Galveston Railway Company v. Gonzales/Opinion of the Court

This case raises the question whether a railway company incorporated under the laws of a certain state, and having its principal offices within one district of such state, can be said to be an inhabitant of another district of the same state, through which it operates its line of road, and in which it maintains freight and ticket offices and depots.

We have no doubt of our authority, under the act of February 25, 1889, to review the decision of the court below, sustaining its jurisdiction over the case; and we have already held that the provision of the Texas statute which gives to a special appearance made to challenge the court's jurisdiction the force and effect of a general appearance, so as to confer jurisdiction over the person of the defendant, is not binding upon the federal courts in that state. Southern Pac. Co. v. Denton, 146 U.S. 202, 13 Sup. Ct. 44; Railway Co. v. Pinkney, 149 U.S. 194, 13 Sup. Ct. 859.

By section 1 of the act of August 13, 1888, revising the jurisdiction of the circuit courts, (25 Stat. 433,) it is enacted that '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;' and by Rev. St. § 740, 'when a state contains more than one district, every suit not of a local nature, in the circuit or districts courts thereof, against a single defendant, inhabitant of such state, must be brought in the district where he resides.' The above provision of the act of 1888 is manifestly a restriction upon the jurisdiction conferred by the act of 1875, which contained a similar provision, but with the additional privilege of bringing such suit within any district 'in which he,' the defendant, 'shall be found at the time of serving such process or commencing such proceeding.' It will be noticed that in this, as well as in prior acts regulating the jurisdiction of the circuit courts, a distinction is made between citizens of states and inhabitants of districts. This distinction has been carefully observed in all the principal adjudications upon the construction of these statutes; and, for the purpose of determining the habitancy of a railway corporation, it is pertinent to refer to some of these cases. In one of the earliest, viz. Picquet v. Swan, 5 Mason, 35, a suit was begun by trustee process or writ of garnishment sued out by an alien against a defendant, described as 'now commorant of the city of Paris, in the kingdom of France, of the city of Boston, in the commonwealth of Massachusetts, one of the United States of America, and a citizen of the said United States.' The process was served by the attachment of a lot of land in Boston belonging to the defendant, and by summoning his agent to appear and show cause. The defendant never appeared as a party to the suit, and it was contended that the plaintiff was entitled to consider him in default, and to have judgment. It was held, however, by Mr. Justice Story, that where a party defendant was a citizen of the United States, but resident in a foreign country, having no inhabitancy in any state of the Union, the circuit courts had no jurisdiction over him, in a suit brought by an alien, though his property were attached in the district. The case involved the construction of that clause of the eleventh section of the judiciary act of 1789 which provided that 'no civil suit shall be brought before either of said courts against an inhabitant of the United States, by any original process in any other district than that whereof he is an inhabitant, or in which he shall be found at the time of serving the writ.' It will be noticed that the words used are 'inhabitant of the United States,' not 'inhabitant of a district,' and, in speaking of these words, Mr. Justice Story said: '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.' That he meant the word 'inhabitant' as 'inhabitant of the United States' is evident from what follows: 'A person might be an inhabitant, without being a citizen; and a citizen might not be an inhabitant, though he retain his citizenship. Alienage or citizenship is one thing; and inhabitancy, by which I understand local residence, animo manendi, quite another. I read, then, the clause thus: 'No civil suit shall be brought before either of said courts against an alien or a citizen, by any original process, in any other district than that whereof he is an inhabitant, or in which he shall be found, at the time of serving the writ.' It cannot be presumed that congress meant to say that if an alien or a citizen were not an inhabitant of, or commorant in, the United States, a suit might be maintained against him in any district, and process served abroad upon him, or judgment given against him without any notice or process served upon him.' There is nothing here which indicates that Mr. Justice Story confounded citizenship of a state with inhabitancy of a district.

In Shaw v. Mining Co., 145 U.S. 444, 12 Sup. Ct. 935, a citizen of Massachusetts sought to maintain a bill in equity in the circuit court for the southern district of New York against the Quincy Mining Company, a corporation organized under the laws of Michigan, and having a usual place of business in the city of New York; and the question arose whether the court had jurisdiction over such a suit. It was held that it did not. In the opinion of the court it was said that the word 'inhabitant,' in the act of 1789, was apparently used, not in any larger meaning than 'citizen,' but to avoid the incongruity of speaking of a citizen of anything less than a state, when the intention was to cover, not only a district which included a whole state, but also two districts in one state.

