ARAB INTERN. BANK & TR. v. NAT. WESTMINSTER BANK

• Citation: 463 F. Supp. 1145
• Decision Date: 15 January 1979
• Docket Number: No. 78 CIV 3370 (LBS).,78 CIV 3370 (LBS).
• Parties: ARAB INTERNATIONAL BANK & TRUST CO., LTD., Plaintiff, v. NATIONAL WESTMINSTER BANK LIMITED, Defendant.
• Court: U.S. District Court — Southern District of New York

463 F. Supp. 1145

ARAB INTERNATIONAL BANK & TRUST CO., LTD., Plaintiff, v. NATIONAL WESTMINSTER BANK LIMITED, Defendant.

No. 78 CIV 3370 (LBS).

United States District Court, S. D. New York.

January 15, 1979.

Donald A. Capobianco, Port Washington, N. Y., for plaintiff.

Kieffer & Hahn, New York City, for defendant; Bleakley, Platt, Schmidt & Fritz, New York City (of counsel).

OPINION

SAND, District Judge.

This is an action characterized by the plaintiff as a suit to recover on a guarantee. Plaintiff alleges that defendant National Westminster Bank, Ltd. agreed to guarantee payment of a commission due plaintiff from London and Lancashire Property Co., Ltd. Defendant vigorously contests plaintiff's characterization of the nature of the transaction in question, and indeed, the facts as to the underlying transaction are quite obscure.

The matter before us at this stage of the proceedings is defendant's motion to dismiss the complaint for lack of subject matter jurisdiction, failure to join an indispensable party, and failure to state a claim upon which relief can be granted, pursuant to F.R.Civ.P. 12(b)(1), (6), and (7). Because we find a lack of subject matter jurisdiction, we do not reach the other contentions raised in defendant's motion.

Plaintiff did not specifically allege diversity jurisdiction in its complaint. It did, however, allege facts presumably in support of such jurisdiction. There being no other apparent basis of jurisdiction, if this Court has subject matter jurisdiction at all, it would be based on diversity of citizenship.

The requisites of diversity jurisdiction are set out in 28 U.S.C. § 1332; in pertinent part, it provides as follows:

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000 . . . and is between—

(1) citizens of different States;

(2) citizens of a State and citizens or subjects of a foreign state;

(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties;

. . . . .

(c) For the purposes of this section . . a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business . . .

Plaintiff alleges that it is a corporation organized under the laws of St. Vincent, the West Indies, with its principal place of business at Kingstown, St. Vincent. Complaint ¶ 1. Plaintiff is thus a citizen of a foreign state for purposes of the subject matter jurisdiction of this Court, and jurisdiction must therefore be found under subsection (2) of Section 1332(a). Under that section, the other party to a litigation involving a foreign litigant must be a citizen of a state of the United States. Not only is this apparent from the face of the statute, it is also a settled matter of case law. See 1 Moore's Federal Practice ¶ 0.751.-2.

Plaintiff alleges that National Westminster Bank, Ltd. ("NatWest") is a corporation organized under the laws of the United Kingdom, "having offices at 100 Wall Street, New York, New York; and that it did obtain a permanent license in the State of New York to operate a foreign branch at 100 Wall Street, New York City." Complaint ¶¶ 2, 3. The complaint makes no further allegations respecting defendant's citizenship.

We assume for purposes of this decision that § 1332(c) applies to alien corporations, i. e., that an alien corporation is deemed a citizen of both the country in which it is incorporated and the place—foreign country or state of the United States—in which it has its principal place of business.¹ The allegations of the complaint are insufficient to establish defendant's principal place of business. Defendant has expressly stated (by affidavit of the Assistant Manager of the New York branch office) that its principal place of business is in London. Affid. of D. J. Simmonds, ¶ 3. On the present record before us, we would conclude that defendant's principal place of business is in London.

Plaintiff contends, however, that defendant's New York office is its principal place of business within the United States, and construes § 1332(c) to provide that, in light of that fact, defendant is a citizen of New York for purposes of federal diversity jurisdiction. Def.Br. in Opp. at 4. Defendant does not concede that its New York office is its principal place of business within the United States, but we find the question to be immaterial.

It is true that where an alien corporation's principal place of business world-wide is in one of the states of the United States, the trend of recent decisions, and the opinion of commentators, is to deem the corporation to be a citizen of that state. See, e. g., Bergen Shipping Co., Ltd. v. Japan Marine Services, Ltd., 386 F.Supp. 430 (S.D.N. Y.1974); Southeast Guaranty Trust Co. v. Rodman & Renshaw, Inc., 358 F.Supp. 1001 (N.D.Ill.1973); 1 Moore's Federal Practice ¶ 0.753.

That is not the factual situation before us, however; defendant's principal place of business world-wide would appear to be in London. The relative prominence of defendant's New York office with respect to its United States business is irrelevant for purposes of establishing its citizenship.² In Eisenberg v. Commercial Union Assurance Co., 189 F.Supp. 500 (S.D.N.Y. 1960), plaintiff was a New York citizen; defendant was a British corporation with its principal place of business in London and its principal place of business within the United States in New York. Defendant sought to be treated as a New York citizen, as diversity of citizenship would then be lacking. The court first stated its opinion that unless a corporation is incorporated by one of the states of the United States, it would not be deemed to be a citizen of the state in which it has its principal place of business. That holding has been disapproved by subsequent cases and criticized by the commentators, as discussed supra at footnote 1. The court went on, however, to hold that in the case before it, defendant's principal place of business was in fact in London, rather than New York, and it therefore could not be deemed a citizen of New York:

Defendant would have me read subdivision (c) of § 1332 as if words were added to it so as to make it provide that a corporation shall be deemed a citizen "of the State where it has its principal place of business" within the United States. (Emphasis in original.)

I do not believe that the statute ought to be read otherwise than literally.. . it was not the purpose of the amendment which added subsection 1332(c) to abandon the protection from local prejudice against outsiders as the reason for diversity jurisdiction. It is a fair inference that a corporation which has located its principal place of business in a State has adopted that State as its actual residence and will not be subject to prejudice against outsiders. If a British corporation has located its principal place of business outside the United States, however, and has set up two branches in the United States, one in Chicago and one in New York, and the one in New York is merely its principal place of business in the United States (emphasis in original), no inference can be legitimately drawn from those facts that it has adopted New York as its actual residence. Its contact

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