Wells Company v. Gastonia Cotton Manufacturing Company

• Decision Date: 08 May 1905
• Docket Number: No. 237,237
• Citation: 49 L.Ed. 1003,25 S.Ct. 640,198 U.S. 177
• Parties: W. L. WELLS COMPANY, Petitioner . v. GASTONIA COTTON MANUFACTURING COMPANY
• Court: U.S. Supreme Court

198 U.S. 177

25 S.Ct. 640

49 L.Ed. 1003

W. L. WELLS COMPANY, Petitioner.

v GASTONIA COTTON MANUFACTURING COMPANY.

No. 237.

Argued April 28, 1905.

Decided May 8, 1905.

The plaintiff, the W. L. Wells Company, seeks in this action to recover a balance alleged to be due from the defendant, the Gastonia Cotton Manufacturing Company, on account of certain sales of cotton in the years 1899 and 1900.

The complaint averred that the plaintiff and defendant were, respectively, created and duly organized as corporations,—the former, under the laws of Mississippi; the latter, under the laws of North Carolina.

The defendant admitted that it was a corporation, duly organized under the laws of North Carolina, and a citizen and resident of that state, but averred that it had 'no knowledge or information sufficient to form a belief as to the truth of the allegation contained in the 1st section of the complaint, to wit, that the plaintiff is a corporation organized under the laws of the state of Mississippi, and a citizen and resident of that state, and, therefore, it denies the said allegation.' The other paragraphs of the answer put in issue the allegations of the complaint touching the plaintiff's claim against the defendant.

There was another action in the same court brought by the W. L. Wells Company against the Avon mills on account of transactions like those involved in the other case.

By consent of the parties, and pursuant to an order of court, the two cases were consolidated and tried together. In answer to questions propounded by the court the jury found that the W. L. Wells Company was, as alleged in the complaint, a corporation and a citizen and resident of Mississippi, and entitled to recover the sum of $39,313.88. A judgment was rendered for that amount against the Gastonia Cotton Manufacturing Company; the circuit court holding, upon a review of the evidence in connection with the findings of the jury, that the W. L. Wells Company was a corporation of Mississippi, and as such entitled to invoke the jurisdiction of that court as against the defendant corporation of North Carolina. 118 Fed. 190.

The case was then carried to the circuit court of appeals, which adjudged that the plaintiff had failed to establish the allegations of the complaint as to its corporate capacity, and, therefore, was not entitled to sue in the circuit court in its alleged corporate name. Without considering the merits of the case, that court reversed the judgment for want of jurisdiction in the circuit court, and the cause was remanded, with liberty to the plaintiffs, if it was so advised, to amend the complaint by inserting the individual names of those constituting the company in whose name the action was brought, which being done a new trial should be granted; and if the plaintiff declined to amend, then the case was to be dismissed without prejudice. 63 C. C. A. 111, 128 Fed. 369. Subsequently, the present writ of certiorari was granted.

Messrs. Joseph Hirsh, Charles W. Tillett, Murray F. Smith, and H. C. Jones for petitioner.

[Argument of Counsel from pages 179-180 intentionally omitted] Messrs. Augustus H. Price, Charles Price, Armistead Burwell, and Edwin Cansler for respondent.

[Argument of Counsel from pages 180-182 intentionally omitted] Mr. Justice Harlan delivered the opinion of the court:

As the plaintiff was not entitled to maintain its action in the circuit court unless it was a corporation of Mississippi (Great Southern Fire Proof Hotel Co. v. Jones, 177 U. S. 449, 454, 456, 44 L. ed. 842, 844, 845, 20 Sup. Ct. Rep. 690, and the authorities there cited), the denial in the answer of knowledge or information sufficient to form a belief on that point put in issue the plaintiff's corporate character, within the meaning of the rule, no longer to be questioned, that for purposes of suing and of being sued in the courts of the United States the members of a corporation are to be deemed citizens of the state by whose laws it was created; and as the jurisdiction of the courts of the United States must always appear affirmatively, of record, it became necessary, under existing statutes, and under the rules of practice and pleading in North Carolina, for the plaintiff to prove that it was a corporation of Mississippi. Roberts v. Lewis, 144 U. S. 653, 656, 36 L. ed. 579, 582, 12 Sup. Ct. Rep. 781; act of June 1st, 1872 (17 Stat. at L. 197, chap. 255, Rev. Stat. § 914, U. S. Comp. Stat. 1901, p. 684); act of March, 1875 (18 Stat. at L. 470, chap. 137, U. S. Comp. Stat. 1901, p. 508); N. C. Code Civ. Proc. §§ 133, 243, 260, 276; Southern P. Co. v. Denton, 146 U. S. 202, 36 L. ed. 943, 13 Sup. Ct. Rep. 44. It was so held, and correctly, by the circuit court of appeals. 63 C. C. A. 111, 128 Fed. 369.

Was the plaintiff a corporation of Mississippi within the meaning of the above rule? In that state individuals may become incorporated for certain purposes under general laws. The first step there towards incorporation is to apply to the governor for a charter, stating the purposes for which the corporation is to be created. That officer then takes the advice of the attorney general as to the constitutionality and legality of the provisions of the proposed charter. If the gov- ernor approves the charter, and causes the great seal of the state to be affixed thereto by the secretary of state, it would seem that the process of incorporation then becomes complete. Charters of incorporation in that state are required to be recorded in the office of the secretary of state and in the office of the clerk of the chancery court of the county in which the corporation does business. Miss. Anno. Code 1892, chap. 25.

It appeared in evidence that W. L. Wells, John T. Wells, and George Butterworth submitted to the governor of Mississippi, to be referred to the attorney general of the state, the following form of charter:

'§ 1. Be it known and remembered that W. L. Wells, John T. Wells, and George Butterworth, their associates and assigns, are hereby created a body politic and corporate, under the name and style of W. L. Wells Company, and by that name shall have succession for fifty years, shall have power to sue and be sued, contract and be contracted with, may have a corporate seal, and break and alter the same at pleasure. § 2. The capital stock of said corporation shall be $50,000, divided into shares of $500 each, and as soon as $10,000 of said stock is subscribed and paid for, said corporation shall have power to commence business. § 3. Said corporation is formed for the purpose of conducting a general cotton business, and may buy and sell cotton, and may transact a cotton factorage business, may advance money or supplies for the purpose of controlling shipments of cotton, may take and receive mortgages or deeds of trust upon property to secure said advances, and generally may have all powers conferred by chapter 25 of the Annotated Code of 1892 necessary and requisite to carry out the purpose of said corporation. § 4. The board of directors of said corporation shall consist of three persons, whose numbers may be increased at any time by a majority vote of the stockholders, and said directors shall have power to elect all necessary officers, and prescribe the duties, salaries, and tenure of such officers.'

The attorney general having certified that the proposed charter of incorporation was not repugnant to the Constitution or laws of the state, it was approved by the...