Jacobson v. Indianapolis Power & Light Company, Civ. No. 2211.

• Decision Date: 19 June 1958
• Docket Number: Civ. No. 2211.
• Parties: Carmie R. JACOBSON v. INDIANAPOLIS POWER & LIGHT COMPANY, a Corporation, and Smith & Johnson, Inc., a Corporation.
• Court: U.S. District Court — Northern District of Indiana

163 F. Supp. 218

Carmie R. JACOBSON v. INDIANAPOLIS POWER & LIGHT COMPANY, a Corporation, and Smith & Johnson, Inc., a Corporation.

Civ. No. 2211.

United States District Court N. D. Indiana, Hammond Division.

June 19, 1958.

Norman Peters and John G. Phillips, Chicago, Ill., William F. Carroll, Crown Point, Ind., for plaintiff.

Travis, Tinkham & Singleton, Hammond, Ind., Ross, McCord, Ice & Miller, Indianapolis, Ind., for defendant.

SWYGERT, Chief Judge.

This cause is before the Court on the combined motion of the defendants, Indianapolis Power & Light Company and Smith & Johnson, Inc. The motion herein considered asserts that venue is improperly laid in the Northern District and seek as relief (a) dismissal or (b) transfer of the cause to the Southern District of Indiana, Indianapolis Division.

Plaintiff, an Illinois citizen, brought this action based on diversity of citizenship against two Indiana corporations. In his complaint plaintiff alleges that the negligent conduct of the defendants caused an accident in which he sustained injuries. The accident occurred in the Southern District of Indiana.

Venue in an action of this sort is governed by the provisions of § 1391(c), Title 28 U.S.C. which reads as follows:

"A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

In Garbe v. Humiston-Keeling & Co., D.C.E.D.Ill.1956, 143 F.Supp. 776, the court in discussing § 1391(c) held that a domestic corporation could be sued in any federal district in the state of its incorporation on the theory that it is "licensed to do business" throughout the whole state.¹ I am not in agreement. If such were the purport of the phrase "licensed to do business", the earlier phrase in § 1391(c) allowing actions against a corporation in any judicial district in which "it is incorporated" would be redundant and meaningless.

In the opinion of this Court, the phrase "licensed to do business" pertains to the action of a foreign corporation in complying with the rules and regulations of a state other than that under whose laws it receives its corporate existence in order that it may have the privilege of transacting business in that state. This phrase connotes the receipt from the host state of something tangible, a license, certificate, or permit, which evidences a compliance with the laws of that state. The phrase has no application to the issue here presented for the defendants are domestic corporations whose existence and power to transact business in this state are governed not by license but by the provisions of their corporate charters.

The phrase "is doing business" is also inapplicable to the facts of this case. It is undisputed that each defendant maintains its principal place of business at Indianapolis in the Southern District of Indiana. Furthermore, it is undisputed that neither defendant has any property, subplants, offices, officers, employees, agents or other personnel, or telephone listings in the Northern District and that neither defendant does business in this district.

It must be added that, because of these undisputed facts, the Court is not called upon to decide whether the phrase "is doing business" is merely an extension of the rule laid down in Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 165, 84 L.Ed. 167, so as to include within the venue provisions of the statute corporations doing business in a foreign state which are not licensed therein and have not appointed a statutory agent² or whether it is also applicable to domestic corporations chartered in a multi-district state under circumstances where the corporation is doing business in the district where the suit is filed but has its principal place of business or "is incorporated" in another district within the state.³

If venue is properly laid in the Northern District of Indiana, its statutory support must be found in the phrase "any judicial district in which it is incorporated." The issue presented therefore is whether, in a suit against a domestic corporation organized under the laws of a state having more than one federal judicial district, the corporation is to be considered incorporated in all of such districts for venue purposes.

