Neirbo Co. v. Bethlehem Shipbuilding Corp.
Neirbo Co. v. Bethlehem Shipbuilding Corp.
Dissenting Opinion
dissenting.
The Circuit Court of Appeals, in a careful and discriminating opinion,
Whatever may be said in support of the original adoption of a different rule, it has been the law for a century that, as respects the jurisdiction of the federal courts over a corporation in diversity of citizenship cases, the corporation is a citizen and resident of the state of incorporation and of no other state. I do not understand the court’s opinion to repudiate the rule.
The statute which is now § 51 of the Judicial Code took its present form in 1888. In 1892 the court held, in Shaw v. Quincy Mining Co., 145 U. S. 444, 453, that, under the statute, “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.” This construction has been followed in this court without deviation and with practical unanimity by the lower federal courts.
At the next term, in Southern Pacific Co. v. Denton, 146 U. S. 202, 205, 207, the ruling was reaffirmed in a case where the defendant had registered as a foreign corporation under a state law and, as a condition of registration, had agreed that service of process might be made upon a designated agent.
Ex parte Schollenberger, 96 U. S. 369, applied that earlier statute. The court held that a foreign corporation which had registered and consented to the service of process upon a designated agent had thereby agreed “to be found” within the state and might therefore be impleaded in a federal court sitting in the state although it was not a citizen or a resident of the state. The case was cited in the opinions in both the Shaw and the Southern Pacific cases. In the latter the court said, referring to the foreign corporation’s agreement as to service: (pp. 207-8) “It might likewise have subjected the corporation to the jurisdiction of a Circuit Court of the United States held within the State — so long as the Judiciary Acts of the United States allowed it to be sued in the district in which it was found. . . . But such an agreement could not, since Congress (as held in Shaw v. Quincy Mining Co. above cited) has made citizenship of the State, with residence in the district, the sole test of jurisdiction in this class of cases, estop the corporation to set up non-compliance with that-test, when sued in a Circuit Court of the United States.”
In re Keasbey & Mattison Co., 160 U. S. 221, the court held (p. 228): “Under the provision of that act [the earlier act of 1875], which allowed a defendant to be sued in the district of which he was an inhabitant, or in that in which he was found, a corporation could doubtless have been sued either in the district in which it was incorporated, or in any district in which it carried on business a;nd had a general agent.” For this statement the court cited Ex parte Schollenberger, Shaw v. Quincy
This interpretation' of § 51 has since remained unchanged. Congress must have known of and acquiesced in the courts’ construction of the section, particularly as there have been efforts to amend it, and no alteration, has been adopted.
Upon principle, and under the authorities, the mere fact that service of process valid under state law can be had on an officer or agent of a foreign corporation doing business within the state is irrelevant; for although the corporation may be served in conformity to local law, it cannot be compelled to try its case in a federal court sitting in the state. I do not understand the opinion of the court to hold to the contrary.
But it is said that registration and designation of an agent upon whom service may be made under compulsion of state law amounts to a waiver of the requirements of § 51 as to venue, or to a consent to be sued in a federal court sitting within the state.
As has been shown by quotation from the opinion, this contention was made in Southern Pacific Co. v. Denton, supra, and was overruled. The holding was one of the alternative grounds' of decision. The Southern Pacific
I see no reason at this late day to attribute a new effect to the statute when Congress has not seen fit to express a view contrary to that embodied in this court’s construction of the law; though this might at any time be done. The principle of stare decisis seems to me to make against such a change.
The court below has analyzed the applicable New York statute and has satisfactorily demonstrated that it deals with service of process on foreign corporations in the courts of New York. The state could not, by its laws, affect the jurisdiction of federal courts or the venue of suits therein, — a matter solely within the control of Congress.
In re Keasbey & Mattison Co., 160 U. S. 221; Macon Grocery Co. v. Atlantic Coast Line R. Co., 215 U.S. 501; Ladew v. Tennessee Copper Co., 218 U. S. 357; Male v. Atchison, T. & S. F. Ry. Co., 240 U. S. 97; General Investment Co. v. Lake Shore Ry. Co., 260 U. S. 261, 271; Seaboard Rice Milling Co. v. Chicago, R. I. & P. Ry. Co., 270 U. S. 363; Luckett v. Delpark, Inc., 270 U. S. 496; Burnrite Coal, Co. v. Riggs, 274 U. S. 208, 211. The decisions in the federal courts are cited and discussed by the Circuit Court of Appeals, 103 F. 2d 767.
