288 U.S. 476 (1933), 492, Puerto Rico v. Russell & Co.

Docket Nº:No. 492
Citation:288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903
Party Name:Puerto Rico v. Russell & Co.
Case Date:March 13, 1933
Court:United States Supreme Court

Page 476

288 U.S. 476 (1933)

53 S.Ct. 447, 77 L.Ed. 903

Puerto Rico

v.

Russell & Co.

No. 492

United States Supreme Court

March 13, 1933

Argued February 10, 13, 1933

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

1. A sociedad en comandita under the laws of Puerto Rico is not a limited partnership in the common law sense, but is a juridical person with a personality like that of a corporation. P. 478.

2. A suit against a sociedad en comandita of Puerto Rico cannot be removed by its members from the Insular Court to the United States District Court for Puerto Rico, under §§ 41 and 42 of the Organic Act, upon the ground that the members are not citizens of or domiciled in Puerto Rico. P. 482.

3. A suit by the Puerto Rico to recover insular taxes is not to be classed as a suit arising under the laws of the United

Page 477

States within the meaning of the jurisdictional statutes governing removal of causes, either (a) because authority to bring it comes from an Act of Congress, or (b) because the plaintiff is recognized as a political entity by the Act of Congress under which its government is organized. Pp. 482, 484.

4. The doctrine that a suit by a corporation organized under an Act of Congress is within the jurisdiction of the federal courts as a suit arising under the laws of the United States has been limited by precedent and by Acts of Congress, and is not to be extended. P. 485.

60 F.2d 10 reversed.

Certiorari, 287 U.S. 593, to review the affirmance of a decree of the United States District Court for Puerto Rico dismissing on the merits a suit removed from the Insular District Court.

STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

The People of Puerto Rico, the petitioner, brought this suit in the Insular District Court of San Juan, Puerto Rico, against the respondent Russell & Co., a sociedad en comandita organized under the laws of Puerto Rico, to recover certain assessments levied on lands of Russell & Co., under an act of the Legislature of Puerto Rico. The individual respondents, members of the sociedad, none of whom are citizens of Puerto Rico or domiciled there, were not named as defendants. They appeared specially in the Insular Court and removed the cause to the United States District Court for Puerto Rico. That court denied a motion to remand and gave its decree for respondents on the ground, first raised by the answer, that the assessments

Page 478

sued for were levied in violation of § 2 of the Organic Act of Porto Rico, March 2, 1917, c. 145, 39 Stat. 951, forbidding the enactment of any law impairing the obligation of contract. On appeal, the Court of Appeals for the First Circuit affirmed, 60 F.2d 10; this Court granted certiorari. 287 U.S. 593.

Section 41 of the Organic Act confers on the United States District Court for Puerto Rico "jurisdiction of all cases cognizable in the district courts of the United States," and also

jurisdiction of all controversies where all of the parties on either side of the controversy are citizens . . . of a foreign State or States, or citizens of a State, Territory, or District of the United States not domiciled in Porto Rico, wherein the matter in dispute exceeds, exclusive of interest or cost, the sum or value of $3,000.

By § 42,

the laws of the United States relating to . . . removal of causes, and other matters [53 S.Ct. 448] or proceedings as between the courts of the United States and the courts of the several States shall govern in such matters and proceedings as between the district court of the United States and the courts of Porto Rico. . . .

Thus, suits arising under the Constitution or laws of the United States are within the jurisdiction of the District Court for Puerto Rico (§ 24, Judicial Code, 28 U.S.C. § 41), and civil suits begun in the Insular Court over which the federal court has original jurisdiction may be removed in accordance with the provisions of § 28 of the Judicial Code (28 U.S.C. § 71).

Admittedly, if the individual members of the sociedad are "parties" within the meaning of the Organic Act, § 41, supra, the suit is one within the jurisdiction of the District Court because of their nonresidence, diversity of citizenship being unnecessary. See Porto Rico Ry., Light & Power Co. v. Mor, 253 U.S. 345. And, if the nonresidence of the individual members would confer jurisdiction upon the federal court in a suit against the sociedad

Page 479

originally instituted there, we will assume, for present purposes, that it would also suffice to justify removal by the individuals, even though the Insular Court refuses to recognize them as parties. Compare McLaughlin v. Hallowell, 228 U.S. 278, 290. The petitioner argues, nevertheless, that the suit was not removable because of citizenship, for the reason that the sociedad is a juridical entity under Puerto Rican law and, as in the case of a corporation, its domicile, rather than that of its members, determines citizenship for purposes of federal jurisdiction. If the petitioner's contention is sound, the District Court was without jurisdiction unless the suit was, as the respondents argue, one arising under the laws of the United States. The questions raised by these contentions must therefore first be answered.

