43 U.S. 497 (1844), Louisville, C. & C.r. Co. v. Letson

Citation:43 U.S. 497, 11 L.Ed. 353
Party Name:THE LOUISVILLE, CINCINNATI, AND CHARLESTON RAILROAD COMPANY, PLAINTIFFS IN ERROR, v. THOMAS W. LETSON, DEFENDANT.
Case Date:March 15, 1844
Court:United States Supreme Court
 
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43 U.S. 497 (1844)

11 L.Ed. 353

THE LOUISVILLE, CINCINNATI, AND CHARLESTON RAILROAD COMPANY, PLAINTIFFS IN ERROR,

v.

THOMAS W. LETSON, DEFENDANT.

United States Supreme Court.

March 15, 1844

OPINION

THIS case was brought up, by writ of error, from the Circuit Court of the United States for the district of South Carolina.

Letson, a citizen of New York, brought an action of covenant against the Louisville, Cincinnati, and Charleston Railroad Company, alleging that they had not fulfilled a contract with him relating to the construction of the road

The suit was brought in November, 1841.

In April, 1842, the defendants filed a plea to the jurisdiction, which was afterwards amended to read as follows:

'And the said the Louisville, Cincinnati, and Charleston Railroad Company come and say, that this court ought not to have or take further cognisance of the action aforesaid, because they say that the said the Louisville, Cincinnati and Charleston Railroad Company is not a corporation whose members are citizens of South Carolina, but that some of the members of the said corporation are citizens of South Carolina, and some of them, namely, John Rutherford, and Charles Baring, are, and were at the time of commencing the said

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action, citizens of North Carolina; and the state of South Carolina is, and was at the time of commencing the said action, a member of the said corporation, and the Bank of Charleston, South Carolina, is also, and was at the time of commencing the said action, a member of the said corporation, which said the Bank of Charleston, South Carolina, is a corporation, some of whose members, namely, Thomas Parish and Edmund Lafau, are, and were at the time of commencing the said action, citizens of New York. And the Charleston Insurance and Trust Company is now, and was at the time of commencing the said action, a member of the said Louisville, Cincinnati and Charleston Railroad Company; which said Charleston Insurance and Trust Company, is a corporation, some of whose members, namely, Samuel D. Dickson, Henry R. Dickson, Henry Parish, and Daniel Parish, are now, and were at the time of commencing the said action, citizens of the state of New York.

'And this the said Louisville, Cincinnati, and Charleston Railroad Company are ready to verify. Wherefore they pray judgment whether this court can or will take further cognisance of the action aforesaid.'

To this plea there was a general demurrer, which, upon argument, was sustained by the court.

The railroad company then pleaded the general issue, and the cause went on to trial. The jury found a verdict for the plaintiff, and assessed his damages at $18,140.23.

The writ of error was brought to review the opinion of the court upon the demurrer.

COUNSEL

Mazyck, for the plaintiffs in error.

Pettigru, Lesesne, and Legare, (then attorney-general,) for the defendant in error.

The case was submitted upon printed arguments; and, on account of its great importance, the reporter has thought it proper to insert these arguments in extenso.

Mazyck, for the plaintiffs in error.

An action is brought by a citizen of New York, in the Circuit Court in South Carolina, against a corporation whose members are alleged to be citizens of South Carolina. A plea to the jurisdiction is set up, in which it is averred: 1st. That two of the members of the corporation sued are citizens of North Carolina. 2d. That the state of

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South Carolina is also a member. 3d. That two other corporations are also members, and that some of the members of each of them are citizens of the state of New York.

The objections to the jurisdiction of the court arising out of these facts, (the facts themselves being admitted by demurrer,) are embraced in the following propositions:

1. That a citizen of one state cannot sue a corporation in the Circuit Court of the United States in another state, unless all the members of the corporation sued are citizens of the state in which the suit is brought.

2. That a citizen of one state cannot sue a corporation in the Circuit Court of the United States in another state, if the state be a member of the corporation, though all the other members of the corporation may be citizens of the state.