Prior to the revision of the Judicial Code in 1948, the controlling venue statute⁴ provided that suits under federal laws must be brought in the district whereof the defendant was an inhabitant, and, in diversity cases, in the district in which either plaintiff or defendant resided. In interpreting the former statute, the Supreme Court held in Shaw v. Quincy Mining Co., 1892, 145 U.S. 444, 12 S.Ct. 935, 36 L.Ed. 768, that a corporation, incorporated in one state only, could not be compelled to defend a suit in a United States Court located in a second state in which it had a usual place of business if the plaintiff were not a resident of that second state. The Court stated the localities in which venue was properly laid against a corporation and, in doing so, used language indicating that a corporation "is incorporated" not only in a state but also in a district within that state:

"In the case of a corporation, the reasons are, to say the least, quite as strong for holding that it can sue and be sued only in the state and district in which it has been incorporated, or in the state of which the other party is a citizen." 145 U.S. at page 449, 12 S.Ct. at page 937, emphasis added.

Two years later in Galveston, H. & S. A. R. Co. v. Gonzales, 1894, 151 U.S. 496, 14 S.Ct. 401, 38 L.Ed. 248, the Supreme Court held that a domestic corporation, incorporated under the laws of a state divided into more than one federal district, is, for the purpose of bringing and defending actions in the federal courts of that state, a resident and inhabitant of that district in the state within which the general business of the corporation is done, and within which it has its headquarters or principal place of business even though it does business and maintains offices in other districts within the state.

In the Gonzales case, the court expressed its opinion in these words:

"* * * In the case of a corporation, the question of inhabitancy must be determined, not by the residence of any particular officer, but by the principal offices of the corporation, where its books are kept and its corporate business is transacted, even though it may transact its most important business in another place. * * * If the corporation be created by the laws of a state in which there are two judicial districts, it should be considered an inhabitant of that district in which its general offices are situated, and in which its general business, as distinguished from its local business, is done." 151 U.S. at page 504, 14 S.Ct. at page 404.

Prior to the 1948 revisions of the Judicial Code, the Gonzales case unquestionably was controlling on the issue of proper corporate venue. See Suttle v. Reich Bros. Const. Co., 1948, 333 U.S. 163, 166, 68 S.Ct. 587, 92 L.Ed. 614, and cases cited therein; London v. Norfolk & W. Ry. Co., 4 Cir., 1940, 111 F.2d 127; Eastman Kodak Co. v. Boyce Motor Lines, Inc., D.C.S.D.N.Y.1947, 74 F.Supp. 981; and cases collected in 35 C.J.S. Federal Courts § 21, pp. 822, 823.

The plaintiff agrees that such was the settled law prior to the revision of the Judicial Code in 1948. However, he argues that the effect of the revision was to broaden the concept of venue. The Gonzales case, argues plaintiff, turned on the phrase in the prior venue statute which laid venue against a defendant in the district "`whereof he is an inhabitant'". Because the court drew an analogy to the inhabitancy of individuals and accordingly equated the corporation's principal place of business with the individual's dwelling place, the plaintiff maintains that this case loses its effect under the revised code which has specific provisions for corporate venue. He contends that the limits of a corporation's existence are defined by the boundaries of the state under whose laws it is chartered and that a corporation therefore exists and is present throughout the length and breadth of that state. From this premise, he concludes that, in a state having more than one federal district, each such district is one in which a domestic corporation "is incorporated" and hence, a proper situs for laying venue. In short, plaintiff contends that § 1391(c) should be read:

"A corporation may be sued in any judicial district in the state in which it is incorporated * * *."

A literal reading of the language used in the statute renders plaintiff's interpretation plausible. I believe, however, it can be argued with equal force from the wording of the statute that Congress intended the phrase "in which it is incorporated" to refer to but a single district. When a statute passed by Congress is susceptible of more than one interpretation, the court is faced with the necessity of attempting to determine the intention of Congress in enacting the law. Thus, in the instant situation, the Court must decide whether, by the use of the phrase "in any judicial district in which it is incorporated" in § 1391(c) of the revised code, Congress intended to effect a substantial change in the law or whether its intention was merely to restate the existing law.

In Fourco Glass Co. v. Transmirra Products Corp., 1957, 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786, the Supreme Court faced a similar problem when it dealt with the effect of the congressional revision of the Judicial Code on corporate venue. While the court in that case was specifically concerned with venue in patent infringement cases, it expressed views about the effect of the revision of the Judicial Code which are applicable to this case.

In the Fourco case, the Supreme Court held that its previous decisions in Stonite Products Co. v. Melvin Lloyd...