Fitzgerald v. Missouri Pac. Ry. Co.

• Decision Date: 16 April 1891
• Citation: 45 F. 812
• Parties: FITZGERALD v. MISSOURI PAC. RY. CO. et al.
• Court: U.S. District Court — District of Nebraska

45 F. 812

FITZGERALD v. MISSOURI PAC. RY. CO. et al.

United States Circuit Court, D. Nebraska.

April 16, 1891

Syllabus by the Court

The case as made by the petition for removal and the pleadings at the time of the removal is the test of the right to remove and no amendment can be made in that circuit court, setting up grounds for removal which were not presented to the state court on the motion to remove.

The decision of the supreme court of the state that a particular corporation is a corporation of that state is binding on the federal court.

When a consolidated company is formed by the union of several corporations chartered by different states it is a citizen of each of the states which granted the charter to any one of its constituent companies, and when sued in one of these states it cannot claim the right of removal on the ground that it is also a citizen of another state.

A consolidated corporation which bears the same name in three states, and has one board of directors and the same share-holders, and operates the road as one entire line, and is designed to accomplish the same purposes, and exercises the same general corporate powers and functions in all the states, is not the same corporation in each state. While it is a unit, and acts as a whole, in the transaction of its corporate business, it is not a corporation at large, nor is it a joint corporation of the three states. Like all corporations, it must have a legal dwelling place, and it dwells in three states, and is a separate and single entity in each. It is, in effect, a corporate trinity, having no citizenship of its own distinct from its constituent members but a citizenship indentical with each.

In the conduct of its corporate business the consolidated corporation acts as a unit,-- as one corporation, and not three; and, in the absence of a statutory provision to the contrary, it may transact its corporate business in one state for all, and the contracts it enters into and the liabilities it incurs in one state are binding upon it in all the states and may be enforced against it in any one of them, when the action is transitory.

The act of congress prescribing the mode in which a railroad company may secure the right of way through the public lands construed, and held that it is the duty of the railroad company, and not the contractor building the road, to do the things required by the act to secure the right of way.

The owner of all the stock and bonds of a corporation does not own the corporate property. The corporate property, which includes all rights of action and claims for damages, belongs to the corporation, and is subject to the management and control of its board of directors.

No federal question is raised in a case by an answer that is bad in substance without reference to the federal question.

A cause is not removable simply because in its progress it may become necessary to construe or apply an act of congress. Unless there is a dispute between the parties as to the meaning of the act, there is no federal controversy between them. The decision of the case, or some material issue in it, must depend upon a construction of the act claimed by one party and denied by the other. A simple averment that such is the fact is stating a conclusion, and is not sufficient; the facts that show it to be true must be set out.

When it is settled that the jurisdiction of the circuit court in a removal cause is doubtful, all doubt as to what the court should do is dispelled, and the cause will be remanded. This rule is in harmony with the spirit and design of the act of congress repealing the act which allowed an appeal or writ of error from an order remanding a cause.

Marquette Deweese & Hall, for plaintiff.

B. P. Waggener and R. S. Hall, for defendants.

CALDWELL J.

This cause was removed by the defendant the Missouri Pacific Railway Company from the state court into this court. The question now to be considered is whether it was properly removed. The suit is brought by the plaintiff as a stockholder in the defendant corporation the Fitzgerald & Mallory Construction Company, hereafter designated as the 'Construction Company,' on behalf of himself and all other stockholders of that company, to compel an accounting between that company and the defendant the Missouri Pacific Railway Company.

The railway company sets up two grounds for removal,-- diverse citizenship and a federal question.

