Ingram Day Lumber Co. v. United States Shipping Board Emergency Fleet Corporation

• Decision Date: 19 July 1920
• Citation: 267 F. 283
• Parties: INGRAM DAY LUMBER CO. v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION.
• Court: U.S. District Court — Southern District of Mississippi

267 F. 283

INGRAM DAY LUMBER CO. v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION.

United States District Court, S.D. Mississippi, Southern Division.

July 19, 1920

White &amp Ford, of Gulfport, Miss., for plaintiff.

Julian P. Alexander, U.S. Dist. Atty., of Jackson, Miss., for defendant.

HOLMES District Judge.

The suit was filed in the chancery court of Jackson county Miss., by the Ingram Day Lumber Company, a corporation organized under the laws of the state of Wisconsin, against the United States Shipping Board Emergency Fleet Corporation organized under the corporation laws enacted by Congress for the District of Columbia, in pursuance of section 11 of the Shipping Act (Comp. St. Sec. 8146f), providing that the same shall be chartered under the laws of the District of Columbia. Service of process was obtained by attachment against the lands in Mississippi of the defendant, as a nonresident corporation, under the provisions of a state statute so permitting. The suit seeks to recover a balance of $906.26 alleged to be due the plaintiff for shipbuilding material delivered to the defendant under an express contract for the payment of stipulated prices.

Within the time and in the manner provided by the removal statutes a petition and bond were filed by the United States Shipping Board Emergency Fleet Corporation, praying for the removal of the cause to the United States District Court for the Southern District of Mississippi, and alleging the following grounds of removal, which I quote:

'(1) That this is a suit of a civil nature, at common law or in equity, and arises under the laws of the United States.

'(2) That the matter in dispute does not exceed the sum or value of $10,000, and the District Court of the United States has original jurisdiction over said suit.

'(3) That the defendant, the United States Shipping Board Emergency Fleet Corporation, is a corporation duly incorporated and organized under the laws of Congress enacted for the District of Columbia by the Act of March 3, 1901, chapter 854, in pursuance of the Shipping Act of September 7, 1916, and by virtue of the executive order of the President of the United States, dated July 11, 1917, issued in pursuance of the emergency shipping fund provision of the Urgent Deficiencies Act of Congress, approved June 15, 1917, was at the time of, and in the transactions out of which this controversy grew, and still is, the appointee of the President of the United States and the representative of the United States, and that this is a suit against the United States.'

Motion is made by the plaintiff to remand said cause to the chancery court of Jackson county, Miss., on the ground, among others, that the same is not removable, as the suit is not one of which the District Court of the United States has original jurisdiction.

With said motion to remand is filed an answer to the defendant's petition for removal, denying that the Fleet Corporation was organized under the laws of Congress enacted for the District of Columbia by the Act of March 3, 1901, chapter 854, in pursuance of the Shipping Act of September 7, 1916, and alleging that the defendant is an ordinary corporation organized under the general laws of the District of Columbia. The answer also denies that by virtue of the executive order of the President of the United States, dated July 11, 1917, issued in pursuance of the emergency shipping fund provision of the Urgent Deficiencies Act of Congress, the defendant was at the time of and in the transactions out of which the controversy herein arose the appointee of the President of the United States, and denies that this suit is one against the United States. It alleges that the material, the price of which is here sued for, was delivered, at the request of the defendant, to various firms, corporations, and individuals building ships on their own account. It denies that the United States was in any way connected with the transactions involved in this suit, or that it had any dealings with, or seeks any redress against, the government of the United States, but only against the defendant as an ordinary corporation.

Motion was filed by the United States attorney for the Southern district of Mississippi to dismiss the cause, on the ground that this suit is in effect and in fact a suit against the United States without its consent, and that neither the state court nor this court had or has any jurisdiction in the premises. By agreement of counsel the motions of plaintiff to remand and of defendant to dismiss were heard and submitted at the same time for decision. They will be taken up in the order named.