For almost a century, in ascertaining whether there is the requisite diversity of citizenship to confer jurisdiction on the federal courts, we have looked to the domicile of a corporation, not that of its individual stockholders, as controlling. Louisville R. Co. v. Letson, 2 How. 497; Rundle v. Delaware & Raritan Canal Co., 14 How. 80; Marshall v. Baltimore & Ohio R. Co., 16 How. 314; Lafayette Insurance Co. v. French, 18 How. 404; Covington Draw Bridge Co. v. Shepherd, 20 How. 227; St. Louis & San Francisco Ry. Co. v. James, 161 U.S. 545; Patch v. Wabash R Co., 207 U.S. 277. In its final form, this rule of jurisdiction was stated in terms of a "conclusive presumption" that the stockholders are citizens of the state of the corporate domicile, see Marshall v. Baltimore & Ohio R., supra, 328; Covington Draw Bridge Co. v. Shepherd, supra, 233; St. Louis & San Francisco Ry. Co. v. James, supra, 554; but even those who formulated the rule found its theoretical justification only in the complete legal personality with which corporations are endowed. Fictitious that personality may be, in the sense that the fact that the corporation is composed of a plurality

Page 480

of individuals, themselves legal persons, is disregarded, but "it is a fiction created by law with intent that it should be acted on as if true." Klein v. Board of Supervisors, 282 U.S. 19, 24. This treatment of the aggregate for other purposes as a person distinct from its members, with capacity to perform all legal acts, made it possible and convenient to treat it so for purposes of federal jurisdiction as well. But status as a unit for purposes of suit alone, as in the case of a joint stock company, see Chapman v. Barney, 129 U.S. 677, 682; Levering & Garrigues v. Morrin, 61 F.2d 115, 117, or a limited partnership not shown to have the other attributes...

