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Ex parte Schollenberger

96 U.S. 369 Court SCOTUS English

Delivered by Waite C.J.

Contents

Majority — Waite C.J.

p. 369
Ex Parte Schollenberger.

Syllabus

A foreign insurance company was doing business in Pennsylvania under a license granted pursuant to a statute, which, among other things, provided that the . company should file a written stipulation, agreeing that process issued in any suit-brought in any court of that Commonwealth having jurisdiction of the subject-matter, and served upon the agent specified by the'company to receive service of process for it, should have the same effect as if personally served upori.the company within the State. . Suit was brought in the Circuit. Court of the United States for the Eastern District of Pennsylvania by a citizen of that State against the company, and process served, in'accordance with the State law, upon its agent so specified, who resided -within the district. The service of the process was quashed, because the company was not an inhabitant' of..or-found within-the district. Held,-1. That the, Circuit Court .has jurisdiction of the suit, and should-proceed to hear and determine it. 2. That said court is a court of the Commonwealth, within the intent of the statute,
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Petition for a .mandamus to the' judges of 'the Circuit Court of the United States for the Eastern District of Pennsylvania.
Schollenberger, a citizen- of- Pennsylvania, brought..sundry suits, in said Circuit. Court against certain foreign insurance 'companies, upon policies which they had severally issiied upon his property situate in that State and-within'the jurisdiction of the court.
Each company, before the issue of its policy, had- accepted the-provisions of the statute of the State, and, in compliance, therewith', appointed its agent residing there,-on whom process of law against it could be served.' So much of the statute- aS bears on the question here involved is set- oiit in the opinion of this court.
The service of the writs, which were' sued ■ out by Schollen-. berger, and executed, in accordance with the State law, on .the agents of the several companies by them respectively specified for the purpose, and residing within, the jurisdiction-of the court, was quashed-by the Circuit Court. On his petition, setting forth the foregoing facts, a rule was awarded upon the judges of that court lo show cause -why a writ of mandamus should not' be issued out of the office of this court, conimanding them to -hear and determine the suits' so brought' in the said Circuit Court, and also to strike from the record certain orders dated the thirteenth day of.April, 1878, whereby the service of the said writs was quashed, and thereupon' to make such disposition of the suits as ought to have been made, had .the said orders not been entered.
The judges, in their return,. answered, that the facts were truly stated in the petition; that the respondents declined to hear and determine the said suits, because, in their opinion, the said Circuit Court had no competent jurisdiction thereof, the defendants not having appeared therein,'or in any wise submitted to the jurisdiction of the court,' and not having been at the commencement of -the respective suits, ot at any time, inhabitants of or found in the said district, within the meaning of the act of Congress of March 3, 1875, re-enacting a like' provision of the eleventh section of the act of Sept. 24, 1789; that the question under this enactment being one of júrisdic
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tion, and not of mere procedure, the statute of Pennsylvania, . mentioned1 in the said petition, was, in the opinion of the respondents, inapplicable. The service of the process in the said suits was, therefore, set aside, as unauthorized.
Mr. It. (7. McMurtrie and Mr. A. Sydney Biddle for Schollenberger.
1. The jurisdiction of the Circuit Court over the parties is indisputable. Schollenberger was a citizen of Pennsylvania. The corporations were created by other States, and by entering their appearance to the actions would have become subject to that jurisdiction, which would not be the case if the requisite-, citizenship of the, parties to the record did not exist. Joneé v. Anderson, 10 Wall. 327 .
2. Mandamus is the appropriate remedy.
That writ goes to the archbishop, if exercising judicial functions, Beg. v. Canterbury, 11 Q. B. 483; to a court declining to exercise judicial functions imposed by law, Reg. v. West R. Justices, 1 New Sess. Cas. 247; to compel making á warrant of distress, St. Lukes v. Middlesex, 1 Wils. 133; on a refusal to act because of a statute which did not apply to the case, Reg. v. Bingham, 4 Q. B. 877; on a refusal to hear an appeal for reasons which were not legal ones, Reg. v. Middlesex, 2 B. C. R. 82; on a refusal because of an erroneous opinion as to sufficiency of grounds, Reg. v. Carnarvon, 1 Q. & D. 423; or on erroneous point of practice, Reg. v. Kis-’ tevan, 3 Q. B. 810; on a refusal of the Circuit -Court to-take jurisdiction of a cause removed to it from a State court, Railroad Company v. Wiswall, 23 Wall. 567 ; on a refusal to grant an' appeal to which a party is entitled, Bx parte Cutting, 94 U. S. 14 ; Bx parte Jordan, id. 248.