3. That a citizen of one state cannot sue a corporation in the Circuit Court of the United States in another state, where one of the members of the corporation sued is another corporation, any of whose members are citizens of the same state with the plaintiff.

1. A citizen of one state cannot sue a corporation in the Circuit Court of the United States in another state, unless all the members of the corporation are citizens of the state in which the suit is brought.

Sect. 2, art. 3, of the Constitution of the United States, provides that the judicial power shall extend to controversies 'between citizens of different states.' In the case of the Bank of the United States v. Deveaux et al., 5 Cranch, 84, it was determined that 'the artificial being, the mere legal entity, a corporation aggregate, is not a citizen, and cannot sue or be sued in the courts of the United States, unless the rights of the members in this respect can be exercised in their corporate name. If the corporation be considered as a mere faculty, and not as a company of individuals, who in transacting their joint concerns may use a legal name, they must be excluded from the courts of the Union. The corporate name cannot be a citizen, but the persons whom it represents may be citizens, and the controversy is in fact, and in law, between those persons suing in their corporate character, by their corporate name, for a corporate right, and the individual against whom the suit may be instituted. Substantially and essentially, the parties in such a case, where the members of the corporation are citizens of a different state from the opposite party, come within the spirit and terms of the jurisdiction conferred by the Constitution on the federal courts. The controversy

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is substantially between citizens of one state suing by a corporate name and those of another state.'

In other words, when a suit is brought in a Circuit Court of the United States, by or against a corporation, the court with reference to the question of jurisdiction, depending on the character of the parties, overlooks the artifical person, the mere legal entity, which cannot be either citizen or alien, and regards only the natural persons of whom it is composed. They are the substance, the real parties; the corporate character and style are only the form and name under which they are presented.

As far as this question is concerned, the members of the corporation are regarded as individuals jointly suing or being sued.

If they have the requisite character, if they are citizens of a different state or states from the other party to the suit, the case falls within the constitutional provision.

In Strawbridge v. Curtis, 3 Cranch, 267, it was held that where the interest was joint, and two or more persons were concerned in that interest as joint plaintiffs, or joint defendants, each of them must be competent to sue, or liable to be sued in the federal courts, and the suit was dismissed because some of the plaintiffs and defendants were citizens of the same state.

And accordingly, the members of a corporation being regarded with reference to the question of jurisdiction, as joint plaintiffs of joint defendants in the same interest, it has been determined that if any of them are citizens of the same state with the other party to the suit, the federal courts have no jurisdiction. Ward v. Arredondo, 1 Paine, 410; Commercial and Railroad Bank of Vicksburg v. Slocomb et al., 14 Pet., 60.

But in order to give jurisdiction to the Circuit Courts, founded on the character of the parties in a suit between citizens of different states, not only is it necessary that none of the parties on one side should be citizens of the same state with any of the parties on the other side, but the suit must be between a citizen or citizens of the state in which the suit is brought, and a citizen or citizens of some other state or states. In other words, all the parties on one side must be citizens of the state in which the suit is brought, and all the parties on the other side must be citizens of some other state or states.

It is not denied that under the constitutional provision as to the judicial power, Congress might, if they had thought proper, have given to the Circuit Courts jurisdiction of all cases between citizens

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of one or more states on one side, and citizens of one or more other states on the other side, as, for example, a case in which some of the plaintiffs should be citizens of New York, and some of them citizens of New Jersey, and some of the defendants citizens of South Carolina, and some citizens of North Carolina. But though Congress might constitutionally have given to the Circuit Courts jurisdiction of such a case, they have not done so. The 11th sect. of the judicial act of 1789, provides that the Circuit Courts shall have cognisance of all suits, &c., where 'the United States are plaintiffs or petitioners, or an alien is a party, or the suit is between a citizen of the state where the suit is brought and a citizen of another state.' If the parties on one side are citizens of a different state from that in which the suit is brought, and some of the parties on the other side are citizens of the state in which the suit is brought, and some of them are citizens of a third state, the suit is clearly not a suit between a citizen or citizens of the state in which it is brought, and a citizen or citizens of another state.

This...

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