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189 practice notes
  • 182 B.R. 211 (Bkrtcy.N.D.Ill. 1995), 94 A 00023, In re Markos Gurnee Partnership
    • United States
    • Federal Cases United States Bankruptcy Courts Seventh Circuit
    • April 27, 1995
    ...It is a general principal of the common law that only "legal persons" may sue or be sued. See Puerto Rico v. Russell & Co., 288 U.S. 476, 480, 53 S.Ct. 447, 449, 77 L.Ed. 903 (1933) (discussing the status as a "legal person" of a Puerto Rican business association). A......
  • 60 F.Supp. 263 (W.D.La. 1945), Civ. A. 1308, Texas & P. Ry. Co. v. Brotherhood of R. Trainmen
    • United States
    • Federal Cases United States District Courts 5th Circuit Western District of Louisiana
    • April 17, 1945
    ...by reason of§ 24(8) of the Judicial Code, 28 U.S.C. § 41(8), 28 U.S.C.A. 41(8). Cf. People of Puerto Rico v. Russell & Co., 288 U.S. 476, 483, 53 S.Ct. 447, 449, 77 L.Ed. 903; Gully v. First Nat. Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70; Peyton v. Railway Express Agency, 316 U.S. 35......
  • 469 B.R. 713 (Bkrtcy.W.D.Mich. 2012), HG 05-00690, In re Teleservices Group, Inc.
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • March 30, 2012
    ..." is a fiction created by law with intent that it should be acted on as if true." People of Puerto Rico v. Russell & Co., 288 U.S. 476, 480, 53 S.Ct. 447, 448, 77 L.Ed. 903 (1933) (quoting Klein v. Bd. of Supervisors, 282 U.S. 19, 24, 51 S.Ct. 15, 16, 75 L.Ed. 140 [37] The iss......
  • Where do I fit in? Citizenship claims and the s. 1332 diversity statute in Underwriters at Lloyd's v. Osting-Schwinn.
    • United States
    • Defense Counsel Journal Vol. 79 Nbr. 1, January 2012
    • January 1, 2012
    ...Carden, 494 U.S. at 185; Indiana Gas Co. v. Home Insurance Co., 141 F.3d 314 (7th Cir. 1998). But see Puerto Rico v. Russell & Co., 288 U.S. 476 (1933). (22) Carden, 494 U.S. at 185, Indiana Gas Co., 141 F.3d at 314. (23) Hertz v. Friend, 130 S.Ct. 1181 (2010). (24) Osting-Schwinn, 613 ......
  • Free signup to view additional results
184 cases
  • 182 B.R. 211 (Bkrtcy.N.D.Ill. 1995), 94 A 00023, In re Markos Gurnee Partnership
    • United States
    • Federal Cases United States Bankruptcy Courts Seventh Circuit
    • April 27, 1995
    ...It is a general principal of the common law that only "legal persons" may sue or be sued. See Puerto Rico v. Russell & Co., 288 U.S. 476, 480, 53 S.Ct. 447, 449, 77 L.Ed. 903 (1933) (discussing the status as a "legal person" of a Puerto Rican business association). A......
  • 60 F.Supp. 263 (W.D.La. 1945), Civ. A. 1308, Texas & P. Ry. Co. v. Brotherhood of R. Trainmen
    • United States
    • Federal Cases United States District Courts 5th Circuit Western District of Louisiana
    • April 17, 1945
    ...by reason of§ 24(8) of the Judicial Code, 28 U.S.C. § 41(8), 28 U.S.C.A. 41(8). Cf. People of Puerto Rico v. Russell & Co., 288 U.S. 476, 483, 53 S.Ct. 447, 449, 77 L.Ed. 903; Gully v. First Nat. Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70; Peyton v. Railway Express Agency, 316 U.S. 35......
  • 469 B.R. 713 (Bkrtcy.W.D.Mich. 2012), HG 05-00690, In re Teleservices Group, Inc.
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • March 30, 2012
    ..." is a fiction created by law with intent that it should be acted on as if true." People of Puerto Rico v. Russell & Co., 288 U.S. 476, 480, 53 S.Ct. 447, 448, 77 L.Ed. 903 (1933) (quoting Klein v. Bd. of Supervisors, 282 U.S. 19, 24, 51 S.Ct. 15, 16, 75 L.Ed. 140 [37] The iss......
  • 144 B.R. 700 (E.D.La. 1992), 86-3382, Oglesby v. Cooper Mfg. Corp.
    • United States
    • Federal Cases United States District Courts 5th Circuit Eastern District of Louisiana
    • June 9, 1992
    ...law determined the citizenship of a party and its capacity to be sued even in federal proceedings. See Puerto Rico v. Russell & Co., 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903 (1933). But, the court also recognizes that the U.S. Supreme Court effectively put such contention to rest in Car......
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2 firm's commentaries
3 books & journal articles
  • Where do I fit in? Citizenship claims and the s. 1332 diversity statute in Underwriters at Lloyd's v. Osting-Schwinn.
    • United States
    • Defense Counsel Journal Vol. 79 Nbr. 1, January 2012
    • January 1, 2012
    ...Carden, 494 U.S. at 185; Indiana Gas Co. v. Home Insurance Co., 141 F.3d 314 (7th Cir. 1998). But see Puerto Rico v. Russell & Co., 288 U.S. 476 (1933). (22) Carden, 494 U.S. at 185, Indiana Gas Co., 141 F.3d at 314. (23) Hertz v. Friend, 130 S.Ct. 1181 (2010). (24) Osting-Schwinn, 613 ......
  • On the nature of federal bankruptcy jurisdiction: a general statutory and constitutional theory.
    • United States
    • William and Mary Law Review Vol. 41 Nbr. 3, March 2000
    • March 1, 2000
    ...J.) (stating that "the doctrine of the charter cases was to be treated as exceptional"); Puerto Rico v. Russell & Co., 288 U.S. 476, 485 (1933) (Stone, J.) (stating that "their doctrine has not been extended to other classes of cases"). (378.) Justice Fuller, therefo......
  • Jurisdiction by cross-reference.
    • United States
    • Washington University Law Review Vol. 88 Nbr. 5, July 2011
    • July 1, 2011
    ...is decisive--not the source of the authority to establish it." (internal quotations omitted)); Puerto Rico v. Russell & Co., 288 U.S. 476, 483 (1933) ("Federal jurisdiction may be invoked to vindicate a right or privilege claimed under a federal statute. It may not be invoked ......