King v. Wall & Beaver Street Corporation

• Decision Date: 16 October 1944
• Docket Number: No. 8724.,8724.
• Citation: 79 US App. DC 234,145 F.2d 377
• Parties: KING et al. v. WALL & BEAVER STREET CORPORATION et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

79 US App. DC 234, 145 F.2d 377 (1944)

KING et al. v. WALL & BEAVER STREET CORPORATION et al.

No. 8724.

United States Court of Appeals District of Columbia.

Argued June 13, 1944.

Decided October 16, 1944.

Mr. Spencer Gordon, of Washington, D. C., for appellants Harry O. King and Isabella G. King, with whom Mr. H. Cecil Kilpatrick, of Washington, D. C., was on the brief for appellant Munson Line, Incorporated.

Mr. Walter M. Bastian, of Washington, D. C., with whom Mr. A. K. Shipe, of Washington, D. C., was on the brief, for appellees.

Before GRONER, Chief Justice, and MILLER and EDGERTON, Associate Justices.

GRONER, C. J.

This is a derivative action brought in the District of Columbia by plaintiffs, citizens of the State of New York, as stockholders of Munson Line, Incorporated, a Maryland corporation, against Harry O. King, the President and a director of that corporation, and against Isabella Greenway King, his wife, alleged in the complaint to be residents of the District of Columbia. The action was brought to recover a judgment against the individual defendants in favor of the corporation for alleged breaches by them of fiduciary duty to the corporation. The Munson Line was accordingly made a party defendant, and service was had on it at its office in Baltimore, Maryland.

The two individual defendants answered the complaint, denying that either of them is or was a resident or inhabitant or citizen of the District of Columbia, and alleging as to Harry O. King that he is and was at all times a resident and citizen of the State of Connecticut, and that Isabella Greenway King was, prior to her marriage, a citizen of Arizona, but that since her marriage to King she has resided in Bridgeport, Connecticut.

The defendant Munson Line filed a motion to dismiss, or to quash the service, on the ground that the jurisdiction of the court is founded on diversity of citizenship, and that Munson Line is not a citizen of the District of Columbia, nor engaged in business in the District, and was served outside the District, as the result of which the service was void and wholly ineffectual.

The Kings subsequently filed a motion for a preliminary hearing under Rule 12(d) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and for summary judgment pursuant to Rule 56 thereof. Depositions were taken on the question of the Kings' domicile and residence; and the District Court found as facts that when they were served they were living in the District of Columbia, the defendant Harry O. King being then Director of the Copper Division of the War Production Board, a temporary position which he had held since March, 1942, at a salary of $1.00 a year. The court further found that neither of the Kings had the intention of making the District his or her permanent home:

"When the action was filed and when the defendants Harry O. King and Isabella Greenway King were served with process, their permanent home was a dwelling on Old Battery Road, Bridgeport, Connecticut, in which they had lived before Mr. King came to Washington, * * *. This house has been kept ready for occupancy, and has been at times occupied by Mrs. King and at times by both Mr. and Mrs. King after Mr. King went to Washington. They have intended to maintain this dwelling in Bridgeport, Connecticut, as their permanent home. The domicile of Harry O. King and Isabella Greenway King is in the State of Connecticut, and they are citizens of that state."

The court further found that the defendant Munson Line is a corporation of Maryland, with its principal office in Baltimore, and that it has never transacted business in the District of Columbia.

On these findings the court concluded as a matter of law that the venue of the action was properly laid in the District of Columbia under the provisions of Section 51 of the Judicial Code, 28 U.S.C.A. § 112, and that service of process on the Munson Line was likewise properly made under Section 51 of the Judicial Code. Accordingly the motion to quash the service and the motion for summary judgment were denied.

Presumably, the court was of opinion that because at the time of filing the suits and service of process the Kings were actually, though temporarily, residing in the District of Columbia, they were for that reason "residents" within Section 51 of the Judicial Code, notwithstanding their actual citizenship in Connecticut. But it is well established that the words "inhabitant" and and "resident in", as used in Section 51 of the Judicial Code, mean neither more nor less than legal domicile, as the result of which jurisdiction except by consent is confined to the district in the State of which one or the other of the parties is a citizen. See Shaw v. Quincy Mining Co., 145 U.S. 444, 12 S.Ct. 935, 36 L.Ed. 768; In re Keasbey & Mattison Co., 160 U.S. 221, 228, 16 S. Ct. 273, 40 L.Ed. 402; Bicycle-Stepladder Co. v. Gordon, C.C., 57 F. 529; United States v. Gronich, D.C., 211 F. 548. Cf. Camp v. Gress, 250 U.S. 308, 39 S.Ct. 478, 63 L.Ed. 997; Putnam v. Ickes, 64 App.D. C. 339, 78 F.2d 223.

In this view the court below was in error in holding that the District of Columbia is the district of residence of the Kings under Section 51 of the Judicial Code.

As it happens, however, plaintiffs are not asking us to affirm the judgment on the grounds assigned by the lower court, but rather on the broader ground that Section 11 — 306 of the District of Columbia Code expands the jurisdiction of the local court to include all cases in law and equity between parties, both or either of which shall be found within the District of Columbia, and that since the Kings were actually found in the District, the service on them is valid. This might be a satisfactory answer to the problem if it were not that the Munson Line is an indispensable party to this action.¹ But unless service of process on Munson Line in Baltimore and out of the territorial jurisdiction of the lower court can be sustained, the action, as settled "for over a century" by established law, cannot be maintained, and if the action cannot be maintained against the Munson Line, it cannot be maintained at all.

And this brings us to the vital question in the case. As to this counsel for plaintiffs say that the District Court of the United States for the District of Columbia has, as we have seen, been given general jurisdiction of suits in law and equity where the defendants are found within the District; that accordingly, service of process on the Kings in the District was valid, and being valid, brings the case within the 1936 addition to Section 51 of the Judicial Code, 28 U.S.C.A. § 112. The language relied upon is as follows:

"Except that suit by a stockholder on behalf of a corporation may be brought in any district in which suit against the defendant or defendants in said stockholders' action, other than said corporation, might have been brought by such corporation, and process in such cases may be served upon such corporation in any district wherein such corporation resides or may be found." Based on this language, it is argued that since under the local statutes covering jurisdiction of the courts in the District of Columbia, the Kings, being found in the District, are properly sued there, it follows that process may be served upon the corporation wherever it is domiciled. But we think this does not follow. It is true, as we have seen, that the District Court of the United States for the District of Columbia may exercise jurisdiction if defendants are found within the District, but it is also true that under the provisions of the local statutes,...