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LOUISVILLE v. LOUISVILLE TRUST COMPANY. SAME V. LOUISVILLE BANKING COMPANY.

decided: May 15, 1899.

LOUISVILLE, NEW ALBANY & CHICAGO RAILWAY COMPANY, PETITIONER
v.
LOUISVILLE TRUST COMPANY.

SAME
v.
LOUISVILLE BANKING COMPANY.



CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT.

Author: Gray

[ 174 U.S. Page 561]

 MR. JUSTICE GRAY, after stating the case as above, delivered the opinion of the court.

The plaintiff, the Louisville, New Albany and Chicago Railway Company, undoubtedly became a corporation of the State of Indiana in 1873 by its incorporation according to the general statute of 1865 of that State.

Whether it afterwards became a corporation of the State of Kentucky also was strongly contested at the bar, and depends upon the legal effect of the statute of Kentucky of 1880.

That statute (being the first statute of Kentucky affecting this corporation) is described indeed in its title, as well as in the title of the statute of 1882 amending it, as "An act to incorporate" this company, although in the title of the first

[ 174 U.S. Page 562]

     statute the word "Louisville" in its name is omitted. By the first words of the enacting part of the statute of 1880, it is "the Louisville, New Albany and Chicago Railway Company, a corporation organized under the laws of the State of Indiana," and not any other corporation, or any association of natural persons, that is "hereby constituted a corporation," with the usual powers of corporations, and with "authority to operate a railroad." And it is the corporation so described that, by the other provisions of that statute, may purchase, lease or condemn real estate required for railroad purposes in the county of Jefferson, and may connect with any other railroad in that county, or build, lease or operate any such connecting line, "and may bond the same, and secure the payment of any such bonds by a mortgage of its property, rights and franchises;" and, by the amendatory statute of 1882, may grarantee the bonds of, or consolidate with, other corporations authorized to construct railroads in Kentucky.

This court has often recognized that a corporation of one State may be made a corporation of another State by the legislature of that State, in regard to property and acts within its territorial jurisdiction. Ohio & Mississippi Railroad Company v. Wheeler, 1 Black, 286, 297; Railroad Co. v. Harris, 12 Wallace, 65, 82; Railway Co. v. Whitton, 13 Wall. 270, 283; Railroad Co. v. Vance, 96 U.S. 450, 457; Memphis & Charleston Railroad v. Alabama, 107 U.S. 581; Clark v. Barnard, 108 U.S. 436, 451, 452; Stone v. Farmers' Loan & Trust Co., 116 U.S. 307, 334; Graham v. Boston, Hartford & Erie Railroad, 118 U.S. 161, 169; Martin v. Baltimore & Ohio Railroad, 151 U.S. 673, 677. But this court has repeatedly said that, in order to make a corporation, already in existence under the laws of one State, a corporation of another State, "the language used must imply creation or adoption in such form as to confer the power usually exercised over corporations by the State, or by the legislature, and such allegiance as a state corporation owes to its creator. The mere grant of privileges or powers to it as an existing corporation, without more, does not do this." Pennsylvania Railroad v. St. Louis, Alton & Terre Haute

[ 174 U.S. Page 563]

     Railroad, 118 U.S. 290, 296; Goodlett v. Louisville & Nashville Railroad, 122 U.S. 391, 405, 408; St Louis & San Francisco Railway v. James, 161 U.S. 545, 561.

The acts done by the Louisville, New Albany and Chicago Railway Company, under the statutes of Kentucky, while affording ample evidence that it had accepted the grants thereby made, can hardly affect the question whether the terms of those statutes were sufficient to make the company a corporation of Kentucky.

But a decision of the question whether the plaintiff was or was not a corporation of Kentucky does not appear to this court to be required for the disposition of this case, either as to the jurisdiction, or as to the merits.

As to the jurisdiction, it being clear that the plaintiff was first created a corporation of the State of Indiana, even if it was afterwards created a corporation of the State of Kentucky also, it was and remained, for the purposes of the jurisdiction of the courts of the United States, a citizen of Indiana, the State by which it was originally created. It could neither have brought suit as a corporation of both States against a corporation or other citizen of either State, nor could it have sued or been sued as a corporation of Kentucky, in any court of the United States. Ohio & Mississippi Railroad v. Wheeler, 1 Black, 286; St. Louis & San Francisco Railway v. James, 161 U.S. 545; St. Joseph Railroad v. Steele, 167 U.S. 659, 663; Barrow Steamship Co. v. Kane, 170 U.S. 100, 106.

