Myers v. Murray, Nelson & Co.

• Decision Date: 01 January 1890
• Citation: 43 F. 695
• Parties: MYERS et al. v. MURRAY, NELSON & CO.
• Court: U.S. District Court — Southern District of Iowa

43 F. 695

MYERS et al. v. MURRAY, NELSON & CO.

United States Circuit Court, S.D. Iowa, Western Division.

September Term, 1890

L. L De Lano and Willard & Willard, for complainants.

Berryhill & Henry and R. G. Phelps, for defendant.

SHIRAS J.

When the bill in this cause was filed, the complainants were, and have ever since continued to be, citizens of Iowa. The defendant Murray, Nelson & Co. was and is a corporation created under the laws of the state of Illinois, and the defendant R. G. Phelps was and is a citizen of the state of Iowa. The suit was brought in the district court of Cass county, Iowa, and, upon the petition of the defendant corporation, Murray, Nelson & Co., the same was removed to this court. Complainants now move to remand the cause, on the ground that R. G. Phelps, one of the defendants, was and is a citizen of Iowa, of which state the complainants are likewise citizens. The averments of the bill show that Phelps is merely the attorney of the corporation; that he has no personal interest in the controversy; that he holds possession of certain of the notes and collaterals involved in the litigation, not in his own right, but solely for the defendant corporation. The facts presented on the record bring the case within the rule laid down in Wood v Davis, 18 How. 467, in which it is held that the presence upon the record of one who is merely an agent or attorney for the principal defendant will not affect the right of removal as between the principal parties to the controversy. That case, in its facts, is similar to the one now under consideration, and the ruling therein made sustains the right of removal in the present suit.

It is urged, as a further objection, that although Murray, Nelson &amp Co. is a corporation created under the laws of the state of Illinois, and so averred to be upon the record, yet that it is not made to appear that the corporation is not a resident of Iowa; and, in support of this contention, reliance is placed upon the ruling made by Mr. Justice MILLER in Hirschl v. Threshing-Machine Co., 42 F. 803. Until this decision was made, it had been the settled doctrine in this circuit that a corporation could be a resident only of the state under whose laws it was created. Fales v Railroad Co., 32 F. 673; Booth v. Manufacturing Co., 40 F. 1. In the latter case Judge BREWER cites several of the decisions of the supreme court upon the point, and holds that thereby the rule is established that a corporation cannot acquire a residence in any state other than that under whose laws it was created. In the conflict of the rulings in the circuit, resort must be had to the decisions of the supreme court. I cite a few thereof:

In Insurance Co. v. Francis, 11 Wall. 210, it is sad:

'A corporation can have no legal existence outside the sovereignty by which it was created. Its place of residence is there, and can be nowhere else. Unlike a natural person, it cannot change its domicile at will; and, although it may be permitted to transact business where its charter does not operate, it cannot, on that account, acquire a residence there.'

In Ex parte Schollenberger, 96 U.S. 377, it is declared that--

'A corporation cannot change its residence or its citizenship. It can have its legal home only at the place where it is located by or under the authority of its charter.'

In Railroad Co. v. Koontz, 104 U.S. 5, it is again affirmed that--

'By doing business away from their legal residence, they do not change their citizenship, but simply extend the field of their operations. They reside at home, but do business abroad.'

In Pennsylvania R. Co. v. St. Louis, A. & T.H.R. Co., 118 U.S. 290, 6 S.Ct. 1094, it is said:

'It does not seem to admit of question that a corporation of one state, owning property and doing business in another state by permission of the latter, does not thereby become a citizen of this state also.'

In Goodlett v. Louisville & N.R. Co., 122 U.S. 391, 7 S.Ct. 1254, it appeared that a corporation, originally created under the laws of the state of Kentucky, had been, by an act of the legislature of Tennessee, authorized to construct and operate an extension of its line in the state of Tennessee; and the supreme court, after an exhaustive examination of the authorities, held that the company must still be deemed to be a Kentucky corporation, and as such to be entitled to remove a suit brought against it in a state court of Tennessee. The ground upon which it was, after some conflict in the earlier cases, finally decided that corporations could sue or be sued in the courts of the United States was that it would be conclusively presumed that a suit by or against a corporation is a suit by or against citizens of the state which created it; it being assumed that the corporators or stockholders are citizens of that state. It is now settled that this is a legal presumption, which cannot be gainsaid. Railroad Co. v. Letson, 2 How. 497; Railroad Co. v. Harris, 12 Wall. 65; Railroad Co. v. Whitton, 13 Wall. 270; Muller v. Dows, 94 U.S. 444.

In the latter case it is said:

'A corporation itself can be a citizen of no state, in the sense in which the word is used in the constitution of the United States. A suit may be brought in the federal courts by or against a corporation, but in such case it is regarded as a suit brought by or against the stockholders of the corporation; and for the purposes of jurisdiction it is conclusively presumed that all the stockholders are citizens of the state, which by its laws created the corporation.'

Therefore when, in a petition for removal by a corporation, it is averred that the corporation was created under the laws of a given state, the legal effect of such averment is that the suit is to be regarded as brought against the stockholders of such...