In construing the acts of 1887 and 1888, it was held that they could not be considered as giving jurisdiction to a circuit court held in a state of which neither party was a citizen, and that, 'in the case of a corporation, the reasons are, to say the least, quite as strong for holding that it can sue and be sued only in the state and district in which it has been incorporated, or in the state of which the other party is a citizen.' It was further held that the domicile, the home, the habitat, the residence, the citizenship of a corporation, could only be in the state by which it was created, although it might do business in other states whose laws permitted it; and it was finally decided that, under these acts of congress, 'a corporation incorporated in one state only cannot be compelled to answer, in a circuit court of the United States held in another state in which it has a usual place of business, to a civil suit, at law or in equity, brought by a citizen of a different state.'

In Southern Pac. Co. v. Denton, 146 U.S. 202, 13 Sup. Ct. 44, it was further held that a citizen of Texas and a resident of the eastern district of Texas could not maintain a suit in the western district of Texas against a railroad incorporated under the laws of the state of Kentucky. It was said to have been long settled that an allegation that a party is a 'resident' does not show that he is a 'citizen,' within the meaning of the judiciary acts, and to hold otherwise in this case would be to construe the petition as alleging that the defendant was a citizen of the same state as the plaintiff, and thus utterly defeat the jurisdiction. The case was held to be covered by the decision in the case of Shaw v. Mining Co. It was contended that the railroad company had consented to be sued in the western district of Texas by doing business and appointing an agent there, under a statute requiring foreign corporations desiring to transact business in Texas to file with the secretary of state a certified copy of its articles of incorporation, and authorizing service of process to be made upon any of its officers or agents engaged in transacting its business. This act also forfeited any permit issued to a foreign corporation to transact business which should remove a case into a federal court on account of its nonresidency. It was held, however, that this statute requiring a corporation to surrender a right and privilege secured to it by the constitution and laws of the United States was unconstitutional and void, and could give no validity or effect to any agreement made by the corporation in obedience to its provisions. The ruling in this case was that the plaintiff should have brought his suit either in Kentucky, of which defendant was a citizen, or in the eastern district of Texas, of which he (the plaintiff) was a resident; and the fact that the defendant was operating a road and doing business and having agents in the western district of Texas was insufficient to authorize a suit to be begun against it there, in the federal court, although, under the laws of the state, such action might have been maintained.

In the case of In re Hohorst, 150 U.S. --, 14 Sup. Ct. 221, (decided at the present term,) it was held that the clause in question-that no civil suit should be brought against any person in any other district than that whereof he was an inhabitant-was manifestly inapplicable to a suit brought by a citizen of one of the United States against an alien, and that the words of the provision evidently looked to those persons, and those persons only, who are inhabitants of some district within the United States. 'Their object is to distribute among the particular districts the general jurisdiction fully and clearly granted in the early part of the same section, and not to wholly annul or defeat that jurisdiction over any case comprehended in the grant. To construe the provision as applicable to all suits between a citizen and an alien would leave the courts of the United States open to aliens against citizens, and close them to citizens against aliens. Such a construction is not required by the language of the provision, and would be inconsistent with the general intent of the section as a whole.' And hence that an alien or foreign corporation might be sued by a citizen of a state in any district in which valid service could be made upon the defendant. It was further held that a service upon the financial agent of a foreign corporation in the city of New York was a sufficient service upon the corporation.

Neither this case, nor any other to which our attention has been called, makes any distinction between cases where citizens and aliens are plaintiffs, though in Hohorst's Case, to prevent a manifest failure of justice, in the inability to sue any foreign corporation whatever, it was held that, where an alien corporation was defendant, it might be sued in any district wherein it might be found. These cases must be regarded as establishing the doctrine that a domestic corporation is both a citizen and an inhabitant of the state in which it is incorporated; but in none of them is there any intimation that, where a state is divided into two districts, a corporation shall be treated as an inhabitant of every district of such state, or of every district in which it does business, or, indeed, of any district other than that in which it has its headquarters, or such offices as answer in the case of a corporation to the dwelling of an individual.