3. The State had a right to impose the prescribed conditions to the transaction of the business of insurance within her territory by the companies. Boyle v. Insurance Company, 94 U. S. 535 ; Lafayette Insurance Ob. v. French, 18 How. 404 ; Railroad Company v.' Harris, 12 Wall. 65 . The latter having accepted them, and subsequently issued the policies which are the subject-matter of the suits in question, were bound to specify, and did specify,.agents residing within the State upon whom process could be. served. Service in the mode prescribed by the State
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law, upon such agents actually within the jurisdiction of the court, was, therefore, good under the' act of Congress ( 17 Stat. 197 ), and had the same effect as' if personally made within the eastern district of Pennsylvania upon the respective companies.
4. Each of the companies had, therefore, a habitat for the purposes of jurisdiction within that' district, and was found there, within the meaning of the act- of Congress of March 3, 1875 ( 18 Stat. 470 ). Knott v. Southern. Life Insurance Co., 2 Woods,. 479 ; Railroad Company v. Karris, supra.
Mr. Richard P. White, contra.
1. Mandamus is not the proper remedy.
The question raised on the motion below to quash the service of the writs was one of .jurisdiction, and the judges in passing upon it were obviously acting in a judicial, and hot in’ (a ministerial, capacity. The proceeding may be ’reviewed on error; but.it is not the office of a -mandamus to compel an inferior court to -reverse a decision made in: the exercise of its legitimate jurisdiction. Ex parte Elippin, 94 U. S. 348 . ' -
2. The service of the writs was properly quashed. Each of the defendants was a foreign corporation, not having an existence, nor its officers any official character, outsidS the limits of the State which-created it. Bank of Augusta v. Earle, 3 Pet. 519 ; Ohio f Mississippi Railroad Co. v. Wheeler, 1 Black, 286 . It 'could not, therefore,. be found within the district. Although the pretended service, was according to the State law, the act of Congress requiring conformity of process and procedure did not make ■ it .-good, if ■ a court of the United States had no-power to issue the writ,, or proceed in the cause. That power cannot bé derived from State legislation,.Poland y.\,Sprague, 12 Pet. 300 ; Levy v. Eitzpatriek, 15 id. 167; Insurance Company v. Morse, 20-Wall. 445;. and.Congress, so far from conferring it, has prohibited a suit in the Circuit Court against a person not an inhabitant of nor- found within the district. . ,
The writs, for..the .service of. which the-statute of '‘Pennsyl-: yan-ia provides, are, by an express limitation, confined to those- ■ sued out in actions brought in the tribunals of that State.
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If, however, each company, by its acceptance of that statute, was constituted, pro tanto, a Pennsylvania corporation, then the Circuit Court had no jurisdiction, as both parties were, for the purposes of the suit, citizens of the same State. Where a corporation exists in two States, it cannot be sued in a Federal court by a citizen of either of them. Ohio Sr Mississippi ■ Railroad. Co. v. Wheeler, supra.
The decision of the Circuit Court is sustained by Pomeroy v. New York New Haven Railroad Co., 4 Blatchf. 120 ; Pay v. Newark India-rubher Manufacturing Co., id. 628; Southern ■Atlantic Telegraph Co. v. The New Orleans, Mobile, f Texas Railroad Go., 2 Cent.;-Law Jour. 88; and Stilwell v. The Umpire Fire Insurance Co., 4 id. 88.
Railroad Company v. Harris, upon which great reliance .is placed on. the other side, was a suit brought in the District of Columbia against a foreign corporation doing business there, under an act which provided that service might be made upon the agent. Congress may undoubtedly regulate the mode of serving process in the courts of that District, and prescribe' the conditions upon which foreign corporations may there transact business. Its power in that regard is the same as that of the several States within their respective limits, and no one questions that Pennsylvania can determine the manner in which writs issued by her own courts may be executed. That case differs essentially from this. Congress, by an act solely applicable to a specific territory, extended the jurisdiction of its ■courts to. suits against a foreign' corporation doing business there, when process should'be.served in the mode prescribed ;■ while by the act of March 3, 1875, which governs here, it withholds from the ’Circuit Court, jurisdiction over a defendant not an inhabitant • of of found within the. proper district. ^
The' opinion in that case must, therefore, be understood with reference to the facts. Although not relating to the effect of State legislation-' upon the service of Federal writs, it evidently misled the learned;judge of the fifth circuit in Knott v. Southern Life Insurance Co\ It should also be borne in mind that the statute which.ho had under consideration-differs from that of Pennsylvania, in requiring the foreign company
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doing business in Alabama to consent that service upon its agents there shall be sufficient, without restriction as to the . courts out of which the writ may issue.

delivered the opinion of the court.