In St. Louis & San Francisco Railway v. James, the company was organized and incorporated under the laws of the State of Missouri in 1873, and owned a railroad extending from Monett in that State to the boundary line between it and the State of Arkansas. The constitution of the State of Arkansas provided that foreign corporations might be authorized to do business in this State under such limitations and restrictions as might be prescribed by law, but should not have power to appropriate or condemn private property. The legislature of Arkansas, by a statute of 1881, provided that any railroad company incorporated by or under the laws of any other State, and having a line of railroad to the boundary

[ 174 U.S. Page 564]

     of Arkansas, might, for the purpose of continuing its line of railroad into this State, purchase the property, rights and franchises of any railroad company organized under the laws of this State, and thereby acquire the right of eminent domain possessed by that company, and hold, construct, own and operate the railroad so purchased as fully as that company might have done; and that "said foreign railroad company" should be subject to all the provisions of all statutes relating to railroad corporations, including the service of process, and should keep an office in the State. Pursuant to that statute, the St. Louis and San Francisco Railway Company, in 1882, purchased from railroad corporations of Arkansas their railroads, franchises and property, including a railroad connecting at the boundary line with its own railroad, and extending to Fort Smith in Arkansas, and thenceforth owned and operated a continuous line of railroad from Monett in Missouri to Fort Smith in Arkansas. In 1889 the legislature of Arkansas passed another statute, providing that every railroad corporation of any other State, which had purchased a railroad in this State, should, within sixty days from the passage of this act, file a copy of its articles of incorporation or charter with the secretary of state of Arkansas, and should "thereupon become a corporation of this State, anything in its articles of incorporation or charter to the contrary notwithstanding." And the St. Louis and San Francisco Railway Company forthwith filed with the secretary of state of Arkansas a copy of its articles of incorporation under the laws of Missouri, as required by this statute.

In an action brought by a citizen of Missouri against that company in the Circuit Court of the United States for the Western District of Arkansas, to recover for its negligence on that part of its road within the State of Missouri, the company pleaded to the jurisdiction that it was a citizen of Missouri; and the question was certified to this court whether the company, by filing a copy of its articles of incorporation under the laws of Missouri with the secretary of state of Arkansas, and continuing to operate its railroad through that State, became a corporation and citizen of the State of Arkansas.

[ 174 U.S. Page 565]

     This court, speaking by Mr. Justice Shiras, upon a careful review of the earlier cases, answered that question in the negative.

The fundamental proposition deduced from the previous decisions was thus stated: "There is an indisputable legal presumption that a state corporation, when sued or suing in a Circuit Court of the United States, is composed of citizens of the State which created it, and hence such a corporation is itself deemed to come within that provision of the Constitution of the United States which confers jurisdiction upon the Federal courts in 'controversies between citizens of different States.'"

The court frankly recognized that "it is competent for a railroad corporation organized under the laws of one State, when authorized so to do by the consent of the State which created it, to accept authority from another State to extend its railroad into such State, and to receive a grant of powers to own and control, by lease or purchase, railroads therein, and to subject itself to such rules and regulations as may be prescribed by the second State;" and that "such corporations may be treated by each of the States whose legislative grants they accept as domestic corporations." 161 U.S. 562.

But the court went on to say: "The presumption that a corporation is composed of citizens of the State which created it accompanies such corporation when it does business in another State, and it may sue or be sued in the Federal courts in such other State as a citizen of the State of its original creation." And after referring to the provisions of the statutes of Arkansas of 1881 and 1889, the court added, "But whatever may be the effect of such legislation, in the way of subjecting foreign railroad companies to control and regulation by the local laws of Arkansas, we cannot concede that it availed to create an Arkansas corporation out of a foreign corporation, in such a sense as to make it a citizen of Arkansas, within the meaning of the Federal Constitution, so as to subject it as such to a suit by a citizen of the State of its origin. In order to bring such an artificial body as a corporation within the spirit and letter of that Constitution, as construed by the decisions of this court, it would be necessary to create

[ 174 U.S. Page 566]

     it out of natural persons, whose citizenship of the State creating it could be imputed to the ...


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