We are therefore compelled to determine the question of the domicile of a corporation either by a resort to general principles of law, or to local statutes fixing such domicile. An individual is almost universally held to be an inhabitant of the place in which he dwells, and, though he do business for a long time in another place, he will not be regarded as changing his domicile so long as the animus revertendi continues. Thus in Jopp v. Wood, 34 Beav. 88, 4 De Gex, J. & S. 616, it was held that a Scotchman engaged in business in India for 25 years did not thereby change his domicile. And in Re Capdevielle, 2 Hurl. & C. 985, it was similarly held with regard to a Frenchman who had resided and engaged in business in England for 29 years. In the case of a corporation, the question of inhabitancy must be determined, not by the residence of any particular officer, but by the principal offices of the corporation, where its books are kept and its corporate business is transacted, even though it may transact its most important business in another place. It is but a corollary of the proposition laid down in the three cases above referred to that, if the corporation be created by the laws of a state in which there are two judicial districts, it should be considered an inhabitant of that district in which its general offices are situated, and in which its general business, as distinguished from its local business, is done.

If there were any doubt upon this subject, it would be removed by reference to the following provisions of the Texas statutes upon the domicile of railway corporations:

'Art. 4115. Every railroad corporation shall have and maintain a public office at some place upon the line of its road in this state. Const. art. 10, § 3; Act Aug. 15, 1876.

'Art. 4115a. § 1. Every railroad or other corporation organized or doing business in this state under the laws or authority thereof, shall have and maintain a public office in the locality where its principal business is carried on in this state for the transaction of its business, where transfers of stock shall be made, where the auditor, treasurer, general traffic manager, and general superintendent of such roads, or where an agent of such corporation, duly authorized to adjust and settle all claims against such corporation for damages, shall have their respective offices, and where shall be kept for the inspection of stockholders of such corporation books in which shall be recorded:

'(1) The amount of capital stock subscribed;

'(2) The names of the owners of the stock, and the amounts owned by them respectively; * *  *

'(6) The names and places of residence of each of its officers; provided, that a railroad corporation shall be required to keep such office at some place on the line of its road in this state.

'Art. 4116. All meetings of stockholders and directors of such corporation shall be held at such public office, and all transfers of stock in such corporation shall be made at such office, and the general business of such corporation shall be transacted at such office.'

'Art. 4118. Every railroad corporation may change at its pleasure its public office by publishing a notice of such change in some newspaper published on the line of its road, if any there be, and if not, then in some newspaper in the state, and having a general circulation in the state, for four successive weeks prior to such change.

'Art. 4119. Every railroad corporation shall also, as soon as it has in the first instance established its public office, give notice of such establishment by a like publication, as required in the preceding article.

'Art. 4120. The public office of a railroad corporation shall be considered the domicile of such corporation.' 2 Sayles' Civil St., arts. 4115, 4116, 4118, 4120.

Language stronger than that used in the last article could scarcely have been chosen to express the idea that a railway corporation should be considered an inhabitant of the place in which its public office is located, and of no other. It is true that article 1198 provides that 'suits against a railroad corporation, or against any assignee, trustee, or receiver operating its railway, may be brought in any county through or into which the railway of such corporation extends or is operated;' but it is manifest that, so far as the federal courts are concerned, this provision is subordinate to the first section of the act of 1888, requiring civil suits to be brought within the district of which the defendant is an inhabitant. There are doubtless reasons of convenience for saying that a corporation should be considered an inhabitant of every district in which it does business, and so the statutes of the several states generally provide; but the law contemplates that every person or corporation shall have but one domicile, and in the case of the latter it shall be in that state by whose laws it was created, and in that district where its general offices are located.

