George Weston, Ltd. v. N.Y. Cent. R. Co.

Decision Date08 October 1935
Citation181 A. 18
PartiesGEORGE WESTON, LIMITED v. NEW YORK CENT. R. CO. et al.
CourtNew Jersey Supreme Court

Action by George Weston, Limited, against the New York Central Railroad Company, a New York corporation, and in the alternative, the West Shore Railroad Company, a New York corporation. On petition of defendants for order removing cause to the United States District Court for the District of New Jersey.

Petition granted.

Argued before HEHER, J, at the Passaic Circuit.

Benjamin M. Taub, of Passaic, for plaintiff.

Wall, Haight, Carey & Hartpence, of Jersey City, for defendant.

HEHER, Justice.

This application is grounded upon a claimed diversity of citizenship requisite to confer jurisdiction upon the Federal District Court. The action sounds in tort. Its object is the recovery of the value of a motortruck demolished in a grade crossing collision. The complaint recites that plaintiff is a "corporation having its principal office in the City of Passaic, County of Passaic and State of New Jersey." There is no further allegation respecting the place of its origin or habitat. The ad damnum clause asserts the consequent damage to have been $5,000.

By joint verified petition, seasonably presented, the defendants set forth, inter alia, that they were, at the time of the institution of this action, and now are, bodies corporate organized under the laws of the state of New York, and "citizens and residents of said state," and not of the state of New Jersey; that the matter in controversy exceeds the sum of $3,000, exclusive of interest and costs; and that the plaintiff "was and now is a corporation organized under the laws of the State of New Jersey, having its principal office and place of business in the City of Passaic, County of Passaic, in said State, and was and now is a resident and citizen of said State"; and prayed acceptance of a bond in the statutory form, tendered therewith, and the removal of the action into the Federal District Court for the District of New Jersey, and the termination of all proceedings in this court.

The matter came on for hearing, on notice; and the plaintiff asked and was granted leave to amend the complaint to incorporate therein the allegations that it was a foreign corporation organized and existing under and by virtue of the laws of the Dominion of Canada, authorized to do business in the state of New Jersey in virtue of a certificate filed with out secretary of state, and that its principal office in this state was located in the city of Passaic, and to state the damage ensuing from defendants' alleged wrongdoing to have been the sum of $2,000. It seems to be a fact that the value of the demolished vehicle was less than that sum, and that this alone is the measure of plaintiff's damage, if liability be established. Thereupon defendants presented a verified "supplement" to their petition for removal, setting forth these amendments to the complaint, and "renewing" their application for removal of the cause on the ground of diverse citizenship.

Plaintiff maintains that, inasmuch as it is a corporation of alien origin and existence, there is not that diversity of citizenship prescribed by the removal act as a prerequisite to jurisdiction in the Federal District Court This contention is not well founded.

Section 28 of the Federal Judicial Code ordains that any suit of a civil nature, at law or in equity, other than those arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, "of which the district courts of the United States are given jurisdiction, in any State court, may be removed into the district court of the United States for the proper district by the defendant or defendants therein, being nonresidents of that State." 28 USCA § 71. Original jurisdiction is conferred by article 3, section 2, clause 1, of the Federal Constitution, and by section 24 (1) of the Judicial Code enacted in the exercise of the constitutional power. The Constitution provides that the judicial power shall extend, inter alia, to controversies between "citizens of different States; * * * and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects." The statute vests in the Federal District Courts jurisdiction of all suits of a civil nature, at common law or in equity, where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, "and (a) arises under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, or (b) is between citizens of different States, or (c) is between citizens of a State and foreign States, citizens, or subjects." 28 USCA § 41 (1).

