Brocki v. American Express Company

• Decision Date: 16 June 1960
• Docket Number: No. 13933.,13933.
• Parties: Myrtle Frances BROCKI, Appellant, v. AMERICAN EXPRESS COMPANY, an Unincorporated Joint Stock Association, Appellee, and DEMERY'S, INC., a New Jersey Corporation, Third-Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

279 F.2d 785 (1960)

Myrtle Frances BROCKI, Appellant, v. AMERICAN EXPRESS COMPANY, an Unincorporated Joint Stock Association, Appellee, and DEMERY'S, INC., a New Jersey Corporation, Third-Party Defendant-Appellee.

No. 13933.

United States Court of Appeals Sixth Circuit.

June 16, 1960.

Harold Helper, Detroit, Mich., Max M. Marston, Detroit, Mich., on brief, for appellant.

Richard C. Van Dusen, Detroit, Mich., Joseph H. Guttentag of McClintock, Fulton, Donovan & Waterman, Detroit, Mich., Ward Randol, Jr. of Dickinson, Wright, Davis, McKean & Cudlip, Detroit, Mich., on brief for appellees.

Before CECIL, WEICK and POPE, Circuit Judges.

POPE, Circuit Judge.

On February 19, 1953, appellant, a citizen of Michigan, filed this action in the court below against defendant American Express Company, which was alleged to be "a corporation organized and existing under and by virtue of the laws of the State of New York." The sole basis claimed for jurisdiction was diversity of citizenship of the parties. The defendant first answered denying the allegation that it was a corporation and alleging that it was an unincorporated joint-stock association having its principal office in New York City and having stockholder-members resident in the State of Michigan and other states and asserting that it had no citizenship other than that of its stockholder-members.

Approximately six years after the filing of the complaint (apparently no steps looking to trial had then been taken), American Express Company filed a motion to dismiss the action for want of jurisdiction. The motion was supported by an affidavit of an officer of the defendant stating that American Express Company was an unincorporated joint-stock association organized and existing under the laws of the State of New York; that it maintained its principal office there, and also maintained offices in the State of Michigan, in which latter state more than 200 of its stockholder-members were resident. Plaintiff resisted this motion, asserting that under the law of the State of Michigan defendant "is regarded as a New York corporation" and that it is "suable in Michigan as a corporation by the name by which it is known." There was no controversy as to the statute under which defendant was organized.

The trial court, holding that diversity jurisdiction was lacking, dismissed the action.

It seems plain that jurisdiction may be sustained here only if defendant can be held to be a corporation of the State of New York. The fact that it may be sued by its common name is not enough. Swan v. First Church of Christ, Scientist, 9 Cir., 225 F.2d 745, 747. Nor is it enough to say that defendant's organization has many features which permit it to operate and carry on its functions in a manner indistinguishable from that followed by corporations Arbuthnot v. State Automobile Insurance Association, 10 Cir., 264 F.2d 260, 262.

And it also seems plain that whether this defendant was made a corporation by New York depends upon the law of New York. It is significant here that the statute under which defendant was organized negatives an intention to treat such a joint-stock association as a corporation. Article I, § 2, of the General Associations Law (McKinney's Consolidated Law of New York Ann., c. 29, Vol. 18-A), provides: "As used in this chapter: 1. The term `joint stock association' includes every unincorporated joint stock association, company or enterprise having written articles of association and capital stock divided into shares, but does not include a corporation or a business trust."

The New York courts have occasion to consider whether similar joint-stock associations are, or are not, corporations. They have said they are not.

In People ex rel. Winchester v. Coleman, 133 N.Y. 279, 31 N.E. 96, 16 L.R.A. 183, the court was dealing with the question whether the National Express Company, a joint-stock association of that state, was properly regarded as a corporation. After viewing the history of New York legislation relating to such organizations, the court said, 31 N.E. at pages 97-98: "These last and quite recent enactments show that the legislative intent is still to preserve and not destroy the original difference between the two classes of organizations; to maintain in full force the common-law liability of associates, and not to substitute for it that of corporators; and, preserving in continued operation that normal and distinctive difference, to evince a plain purpose not to merge the two organizations in one, or destroy the boundaries which separate them."

That case was cited and followed in Hibbs v. Brown, 190 N.Y. 167, 82 N.E. 1108, where the court was considering the status of Adams Express Company, also a joint-stock association organized under the laws of New York.¹

It follows that we must consider this to be an unincorporated association, and hence it cannot be deemed a citizen, apart from its members, for the purpose of diversity jurisdiction. Chapman v. Barney, 129 U.S. 677, 9 S.Ct. 426, 32 L.Ed. 800; Great Southern Fireproof Hotel Co. v. Jones, 177 U.S. 449, 20 S.Ct. 690, 44 L.Ed. 842; Thomas v. Board of Trustees, 195 U.S. 207, 25 S.Ct. 24, 49 L.Ed. 160; Fred Macey Co. v. Macey, 6 Cir., 135 F. 725; Taylor v. Weir, 3 Cir., 171 F. 636; Rountree v. Adams Express Co., 8 Cir., 165 F. 152.²

Appellant cites the provision of Article X, § 4 of the New York Constitution: "The term corporations as used in this section, and in sections 1, 2 and 3 of this article shall be construed to include all associations and joint-stock companies having any of the powers or privileges of corporations not possessed by individuals or partnerships. And all corporations shall have the right to sue and shall be subject to be sued in all courts in like cases as natural persons." This means no more than that for the purposes stated in those sections — 1, 2, 3 and 4 of Article X, joint-stock companies are subject to the same regulation as corporations. Attorney General v. Hill Davis Co., 261 Mich. 89, 245 N.W. 579. That such a provision does not suffice to make them corporations for the purpose of diversity of citizenship was noted in Fred Macey Co. v. Macey, supra.

Appellant cites Van Sant v. American Express Co., 3 Cir., 169 F.2d 355. Of that case, the trial court properly said: "We are convinced, however, that the Court's primary concern there had to do with capacity and that any observations as to jurisdiction are purely dicta and not determinative of any issue directly before that Court. The Court's attention there was directed toward a different question entirely, and the `distinction between suability and citizenship in this Constitutional sense may have been overlooked.' Swan v. First Church of Christ, Scientist, in Boston, supra, 225 F.2d at page 748, footnote 3."

There is nothing unusual about provisions in state statutes that for the purposes of those acts joint-stock associations, and other similar organizations, should be treated as corporations. Michigan has such a statute.³ The validity of that provision has been upheld. Hemphill v. Orloff, 238 Mich. 508, 213 N.W. 867, 58 A.L.R. 507, affirmed 277 U.S. 537, 48 S.Ct. 577, 72 L.Ed. 978.⁴ But such provisions do not operate to make such foreign organizations corporations for the purpose of diversity jurisdiction. The Michigan court itself has repeatedly held that for purposes other than those specially...