Bushnell v. Parker Bros.

The statements in the petition filec to obtain a removal of the case which are essential to present thi questions involved upon this appeal are that the matter in disputo in the suit exceeds the sum of $2,000; that the controversy i between citizens of different states; that the defendant is a Penn sylvania joint stock company or corporation, and a citizen am resident of the city of Pittsburgh, in the state of Pennsylvank and that the plaintiff is a citizen and resident of the state of Hex Jersey.

The removal act of March 3, 1887, as amended August lc 1888, provides (§ 1) that the circuit courts of the United State shall have jurisdiction “ of all suits of a civil nature at commo law or in equity * * * in which there shall be a controvers between citizens of different states, in which the matter in disput exceeds, exclusive of interest and costs, the sum or value c $2,000.”

Section 2 provides that “any suit * * * may be remove into the circuit court of the United States for the proper distrk by the defendant or defendants therein being non-residents of thi state.”'

At the outset of the confusion and uncertainty that has arisen is important to determine what is the proper practice upon motion of this character. It is contended by defendant that it w<‘ improperly made in the supreme court and that it should hax been made on a motion to remand, in the circuit court of tl United States. It is desirable that some uniform rule should 1

If the petition be sufficient no action taken by the state court can remove the suit, nor can any refusal by it to act prevent the removal.

In Stone v. South Carolina, 117 U. S., 430 , it is said that “ a state court is not bound to surrender its jurisdiction of a suit on a petition for removal until a case has been made which, on its iace, shows that the petitioner has a right to the transfer ” (citing jases). It is undoubtedly true, as was said in Steamship Company v. Tugman, 106 U. S., 118 -122, that upon the filing of the jetition and bond, the suit being removable under the statute, the urisdiction of the state court absolutely ceases and that of the jircuit court of the United States immediately attaches; but still, is the right of removal is statutory, before a party can avail himlelf of it he must show upon the record that his is a case which ¡ornes within the provisions of the statute.

As was said in Insurance Company v. Pechner, 95 U. S., 183 , 85, “ his petition for removal, when filed, becomes a part of the ecord in the cause. It should state facts which, when taken in onnection with such as already appear, entitle him to the trans-er. If he fails in this he has not in law shown to the court that t ‘cannot proceed further with the suit.’ Having once acquired urisdiction the court may proceed until it has been judicially in-armed that its power over the cause has been suspended."

The mere filing of a petition for the removal of a suit which 5 not removable does not work a transfer. To accomplish this íe suit must be one that may be removed, and the petition must bow a right in the petitioner to demand the removal. All issues £ fact made upon the petition for removal must be tried in the ircuit court, but the state court is at liberty to determine for self whether on the face of the record a removal has been fected.

Without deciding whether or not the United States court can roperly entertain a motion to remand based solely on the petition, tere is both reason and authority for holding that the state court is jurisdiction to entertain the motion for a denial of the petion for a removal where the same is based solely upon the petion itself and raises no disputed question of fact, but simply one : law. It can determine whether taking all the allegations of e petition, as true, it makes out a case for removal under the atute.

On the other hand, if the plaintiff wishes to deny any of the legations of the petition and in that way to raise a question of 3t, he must make that motion upon answering affidavits to the ieral court which alone has jurisdiction upon such applications

In Burlington Railway v. Dunn, 122 U. S., 513 , the court says: “ The record closed so far as the question of removal is concerned when the petition for removal is filed and the necessary security furnished. It presents then to the state court a pure question of law, and that is, whether, admitting the facts stated in the petition for removal to he true, it appears on the face of the record, which includes the petition and the pleadings and proceedings down to that time, that the petitioner is entitled to a removal of the suit. That question the state court has the right to decide for itself and if it errs in keeping the case and the highest court of the state affirms its decision, this court has jurisdiction to correct the error, considering, for that purpose, only the part of the record which ends with the petition for removal.”

The proceeding to obtain the removal ex parte simply requires the presentation of the petition and bond, and the only act of the judge receiving the same is to accept the petition and approve the bond. It is evident, therefore, that a plaintiff after a proceeding thus taken by the defendant without notice to him has a right tc move to vacate the ex parte proceeding by a motion upon notice properly made to the court, and thus is brought before it the same questions with the same right to pass thereon as if the origina application of the defendant had been noticed.

