Galveston Railway Company v. Gonzales/Dissent Jackson

Mr. Justice JACKSON, dissenting.

I cannot concur in the opinion and judgment of the court in this case. The jurisdictional averments set out in the petition are that the plaintiff below was a citizen of the state of Chihuahua, in the republic of Mexico, and that the defendant was a corporation duly organized under the laws of the state of Texas, and was a citizen thereof, with its railway, on which its cars were run and operated, extending from the city of Houston to the city of El Paso, in that state. These averments brought the case directly within the fifth class of civil suits described in the first section of the acts of March 3, 1887, and August 13, 1888, of 'a controversy between citizens of a state and foreign states, citizens, or subjects,' the matter in dispute being in excess of $2,000, exclusive of interest and costs.

The defendant appeared specially, and interposed the following plea in abatement:

'That, nevertheless, while it admits that the defendant operates a line of railroad through the county where this suit is pending, and maintains a ticket and freight office and depot, and has an agent on whom process, under the law of Texas, may be served there, the said defendant is not an inhabitant of the judicial district in which the suit is pending; that it is a corporation duly incorporated and existing under the laws of Texas, having its principal office, habitat, and domicile in the city of Houston, Harris county, Tex., and beyond and not within this judicial district, but within the eastern district of Texas.'

This presents the question whether the fact that the defendant's principal office is located at Houston, in the eastern district of Texas, prevents the railway company from being sued by an alien in the United States circuit court for the western district of that state, held at El Paso, the western terminus of the railroad. The opinion of the court answers this question affirmatively, upon the ground that the location of the company's principal office fixes the domicile or residence of the corporation, so that it cannot be treated or regarded as an inhabitant of any other district in the state of its creation, although, by the laws of that state, it is liable and subject to be sued in every county through which its lines extend.

This conclusion is rested upon the doctrine announced in Shaw v. Mining Co., 145 U.S. 444, 12 Sup. Ct. 935, and Southern Pac. Co. v. Denton, 146 U.S. 202, 13 Sup. Ct. 44, that a corporation incorporated in one state only, and doing business in another state, was not an inhabitant of the latter, within the meaning of the judiciary acts, and liable to be sued in the circuit courts of the United States held therein, if objection is properly made.

The present case is clearly distinguishable from these authorities in two respects-First, that the defendant corporation is a citizen of the state of Texas, in which it is sued; and, second, that the parties to the controversy are not citizens of different states of the Union, as was the case in those decisions. In other words, Shaw v. Mining Co., 145 U.S. 444, 12 Sup. Ct. 935, and Southern Pac. Co. v. Denton, 146 U.S. 202, 13 Sup. Ct. 44, dealt with cases where the controversy was between citizens of different states, while the present case involves a controversy between an alien and a citizen, and presents the question whether the citizenship of the defendant corporation is coextensive with the line of its road, and the actual exercise of its franchise within the state of its creation, or is limited and restricted to the place where its chief office is located.

Neither the plea in abatement nor the opinion of the court questions the fact that the railway company was and is a citizen of the state of Texas, for purposes of federal jurisdiction at the suit of an alien; but the opinion, in effect, if not in express terms, restricts and confines that citizenship to the county or place in which the principal office of the company is located. There are two serious objections to this conclusion of the court: First, there is no warrant for giving the railway company a domicile or residence confined to one of its termini in the state of its creation; and, second, the present case is not controlled by that provision of the judiciary acts of 1887 and 1888 which provides that, 'where the jurisdiction is founded only on the fact that the action is between citizens of different states, suits shall be brought only in the district of the residence of either the plaintiff or defendant.'

In respect to the first objection: While the statute of Texas (article 4120) referred to in the opinion provides that the principal office of a railway company shall be considered the domicile of such corporation, it is also provided by article 1198, subd. 21, that suits against any private corporation may be commenced in any county where the cause of action arose, or in which such corporation has an agent or representative, and that 'suits against a railroad corporation may also be brought in any county through or into which its railroad extends.'

In Railroad Co. v. Traweek, 84 Tex. 65, 19 S. W. 370, the supreme court of Texas, in considering this provision of the Revised Statutes, held that a railway company was a private corporation, within the meaning of the act, and that it could be sued in any county through which the road extended, or in which it had an agent for the transaction of its business; thus extending the residence of the corporation, and its liability to be sued, beyond the place of its principal office.

In Bristol v. Railroad Co., 15 Ill. 437, it was held that 'the residence of a corporation, if it can be said to have a residence, is necessarily where it exercises corporate functions. It dwells in the place where its business is done. It is located where its franchises are exercised. It is present where it is engaged in the prosecution of the corporate enterprise. This corporation has a legal residence in any county in which it operates the road, or exercises corporate powers and privileges. In legal contemplation, it resides in the counties through which its road passes, and in which it transacts its business.'

