Tioga Railroad v. Blossburg and Corning Railroad

ERROR to the Circuit Court for the Northern District of New York.

The Tioga Railroad Company was a corporation duly organized under the laws of Pennsylvania, and was the proprietor of a railroad extending from Blossburg, a town in that State, a little south of the line between Pennsylvania and New York, up to that said line. The Blossburg and Corning Railroad Company was a corporation organized under the laws of the State of New York, and was the proprietor of a railroad connecting with the abovementioned road at the State line and extending thence to Coring in New York; the two roads forming a complete line of railroad from Blossburg to Corning. The latter company had acquired its part of the road by purchase in 1855, succeeding to the rights of a former company called the Corning and Blossburg Railroad Company. By contract made in 1851 the Corning or New York end of the line was leased to the Tioga Railroad Company under certain terms and stipulations, amongst which was the following:

'For the use of the said railroad of the said Corning and Blossburg Railroad Company, and the use of their depots, enginehouses, machine-shops, grounds, water-stations, &c., the Tioga Railroad Company agrees to pay to the Corning and Blossburg Railroad Company two-thirds of the receipts for passengers, mails, and freights which shall be taken for the said Corning and Blossburg Railroad, the expenses charged customers for the loading and unloading coal, lumber, and other freights, and for the warehousing, and such additional charges, by way of discrimination, as shall be made for short distances for motive power, not to be included in the term receipts, as abovementioned.'

The parties soon disagreed as to the meaning of the words italicized. The lessees asserted that they were entitled to keep any excess of way-fares and freights for intermediate places and short distances above the through rates for those places, and did not account for, but retained the same; and for this difference, running through many years, the Blossburg and Corning company, on the 6th of May, 1864, sued the other company in the court below.

Previously to the bringing of this, the present suit, that is to say, in January, 1855, the Blossburg company had brought a suit in the Supreme Court of New York against the Tioga company on the contract in question, in which this question of difference was litigated. The record of that case, which went to final judgment (see 1st Keyes, 486), was given in evidence in this one.

The present suit was brought for the same class of receipts which had accrued since the commencement of the former action. Besides the defence abovementioned, the Tioga company in this case pleaded the statute of limitations as to all receipts which accrued more than six years before the commencement of the suit. The plaintiff replied that the defendant was a corporation organized under the laws of Pennsylvania, and not created or existing under the laws of the State of New York, and that when the supposed cause of action accrued in favor of the plaintiff, the defendant (the Tioga company) was out of the State of New York, and so remained until this action was commenced. The defendant denied that at or since the commencement of the action it had been out of the State.

The significance of these pleadings was derived from the New York statute of limitations. The period limited for bringing an action of this kind is six years. But by the one hundredth section of the Code of Practice it is enacted as follows:

'If, when the cause of action shall accrue against any person, he shall be out of the State, such action may be commenced within the terms herein respectively limited after the return of such person into this State; and if, after such cause of action shall have accrued, such person shall depart from and reside out of this State, the time of his absence shall not be deemed or taken as any part of the time limited for the commencement of such action.'

The Blossburg company insisted that as the Tioga company was a Pennsylvania corporation, it could have no legal residence or existence in any other State than Pennsylvania, and hence that it was not in the State of New York when the action accrued, and had not been therein at any time since; and, therefore, could not claim the benefit of the statute of limitations. This the Tioga company disputed; and its counsel relied on certain sections of the Code of Practice of New York, which showed that foreign corporations might be sued in New York under certain circumstances, as where they had property in the State, or where their officers, agents, or directors are found within it, and were served with process. Thus, by act of 1851 (§ 134 of the Code), after providing for service of process on a corporation by delivering a copy to the president, secretary, treasurer, director, or managing agent, it is said:

'Such services can be made in respect to a foreign corporation only where it has property within this State, or the cause of action arose therein.'

Or, by the act of 1859,

'Where such service shall be made within this State personally upon the president, treasurer, or secretary thereof.'

The case, according to the New York practice, in cases which it is anticipated may involve the examination of long accounts, was referred to and tried by a reference.

Evidence was given which, as the counsel of the defendant asserted, showed-what he alleged was not denied-'that during all the time of the existence of the contract of 1851, the Tioga company had property within the State of New York, an office at Corning, directors, officers, and agents, constantly within that State and at all times amenable to the process of its courts, and in fact, in 1855, that the Blossburg company availed itself of this condition of things by bringing a suit against the defendant for a portion of the demand claimed under the contract now in controversy, recovered judgment and collected the same, and that in fact this suit was commenced by personal service of a summons upon the defendant's agent at Corning.'The referee refused to find as facts what is above stated in regard to the Tioga company, and found generally in favor of the plaintiff. Judgment being entered on the finding the case was now here on error.

Mr. J. H. Reynolds, for the plaintiff in error (after arguing the case on merits):

I. The same matter disposed of in the Court of Appeals of New York, in 1855, does not come in question here. No portion of the claim there made is embraced in this action. It is true that the claim arises under the same contract, but that circumstance is not of consequence if this court is not concluded by its construction in the courts of New York, which it clearly is not under the decision in Swift v. Tyson, and Chicago v. Robbins. Moreover, it is not easy to see that the same question was decided in the New York courts. A reference to the cases will show this.

II. The antiquated rule that a corporation cannot migrate must now be regarded as a legal fiction rather than a substantial reality. In actual practice, corporations created by the laws of one State do travel into other States, carry their property, establish offices, locate agents, transact business, and accumulate money, and they are recognized outside of the territorial limits of their creation as legal beings, having legal rights.

It was at one time questioned in this court, whether a corporation created by the laws of a State, made the corporate body a citizen of the State creating it, when the corporators actually resided beyond its territorial jurisdiction, within the meaning of the act of Congress in respect to the removal of causes from a State to a Federal court for trial. It is now the settled law of this court, that a corporation is a citizen of the State creating it, and entitled to all the rights and immunities accorded to a citizen by the Constitution and the law.

If it be, as it must be, assumed that a corporation is a citizen of the State by which it is created, then it must be accorded the rights of a citizen in all courts and places.

We are aware of certain decisions in New York not in accordance with these views. But there is no greater reason for this court's following the decision of State courts in respect to the limitation of actions, than for its following the laws and decisions respecting the validity of bonds in aid of railroads or any other local improvements. These, certainly, it has not followed.

It was proved and conceded that during all the time of the existence of the contract of 1851, the defendant had property within the State of New York, an office at Corning, New York, directors, officers, and agents constantly within this State, and at all times amenable to the process of its courts; and in fact in 1855 the plaintiff availed itself of this condition of things by bringing a suit against the defendant for a portion of the demand claimed under the contract now in controversy, recovered judgment, and collected the same, and that in fact this suit was commenced by personal service of a summons upon the defendant's agent at Corning. It is, therefore, apparent that the Tioga company has been at all times subject to a suit at law, for any debt it owed to the Blossburg company or any other party.

Mr. D. Rumsey, contra.

Mr. Justice BRADLEY, having stated the case, delivered the opinion of the court.