This court having held, in the cases heretofore referred to, that a corporation cannot be considered an inhabitant of any state in which it is not incorporated, by reason of the fact that it does business, or, in the case of a railroad, that it runs its road through such state, it would seem inconsistent to hold that it is an inhabitant of a district by reason of the same facts, unless the distinction between citizenship and inhabitancy is to be wholly abolished. As said by Mr. Justice Story in Picquet v. Swan, alienage or citizenship is one thing, and inhabitancy quite another. In the constitution and laws of the United States, citizenship is affirmed of a state, or of the United States. Inhabitancy may be affirmed either of the United States, a state, or a subordinate locality. Nor, in our view, does it make any difference that the plaintiff is an alien instead of a citizen. The provision that no civil suit shall be brought against any person in any other district than that whereof he is an inhabitant is of universal application, except that, if the plaintiff be also a citizen, he may bring it in his own district, if he can obtain service upon the defendant in that district. The purpose of this is that the plaintiff may have the same advantage of litigation in his own district that the defendant has. An alien, however, is assumed not to reside in the United States, and hence must resort to the domicile of the defendant. On the other hand, if the suit be against the alien, he may doubtless, under Hohorst's Case, be sued in any district wherein he is found. It was not meant nor intimated, however, in that case, that the clause in question had no application to cases where an alien was plaintiff, but only where he was defendant.

On the contrary, both the decision and the reasoning in that case were carefully limited to a suit brought by a citizen against an alien. At the conclusion of the discussion of that question, the point decided was stated to be 'that the provision of the existing statute, which prohibits suit to be brought against any person 'in any other district than that whereof he is an inhabitant,' is inapplicable to an alien or a foreign corporation sued here, and especially in a suit for the infringement of a patent right, and that, consequently, such a person or corporation may be sued by a citizen of a state of the Union in any district in which valid service can be made upon the defendant.' The provision, in terms, relates to defendants only; and the reasoning that it could not include an alien defendant, because he was not an inhabitant of any district in the United States, has no application to a defendant citizen, who is confessedly and necessarily an inhabitant of some one of those districts.

Irrespective of any statute such as that of Texas, above referred to, the rulings of the state courts generally favor the position that a corporation can only be considered as resident in the jurisdiction in which its principal offices are located, though it may run a railway and have local agents in other jurisdictions. Thus, in Thorn v. Railroad Co., 26 N. J. Law, 121, it was held that, in a suit brought against a railroad corporation, the venue should be laid in the county where its principal office was located; that being considered its place of residence, within the meaning of the statutes. In that case the corporation ran its railway and exercised its franchises both in Essex county and Somerset county, but its principal office was in the former, while the suit was brought in the latter; and upon a motion to change the venue the court held that the corporation must be deemed to be a resident of Essex county, and the venue should be changed to that county. 'The only question,' said the court, 'is whether a railroad corporation can be said to reside, within the meaning of the act of the legislature, in as many counties as it happens to traverse with its road, or whether, if it can be properly said to have any residence, that residence is not to be taken to be in the county where it keeps its principal office of business. * *  * The course of legislation on the subject of corporations would indicate that they are to be considered as having a residence where their office or place of business is located.'

In the case of Railroad Co. v. Cooper, 30 Vt. 476, it was declared that, where a corporation is not located by the terms of its charter, its residence and location are regarded as being in the place where it keeps its principal office and does its corporate business. The fact that the railway ran through another county was regarded as unimportant, and not constituting a residence of the corporation. In the case of Transportation Co. v. Schen, 19 N. Y. 408, a corporation organized to navigate the lakes was declared to have its domicile, for the purposes of taxation, in the city or town in which the principal office for managing the affairs of the company was located, as evidenced by its certificate of organization, although it had an office elsewhere, employing the services of 20 times as many agents, and where a much larger proportion of its moneys was received and disbursed, and where its principal officers resided during the business season. See, also, Pelton v. Transportation Co., 37 Ohio St. 450; Jenkins v. Stage Co., 22 Cal. 537; Sangamon & M. R. Co. v. Morgan Co., 14 Ill. 163; and, to the contrary, Sherwood v. Railroad Co., 15 Barb. 650; Bristol v. Railroad Co., 15 Ill. 436; Slavens v. Railroad Co., 51 Mo. 308.

The judgment of the court below must therefore be reversed, and the case remanded for further proceedings in conformity to this opinion.