Galva Foundry Co. v. Heiden

• Citation: 924 F.2d 729
• Decision Date: 13 February 1991
• Docket Number: No. 90-1468,90-1468
• Parties: GALVA FOUNDRY COMPANY, Plaintiff-Appellant, v. Ray F. HEIDEN, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 729

924 F.2d 729

GALVA FOUNDRY COMPANY, Plaintiff-Appellant, v. Ray F. HEIDEN, Defendant-Appellee.

No. 90-1468.

United States Court of Appeals Seventh Circuit.

Argued Jan. 14, 1991.

Decided Feb. 13, 1991.

James R. Morrin, Wildman, Harrold, Allen & Dixon, Chicago, Ill., James E. Konsky, Vonachen, Lawless, Trager & Slevin, Peoria, Ill., for plaintiff-appellant.

Dean B. Rhoads, Edwin L. Durham, Sutkowski & Washkuhn, Peoria, Ill., for defendant-appellee.

Before CUMMINGS, POSNER, and KANNE, Circuit Judges.

POSNER, Circuit Judge.

The district judge dismissed this case for want of diversity jurisdiction because he concluded that on the day the complaint had been filed, the defendant, Ray Heiden, was a citizen of Illinois--a state of which the plaintiff, Galva Foundry, is unquestionably a citizen for diversity purposes (it is incorporated in Illinois). This conclusion must stand unless clearly erroneous. Lew v. Moss, 797 F.2d 747, 750 (9th Cir.1986); Blakemore v. Missouri Pac. R. Co., 789 F.2d 616, 618 (8th Cir.1986); Julien v. Sarkes Tarzian, Inc., 352 F.2d 845 (7th Cir.1965); Casio, Inc. v. S.M. & R. Co., 755 F.2d 528, 530 (7th Cir.1985).

Although the diversity statute defines the state of a corporation's citizenship- --a corporation is a citizen of both the state in which it is incorporated and the state in which it has its principal place of business, 28 U.S.C. Sec. 1332(c)(1)--there is no statutory definition of an individual's state of citizenship. But the courts have held that it is the state of the individual's domicile, Gilbert v. David, 235 U.S. 561, 569, 35 S.Ct. 164, 166, 59 L.Ed. 360 (1915); Sadat v. Mertes, 615 F.2d 1176, 1180 (7th Cir.1980) (per curiam); Julien v. Sarkes Tarzian, Inc., supra, 352 F.2d at 846; Rodriguez-Diaz v. Sierra-Martinez, 853 F.2d 1027, 1029 (1st Cir.1988)--the state he considers his permanent home.

Unfortunately, in this age of second homes and speedy transportation, picking out a single state to be an individual's domicile can be a difficult, even a rather arbitrary, undertaking. Domicile is not a thing, like a rabbit or a carrot, but a legal conclusion, though treated as a factual determination for purposes of demarcating the scope of appellate review. And in drawing legal conclusions it is always helpful to have in mind the purpose for which the conclusion is being drawn. The purpose here is to determine whether a suit can be maintained under the diversity jurisdiction, a jurisdiction whose main contemporary rationale is to protect nonresidents from the possible prejudice that they might encounter in local courts. This argues for finding the defendant, Mr. Heiden, to be a domiciliary of the same state as the plaintiff, Galva--that is, Illinois. Heiden is a long-time resident of Illinois and unlikely therefore to encounter hostility in its state courts. And anyway he does not want to be in federal court. It is Galva that wants to be in federal court. Yet Galva is indisputably a citizen of Illinois.

Heiden, 68 years old when the suit was filed in 1989, was born and raised in Peoria, and has lived there all his life and worked there all his life until the events giving rise to this suit. Having risen through the ranks to become the president of Galva, in 1988 he quit the company and sold his stock in it. The suit charges that he defrauded the company. In 1966 Heiden had bought a second home in Florida, which he and his wife have used as a vacation home. In 1989, after leaving the employ of Galva, Heiden spent several months in Florida, dividing the balance of the year between...