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Vol. IV.)

BALTIMORE & Ohio RAILROAD Co. v. CARY.

[No. 9.

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and so far as allowed by the laws of the state; and that, under the facts of this case, it cannot be regarded as a corporation or citizen of Ohio. Railroad Co. v. Harris, 12 Wall. 65.

2. But it is claimed that, if the company is not held to be a citizen of Ohio, it must nevertheless be regarded as having waived its right, as a citizen of another state, to remove cases brought against it in the state courts to those of the United States.

This claim is founded alone upon the concluding proviso of the twentyfourth section of the act providing for the creation and regulation of incorporated companies, as amended March 19, 1869 (66 Ohio L. 321), which is as follows: “ Provided, further, that it shall be regarded as one of the conditions upon which a railroad company of another state may lease or purchase a railroad, the whole or any part of which is in this state, or make any arrangement for operating the same under the provisions of this section, that such railroad company of another state thereby waives the right to remove any case from any of the courts of this state to any of the courts of the United States, or to bring a suit in any of the courts of the United States against any citizen of this state ; and a violation of such condition shall operate as a forfeiture of all rights acquired under such lease, purchase, or arrangement.”

Apart from all considerations to the contrary, growing out of the fact that all the rights of the Baltimore and Ohio Railroad Company were acquired by contract before the enactment of this proviso, if it be viewed as applicable to the case before us, so far as regards the waiver provided for, it is open to the objection made to a similar provision, which was considered in the case of the Assurance Co. v. Pierce, 27 Ohio St. 155. In that case it was held by this court, upon the authority of the tribunal of last resort, upon the question, that a statute of Ohio, which requires a foreign insurance company, as a condition precedent to its right to transact business in the state, to waive its right to remove cases brought against it in the state courts to the federal courts, is, so far as regards such waiver, repugnant to the Constitution and laws of the United States, and therefore void,

The case of The Home Ins. Co. v. Morse, 20 Wall. 445, which was followed in that case, embraces, in the principles determined, all foreign corporations alike, and is as clearly conclusive of the invalidity of the statutory waiver relied upon in this case, as it was of the invalidity of the statute relied upon in that. We are, therefore, equally bound to follow it in this case, and must, for the reasons stated in that case, hold the proviso in question ineffective as a waiver of the right to remove cases to the federal courts.

It results that the judgment of the district court and that of the common pleas must be reversed.

The cause will be remanded to the court of common pleas, to be proceeded with according to law.

Ashburn, J., dissented from the third point in the syllabus.
JOHNSON, J. I am unable to concur in the opinion announced in this

The magnitude of the interests, both public and private, affected by the conclusions reached, warrants me in placing upon record the reasons for this dissent.

case.

Vol. IV.)

BALTIMORE & Onio RAILROAD Co. v. Cary.

(No. 9.

The action below was brought by Cary, a citizen of Ohio, in the court of common pleas of Belmont County, to recover damages for injuries to his real estate, committed by the defendant, a corporation styled - The Baltimore and Ohio Railroad Company,” while that corporation was engaged in extending the Central Ohio Railroad track to connect the same with a bridge across the Ohio River, at Bellaire, in said county.

The damages claimed exceeded five hundred dollars. The defendant filed a petition for a removal to the circuit court of the United States, on the ground that it is "a corporation created by the laws of the State of Maryland, and was therefore, at the time the suit was brought, and now is, a citizen of the State of Maryland, and is to be so regarded for the purposes of this petition.

The plaintiff's answer admits that the Baltimore and Ohio Railroad Company was originally created by the laws of the State of Maryland, but avers that as to this action it was and is a citizen of the State of Ohio; that such corporation, under authority of the laws of Ohio, leased from the Central Ohio Railroad Company as reorganized, its road, with all its corporate powers conferred by Ohio law, and as such lessee it derives all its powers, franchises, and privileges from such lease, and the laws of Ohio, under which said road is owned and operated by defendant.

It appears from the answer that this lease is in perpetuity, and therefore it is averred that the defendant is the lessee and owner of the road, and as such committed the grievances complained of, on the line of the Central Ohio Railroad, in the State of Ohio. To this the defendant demurred. This demurrer presented the single question, whether, upon the facts thus admitted, the defendant in this action is to be regarded as a citizen of Ohio or of Maryland, within the meaning of article 3, section 2, of the Constitution of the United States, and of the Act of 1789.

Is a corporation, originally created by the State of Maryland, and subsequently authorized by the laws of Ohio, to become the lessee of an Ohio road, constructed, operated, and leased solely under Ohio laws, which confer on the lessees no further or greater powers, franchises, or privileges than was possessed by the lessors, responsible as a citizen of Ohio for acts committed within this state in the exercise of the powers and franchises conferred by such lease, where under such laws it is liable to be served with process within this state?