It is clear that the case in hand does not fall within subdivision (b). King v. Cornell, 106 U. S. 395, 1 S. Ct. 312, 27 L. Ed. 60. But, regarding the plaintiff as an alien corporation, there is diversity of citizenship within the intendment of subdivision (c). The individual members of a corporation, created by the laws of one of the states of the Union, are, for the purposes of suit by or against it in the state courts, conclusively presumed to be citizens of the state by whose laws the corporation is created and exists. And a corporation of a foreign state is, for purposes of jurisdiction in the courts of the Union, to be deemed constructively a citizen or subject of such state. National Steamship Co. v. Tugman, 106 U. S. 118, 1 S. Ct. 58, 27 L. Ed. 87; Petrocokino v. Stuart, Fed. Cas. No. 11,041; Purcell v. British Land & Mortgage Co. (C. C.) 42 F. 465. An alien corporation is regarded as a nonresident, although it has a branch office within the state for the transaction of its business. Baumgarten v. Alliance Assur. Co, Ltd, of London, England (C. C.) 153 F. 301; Purcell v. British Land & Mortgage Co, supra. But the residence of an alien within a state will not deprive him of his right to sue in the federal court. Breedlove v. Nicolet, 7 Pet. 413, 430, 8 L. Ed. 731; Bonaparte v. Camden & A. R. Co, 3 Fed. Cas. 821, No. 1,617; Sturchler v. Hicks (D. C.) 17 F.(2d) 321.

The right of removal conferred by the statute, where, as here, an alien institutes in a state court an action against a citizen of another state of the Union is absolute and unconditional; and this is so even though the plaintiff could not have originally brought his action in the Federal District Court to which removal of the cause is sought. The statutory provision that, with given exceptions not here pertinent, "no civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant" (28 USCA § 112, Judicial Code, § 51), does not condition the right to removal of an action brought in a state court by an alien against a citizen of a sister state. H. J. Decker, Jr., & Co. v. Southern R. Co. (C. C.) 189 F. 224; Cuban Trading Co. v. Black Diamond S. S. Corporation (D. C.) 277 F. 857; Bagenas v. Southern Pacific Co. (C. C.) 180 F. 887; Matarazzo v. Hustis (D. C.) 256 F. 882; Barlow v. Chicago & N. W. R. Co. (C. C.) 164 F. 765, rehearing denied (C. C.) 172 F. 513; Smellie v. Southern Pac. Co. (D. C.) 197 F. 641; Sherwood v. Newport News & M. Val. Co. (C. C.) 55 F. 1.

While the question has been the subject of sharp conflict of opinion, it is now settled that the provisions of section 51 of the Judicial Code (28 USCA § 112) relate to the venue of suits originally begun in the Federal District Court, and do not qualify or restrict the operation of the removal act. Lee v. Chesapeake & Ohio R. Co, 260 U. S. 653, 43 S. Ct. 230, 231, 67 L. Ed. 443. It was there held that this provision does not qualify or restrain the general jurisdiction of the District Courts, as defined and prescribed in section 24 (1) of the Judicial Code (28 USCA § 41 (1), "or withdraw any suit therefrom, but merely confers a personal privilege on the defendant, which he may assert, or may waive, at his election, and does waive if, when sued in some other district, he enters an appearance without claiming his privilege." It was pointed out that the removal act (section 28 of the Judicial Code [28 USCA § 71]) vests in the District Court "for the proper district" jurisdiction of the cause removed; and that section 29 of the Judicial Code (28 USCA § 72) defines this jurisdictional phrase as the "district where such suit is pending." And it was further noted that, where the suit arises under the Federal Constitution, or a law or treaty of the United States, the right of removal is given to "the defendant or defendants" without qualification; but that "in any other suit" it is given to the defendant only if he be a nonresident of the state, and that it is not open to the plaintiff "to urge that the removal be into the District Court for some other district, for it is his act in bringing the suit in a state court within the particular district which fixes the venue on removal."

The considerations underlying for this interpretation of the removal statute are stated in General Investment Co. v. Lake Shore & M. S. R. Co, 260 U. S. 261, 43 S. Ct. 106, 113, 67 L. Ed. 244: First, because the venue provision (section 51 of the Judicial Code [28 USCA § 112]) "does not except or take any suit from the general jurisdiction conferred by section 24; next, because there could be no purpose in extending to removals the personal privilege accorded to defendants by section 51, since removals are had only at the instance of defendants; and, lastly, because the venue on removal is specially dealt with and fixed by section 29." A contrary construction would obviously emasculate subdivision (c) of section 24 (1) of the Judicial Code (28 USCA § 41 (1) (c).

But plaintiff argues that, in virtue of the amendment of the ad damnum clause, the cojurisdictional requisite of a matter in controversy exceeding the prescribed sum or value is lacking. This...

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