Lake Shore & M.S.R. Co. v. Eder

• Citation: 174 F. 944
• Decision Date: 07 December 1909
• Docket Number: 1,948.
• Parties: LAKE SHORE & M.S. RY. CO. v. EDER.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

174 F. 944

LAKE SHORE & M.S. RY. CO. v. EDER.

No. 1,948.

United States Court of Appeals, Sixth Circuit.

December 7, 1909

F. S McGowan, for plaintiff in error.

Anderson Anderson & Barnum, for defendant in error.

Before LURTON, SEVERENS, and WARRINGTON, Circuit Judges.

SEVERENS Circuit Judge.

The plaintiff in this case was a brakeman in the employment of the defendant, and on August 22, 1907, was in service on a freight train running on the road of the defendant near Stoneboro, Pa., when from accident resulting, as he says, from the negligence of the defendant in failing to keep its roadbed in order and its ties and rails in proper order and position, the train ran off the track and he was severely injured.

He brought this suit to recover damages in the Circuit Court for the Northern District of Ohio and obtained a verdict and judgment therefor. There are three leading questions raised and there are also miscellaneous points, some of which are of sufficient importance to be considered.

The first question is one which relates to the jurisdiction of the Circuit Court. The plaintiff is a citizen of Pennsylvania. The defendant is a constituent of a company consisting of several companies incorporated in each of the states of Ohio and Pennsylvania and still others. The division of its road on which the accident occurred is partly in each of the above-named states, extending from Ashtabula Ohio, to Stoneboro. The defendant by proper plea interposed the defense that the requisite diversity of citizenship did not exist. The plea was overruled and the jurisdiction sustained. It was there, and is here, contended that, as the defendant is a citizen of Pennsylvania as well as of Ohio, the plaintiff could not maintain a suit against the company in a federal court in the state of Ohio for a cause of action arising in his own state, or, as otherwise stated, that, the plaintiff and the defendant being both citizens of Pennsylvania, there could be no federal jurisdiction there or elsewhere. This contention is plausible, but not sound. The cause of action was transitory, and a suit upon it might be brought in the courts of any state where proper service of process could be had and it could be brought in any federal court where diversity of citizenship existed. The circumstance that the cause of action arose in Pennsylvania is wholly immaterial. The court below whose jurisdiction was invoked was administering the law of Ohio, and that law regards the corporation sued as the one of its own creation, and it is indifferent to the fact, if it exists, that some other state has incorporated it, or suffered it to be incorporated. Although for some purposes a body incorporated in several states may be regarded as an entity, it is not so for all. It is likely to have different attributes in each state arising from different laws which affect it. It might acquire franchises in one state which it does not possess in others. An incorporation by one state of the same individuals is not the adoption of the corporation of another state. These considerations furnish a reason why it is that, where a corporation of a state is sued in its own courts, regard is had to it only as a creation of that state for all purposes of jurisdiction. Business enterprises in which a combination of such corporations may engage, create common rights, and entail joint liabilities. These, however, concern the activities of the corporations, and not their essential character. When the idea is grasped that whenever a corporation is sued in a state by whose laws it has been created and the question of its citizenship is involved, the court will regard the corporation intended as defendant as the one created and existing by the laws of that state, we have the key to the solution of the inquiry. The laws of the state are the mould in which the corporation is cast and continues to exist. It derives its faculties from those laws; and the fact that it may be allowed to exercise those faculties in another state, however freely or with whatever limitations, does not alter its essential character in the state of its creation.

It is a citizen of that state and of no other, whatever privileges it may there be permitted to enjoy, even though they be identical with those it enjoys at its home. But we have dwelt long enough upon the reasons upon which we conceive the doctrine relating to this subject rests. We have done this in response to suggestions and arguments advanced for the plaintiff in error. The question itself is, we think, settled for us by the authority of decisions of the Supreme Court as well as of a decision of our own. Railroad Co. v. Whitton, 13 Wall. 270, 20 L.Ed. 571; Nashua & Lowell R. Co. v. Boston & Lowell R. Co., 136 U.S. 356, 10 Sup.Ct. 1004, 34 L.Ed. 363; Muller v. Dows, 94 U.S. 444, 24 L.Ed. 207; Patch v. Wabash R. Co., 207 U.S. 277, 28 Sup.Ct. 80, 52 L.Ed. 204; Williamson v. Krohn, 66 F. 656, 13 C.C.A. 668.

In Nashua, etc., R. Co. v. Boston, etc., R. Co., the suit was brought by one constituent of a combination against the other in the federal Circuit Court in Massachusetts. The combination bore the name of the complainant which was incorporated in New Hampshire. The defendant was a Massachusetts corporation. But by the reciprocal legislation of both states they had been united for the purposes of management and operation and their stock had been fused; and the property of each corporation was declared to be the joint property of the stockholders of both. This legislation had been accepted by the stockholders of both corporations, and a single board of directors had managed the property as a unit for more than forty years. The plea that there was no diversity of citizenship was overruled, and the jurisdiction was sustained.

In the case of Patch v. Wabash R. Co. the suit was brought by a citizen of Illinois in a court of the state of Illinois against a corporation which was consolidated under the several laws of Illinois and several other states. The petition for removal alleged that the plaintiff was a citizen of Illinois, and that the defendant was a corporation organized under the laws of Ohio and was a citizen of that state; and, upon these bare facts, sufficient grounds for removal were stated. But, on the case coming...