This is a petition for a writ of mandamus,' requiring the judges of the Circuit Court of the United States for the Eastern District of Pennsylvania to hear and determine certain suits brought in that court in favor of the relators against 'a number of insurance companies incorporated by the laws of other, States, but, doing business in that State under a license ' granted pursuant to a statute regulating that subject. The Circuit Court declines to entertain jurisdiction of the causes, for the reason, as is alleged, that the defendant companies were not “ at the commencement of the respective suits, or at any time, inhabitants of or found in the said district.” This presents the only question in. the case, as it is conceded that the citizenship of the parties is such as to give the court jurisdiction, if the several defendants can be sued in the- -district without, their consent.

A statute of Pennsylvania provides that “ no insurance company not of this State, nor its agents, shall do business in this State until he has filed with the insurance commissioner of this' State a written stipulation, duly authenticated by the company, • agreeing that- -any legal process affecting the company served on, the insurance commissioner, or the party designated by him, or the agent specified by said company to receive service of process for the said company, shall have the same effect as if ' served personally on the, company within this State; and, if such company should cease to maintain such agent in this State, so . designated, such process may thereafter be' served on the insurance commissioner; but, so long as_,any liability of the stipulating company to any resident of this State continues, such stipulation cannot be revoked or modified, except that a new one may be substituted, so as to require or dispense with the. service at the office of said company within this State, and that such service of process according to this stipulation shall be sufficient personal service on the. company. The term ‘ pro

p. 375
cess ’ includes any writ of'summons, subpoena,'.or order whereby . any action, suit, or proceedings shall be commenced, or which shall be issued in or upon ¿ny action, suit, or proceedings brought in any court .of this Commonwealth having jurisdiction of the subject-matter.” Laws of Penn., 1873, p. 27, sect. 13.

The return to the rule to show eaúse admits that all the defendant companies were doing business in the State under this •statute, and that their designated agents were duly served with process in each of the suits. For the purposes of this hearing, the fact of due service upon the agents must be considered as established. . If in reality it is not so, the court below will not be precluded by any thing in- this proceeding from .inquiring into the truth, and acting upon the facts as they are found to exist.

The act of 1875, determining -the jurisdiction of the circuit-courts ( 18 Stat. 470 ), and, which in this' particular is- substantially a re-enactment of the act of 1789 ( 1 Stat. 79 , sect. 11), provides that “ no civil suit shall vbe brought before 'either of said courts against Shy person by any original process or,.,proceeding in any other district than that whereof he is ah inháb • itant, or in which he shall he found at the time of serving such process or commencing such proceedings, except,” &c.

-. It is unnecessary to .inquire whether" these several companies were inhabitants of the district. . The requirements of the law, for all'the. purposes'of this case, are satisfied if they, were found there at the time of the commencement of the suits; and that question, we think, was settled in Railroad Company v. Harris, 12 Wall. 65 . In that case, it appears-that, when the suit was .commenced, the statutes defining the jurisdiction of the courts of the District of Columbia provided that “ no action or suit shall be brought. . . by-any original process against any person who shall not be an inhabitant.of or- found within the District at the' time of serving, the writ.” 2 Stat. 106 , sect. 6. After-wards, in 1867, the law was changed in respect to foreign corporations doing-business in the District, and service allowed upon the' agent ( 14 Stat. 404 , sect. 11) ; -but-when the- suit . was begun and the process served the old law was in force. The Baltimore and Ohio Railroad-Company, a Maryland corpo- . ration, was authorized by Congress to construct and.extend its-

p. 376
railroad into, the District of Columbia. Harris, having been injured while travelling as a passenger upon the railroad outside of the District, sued the company in the Supreme Court of the District, and' caused the writ to be served upon the president of .the company within the District. The company objected to the. jurisdiction of the court, and insisted that it was neither an inhabitant of nor found within the District; In ruling upon this objection, we held that, although the company was a foreign corporation, it was suable in the District, because it had in effect consented to be sued there, in consideration of its being permitted by Congress to exercise therein its corporate powers and privileges. The language of the court, speaking through ■ Mr. Justice Swayne, is; “ It (a corporation) cannot migrate, but may Exercise'its authority in- a foreign territory upon such •conditions as may be. prescribed’.by the law of the place. ■■ One of these conditions may be. that it shall consent to be sued there. If it do business there, it. will be' presumed to have, assented, and'will be bound accordingly.” Then, after an-examination of the statute granting the right to extend the road, it was said' (p. 84): “We entertain no doubt that it made the company liable to suit where this suit was brought, in all'respects as if it had been an independent corporation of the .same locality.” This language was cited with approbation, and adopted as a correct , exposition of the law by Mr. Justice Field, speaking for'the Court, in Railway Company v. Whitton, 13 Wall. 270 .

