Wells v. Russellville Anthracite Coal Mining Co.

• Decision Date: 07 July 1913
• Parties: WELLS v. RUSSELLVILLE ANTHRACITE COAL MINING CO. et al.
• Court: U.S. District Court — Eastern District of Arkansas

206 F. 528

WELLS v. RUSSELLVILLE ANTHRACITE COAL MINING CO. et al.

United States District Court, E.D. Arkansas, Western Division.

July 7, 1913

This action was originally instituted on December 12, 1912, in the circuit court of Pope county, state of Arkansas, to recover damages in the sum of $2,999.99, alleged to have been sustained by the plaintiff as administratrix of the estate of W. J. Wells, deceased, who, it is alleged, was, while an employe of the defendants, by reason of their negligence injured on March 9, 1911, from the effects of which he died within a few days of the accident. The complaint alleged that the defendant the Russellville Anthracite Coal Mining Company (hereinafter called the Russellville Company) is a corporation created by and existing under the laws of Michigan, and that the other defendant (hereinafter referred to as the Fidelity Company) is a corporation organized and existing under and by virtue of the laws of the state of ., not mentioning the state of its creation. In due time the defendants filed a petition and bond for removal to this court, which was granted by the state court. The petition alleges that the defendant the Russellville Company is a citizen of the state of Michigan, and the defendant the Fidelity Company a citizen of the state of Kansas, and were so at the time of the filing of the complaint and petition but fails to allege under the laws of which states they exist.

The plaintiff has filed a motion to remand, setting up some general grounds that the court has no jurisdiction, and that the cause is not removable, and also the following specific grounds: (1) That the requisite diversity of citizenship required as a condition precedent to the jurisdiction of this court in a controversy of the character presented in this record does not exist. (2) That it is apparent upon the face of the record presented that the amount in controversy does not exceed, exclusive of interest and costs, the sum or value of $3,000.

R. C. Bullock and M. L. Davis, both of Dardanelle, Ark., and Mehaffy, Reid & Mehaffy, of Little Rock, Ark., for plaintiff.

J. B. Ward, of Russellville, Ark., and W. R. Thurmond, of Kansas City, Mo., for defendants.

TRIEBER District Judge (after stating the facts as above).

The petition for removal alleges that the defendants, both of whom are corporations, are citizens and residents of the states of Michigan and Kansas, respectively, but fails to state what states created either of them. The diversity of citizenship to authorize a removal need not be alleged in the petition for removal, when it appears from the complaint or any part of the record when the petition for removal was filed. Gold-Washing & Water Co. v. Keyes, 96 U.S. 199, 24 L.Ed.

656; Bondurant v. Watson, 103 U.S. 285, 26 L.Ed. 447; Denny v. Pironi, 141 U.S. 121, 124, 11 Sup.Ct. 966, 35 L.Ed. 657; Shattuck v. North British & Merc. Ins. Co., 58 F. 609, 7 C. C. A. 386. By reference to the complaint we find that it is alleged that the Russellville Company was created and exists under the laws of the state of Michigan; but it fails to allege under the laws of which state the Fidelity Company was created, leaving the name of the state blank.

As the jurisdictional facts must clearly appear from the record to give a court of the United States jurisdiction, and there is nothing to show either in the petition or the complaint that the Fidelity Company was created and exists under the laws of a state other than that of Arkansas, of which state the plaintiff is a citizen and resident, the petition is clearly defective, unless the allegation in the petition that these corporations are citizens and residents of the states named is sufficient. That a corporation, as an entity, is not a citizen of any state is now settled by an unbroken line of decisions. Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357; Norfolk & Western R.R. Co. v. Pennsylvania, 136 U.S. 114, 10 Sup.Ct. 958, 34 L.Ed. 394; Orient Insurance Co. v. Daggs, 172 U.S. 557, 19 Sup.Ct. 281, 43 L.Ed. 552; Waters-Pierce Oil Co. v. Texas, 177 U.S. 28, 20 Sup.Ct. 58, 44 L.Ed. 657; Great Southern Fireproof Hotel Co. v. Jones, 177 U.S. 454, 20 Sup.Ct. 690, 44 L.Ed. 842; Rife v. Lumber Underwriters (C.C.A.) 204 F. 33.

