law which
have heretofore governed the decisions of the court, and must
decide the question now before us.
In case of
Bank of Augusta v.
Earle, 13 Pet. 512, the Court held that the
artificial person or legal entity known to the common law as a
corporation can have no legal existence out of the bounds of the
sovereignty by which it is created, that it exists only in
contemplation of law and by force of law, and where that law ceases
to operate, the corporation can have no existence. It must dwell in
the place of its creation.
It had been decided in the case of
Bank v. Deviary, 5
Cr. 61, long before the case of
Bank of Augusta v. Earle
came before the Court, that a corporation is not a citizen within
the meaning of the Constitution of the United States, and
Page 66 U. S. 296
cannot maintain a suit in a court of the United States against
the citizen of a different state from that by which it was
chartered unless the persons who compose the corporate body are all
citizens of that state. But if that be the case, they may sue by
their corporate name, averring the citizenship of all of the
members, and such a suit would be regarded as the joint suit of the
individual persons, united together in the corporate body and
acting under the name conferred upon them for the more convenient
transaction of business, and consequently entitled to maintain a
suit in the courts of the United States against a citizen of
another state.
This question as to the character of a corporation and the
jurisdiction of the courts of the United States in cases wherein
they were sued or brought suit in their corporate name, was again
brought before the Court in the case of
Louisville, Cincinnati &
Charleston Railroad Company v. Letson, reported in
2 How. 497, and the Court in that case, upon full consideration,
decided that where a corporation is created by the laws of a state,
the legal presumption is that its members are citizens of the state
in which alone the corporate body has a legal existence, and 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 purposes of withdrawing the suit
from the jurisdiction of a court of the United States.
The question, however, was felt by this Court to be one of great
difficulty and delicacy, and it was again argued and maturely
considered in the case of
Marshall v. Baltimore &
Ohio Railroad Company, 16 How. 314, as will appear
by the report, and the decision in the case of
Louisville,
Cincinnati & Charleston Railroad company v. Letson
reaffirmed.
And again, in the case of
Covington Drawbridge
Company v. Shepherd, 20 How. 232, the same question
of jurisdiction was presented, and the rule laid down in the two
last-mentioned cases fully maintained. 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
Page 66 U. S. 297
name, as a suit by or against citizens of the state which
created it.
It follows from these decisions that 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 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 suit. 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 of Augusta v.
Earle, before referred to.
It is true, that a corporation by the name and style of the
plaintiffs appears to have been chartered by the States of Indiana
and Ohio, clothed with the same capacities and powers, and intended
to accomplish the same objects, and it is spoken of in the laws of
the states as one corporate body, exercising the same powers and
fulfilling the same duties in both states. Yet it has no 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
Page 66 U. S. 298
of the Ohio & 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.
These questions, however, have been so fully examined in the
cases above referred to that further discussion can hardly be
necessary in deciding the case before us. And we shall certify to
the circuit court that it has no jurisdiction of the case on the
facts presented by the pleadings.