The same principle was announced in Slavens v. Railroad Co., 51 Mo. 308, 310, where it was held that 'a residence of a railroad corporation is in any county through which its line of road passes, and in which it has an agent upon whom process can be served.' So, in Locomotive Engine Safety Co. v. Erie Ry. Co., 10 Blatchf. 292, 306, it was held that a corporation, if it can be properly said to reside at all, resides in all of the districts of the states creating it, and that the legal existence of the defendant railroad company under its incorporation by the state of New York was coextensive with the territorial limits of that state.

In Davis v. Banking Co., 17 Ga. 323, the same question was presented in a somewhat different form. The constitution of Georgia provided that 'the inferior courts shall have also concurrent jurisdiction in all civil cases, excepting cases respecting titles to lands, which shall be tried in the county where the defendant resides.' By an act passed in 1854, railroad companies of the state were subject to suit in the counties in which injuries to stock, etc., may have been committed. The plaintiff in that case, under this act of 1854, sued the railroad company in the county in which the injury was committed; and the railroad company filed a plea to the jurisdiction, on the ground that the corporation had its principal office and residence in a different county, and was not, therefore, under the constitution, suable in any other county. But after a full consideration of the question the supreme court of Georgia held that the railroad company was a resident of every county through which its line of railroad extended.

The statute of Texas, however, even if it gave to the defendant corporation, in this case, a residence confined to the locality of its principal office, does not control the question here presented. The opinion proceeds upon the theory that the question of jurisdiction depends upon the residence of the defendant corporation, and is controlled by the first section of the act of 1887, providing that, 'where the jurisdiction is founded only on the fact that the action is between citizens of different states, suits shall be brought only in the district of the residence of either the plaintiff or defendant.'

This, however, is a misapprehension of the statute. That clause of the act relates alone to suits between citizens of different states of the Union, and has no application to a case like the present, where the suit is between an alien and a citizen. Suits of the latter character are controlled by the previous portion of the section, as this court has declared in one or more cases.

Thus, in Machine Co. v. Walthers, 134 U.S. 41, 43, 10 Sup. Ct. 485, where the court had under consideration that portion of the first section of the acts of 1887 and 1888 which provides 'but no person shall be arrested in one district for trial in another in any civil action before a circuit or district court; and no civil suit shall be brought before either of said courts against any person by any original process or proceeding in any other district than that whereof he is an inhabitant, but where the jurisdiction is founded only on the fact that the action is between citizens of different states suit shall be brought only in the district of the residence of either the plaintiff or the defendant,' there was given to the provision the following construction: 'The jurisdiction common to all the circuit courts of the United States in respect to the subject-matter of the suit and the character of the parties who might sustain shits in those courts is described in the section, while the foregoing clause relates to the district in which a suit may be originally brought. Where the jurisdiction is founded upon any of the causes mentioned in this section, except the citizenship of the parties, it must be brought in the district of which the defendant is an inhabitant; but where the jurisdiction is founded solely upon the fact that the parties are citizens of different states, the suit may be brought in the district in which either the plaintiff or the defendant resides.'

This construction thus placed upon these clauses of the act was recognized and reaffirmed in Shaw v. Mining Co., 145 U.S. 444, 12 Sup. Ct. 935.

In the recent case In re Hohorst, where the suit was between a citizen and a foreign corporation, (decided at the present term of this court,) it was expressly held that, of the two provisions above quoted, 'the latter relates only to suits between citizens of different states of the Union, and is therefore manifestly inapplicable to a suit brought by a citizen of one of these states against an alien, and the former of these two cannot reasonably be construed to apply to such a suit.' In that case jurisdiction was maintained against the foreign corporation, which was brought before the court by service upon a resident agent of the state of New York.

Following the provision of the constitution in reference to the extent of the judicial power of the federal courts, the acts of 1887 and 1888 conferred upon the circuit courts of the United States original cognizance, concurrent with the courts of the several states, of all suits of a civil nature, at common law or in equity, where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of $2,000, in certain enumerated cases; the fifth class of such cases being 'a controversy between citizens of a state and foreign states, citizens, or subjects.' This jurisdiction, based upon the alienage of one party and the citizenship of the other, was not intended to be restricted by the subsequent provisions of the act above referred to. This is clearly announced in the Hohorst Case, which went so far as to declare that the subsequent provision of the statute, providing that 'no civil suit shall be brought before either of said courts against any person by any original process or proceedings in any other district than that whereof he is an inhabitant,' had no application to a suit between a citizen and an alien.