When narrowed down, the question resolves itself into this: What is the test of citizenship of a corporation, within the meaning of the judiciary article of the Constitution of the United States ?

In the case of the Bank of Augusta v. Earle, 13 Peters, 512, it was held: “ That the artificial person, or legal entity, known to the common law as a corporation, can have no legal existence out of the bounds of the sovereignty by which it is created; that it exists only in contemplation of law and by force of law, and where that law ceases to operate, the corporation can have no legal existence. It must dwell in the place of creation.” This doctrine has been repeatedly affirmed, and especially in Paul v. Virginia, 8 Wallace, 168; Lafayette Insurance Co. v. French, 18 Howard, 407 ; Ohio f Mississippi Railroad Co. v. Wheeler, 1 Black, 295.

Long before the case of the Bank of Augusta v. Earle, it had been de

Vol. IV.]

BALTIMORE & Ohio RAILROAD Co. v. CARY.

[No. 9.

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cided that a corporation was not a citizen, within the meaning of this article of the Constitution of the United States, unless the persons who compose the corporate body were all citizens of the state wherein it exercises its corporate powers.

In such case it was regarded as the joint suit of the individuals acting under the name conferred upon them, and consequently entitled to maintain such suit against the citizen of another state in the corporate name. Hope Insurance Company v. Boardman, 5 Cranch, 57; U. S. Bank v. Devaux, 5 Cranch, 61; U. S. v. Planters' Bank, 9 Wheat. 410; Commercial Bank v. Slocom, 14 Pet. 60.

In the case of The Louisville, C. & C. R. R. Co. v. Letson, 2 Howard, 497, after grave consideration, it was held, modifying the former ruling, that the court would not look to the actual residence of the members of the corporation, but would presume they were citizens of the same state, in which alone the corporate body has a legal existence, and that a suit by or against a corporation, in its corporate name, must be presumed to be a suit by or against citizens of the state creating the corporate body; and that no averment or evidence to the contrary is admissible, for the

purpose of withdrawing the suit from the jurisdiction of a court of the United States.

In that case, which was ably argued and carefully considered, it was sought to oust the federal court of jurisdiction because some of the stockholders were not citizens of the state where the corporation existed and was sued.

The syllabus on this point was: “A corporation created by, and transacting business in a state, is to be deemed an inhabitant of the state, capable of being treated as a citizen, for all the purposes of suing and being sued, and an averment of the facts of its creation and the place of transacting business is sufficient to give the circuit courts jurisdiction.”

In the opinion of the court, it is said : “A corporation created by a state, to perform its functions under the authority of that state, and only suable there, though it may have members out of the state, seems to us to be a person, though an artificial one, inhabiting and belonging to that state, and therefore entitled, for the purpose of suing and being sued, to be deemed a citizen of that state.' Again : “Like a citizen it makes contracts, and though in regard to what it may do in some particulars, it differs from a natural person, and in this especially, the manner in which it can sue and be sued, it is substantially, within the meaning of the law, a citizen of the state which created it and where its business is done, for all the purposes of suing and being sued.”

This subject again came before the court in Marshall v. The B. f 0. R. R. Co. 16 Howard, 314. That was a suit by a citizen of Virginia, in the circuit court of Maryland, against the defendant, as a body incorporated by the laws of Maryland. In that case the court say:

“ The necessities and conveniences of trade and business require that such numerous associates and stockholders should act by representation, and have the faculty of contracting, suing, and being sued in a fictitious or collective name. It is not reasonable that those who deal with such persons should be deprived of valuable privileges by a syllogisın, or rather sophism, which deals subtly with words and names,

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Vol. IV.]

BALTIMORE & Oaro RAILROAD Co. v. CARY.

[No. 9.

without regard to the things or persons they represent.” .." For all the purposes of acting, contracting, and judicial remedy, they can speak and act and plead only through their representatives or curators.”

“ The persons who act under these faculties, and use this corporate name, may be justly presumed to be resident in the state which is the necessary habitat of the corporation.”

Perhaps no case throws more light on the problem before us than The Ohio f Mississippi R. R. Co. v. Wheeler, 1 Black, 295. That was an action by the corporation, described as having been created by the laws of the states of Indiana and Ohio, and having its principal place of business in Cincinnati, in the State of Ohio, a citizen of Ohio," brought in the United States circuit court of Indiana, against the defendant, a citizen of Indiana, who pleaded to the jurisdiction on the ground that the defendant was also a citizen of the same state, being a body corporate, by virtue of a law of the State of Indiana, under which the road was built and operated. The plea was sustained, on the ground that the corporation was, in fact, a citizen of Indiana. It was held : That a corporation, endued with capacities and faculties by the cooperating legislation of two states, cannot have one and the same legal being in both states ; that the legal entity or person which exists by force of law can have no existence beyond the limits of the state which gives it life and power to act; and that the corporation in Indiana is a separate and distinct body from that of the same name in Ohio, and that “they cannot be joined in a suit as one and the same plaintiff, nor maintain a suit in that name against a citizen of Indiana or Ohio in a circuit court of the United States."

