Exxon Corp. v. DUVAL COUNTY RANCH COMPANY
| Decision Date | 30 October 1975 |
| Docket Number | Civ. A. No. 73-C-1. |
| Parties | EXXON CORPORATION v. DUVAL COUNTY RANCH COMPANY. |
| Court | U.S. District Court — Southern District of Texas |
Robert L. Norris and Robert D. McGee, Exxon Corp., Houston, Tex. Co-counsel: Frank Nesbitt, Corpus Christi, for Exxon Corp., plaintiff.
Jack Skaggs, Stiernberg, Skaggs & Koppel, Harlingen, Tex., for Duval County Ranch Co., defendant.
The Court on its own motion raised the question of whether there existed diversity citizenship between the two corporations in this lawsuit. A corporation is considered a citizen of the state of its incorporation and a citizen of the state where it has its principal place of business. 28 U.S.C. § 1332(c). It was clear to this Court that Defendant Duval County Ranch Company was a citizen of Texas, being incorporated under the laws of the State of Texas and having its principal place of business in this state. It was not similarly clear of what state or states the Plaintiff Exxon Corporation or its parts might be a citizen. The Plaintiff alleged that it was incorporated under the laws of the State of New Jersey and that it had its principal office and place of business in the State of New York. The Court felt that it was proper to test the Plaintiff's jurisdictional allegations because the Court had held in Coles v. Humble Oil & Refining Company, 348 F.Supp. 1240 (S.D.Tex.1973), that Humble Oil & Refining Company, one of the building blocks of the Exxon Corporation, was a separate juridical entity for diversity purposes with its principal place of business in Texas. As substantially all the operating functions of Humble Oil are now carried on by Exxon, U.S.A., a division of Exxon Corporation, the possibility existed that this division should be treated as a separate juridical entity, as Humble Oil had been. If it were treated in such a manner and on that basis its principal place of business were found to be in Texas, there would be no diversity of citizenship. Therefore, the Court asked the Plaintiff to show, as they alleged, that the conversion of Humble Oil into a division of the Exxon Corporation established a new juridical entity, Exxon Corporation, with its principal place of business in a state other than Texas. The parties have filed briefs, affidavits and extended interrogatories.
It appears to this Court that the Defendant has not seriously disputed the facts surrounding the merger of Humble Oil into the then newly formed Exxon Corporation. Rather, the Defendant disputes only the implications to be drawn from those facts in deciding whether Exxon, U.S.A. should be treated as a separate juridical entity for diversity purposes. The salient facts are few. Effective January 1, 1973, Humble Oil and other national and international corporate entitles were merged into Exxon Corporation (formerly Standard Oil of New Jersey). This new corporation filed its articles of incorporation in New Jersey. As a result of this corporate transformation, what had formerly been Humble Oil became basically what is now referred to as Exxon, U.S.A., one of four major divisions of Exxon Corporation. Exxon Corporation succeeded to all the assets and liabilities of Humble Oil. The executive officers of Exxon, U.S.A., who initially were the same persons who had managed Humble Oil, now operate under authority delegated to them by the Board of Directors of Exxon Corporation, rather than from its own independent board of directors. The corporate headquarters for Exxon Corporation are in New York City, and the division headquarters for Exxon, U.S.A. are in Houston, Texas. All major business and financial decisions affecting the Exxon Corporation and its divisions are made in its New York headquarters. Tax returns for the entire Exxon Corporation are filed in New York.
The Plaintiff Exxon Corporation asserts that Exxon, U.S.A. is an integral part of Exxon Corporation, that Humble Oil has ceased to exist and therefore the Court must look to the citizenship of Exxon Corporation. The Plaintiff goes on to argue that under either of the prevailing tests for determining the principal place of business of a corporation (e. g., the "nerve center test" or "the day-to-day activity test"), the principal place of business of the Exxon Corporation is New York City. The Defendant counters by arguing that the functions for which Exxon Corporation was organized and the purposes for which it exists in the United States have been delegated to Exxon, U.S.A., which is managed by the same people who work in the same building as when it was denominated Humble Oil, and that Exxon, U.S.A., as was Humble Oil, should be viewed as a separate juridical entity having its...
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