This practice was followed in the case of Hunter v. Charter Oak Ins. Co., 1 New York Daily Reg., March 13, 1888. There an ex parti proceeding was had and subsequently upon the plaintiff’s motion for defects appearing on the face of the papers, the order wa¡ vacated by the court at special term, Mr. Justice Barrett saying “ This court had jurisdiction to determine the question of lav arising upon the disputed facts set out in the petition ( 122 U S., 513 .) And in the case of inadvertent acceptance of the petit ion and bond, to reject the latter and proceed in the cause (32 Fed Rep., p. 644).” The case of Chamberlain v. Trust Co., 11 Hun 370 , which is a decision of this court, is relied upon by the defend ant as an authority against the right of the court to entertain th motion ; but an examination of that case will, I think, show tha it is in complete harmony not only with the view expressed by Mi Justice Barrett, but the decision quoted of the United State supreme court.

In the opinion in that case Davis, J., says : “ The only ques tions which we have any power upon this appeal to consider ar whether the petition did set forth the jurisdictional facts require by the act of congress, and whether the security offered was sue as to call for its approval by the court below. For * * * i the court below had jurisdiction to make the order upon the fact presented and found, and upon the bond or security given, it order was completely effective to transfer jurisdiction to the cii cuit court of the United States, and to divest this court of a. jurisdiction of the case. ”

It is true the court held, the questions involved arising outsid

Upon the part of the appellant it is contended that the petition was defective in two particulars :

First. That it- did not allege that the defendant was not also a resident of the state of Hew York and failed to deny the allegations of the complaint that for many years it had carried on business here; had an office and a large amount of property here.

Second. That the statement that defendant is “ a Pennsylvania joint stock company or corporation,” being in the alternative, is wholly insufficient, because it is impossible to determine whether the status of citizenship in Pennsylvania is predicated of “the joint stock company,” or “the corporation.”

This brings us to the consideration of the real question on this appeal.

The petition here states that the defendant is a Pennsylvania corporation and citizen of that state, and a resident of the city of Pittsburgh in that state. This is claimed by the appellant to be lefective because it does not in addition allege that the defendant vas not a resident of the state of Hew York, contending that vithin the meaning of the word as used in the removal act a corjoration is a “ resident ” of any state where it regularly maintains m office and carries on its business and owns property.

A lamentable conflict exists between the circuit courts in differ-mt sections of the Union upon this important question of renoval. « On the one hand it has been held in numerous cases that , corporation though carrying on business in several states can Lave a residence only in the state in which it was created; so that he averment that the corporation was created under the laws of certain state precludes the idea that it may become a resident of nother state, and is sufficient in the petition for the removal of a ause from a state to a federal court. Myers et al. v. Murray, Neilson & Co., 43 Federal Rep., 695; Fales v. Railway Co., 32 id., 73; Henning v. Western U. T. Co., 43 id., 97; Purcell v. The British Land, etc., Co., 42 id., 465; Filli v. D. L. & W. R. R. Co., 37 1., 65; Booth v. Manfg. Co., 40 id., 1.

On the other hand it has been held that “ a corporation is a itizen of the state under whose laws it is organized. For the pyroses of suing and being sued it may become a resident of each ;ate in which it does business under state law. The rule under le removal act of August 13, 1888, as to natural persons is aplicable to corporations. When a corporation of one state is

As was said by Shiras, J., in Myers v. Murray, Neilson & Co., supra; “In the conflict of the rulings in the circuit courts resort must be had to the decisions of the supreme court. J! cite a few thereof.

“In Insurance Company v. Francis, 11 Wall., 210 , it is said: ‘A corporation can have no legal existence outside the sovereignty by which it was created. Its place of residence is there and can be nowhere else; and like a natural person it cannot change its domicil at will, and although it may be permitted to transact business where its charter does not operate, it cannot on that account acquire a residence there.’ ”

See, also, Ex parte Schollenberger, 96 U. S., 377 ; Railroad Company v. Koontz, 104 id., 5; Pennsylvania R. R. Co. v. St. Louis A. & T. H. R. R. Co., 118 id., 290.

