Ex parte Edelstein

• Decision Date: 04 February 1929
• Parties: Ex parte EDELSTEIN.
• Court: U.S. Court of Appeals — Second Circuit

30 F.2d 636 (1929)

Ex parte EDELSTEIN.

Circuit Court of Appeals, Second Circuit.

February 4, 1929.

Louis D. Frohlich, of New York City, for the motion.

Paul N. Turner, of New York City (Justus Sheffield and Emily Holt, both of New York City, on the brief), opposed.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

L. HAND, Circuit Judge (after stating the facts as above).

Both sides agree that the plaintiff cannot appeal from the decree dismissing the bill in part, and, as he has not discontinued the suit against Gillmore, Mitchell, and Dullzell, the first question is whether we have jurisdiction to issue a writ of mandamus. It is abundantly settled that we have, when it is necessary to protect our appellate jurisdiction, whether or not the cause be already before us on appeal (D., L. & W. R. R. v. Rellstab, 276 U. S. 1, 48 S. Ct. 203, 72 L. Ed. 439; McClellan v. Carland, 217 U. S. 268, 30 S. Ct. 501, 54 L. Ed. 762; In re Watts, 214 F. 80 C. C. A. 2; Goldwyn Pictures Corporation v. Howells Sales Co., 287 F. 100 C. C. A. 2); but in the case at bar the District Court has already acted, and its decision will in season come before us for review, so that it might well be argued that the only service of the writ would be to expedite an appeal. Moreover, mandamus will not usually go when there is another remedy. On the other hand, the court has refused to entertain the case at all, and its action does prevent our consideration of the merits which will not be before us on appeal from the decree. At any rate the Supreme Court in Re Hohorst, 150 U. S. 653, 14 S. Ct. 221, 37 L. Ed. 1211, took the second view under precisely similar circumstances to those at bar, and the decision, though several times cited, has never been questioned. While the power depended upon section 342 of title 28 of the Code (28 USCA § 342), it was ancillary to the appellate jurisdiction of the court (Insurance Co. v. Comstock, 16 Wall. 258, 21 L. Ed. 493); and, although our own power must rest upon section 377, we do not doubt that, if our appellate jurisdiction be involved, that section covers instances in which the Supreme Court would protect its own jurisdiction under section 342. We think, therefore, that we must decide the question presented to the District Court.

The doctrine that a corporation has a supposititious citizenship from the state of its incorporation, regardless of those of its shareholders, was by no means apparent at the outset (Bank of the U. S. v. Deveaux, 5 Cranch, 61, 3 L. Ed. 38; Commercial & R. R. Bank v. Slocomb, 14 Pet. 60, 10 L. Ed. 358), was first tentatively put forward only in 1844 (Louisville R. R. Co. v. Letson, 2 How. 497, 11 L. Ed. 353), and did not become settled law under the guise of a presumption until 1853 (Marshall v. B. & O. R. R. Co., 16 How. 314, 14 L. Ed. 953). It was never extended to unincorporated associations, whose aggregate nature has always been recognized, not only when organized under the laws of a state (Chapman v. Barney, 129 U. S. 677, 9 S. Ct. 426, 32 L. Ed. 800), but even when there considered "quasi corporations" (Great Southern, etc., Co. v. Jones, 177 U. S. 449, 20 S. Ct. 690, 44 L. Ed. 842), or when consisting of a board of appointed officials with public duties (Thomas v. Trustees of Ohio State University, 195 U. S. 207, 25 S. Ct. 24, 49 L. Ed. 160). See, also, Taylor v. Weir, 171 F. 636 C. C. A. 3; Spencer v. Patey, 243 F. 535 C. C. A. 2; Wise v. Brotherhood of Locomotive Firemen and Enginemen, 252 F. 961, 965 C. C. A. 8.

In view of these authorities, the plaintiff does not dispute that he could not have sued in the District Court before United Mine Workers v. Coronado Co., 259 U. S. 344, 42 S. Ct. 570, 66 L. Ed. 975, 27 A. L. R. 762, and rests his suit upon a supposed change in the law made by that case. The decision did not involve the point, since the substantive jurisdiction of the District Court rested upon the anti-trust laws, and the question of diverse citizenship could not come up. The argument runs, however, that, since it was there held that an unincorporated association could be sued by the service of process upon its officers, it necessarily follows that it must be treated as a legal person and a citizen, and, if so, the only citizenship ascribable to it must be that of the state of its organization. It does not in the least follow, because the citizenship of the shareholders of a corporation is presumed to be that of the state of organization (which was at least the original form of the doctrine), that the same presumption must obtain in the case of looser associations. The law has for long imposed liability upon members of an associated group because of acts done in execution of the common purposes. Usually, indeed, all must be sought out and sued individually to obtain redress, though in most states even this has been enough modified by statute to reach the common funds of partnerships. United Mine Workers v. Coronado reached the same result without the aid of any statute, at least so far as to subject the common funds to suit, and apparently also to enforce individual liabilities, but the contrivance was not necessarily of a presumptive citizenship of the members, or of a fictitious personality itself capable of citizenship. Russell v. Central Labor Union (D. C.) 1 F.(2d) 412. Every member of an association consents to the execution of the common plan; that is the origin of his liability for wrongs committed in its realization. To just what consequences that consent shall subject him is a matter of more or less; to make him and all the members suable through some of their number was alone necessary. The law has more shifts than one, and has used an implied consent before in not dissimilar situations. Lafayette Insurance Co. v. French, 18 How. 404, 15 L. Ed. 451.

We do not, therefore, think that there is even an intimation that the Supreme Court meant to change the doctrine that such associations are aggregations, the political status of whose members is as little enlarged as though they were partners in an ordinary commercial or industrial enterprise. Indeed, in the case of corporations themselves, in recent times the tendency has been rather to emphasize their aggregate character than their fictitious personality, an exotic in any case in English law.

We have not to decide whether the fact that 29 of the members of the association were citizens of other states would alone have been ground for dismissal. An alien may select a federal court in which to sue a citizen of any state, and it may well be true that, as between the plaintiff and citizens of other states than New York, the question is one, not of jurisdiction, but of venue, which is covered by United Mine Workers v. Coronado. But concededly an alien may not sue an alien in a federal court, and the 33 alien members of the association constituted an insurmountable obstacle to substantive jurisdiction. Recourse to a federal court, though granted by the Constitution, depends upon statute, and Congress need not confer it to its full extent. Even though it be possible to include the case at bar within the constitutional grant, Congress has not done so. The result is not to deny justice to the plaintiff, who can sue the association in the state courts; it goes no further than to prevent access to a tribunal of limited powers whose jurisdiction, for reasons good or bad, has not been thought appropriate to such controversies.

Motion denied.

MANTON, Circuit Judge (dissenting).

It is properly held in the opinion of the majority of the court, that the plaintiff's remedy is by mandamus. In re Hohorst, 150 U. S. 653, 14 S. Ct. 221, 37 L. Ed. 1211; § 377, U. S. Code (28 USCA § 377).

The hesitancy to attribute citizenship to a corporation for purposes of jurisdiction, as resulting from the grant of incorporation, was very marked in the early decisions. Hope Insurance Co. v. Boardman, 5 Cranch, 57, 3 L. Ed. 36; Bank of United States v. Deveaux, 5 Cranch, 61, 3 L. Ed. 38; Sullivan v. Fulton Steamboat Co., 6 Wheat. 450, 5 L. Ed. 302; Commercial & R. Bank v. Slocomb, 14 Pet. 60, 10 L. Ed. 354. But in Marshall v. Baltimore & Ohio R. R., 16 How. 314, 14 L....