Railroad Co. v. Koontz

104 U.S. 5, 26 L. Ed. 643, 14 Otto 5, 1881 U.S. LEXIS 1962

• Court: Supreme Court of the United States
• Decided: October 31, 1881
• Docket: 30
• Status: Published

Opinion

Mr. Chief Justice Waite,

after stating the,facts, delivered the opinion of the court.

The questions presented for our consideration are :• 1. Whether a case for removal was made by the company -; add, 2,'’if it was; whether, as it does not appear affirmatively that.-copies of the records have been entered in the Circuit.Court, tlie company has.lost its right to have the judgments reversed for the original .errors’ in-tbat behalf...

The Court of Appeals in-Virginia held, as early as $855, in Baltimore Ohio Railroad Co. v. Gallahue's Adm'rs (12 Gratt. (Va.) 655), that the Baltimore and Ohio company could be sued in Virginia, and in the course of the opinion said that the’effect of the Enabling Act of Virginia was to make the company a Virginia corporation as to its road within the territory' of' Virginia. Afterwards, in 1870, this court decided, in Railroad Company v. Harris (12 Wall. 65), that the company could be sued in the District of Columbia, into .which a lateral road had been built with the consent of Congress, given through an enabling-act-much like.that of Virginia. In that case we held -the company to be..a. Maryland corporation only, and that no new corporation had been created by the Enabling Act either of Virginia or the District of Columbia. ’ The ruling in the Virginia case was followed by the-Supreme Court of Appeals of West Virginia in Goshorn v. Supervisors (1 W. Va. 308) and Baltimore & Ohio Railroad Co. v. Supervisors (3 id. 319), both of which eases were decided before Railroad Company v. Harris, in this court. That question is, however, unimportant here, as’ it is conceded that the part of the road originally in Virginia is now in West Virginia, and that the company no longer uses in Virginia any of the franchises conferred by the Enabling Act of that State. Neither the Court of Appeals nor counsel here make any claim on account of that "legislation. Even conceding that the company was once a Virginia corporation, so far as its original road in .that State was concerned, the most that can be said of it-now is, that, in common with all citizens of the old State residing on the ceded territory, its citizenship Avas transferred by the organization of West Virginia from the old State to the new. Consequently, if it was. once a corporation of Maryland and Virginia, it is now a corporation of Maryland and West Virginia. Any citizenship it may have had in Virginia has been lost.

It is not contended that this Enabling Act gave the company a right to lease another Virginia road and operate it as a lateral road, nor that in running the leased road the company uses any of the franchises conferred by the original grant. ' The present claim is that, by using the franchises of another Virginia corporation to run its leased road, it made itself a corporation of Virginia for all the purposes of that business, just as the lessor Avas and is.

It is Avell settled that a corporation of one State doing business in another is suable where its business is done-, if the laws make provision to that effect. We have so held many times. Lafayette Insurance Co. v. French, 18 How. 404; Railroad Company v. Harris, supra; Ex parte Schollenberger, 96 U. S. 369. This company concedes that it Avas properly sued in Virginia. What it asks is, that, being sued there, it may avail itself of the privilege it has under an act of Congress, as a corporation of Maryland, and remove into the proper court of the United States exercising jurisdiction Avithin Virginia a suit which has been instituted against it by a citizen of the latter State. The litigatio.ñ is not to be taken out of Virginia, biikonly from one court to another within that State. So that the single question presented is, Avhetker, by taking a lease of the road of a Virginia corporation, the Maryland corporation made itself also a corporation of Virginia, for all purposes connected Avith the use of the leased property.

It is not denied that the Maryland company derived all its power, so far as the operation of the Virginia road was concerned, from the Virginia corporation; nor that, in respect of the business bf that road, it must do just what was required of the Virginia corporation by the la\vs of Virginia; but that does not, in our opinion, make it a corporation óf Virginia. It, maybe sued in Virginia, because • with1 the implied assent of' that State it does business there ;' but, as we said substantially in Schollenbergeris-cáse;' the question of suability'and juris-, diction is not só much one of citizenship as of finding. If a citizen of one State is found, for the purposes of the-, lawful service of judicial process, in another, he may ordinarily be sued there. A citizen, of Maine may be sued in California, if he happens to. be fhere in person,, and the proper officer serves him personally with the lawful process of a California court. He is still a citizen of Maine, although, in the exercise of one of the privileges of a citizen of the Unjted States, he has been found in California. An individual may, without' asking permission of State authorities, do business where he pleases, ánd, if a citizen of one State, he is entitled to all the privileges and immunities of citizens of. the several States. Const., art. 4, sect. 2. Not so with corporations. Their rights outside the .State; under the authority of which they were' created, depend primarily on their charters. If the charter allows it, they may exercise their chartered privileges and carry on their chartered business in any other State which, by express grant or by implication, permits them'to do so. They have no absolute right of recognition in any other State .than their own. Paul v. Virginia,, 8 Wall. 168. And the State which recognizes them can impose such conditions on its recognition as it chooses, not inconsistent with the Constitution and laws of the United States. If they . are recognized and permitted to do business without limitation, express or implied, they carry with them wherever they go all their chartered rights, and may claim all their chartered privileges which can be used away from their legal home. Their; charters are the law of their existence, and are taken wherever they go. By doing business away from their legal residence they do not change their citizenship, but simply extend the field of their operations. They reside at home, but do business abroad.