1. On Motion to Remand.

The removing defendant, the United States Shipping Board Emergency Fleet Corporation, was incorporated under the laws of Congress enacted for the District of Columbia. Act March 3, 1901, c. 18, subc. 4, Sec. 605 et seq. (31 Stat. 1189, 1284, 1285, c. 854). The incorporation of this defendant was pursuant to the United States Shipping Board Act of September 7, 1916, c. 451, Sec. 11, 39 Stat. 731 (Comp. St. Sec. 8146f), which provided that the Shipping Board, if in its judgment necessary to carry out the provisions of the act, might form, under the laws of the District of Columbia, one or more corporations for the purchase, construction, equipment, lease, charter, maintenance, and operation of merchant vessels in the commerce of the United States. The capital stock of such corporation authorized to be formed was not to exceed $50,000,000, and the Shipping Board was authorized on behalf of the United States to subscribe to, purchase, and vote not less than a majority of such capital stock, and to do other things in regard thereto necessary to protect the interests of the United States and to carry out the purposes of the act. It was further provided that the board, with the approval of the President, might sell any or all of the stock of the United States in such corporation, but at no time should the United States become a minority stockholder therein. The act also provided that at the expiration of five years from the conclusion of the European War the operation of vessels on the part of any corporation in which the United States might then be a stockholder should cease, and the corporation stand dissolved. The date of the conclusion of the war was to be declared by proclamation of the President.

It will be noted that only in case the United States should 'then' be a stockholder in such corporation should its operations cease and the same stand dissolved. It was clearly contemplated by the act that the United States might sell all its stock to private individuals, in which event the corporation might exist perpetually under the laws enacted for the District of Columbia. In case, however, of the dissolution of the corporation at the expiration of five years from the termination of the European War, provision was made for the disposition of its vessels and other property on the best available terms after the payment of all debts and obligations and a deposit of the proceeds thereof in the treasury of the United States. All stock in such corporation owned by others than the United States at the time of the dissolution was required to be taken over by the board, at a fair and reasonable value, and paid for with funds to the credit of such board. In case of disagreement such value was to be determined by appraisers, one to be appointed by the board, one by the person interested, and a third by the two so appointed; the finding of such appraisers to be final and binding upon both parties.

Section 607 of the Act of March 3, 1901, under which the defendant was incorporated pursuant to the provisions of the above Shipbuilding Act, provides that a corporation so organized-- 'shall be a body politic and corporate in fact and in name, by the name stated in such certificate, and by that name have succession and be capable of suing and being sued in any court of law or equity in the district, and they and their successors may have a common seal and make and alter the same at pleasure,' etc.

Being so organized, it seems too clear for disputation that the defendant corporation is in general capable of suing and being sued, regardless of whether part or all of its stock is owned by the United States. Bank of United States v. Planters' Bank, 9 Wheat. (U.S.) 904, 6 L.Ed. 244; Panama R. Co. v. Curran, 256 F. 768, 168 C.C.A. 114.

The first ground in the petition for removal is that this suit arises under the laws of the United States. It is well settled that suits brought against corporations of the United States, created by and organized under acts of Congress, are suits 'arising under the laws of the United States.'

Under paragraph 1 of section 24 of the Judicial Code (Comp. St Sec. 991) the District Courts have original 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. ' In the case of Union Timber Products Co. v. United States Shipping Board Emergency Fleet Corporation (D.C.) 252 F. 320, it is held that an action against the Fleet Corporation upon an alleged contract for the building of ships, which it was not allowed to build, is an action arising under the Constitution and laws of the United States, and is not subject to remand from the federal District Court to the state court. Numerous authorities are cited, but the amount there in controversy does not appear. This is decisively important. It is to be presumed that it was in excess of $3,000, the jurisdictional amount. But the amount in controversy in this case is not sufficient to give ...