Some of the cases are cited by the Circuit Court of Appeals in its opinion 103 F. 2d 769.
Opinion of the Court
delivered the opinion of the Court.
The case is here to review the affirmance by the Circuit Court of Appeals for the Second Circuit of an order of the District Court for the Southern District of New York setting aside service of process upon Bethlehem Shipbuilding Corporation, Ltd. (hereafter called Bethlehem) and dismissing as to it petitioners’ bill, 103 F. 2d 765. The suit was based on diversity of citizenship and was not brought “in the district of the residence of either the plaintiff or the defendant.” (§ 51 of the Judicial Code, Act of March 3, 1887, 24 Stat. 552, as corrected by Act of August 13, 1888, 25 Stat. 433, 28 U. S. C. § 112.
The jurisdiction of the federal courts — their power to adjudicate — is a grant of authority to them by Congress and thus beyond the scope of litigants to confer. But
• Being a privilege, it may be lost. It may be lost by failure to assert it seasonably, by formal submission in a cause, or by submission through conduct. Commercial Ins. Co. v. Stone Co., supra. Whether such surrender of a personal immunity be conceived negatively as a waiver or positively as a consent to be sued, is merely an expression of literary preference. ' The essence of the matter is that courts affix to conduct consequences as to place of suit consistent with the policy behind § 51, which is “to save defendants from inconveniences to which they might be subjected if they could be compelled to answer in any district, or wherever found.” General Investment Co. v. Lake Shore Ry. Co., supra, at 275.
When the litigants are natural persons the conceptions underlying venue present relatively few problems in application. But in the case of corporate litigants these procedural problems are enmeshed in the wider intricacies touching the status of a corporation in our law. The
It took half a century of litigation in this Court finally • to confer on a corporation, through the use. of a fiction,
To be sure, that case arose under the Judiciary Act of 1875, 18 Stat. 470, the language of which differed from the Act of 1887, now. § 51 of the Judicial Code. The earlier provision was as follows: “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/or in which he shall be found . . .” The Act of 1887 omitted the words “in which he shall be found.” But, of course, the Phoenix and the Clinton Insurance Company in Ex parte Schollenberger, supra, were not geographically “found” in Pennsylvania, and Chief Justice Waite so recognized. They were “found” in the Eastern District of Pennsylvania only in a metaphorical sense, because they had consented to be sued there by complying with the Pennsylvania law for designating an agent to accept service. Not less than three times does the opinion point
The notion that the 1887 amendment, by eliminating the right to sue a defendant in the district “in which he shall be found,” was meant to affect the implications of a consent to be sued — implications which were the basis of the Schollenberger decision — derives from a misapplication of the purpose of Congress to contract diversity jurisdiction, based upon a misunderstanding of the legislative history of the 1887 amendment.
And so, after the Act of 1887 and despite its elimination of “in which he shall be found” from the Act of 1875, lower federal courts continued to apply the doctrine of Scholleriberger’s case by considering the designation of an agent for service of process an effective consent to be sued in the federal courts.
In conformity with what is now § 210 of the General .Corporation Law of New York,
In finding an actual consent by Bethlehem to be sued in the courts of New York, federal as well as state,' we are not subjecting federal procedure to the requirements of New York law. We are recognizing that “state legislation and consent of parties may bring about a state of facts which will authorize the courts of the United States to take cognizance of a case.” Ex parte Schollenberger, supra, at 377. The judgment below is
Reversed.
Section 112 reads as follows: “Except as provided in sections 113 to 117 of this title, no person shall be arrested in one district for trial in another in any civil action before a district court; and, except as provided in sections 113 to Í18 of this title, no civil suit shall be brought in any district court 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.”
See Henderson, “The Position of Foreign Corporations in American Constitutional Law,” passim, and especially the illuminating analysis, pp. 163-194.
See Gray, “The Nature and Sources of the Law,” 184, and Henderson, op. cit. supra, note 2, pp. 50-76.
See St. Clair v. Cox, 106 U. S. 350, 355.
“We are aware that the practice in the circuit courts generally has been to decline jurisdiction in this class of suits.” 96 U. S. 369, 378.