The significance of this decision consists in the holding that, although this corporation was operating one continuous line of railway in two states, with its principal office and place of business in Ohio, yet, because it owed its right to build and operate its road in Indiana to the legislation of that state, it was, in fact, for the purposes of citizenship, two distinct

, corporations, one a citizen of that state, the other of Ohio, and could sue in neither state in the courts of the United States. In legal effect, it was two corporations uniting as one plaintiff, the one being a citizen of Indiana, the other of Ohio.

Insurance Company v. Francis, 11 Wall. 415, presented this question, upon this state of facts : The Germania Fire Insurance Company, which was incorporated by and had its head office in New York, established agency in Aberdeen, Mississippi, and the averment was, “a corporation of New York, located in Aberdeen, and doing business there.” The court held that this allegation was, in legal effect, that the company was a citizen of New York, following the cases of 0. f M. R. R. Co. v. Wheeler, and Louisville R. R. Co. v. Litson, adding, as the reason :

• Because a corporation can have no legal existence outside of the sovereignty which created it. Its place of residence is there, and nowhere else.”

The next case in order is that of The B. 0. R. R. Co. v. Harris, 12 How. 65, which was twice argued. The company had a charter from the State of Maryland, to build and operate a road from Baltimore to the Ohio River, and from the same point, by subsequent grant, to run a branch to the District of Columbia.

Subsequently, the State of Virginia granted to that corporation the same rights in that state as it had in Maryland.

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Vol. IV.)

BALTIMORE & Ohio RAILROAD Co. v. CARY.

(No. 9.

Congress also authorized the company to extend its branch into the District of Columbia. The question was, whether the corporation could be sued in the courts of the District of Columbia for injuries received as 'a passenger on the road in the State of Virginia. The office of the corporation, where its board met and transacted business, was in Baltimore. The writ was served on the president of the company, within the district. The jurisdiction of the court was limited to "inhabitants of the district, or persons found within the district."

It was claimed by the company, on the authority of The 0. f M. R. R. Co. v. Wheeler, that, as a corporation of Maryland, it was not an inhabitant of the District of Columbia ; but it was held: That the acts of Congress, and of the State of Virginia, were in the nature of enabling acts, and not, as in the Wheeler case, acts creating new corporations, when the unity of the road was unchanged in name, locality, election, and power of officers, mode of declaring dividends, and doing all its business, and that, in such case, no new corporation was created, and that in view of such unity, it was liable as an inhabitant of the District of Columbia.

The same question that arose in the Wheeler case was again before the court in Railway v. Whitten, 13 Wall. 270. That was an action against the Chicago and Northwestern Railway Company, brought in one of the state courts of Wisconsin, to recover over $500. After service, the plaintiff, who was a citizen of Illinois, moved for a transfer to the circuit court of the United States for the District of Wisconsin. The motion was resisted on the ground that the defendant was a corporation existing under the laws of Illinois, Wisconsin, and Michigan, and its line of railway was located and operated in each of those states ; that its entire line of railway was managed and controlled by a single corporation ; that all its powers and franchises were exercised, and its affairs managed and controlled, by one board of directors and officers; that its principal office and place of business was at the city of Chicago in Illinois ; and that there was no office for the control or management of the general business and affairs of the corporation in Wisconsin.

The grounds for the motion were that the plaintiff was a citizen of Illinois, and the defendant was a citizen of Wisconsin. The company resisted the removal on the ground that it was a corporation by the laws of Illinois, Wisconsin, and Michigan, with its board of officers and headquarters at Chicago, and with no office for the management of its corporate business in the latter state. It was held, upon this state of facts, that the corporation being sued in Wisconsin, it could only be brought into court as a citizen of that state, whatever its citizenship was elsewhere. The language of the court was: “The plaintiff is a citizen of the State

“ of Illinois, and the defendant is a corporation created under the laws of Wisconsin. Although a corporation, being an artificial body created by legislative power, is not a citizen within several provisions of the Constitution ; yet it has been held, and that must now be regarded as settled law, that where rights of action are to be enforced, it will be considered as a citizen of the state where it was created, within the clause extending the judicial power of the United States to controversies between citizens of different states. The defendant therefore must be regarded, for the pur

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