It cannot be doubted that the first section of the acts of 1887 and 1888, standing alone, gave jurisdiction to the circuit courts of a controversy between a citizen of a state and an alien, and that such jurisdiction may be exercised whether the suit is by or against any alien in any circuit court of the United States, sitting in any district thereof, before which the defendant may be legally brought by service or process. Jurisdiction of the pending suit of an alien against the Texas railroad corporation cannot be restricted by the laws of Texas to the circuit court of the district in which the defendant's principal office is located, unless the last clause of section 1, referring to suits between citizens of different states of the Union, is applicable to such a case. But, as already shown, that clause is not applicable, because it has reference only to suits between citizens of different states of the Union.

The reasoning on which the opinion in the present case proceeds cannot be reconciled with the Hohorst Case, because the grounds on which the alien is denied the right to maintain this suit against the Texas corporation must govern and control when the suit is against the alien.

If, as held in Hohorst's Case, the clause that 'no civil suit shall be brought before either of said courts against any person by any original process or proceedings in any other district than that whereof he is an inhabitant,' has no application to controversies between a citizen and an alien, it is impossible to escape the conclusion that the plea in abatement in the present case presented no valid objection to the jurisdiction of the United States circuit court for the western district of Texas; for the service upon the defendant in the county of El Paso was a valid service, which brought the corporation before the court in a district of the state whereof it was a citizen, within the meaning of the judiciary acts, and, being a citizen of the state in which suit was brought by the alien, the circuit court for the western district acquired jurisdiction over the person of the defendant, just as effectually as jurisdiction was acquired over the foreign corporation in Hohorst's Case at the suit of a citizen.

The opinion of the court attempts to distinguish this from Hohorst's Case on the ground that in the latter the suit was by a citizen against an alien, while here the suit is by an alien against a citizen. This is making a purely arbitrary distinction without any substantial difference. The provision of the constitution and the laws enacted for carrying the grant of judicial power into effect makes no distinction as to the position, whether as plaintiffs or defendants, which may be occupied by either the citizen or the alien. The jurisdiction is given where the alien is a party on one side of the controversy and a citizen of some one state of the Union is on the other side, without regard to which may be plaintiff or defendant. It was never before held or suggested that if the citizen was plaintiff and the alien defendant the jurisdiction would attach, but that if the position of the parties was changed, so that the alien would be the plaintiff and the citizen the defendant, the jurisdiction would be defeated.

If the railroad company, in the present case, were an alien corporation, with its line extending from El Paso, in the western district of the state of Texas, to Houston, in the eastern district of that state, and with its principal office at the latter place, a citizen of that state could have sued the corporation in the circuit court of the United States in either the western or the eastern district of that state.

So, too, if the position of the parties in this case were changed, and the railroad company had sued the alien in the circuit court of the United States for the western district of Texas, and had obtained personal service on him, no question could have been raised as to the jurisdiction of the court. The corporation, having a localized existence and citizenship in the western district of the state, is equally liable to the suit of an alien in that district. It cannot properly be held that the principle which applies to a suit against an alien does not apply to a suit by an alien.

The judiciary act, in declaring that circuit courts of the United States shall have original cognizance, concurrent with the courts of the several states, of all suits of a civil nature, at common law or in equity, between citizens of a state and foreign states, citizens, or subjects, when the matter in dispute exceeds, exclusive of interest and costs, the sum of $2,000, means, as I understand its language, that the circuit courts of the United States shall have the same jurisdiction as the state courts; otherwise, it could not be concurrent. Now, the state court at El Paso would have had undoubted jurisdiction of the present suit; and although the United States circuit court, held at the same place, has concurrent (the same) jurisdiction over the subject-matter and the parties, the result of the court's opinion is to deny the jurisdiction of the federal court. Postmaster General v. Early, 12 Wheat. 147, 148.

It cannot be questioned that under the authorities of this court, commencing with Railroad Co. v. Letson, 2 How. 497, a corporation, for the purposes of federal jurisdiction, is not merely a resident, but a citizen, of the state of its creation, and such citizenship subjects it to the jurisdiction of the federal courts in the state of its creation, at the suit of an alien.

Corporations have been gradually brought within the provision which extends the judicial power to controversies 'between citizens of different states.' The ground originally taken by the court was that the corporation's citizenship depended upon, and was determined by, the citizenship of the members or the individual corporators; and, while that rule prevailed, it was necessary to aver this citizenship of the members on the record.

Thus, as late as Railroad Co. v. Wheeler, 1 Black, 286, it was said by this court that 'a corporation exists only in contemplation of law, and by force of law, and can have no legal existence beyond the bounds of the sovereignty by which it was created, and it must dwell in the place of its creation;' and, further, that 'a corporation is not a citizen, within the meaning of the constitution, and cannot maintain a suit in the courts of the United States against a citizen of a different state from that by which it was created, unless the persons who composed the corporate body are all citizens of that state. In such cases they [the citizen corporators] may sue by their corporate name, averring the citizenship of all the members; and such a suit would be regarded as a joint suit of individual persons, united together in a corporate body, and acting under the authority conferred upon them for the more convenient transaction of business, and consequently entitled to maintain a suit in the courts of the United States against the citizens of another state.'