In this case, a Maryland corporation leased the railroad and the franchises of a Virginia corporation. Neither State legislature acted specially on the subject, so far as the record discloses. The Maryland corporation assumed the right to take, and the Virginia corporation- to grant, the -lease which lies at the foundation of the rights of the parties. Under this lease possession -was given and taken without objection from the authorities of either State, and the Maryland corporation actually uses the franchises of that of Virginia. The question,therefore, presented to us is not one of ultra vires. No complaint is made that Maryland has never given its corporation the right to go to Virginia and take a lease, nor that Virginia has never authorized its corporation to grant such a lease. For all the purposes of these cases, we must assume that the Maryland corporation is rightfully using the leased road, and with the consent of both States.

We can hardly believe if an individual, a citizen of a State other than Virginia, went into that-State and leased the property of a Virginia corporation, to use as the corporation did, it would be claimed that he made himself thereby á citizen of Virginia, within the meaning of the Constitution and laws of the United States. Citizenship in this connection has a special signification. 'All persons born or naturalized -in the. United States, and .subject-to the jurisdiction thereof,- are citizens of the United States, and of the State wherein they reside. Amend. 14, sect. 1. A corporation may for- the purposes of suit be said to be born where- by law it is created and organised, and to reside where, by or under the authority of ■ its charter, its principal -office is. A corporation, therefore, created by and organized under the laws of a particular State, and having its principal office there, is, under the Constitution and -laws,-for the purpose of suing-and being sued, a citizen of that State, possessing all the rights and having all the powers its charter confers. It cannot migrate nor change its residence-without the consent, express or implied, of its State; but it may transact business wherever its charter allows, unless prohibited by local laws. Such has been for a.long time the' settled doctrine of this court. “ It must dwell in the place of its creation, and cannot migrate to another sovereignty“but its residence in one State-creates no insuperable objection to its contracting in another.” Bank of Augusta v. Earle, 18 Pet. 519, 520. With a long line of authorities in this court to the same effect before us, we. cannot hesitate to say, with all due respect for the Court of Appeals of Virginia, that the Maryland corporation, by taking from the Virginia corporation, with the unconditional assent of Virginia, a lease of a . railroad which-, could only be operated by the use in Virginia of the corporate franchises of the lessor, did not make itself a corporation of Virginia, or part with any of the rights it had under the Constitution and laws of the United States as a cor.poration of Maryland. The State of Virginia has not granted -to it any special powers or privileges, beyond allowing it to transact its corporate business in Virginia. Its powers within the' State come from its Maryland charter and the Virginia corporation. That corporation had certain franchises and privileges which it held by grant from its State. These franchises and privileges were a species of property which, we must presume for all the purposes of this case, it had the right .to allow the corporation of another State to use. The Virginia authorities have impliedly assented- to all that has been done. This ass'ent having-been given and the contract entered into" •between the companies, all Virginia can now require is that the Maryland company,' in carrying on its business under the contract and using the franchises of the Virginia company, shall be subject to all obligations which the charter imposes on that corporation. The Maryland corporation simply occupies the position of a company carrying on an authorized business away from its- home, with the consent of its own State and of that of the State in which its business is done. For these reasons we must hold that the Court of Appeals erred in deciding that the removal of the suit to the Circuit Court was properly refused, because the company, by taking the lease and using the road in Virginia, became, for all the purposes of that lease, a corporation of Virginia.

The only remaining question is whether the company can now claim a reversal of the judgments below on account of this error, since it does not appear that copies of the records in the State court have been entered in the Circuit Court. The State court of original jurisdiction directly decided, in accordance with the claims of the several defendants in error, that upon the showing made the company was . not entitled to a removal, but must remain and defend the suits in that court. It was conceded on the argument that if the judgment had been rendered before the first day-of the next term of the Circuit Court of the United States, there could be a reversal if the case was in fact. removable. The position of the defendants in error seems to -be, that as the company appeared and went on with the causes in the State court after the next tei’m in the ’Circuit Court, without showing that the copies of the records had been entered in that court, it in .effect waived its right to ar removal and submitted itself again voluntarily to the jurisdiction of the State court.