Applying these principles to the present case, there cannot be any doubt, as it seems to us, of -the jurisdiction of the Circuit • Court over these defendant companies. They have in express terms, in consideration of a grant of the privilege of doing busi-. ness within ■ the State, agreed that they may be. sued . there; that- is to say, that they may be. found there for the purposes of the service of process issued “ by any court of the Commonwealth having jurisdiction of the subject-matter.” ' This was a condition imposed by the State Upon the. privilege granted, and it was not unreasonable. Lafayette Insurance Co. v. French, 18 How. 404 . • 'It was insisted in argument that the' statute; confines the right of suit to the courts of the State;. but we cannot so construe it. There is . nothing to manifest such an

p. 377
intention; and, as the object of. tbe legislature evidently was to relieve the citizens of Pennsylvania from tbe necessity of going outside of tbe State to seek judicial redress upon tbeir contracts made with foreign insurance companies, it is but reasonable to suppose that they were entirely at liberty to select tbe court in tbe State having jurisdiction of the subject-matter, which, in tbeir judgment, was the most convenient and desirable. As the company, if sued in a State court, could remove tbe cause to'the Circuit Court, and tbus compel a citizen of tbe State to submit to that jurisdiction, we see no reason why tbe citizen may not, if be desires it, bring tbe company into the same jurisdiction at tbe outset.. While tbe Circuit Court may.not be technically a court of tbe Commonwealth, it is a court within it; and that, as we think, is all tbe legislature intended to. provide for.

States cannot by tbeir legislation confer jurisdiction upon tbe courts of tbe United States, neither can consent of parties give jurisdiction when tbe facts do not; but both State legislation and consent of parties may bring about a state of facts which will" authorize tbe courts of tbe United States to take cognizance, of abase. Ex parte McNeil, 13 Wall. 236 . Tbus, if tbe parties to a suit, both plaintiff and defendant, are in fact citizens of the saíne State, an agreement upon the record that they aré citizens oi different States will not give jurisdiction. But' if the • two agree that one shall move into and become a citizen of another State, in order that jurisdiction may be given, and be actually’does so in good faith, tbe court cannot refuse to entertain tbe suit. So, as in this case, if tbe legislature of a State requires a foreign corporation to consent to be “ found”-within its territory, for the purpose of tbe service of process in a suit, as a condition to doing business in tbe State, and tbe corporation does so consent, the fact that it is found gives the jurisdiction, notwithstanding tbe finding was procured by consent. Tbe essential fact is tbe finding, beyond which tbe court will not ordinarily look.

A corporation cannot change its residence or its citizenship. It can have its legal home only at tbe place where it is located by or under tbe authority of its charter; but fit may by its agents transact business anywhere, unless prohibited by its

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charter or excluded'by local laws. Under such circumstances, it seems clear that it may, for the purpose of securing business, consent to be “ found ” away from home, for the purposes of suit as to matters growing out of its-transactions. The act of Congress prescribing the place where a person may be sued is not one affecting the general jurisdiction of the courts, It is rather in the nature of a personal exemption in favor' of a defendant, .and it-is one which he may waive. If the citizenship of the parties is sufficient, a defendant may consent to be sued ■ anywhere he pleases, and certainly jurisdiction will not be ousted because he has consented. -Here, the defendant companies have provided that they can be found in a district other than that in which they reside, if a particular mode of proceeding is adopted,ánd they have been so found. In our opinion, therefore, the Circuit Court has jurisdiction of the causes, and should proceed to hear and decide them.

We are aware that the .practice in the circuit courts generally has been to decline jurisdiction in this class of suits. Upon an examination of the reported cases in which this question has been decided, we find that in almost every instance the ruling was made upon the authority of the late Mr. Justice Nelson, in Day v. The Newark India-rubber Manufacturing Co., 1 Blatchf. 628 , and Pomeroy v. The New York & New Haven Railroad Co., 4 id. 120. These cases were decided by that learned, justice, the one in 1850 and the other in 1857, long before our decision in Railroad Company v. Harris (supra), which was not until 1870,- and are, as we think, in conflict with the rule we there established. It may also be remarked, that Mr. Justice Nelson, as a member of this court, concurred in' that decision.

Judge Woods, of the fifth'circuit, has already decided in, favor of the jurisdiction in Knott v. The Southern Life Insurance Co. ( 2 Woods, 479 ), and Judge Dillon, of the eighth circuit, declined to. take it, only because he felt himself - foreclosed by the rulings of other- judges, and especially of Mr. Justice Nelson. Stillwell v. The Empire Fire Insurance Co., 4 Cent. Law Jour. 463. Writ of mandamus granted.

Cases cited