Arkansas, under an Arkansas statute which provided that it should thereupon become a corporation of the state, "anything in its articles of incorporation or charter to the contrary notwithstanding." It was sued in Arkansas, in the federal courts, by a Missouri citizen; and the Supreme Court held, on a full reconsideration of the authorities, that the court did not have jurisdiction.1 The doctrine that in Arkansas it could be looked upon only as an Arkansas corporation, was expressly overruled: The presumption that a corporation is composed of citizens of the state which created it accompanies such corporation when it does business in another state, and it may sue or be sued in the federal courts in such other state as a citizen of the state of its original creation. We are now asked to extend the doctrine of indisputable citizenship, so that if a corporation of one state, indisputably taken, for the purposes of Federal jurisdiction, to be composed of citizens of such state, is authorized by a law of another state to do business therein, and to be endowed, for local purposes, with all the powers and privileges of a domestic corporation, such adopted corporation shall be deemed to be composed of citizens of the second state, in such a sense as to confer jurisdiction on the Federal courts at the suit of a citizen of the state . of its original creation. We are unwilling to sanction such an extension of a doctrine which, as heretofore established, went to the very verge of judicial power. Although put in the form of a renunciation of jurisdiction, and of a disclaimer of intent to extend the doctrine of corporate citizenship, the effect of the case was really, as soon developed, just the opposite. Formerly, a state could counteract the effect of the doctrine, as to suits brought by its own citizens in its own courts, by compelling the foreign corporation to reincorporate. As a domestic corporation, it could not henceforth remove to the federal courts any suits 1 St. Louis and San Francisco Railway Company v. James, 161 U. S. 545 (1896); Louisville, New Albany, etc., Railway v. Louisville Trust Company, 174 U. S. 552 (1899); Southern Railway v. Allison, 190 U. S. 326 (1903) accord. brought by a citizen of the state. But now this device failed. The corporation remained a citizen only of the original state of incorporation, and the state courts could not prevent a removal to the federal courts. The doctrine of the case applied, however, only where a corporation of one state had been compelled to reincorporate in another. A corporation formed simultaneously in a number of states cannot invoke the doctrine, for it has no original state of incorporation; and it was accordingly held that such a corporation could not claim the privilege of removal.1 Mr. Justice Holmes, for the court, said: No nice speculation as to whether the corporation is one or many, and no details as to the particulars of the consolidation, are needed for an answer. The defendant exists, in Illinois, by virtue of the laws of Illinois. It is alleged to have incurred a liability under the laws of the same state, and is sued in that state. It cannot escape the jurisdiction by the fact that it is incorporated elsewhere. The court makes, however, several interesting suggestions: What would be the law in case of a suit brought in Illinois upon a cause of action which arose in Ohio, is a question that may be left on one side, as also may be the decisions in cases where a corporation originally created in one state afterwards becomes compulsorily a corporation of another state for some purposes in order to extend its powers. In the case at bar the incorporation must be taken to have been substantially simultaneous and free. If any distinction were to be made it hardly could be adverse to the jurisdiction of Illinois, in view of the requirements of its constitution and statutes that the directors should be residents of Illinois, and that the corporation should keep a general office in that state. There are here two suggestions, each pregnant with possibilities: That an interstate corporation is a citizen of each state only with respect to causes of action arising therein; or that it is a citizen of one state only, the state in which its 1 Patch v. Wabash Railroad Company, 207 U. S. 277 (1907). See Missouri Pacific Railway Company v. Castle, 224 U. S. 541 (1912). principal offices are maintained. I shall return to these suggestions later, when a broader foundation shall have been laid for considering them on principle.1 In the meantime the historical narrative must be resumed where it was left off. A case decided in the Supreme Court not long ago may fittingly close this chapter. A New Jersey citizen, stockholder in a