Day v. Newark India-Rubber Mfg. Co., 1 Blatch. 628; Fed. Cas. No. 3,685; Pomeroy v. New York, N. H. & H. R. Co., 4 Blatch. 120; Fed. Cas. No. 11,261. Both these cases were decided by Mr. Justice Nelson, on circuit.
“While the Circuit Court may not be technically a court of the Commonwealth, it is a court within it; and that, as we think, is all the legislature intended to provide for.” 96 U. S. 369, 377. See Madisonville Traction Co. v. Mining Co., 196 U. S. 239, 255-56. Cf. Louisville & N. R. Co. v. Chatters, 279 U. S. 320, 329.
A cognate misconception as to the purpose of the Act of 1887-88 in contracting the jurisdiction of the circuit courts underlay the decision in Ex parte Wisner, 203 U. S. 449, overruled in Lee v. Chesapeake & Ohio Ry. Co., 260 U. S. 653, 659.
The Culberson Bill, which passed the House in 1887, was H: R. 2441, 49th Cong., 1st Sess. It provided in its original form that the lower federal courts should" not take “cognizance of any suit” between-“a corporation created or organized by or under the laws of any State and a citizen of any State in which such corporation at the time the cause of action accrued may have been carrying on any business authorized by the law creating it. . . .” There were likewise provisions forbidding removal of such suits to the lower federal courts. See 18 Cong. Rec. 613; H. Rep. No. 1078, 49th Cong., 1st Sess.
Cong. Rec. 1304-1305; 14 Cong. Rec. 1270; 15 Cong. Rec. 4909.
Riddle v. New York, L. E. & W. R. Co., 39 F. 290 (C. C., W. D. Pa., 1889); Consolidated Store-Service Co. v. Lamson Consol. Store-Service Co., 41 F. 833 (C. C. Mass., 1890) approvingly cited in Haight & Freese Co. v. Weiss, 156 F. 328 (C. C. A. 1st, 1907).
Texas Land & Mortgage Co. v. Worsham, 76 Tex. 556.
146 U. S. at 207. The Denton case was based on Shaw v. Quincy Mining Co., 145 U. S. 444, in which there was no consent derivable from the designation of an agent for service. Both opinions were written by Mr. Justice Gray, who later accurately delimited the scope - of the holdings in both the Shaw and the Denton cases. In re Keasbey & Mattison Co., 160 U. S. 221, 229. The decisive difference ber
Platt v. Massachusetts Real Estate Co., 103 F. 705 (C. C. Mass., 1900); Hagstoz v. Mutual Life Ins. Co., 179 F. 569 (C. C. E. D. Pa., 1910); Beech-Nut Packing Co. v. P. Lorillard Co., 287 F. 271 (S. D. N. Y., 1921); Jones v. Consol. Wagon Co., 31 F. 2d 383, 384 (D. Idaho, 1929); Kerfoot & Co. v. United Drug Co., 38 F. 2d 671 (D. Del., 1930); Standard Stoker Co. v. Lower, 46 F. 2d 678 (D. Md., 1931); McLean v. Mississippi, 96 F. 2d 741 (C. C. A. 5th, 1938); Gray v. Reliance Ins. Co., 24 F. Supp. 144 (W. D. La., 1938); Hamilton Watch Co. v. George W. Borg Co., 27 F. Supp. 215 (N. D. Ill., 1939); Toulmin v. James Mfg. Co., 27 F. Supp. 512 (W. D. N. Y., 1939). Cf. Heine Chimney Co. v. Rust Engineering Co., 12 F. 2d 596 (C. C. A. 2nd, 1926).
Shainwald v. Davids, 69 F. 704 (N. D. Cal., 1895); Dodfre Mfg. Co. v. Patten, 23 F. 2d 852 (D. Ind., 1928), aff’d 60 F. 2d 676 (C. C. A. 7th, 1932); Oklahoma Packing Co. v. Oklahoma Gas & Elec. Co., 100 F. 2d 770 (C. C. A. 10th, 1938).
Originally enacted as c. 687, Laws of 1892, pp. 1805-1806.
Reference
- Full Case Name
- NEIRBO CO. Et Al. v. BETHLEHEM SHIPBUILDING CORP., LTD.
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- 768 cases
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