In Muller v. Dows, 94 U. S., 444 , it is said: “A corporation itself can be a citizen of no state in the sense in which the word is used in the constitution of the United States. A suit may be brought in the federal courts by or against a corporation, but in such case it is regarded as a suit brought by or against the stockholders of the corporation, and for the purposes of jurisdiction it is conclusively presumed that all the stockholders are citizens of the state which by its laws created the corporation.”

In Railroad Company v. Koontz, supra, Mr. Chief Justice Waite, in delivering the opinion of the court, says: “ A corporation may, for the purposes of suit, be said to be born where by law it it created and organized, and to reside where by or under the authority of its charter its principal office is. A corporation, therefore, created and organized under the laws of a particular state and having its principal office there, is under the constitution anc laws for the purpose of being sued, a citizen of that state," posses sing all the rights and having all the powers its charter confers.

“ It cannot migrate or change its residence without the consent express or implied, of its state; but it may transact businesi wherever its charter allows, únless prohibited by local laws. Suet has been for a long time the settled doctrine of this court. I must dwell in the place of its creation arid cannot migrate to an other sovereignty.”

It may be true that the word “ resident ” as used in the Code (§ 636), relating to attachments, and in § 54, chap. 358 of the Law,' of 1863, as construed in the case of The People v. Platt, 117 N. Y. 159 ; 27 N. Y. State Rep., 149, received a different interpretation, ye it must be remembered that the question here involved is the con struction of the word “resident” as used in the removal act, anc that being a statute of the United States, we should look to th federal courts for a determination as to its meaning as thu used.

Assuming, therefore, that the weight of authority is in favor of the construction as contended for by the respondent, it is still insisted that the petition is defective and fatally so in that it alleges that the defendant “Is a joint stock company or foreign corporation organized under the laws of the state of Pennsylvania, etc."

It is urged that although the defendant, if a corporation, could remove the case, it certainly could not if it be a joint .stock company. The petition leaves it uncertain. which of the two the defendant is; nor is it to be assumed that these appellations of “ joint stock company ” and “ corporation ” are synonymous; for we know that the former has been held to be a mere partnership. It is necessary that the petition should distinctly aver the jurisdictional facts, and we do not think that an allegation in the alternative is such a distinct averment. Moreover upon a question of ousting this gourt of jurisdiction the presumption with regard to a sworn statement should be that where it is susceptible of two constructions that one should be given which is against the person making it. The alternative statement in the petition implies at least that defendant is a joint stock company. Assuming, therefore, the statement to be that the defendant is a joint stock company the question is presented similar to the one that arose in Chapman v. Barney, 129 U. S., 677 , where the court in delivering the opinion used the following language: “ But, aside from all this, we are confronted with the question of jurisdiction, which, although not raised by either party in the court below or in this court, is presented by the record, and, under repeated decisions of this court, must be considered.

The ground upon which the jurisdiction of the federal court is invoked is that of diverse citizenship of the parties. In Robertson v. Cease, 97 U. S., 646 , 649, it was said that “where jurisdiction depends upon the citizenship of the parties, such citizenship or the facts which in legal intendment constitute it, should be distinctly and positively averred in the pleadings; or they should appear iffirmatively and with equal distinctness in other parts of the record.

“ On looking into the record we find no satisfactory showing as :o the citizenship of the plaintiff. The allegation of the amended petition is that the United States Express Company is a joini-stoclc company, organized under a law of the state of New York, and a fitizen of that state. But the express company cannot be a citizen :>f New York, within the meaning of the statutes regarding jurisliction, unless it be a corporation. The allegation that the company was organized under the laws of New York is not an allegaion that it is a corporation. In fact the allegation is that the iompanv is not a corporation, but a joint-stock company; that is i mere partnership. * * *

This defect in the petition being a jurisdictional one, calls for a reversal of the order, with costs and disbursements, but without prejudice to defendants filing a new petition.

Ordered accordingly.

I do not concur in the result of this opinion. I think that the motion to remand the cause should be heard in the United States courts, as no adjudication that we can make will ■deprive that court of jurisdiction, if they hold the allegations o: the petition to be sufficient, which they may very well do.

The order should be affirmed, with costs.

I agree that the approval of the bond, and filing that with petition, transferred this action to the United States circuit court, and this court was thereby divested of its jurisdiction over it. If the proceeding was for any cause irregular, the motion to send the action back to this court on that account should be addressed to the circuit court. And this court accordingly can do no less than to affirm the order of the special term.