New York corporation, brought a stockholders' bill in the federal court in New York. Since jurisdiction depended on the doctrine of indisputable citizenship, he necessarily alleged that there was a conclusive presumption that all the stockholders were citizens of New York. The defendant replied, with ineluctable logic, that by so alleging, he alleged himself out of court, since there necessarily arose an irrebuttable presumption that the plaintiff himself was a citizen of New York, and hence there could be no diversity of citizenship. Of course the Supreme Court followed sense rather than logic, and sustained the jurisdiction, frankly admitting, however, that the presumption of citizenship was a pure fiction, devised for no other purpose than to enable the court to assume a jurisdiction which it believed the Constitution did not confer.2 1 See post, ch. X. 2 Doctor v. Harrington, 196 U. S. 579 (1905). CHAPTER V JURISDICTION OF THE COURTS OVER FOREIGN As foreign corporations became an increasingly important factor in the business communities of the several states, and their legal status to be generally recognized and accepted, the question inevitably arose whether they could be subjected to suit within the state. Until toward the middle of the century, the idea seems to have been widely prevalent that foreign attachment was the only process available against them. An early dictum of the Supreme Court of New York probably had much to do with this belief. A state statute provided for proceedings against absconding and absent debtors, by foreign attachment, and the question was whether this law, which referred throughout only to "debtors" and "persons," was available against a foreign corporation owning property within the state. The court held that it was not.1 Spencer, J., said: The court have no doubt, from a view of the whole act, that the legislature intended to authorize proceedings under it against natural persons only. The twenty-first section supposes that the person giving the security to appear and plead to any action to be brought, would, if within the state, be subject to suit; and, we think, a foreign corporation never could be sued here. The process against a corporation must be served on its head, or principal officer, within the jurisdiction of the sovereignty where this artificial body exists. If the president of a bank of another state were to come within this state, he would not represent the corporation here, his functions and his character would not accompany him, when he moved beyond the jurisdiction of the government under whose laws he derived this character; and though 1 Matter of M'Queen v. Middletown Manufacturing Company, 16 Johns. 5 (1819). possibly, it would be competent for a foreign corporation to constitute an attorney to appear and plead to an action instituted under another jurisdiction, we are clearly of opinion that the legislature contemplated the case of a liability to arrest, but for the circumstance that the debtor was without the jurisdiction of the process of the courts of this state; and that the act, in all its provisions, meant, that attachments should go against natural, not artificial, or mere legal entities. There was, of course, no doubt that foreign attachment against corporations of other states could be expressly authorized by statute. Rhode Island made such a provision in 1822,1 New York in 1829,2 Maryland in 1832,3 Pennsylvania in 1836, New Jersey and Massachusetts in 1839.5 By 1850, Missouri, Michigan, Maine and Wisconsin had followed suit. In the meantime the Supreme Court of Pennsylvania in an exhaustive opinion had declined to follow the lead of New York, and had construed its general foreign attachment statutes as applicable to foreign corporations." Until the middle of the century, this seems to have been the normal way of proceeding against corporations of other states. But the dictum of Judge Spencer, that a foreign corporation could not be sued in personam, was grounded on a principle that might raise constitutional difficulties. Since New York had no statute authorizing such a suit, the dictum clearly meant no more than that the common law provided no available method of service. In Peckham v. North Parish in Haverhill, the Massachusetts Supreme Court reached the 1 Rev. Laws, 1822, 162. 2 Rev. Stats. 1829, tit. IV, art. 1, § 15-30. 3 Laws of 1832, ch. 280. 4 Laws, 1835-36, 586. 5 New Jersey Acts of 1838-39, 63; Massachusetts Acts of 1839, ch. 158. 6 Missouri Rev. Stats. 1845, art 1, § 22, 124; Michigan Rev. Stats. 1846, ch. 116, § 9 ff.; Maine, Rev. Stats. 1847, ch. 76, § 5; Wisconsin Rev. Stats. 1849, ch. 113, § 8 ff. 7 Bushel v. Commonwealth Insurance Company, 15 S. & R. 173 (1827). 8 16 Pick. 274 (1834). |