1. The averments in the petition for removal touching the citizenship of the parties are as follows:

'Your petitioner further avers that at the commencement of this suit the said plaintiff was and still is a citizen of the state of Nebraska, and at the commencement of this suit the defendant the Fitzgerald & Mallory Construction Company was and still is a corporation created, chartered, and organized under and by virtue of the laws of the state of Iowa; and your petitioner avers that it is advised and believes, and so charges the fact to be, that for the purpose of this action it was at the commencement of this suit, and still is, a corporation chartered, incorporated, and created under and by virtue of the laws of the state of Kansas; that prior to the commencement of this action your petitioner was made up of three several constituent companies, to-wit, a railroad company chartered, organized, created, and existing under and by virtue of the laws of the state of Missouri, a railroad company chartered, organized, created, and existing under the laws of the state of Kansas, and a railroad company chartered, organized, created, and existing under the laws of the state of Nebraska; that the said Missouri and Kansas corporations were, by due proceedings had under and by virtue of the laws of each of said several states, duly consolidated under the name of the 'Missouri Pacific Railway Company,' and subsequent thereto the said consolidated company was, by due proceedings had in 1882, duly consolidated with the Missouri Pacific Railway Company in Nebraska, which said latter consolidation was in all respects under and in pursuance of the consolidation and laws of the state of Nebraska, and that for the purpose of all contracts entered into in said state of Nebraska, and all causes of actions which accrued against said the Missouri Pacific Railway Company in said state of Nebraska, and for the enforcement of all statutory obligations by said consolidation, it became and was, and still is, a corporation organized, created, and existing in pursuance of the laws of the state of Nebraska; but your petitioner avers that said pretended cause of action set forth in plaintiff's petition filed herein arose and accrued out of a certain contract entered into between the said Fitzgerald and Mallory Construction Company and the said the Missouri Pacific Railway Company, as chartered, organized, created, and existing under and by virtue of the laws of the state of Kansas; * * * and your petitioner thereon avers that it is advised and believes that by reason of said matters and things, for the purpose of this action only, and by reason of the obligations, if any, growing out of contract relations between your petitioner and the said Fitzgerald & Mallory Construction Company, your petitioner was at the commencement of this suit, and still is, a citizen of the state of Kansas.'

Like averments are made in the answer filed with the petition for removal in the state court. The case as made by the petition for removal and the pleadings at the time of the removal is the test of the right to remove. Graves v. Corbin, 132 U.S. 571, 10 S.Ct. 196; Jackson v. Allen, 132 U.S. 27, 10 S.Ct. 9; Rothschild v. Matthews, 22 F 6; Stevens v. Nichols, 130 U.S. 230, 9 S.Ct. 518. No amendment can be made in the circuit court setting up grounds for removal which were not presented to the state court on the motion to remove. Id., and Cameron v. Hodges, 127 U.S. 322, 8 S.Ct. 1154; Crehore v. Railroad Co., 131 U.S. 240, 9 S.Ct. 692. The supreme court of Nebraska has decided that the railway company is a corporation of the state. The decision was rendered in a case brought against the railway company for the purpose of determining that question. State v. Railway Co., 25 Neb. 164, 41 N.W. 127. The decision is conclusive upon the question in this court, and puts an end to the defendant's claim to remove this cause on the ground of citizenship. But, independently of that decision, upon the averments of the petition for removal and the answer, it sufficiently appears that the defendant is a corporation and citizen of Nebraska. A denial of its citizenship in Nebraska, in the face of the facts set out in the petition for removal and the answer, is simply a denial of the law. It has long been settled law that when a consolidated company is formed by the union of several corporations chartered by different states it is a citizen of each of the states which granted the charter to any one of its constituent companies, and when sued in one of those states it cannot claim the right of removal on the ground that it is also a citizen of another state. Dill. Rem. Causes, Sec. 104, and cases cited; Mor. Priv. Corp. Sec. 101; Fost. Fed. Pr. Sec. 19. It is expressly averred in the petition for removal that the defendant the Missouri Pacific Railway Company was formed by the consolidation of companies originally chartered by the states of Missouri, Kansas, and Nebraska. This makes the consolidated company, for all purposes of jurisdiction in the federal courts, a citizen of each of those states. Although it bears the same name in the three states, has one board of directors and the same shareholders, and operates the road as one entire line, and is designed to accomplish the same purposes, and exercises the...