In the subsequent case of Muller v. Dows, 94 U.S. 444, it was held that, 'where a corporation is created by the laws of a state, the legal presumption is that its members are citizens of the state in which alone the corporate body has a legal existence.' It was further said in that case that 'a suit by or against a corporation, in its corporate name, may be presumed to be a suit by or against citizens of the state which created the corporate body, and no averment or denial is admissible for the purpose of withdrawing the suit from the jurisdiction of the courts of the United States.' This is now the established rule on the subject in respect to jurisdiction in suits by or against corporations in the federal courts.

The laws of Texas, requiring a railroad corporation to have a principal office where its books shall be kept, can in no way affect the jurisdiction of the federal courts over such corporate body, founded as it is upon the conclusive presumption that the members of such corporation are citizens of the state which created the body corporate. Having a principal office does not restrict the citizenship of the corporation, or of its members, to the particular locality where such office is kept. Neither does it raise any presumption, prima facie or conclusive, that the members of such corporation, citizens of the state, reside at that particular place.

The members of a corporation created by a state being conclusively presumed to be citizens of the same state, so as to confer upon the federal courts the jurisdiction to entertain suits by or against the corporate body, upon what theory or principle heretofore ever suggested can it be maintained that the state citizenship of the members of such corporation is to be confined or restricted to the locality of the principal office of the corporate body? There is no presumption that this citizenship, 'united together in a corporate body, and acting under the authority conferred upon them for the more convenient transaction of business, and consequently entitled to maintain suits in the courts of the United States,' has its separate or aggregate residence in the particular locality or place where the corporate body keeps its principal office.

The opinion of the court, while compelled to recognize the presumption of the citizenship of the members of the corporate body, on which the jurisdiction of the court over the corporation rests, or upon which it depends, in effect confines that citizenship to a particular locality within the state creating the corporation, when there is no presumption, either of fact or law, that the citizenship composing the corporate body is so restricted. In other words, the legal presumption that the members of the corporation are citizens of the state under which the corporate body, is created is, by the opinion of the court, restricted so as to give that citizenship a legal residence confined to the place where the corporate body has its principal office. I know of no authority or principle upon which this can be done.

But suppose the clause, that 'no civil suit shall be brought before either of said courts against any person by any original process or proceedings in any other district than that whereof he is an inhabitant,' can have no application to the suit of an alien against a citizen, or of a citizen against an alien; what is the meaning of the word 'inhabitant,' as used in that clause of the act? The word has, of course, a great variety of meanings, dependent upon the connection in which it is used. It is not used in the judiciary acts of 1887 and 1888, or in any previous judiciary act, in a sense that was intended to limit and restrict the jurisdiction conferred by the previous clause of section 1. Congress did not mean to broadly confer jurisdiction of a controversy between an alien and a citizen in the first clause of the act, and then, in the subsequent clause, restrict that jurisdiction by the word 'inhabitant,' so as to limit such jurisdiction to the residence of the alien or of the citizen. The meaning of the word, as used in the judiciary act, is to be taken in the sense of 'citizen' or 'alien.'

This was the meaning given to the word as it was used in the eleventh section of the act of 1789. Thus, in Picquet v. Swan, 5 Mason, 35, 46. Mr. Justice Story had occasion to construe the meaning of the word 'inhabitant,' as used in the first judiciary act, and said: 'But I lay no particular stress upon the word 'inhabitant,' and deem it a mere equivalent description of 'citizen' and 'alien' in the general clause conferring jurisdiction over parties.'

In Shaw v. Mining Co., 145 U.S. 444, 12 Sup. Ct. 935, Mr. Justice Gray, speaking for the court, said in effect that the word 'inhabitant,' in the act of 1887, was apparently used in no larger or different meaning than 'citizen.'

If, as already shown, the latter clause of the first section of the act of 1887, declaring that 'where the jurisdiction is founded only on the fact that the action is between citizens of different states, suit shall be brought only in the district of the residence of either the plaintiff or the defendant,' has no application to the present suit; and if the prior clause, containing the word 'inhabitant,' is inapplicable to suits between an alien and a citizen, as held in Hohorst's Case, or if the word 'inhabitant' is used in the sense of 'citizen' or 'alien,'-then it is clear that the plea in abatement interposed in the present case by the Texas corporation is not a valid objection to the jurisdiction of the circuit court.

The opinion of the court, holding to the contrary, rests upon grounds which have no application to this case.

Mr. Justice HARLAN concurs in this dissent.