When the question of jurisdiction of the national courts in actions by or against corporations first came before the Supreme Court, it was held that the jurisdiction depended upon the citizenship of all the stockholders, as in a partnership, and if any one of the stockholders of the corporation was a citizen of the same state as any one of the parties on the other side to the action, there was no such diversity as will justify the assumption of jurisdiction by a national court. Hope Insurance Co. v. Boardman, 5 Cranch, 57, 3 L.Ed. 36; Bank of United States v. Deveaux, 5 Cranch, 61, 3 L.Ed. 38. This construction was adhered to and followed by that court for 50 years; the last case in which this rule was recognized being Irvine v. Lowry, 14 Pet. 293, 10 L.Ed. 462. But in 1844 in Louisville, etc., R.R. Co. v. Letson, 2 How. 497, 11 L.Ed. 353, this rule was changed, and it was there held:

'A corporation created by and transacting business in a state is to be deemed an inhabitant of the state and capable of being treated as a citizen for all purposes of suing and being sued, and an averment of the facts of its creation and place of transacting business is sufficient to give the Circuit Court of the United States jurisdiction.'

In that case it will be noticed it was not yet determined that this was a conclusive presumption; but in Marshall v. B. & O. Ry. Co., 16 How. 314, 14 L.Ed. 953, it was finally determined that, the presumption arising from the habitat of a corporation in the place of its creation being conclusive as to the residence or citizenship of those who use the corporate name and exercise the faculties conferred by it, the allegation that the defendants are a body corporate by the act of the General Assembly of Maryland is a sufficient averment that the real defendants are citizens of that state, and the earlier decisions expressly overruled. Since then it has been uniformly held that such an allegation conclusively establishes the citizenship of all the stockholders of the corporation, and cannot be disproved by evidence that the stockholders or some of them are in fact not citizens of the state which created the corporation. Shaw v. Quincy Mining Company, 145 U.S. 444, 451, 12 Sup.Ct. 935, 36 L.Ed. 768.

As a corporation is not a citizen, an allegation that it is a citizen and resident of a certain state is insufficient. Lafayette Ins. Co. v. French, 18 How. 405, 15 L.Ed. 451; Great Southern, etc., Hotel Co. v. Jones, supra; Thomas v. Board of Trustees, 195 U.S. 207, 25 Sup.Ct. 24, 49 L.Ed. 160; Fred Macey Co. v. Macey, 135 F. 725, 68 C.C.A. 363; Rife v. Lumber Underwriters, supra. As neither the petition for removal nor the complaint show that the defendant Fidelity Company was created under the laws of a state other than the state of Arkansas, the petition is defective and does not authorize the removal. But since the decision of the Supreme Court, in Kinney v. Columbia Savings, etc., Ass'n, 191 U.S. 78, 24 Sup.Ct. 30, 48 L.Ed. 103, it is now no longer open to controversy that defects of this nature may be cured by amendment if the case has not yet been finally disposed of in the trial court, although it would not be subject to amendment after it has reached the appellate court. The reason for this, as stated by the Supreme Court in the Kinney Case, is that:

'A petition and bond for removal are in the nature of process. They constitute the process by which the case is transferred from the state to the federal court. Congress has made ample provision for the amendment of process'-- referring to sections 948 and 954, R.S. (U.S. Comp. St. 1901, pp. 695, 696).

The defendants will, therefore, be granted leave to amend their petition for removal, if the court determines that it was properly removable in spite of the fact that the amount involved does not exceed the sum of $3,000, exclusive of interest and costs.

As it appears from the record that the cause of action accrued on March 9, 1911, prior to the date the Judicial Code went into effect (January 1, 1912), although the suit was not instituted in the state court until the 12th day of December, 1912, it is contended on behalf of the plaintiff that it is not removable, and could not have been originally instituted in this court under the provisions of section 24, subd. 1, of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1091 (U.S. Comp. St. Supp. 1911, p. 135)). Washington Home, etc., Co. v. American Security & Trust Co., 224 U.S. 486, 32 Sup.Ct. 554, 56 L.Ed. 854, is relied on as a conclusive authority on that point. On the other hand, it is contended on behalf of the defendants that section 299 of the Judicial Code preserves the jurisdiction of the national District Courts of all actions which arose prior to the date the Judicial Code went into effect, although suit thereon is instituted thereafter. That the action could have been maintained under the amendatory act of March 3, 1887 (24 Stat. 552, c. 373), as corrected by the act of August 13, 1888 (25 Stat. 433, c. 866 (U.S. Comp. St. 1901, p. 508)), and also removed to this court from a state court, is not questioned, leaving the only question for determination the construction of section 299 of the Judicial Code.

The only reported cases on this question are Taylor v Midland Valley R.R. Co. (D.C.) 197 F. 323, and Dallyn v. Brady (D.C.) 197 F. 494, the first decided by Judge Youmans and the latter by Judge Witmer, and in both of them the contention of ...