We have uniformly held that if a State court wrongfully refuses to give up its jurisdiction on a petition for removal, and forces' a party to trial, he loses none^of his rights-by remaining and contesting The case oh its merits: Insurance Company v. Dunn, 19 Wall. 214; Removal Cases, 100 U. S. 457; Railroad Company v. Mississippi, 102 id. 185. It is also a well-settled'rule of decision in this court, that, when a sufficient- case for removal is made in- the State court, the rightful jurisdiction of that court comes to an end, and no further proceedings- can properly' be had there, unless in some form its jurisdiction is restored. Gordon v. Longest, 16 Pet. 97; Kanouse v. Martin, 15 How. 19.8; Insurance Company v. Dunn, supra ; Railroad Company v. Mississippi, supra. The entering of the copy of the record in the Circuit Court, is necessary to enable that court to proceed, but its jurisdiction attaches when, under the law; it becomes the duty of the State court to ■“ proceed no further.” The provision of the act of 1875 is in this respect substantially the same as that of the twelfth section.of the Judiciary Act of-Í789, and requires the. State court, when the petition and a- sufficient bond are presented, to proceed no further .with the suit; and the Circuit. Court, when the record-is entered there, to deal with the cause as if it had been originally commenced' in that court. The jurisdiction is clanged when thé removal is demanded in proper form and a c. .e for removal made. Proceedings in the Circuit Court may begin when the copy is éntered. Such is clearly the effect of* the cases of Gordon v. Longest and Kanouse v. Martin, where it does not appear that the record was ever entered in the Circuit Court. In Insurance Com pany v. Dunn and Railroad Company v. Mississippi, the records were entered, but) no point was made of this in the opinions. We are aware that in Removal Cases (supra) and Kern v. Huidekoper (103 U. S. 485) it is said, in substance, that after the petition for removal and the entering of the record the jurisdiction of the Circuit’Court is complete; but this evidently refers to the right- of the Circuit Court to proceed with the cause. The entering of the record is necessary for that, But not for' the transfer of jurisdiction. The State court must stop when the petition and security are presented, and the Circuit Court go on when the record is entered there, which is in effect docketing the cause. The question then is, whether, if the State court refuses to let- go its jurisdiction and forces the petitioning party to trial, lie- must, in order to prevent his appearance from operating as a waiver, show to thp State court that he is not’in default in respect to entering the record and docketing the cause in the Circuit Court -on the first day of the next term following the. removal.

As has just been seen, when the State court has once lost its jurisdiction it is prohibited from proceeding until in some way jurisdiction has been restored. The right to remove is derived from á law of the United States, and whether a case is made for removal is a Federal question. If, after a case has been made,'the State court forces the petitioning party to trial and judgment, and thediighest court of the State sustains the judgment, he is entitled to his writ of error to this court, if he saves the question on the record. If a reversal is had here on account of that error, the case is sent back to the State-court, with instructions to recognize the removal, and proceed no further. Such was, in effect, the order in Gordon v. Longest, supra. The petitioning party has the right to remain in the State court under protest, and rely on this form of' remedy if he chooses, or he may enter the record in the Circuit Court and require the adverse party to litigate with him there, even while the State court is going on. This was actually done in Removal Cases. When, the suit is docketed in the Circuit Court, the adverse party may move to remand. If his motion is decided -against him, he may save his point on the record, and after final judgment bring the case here for review, if the amount involved is sufficient for our jurisdiction. If, in such a case, we think his motion should have been, granted, we reverse the judgment of the Circuit Court, and direct that the suit be sent back to the. State co.urt to be proceeded with there as if no removal had been had. . If the motion to remand is decided by the Circuit Court against the petitioning party, he can at once bring the case here by writ of error or appeal for a review of that decision, without regard to the amount in controversy. Babbitt v. Clark, 108 U. S. 606. If, in such a ■case, we reverse the order of the Circuit Court to remand, our instructions to that court are, as in Relfe v. Rundle (id. 222), to proceed according to law, as with a pending suit •within its jurisdiction by removal. Should the petitioning party neglect to enter the record and docket the cause, in the Circuit Court in time, we see no reason why his adversary may not go into the Circuit Court and have the cause remanded on that account. This being doné, and no- writ of error or appeal to this court taken, the jurisdiction of the State court is restored,-and it may rightfully proceed as though no removal had ever been attempted.'

• It is contended! however, that if the petitioner fails to enter the record and docket the cause in the Circuit Court on the first day of the next term, the jurisdiction of that court is lost, and there can be no entry on a. subsequent day. Such we do not understand to be the law. The petitioner must give security that he will enter the record on that day, but there is nothing in the act of Congress which prohibits the court from allowing it to be entered on a subsequent day, if good cause is shown. In Removal Cases (supra) we used this language: “ While the act of Congress requires sécurity that the transcript shall be filed on the first day of the next term, it nowhere appears that the Circuit-Court is to be deprived of its jurisdiction if, by accident, the party is delayed. until a later day in the term. If the Circuit Court, for.good cause shown, accepts the transfer after the day and during the term, its jurisdiction will, as a general rule, be complete and the removal properly effected.” This was as far as it -was necessary to go in that case, and in entering, .as we did then, on the construction of the act of 1875, it was deemed advisable to confine our decision'to the facts we had then before us. Now the question arises whether, if the petitioning party is kept by his adversary, and against his will, in the State court, and forced to a trial there on the merits, he may, after having obtained in the regular course of procedure a reversal of the judgment and an order for the allowance of the removal, enter the cause in the! Circuit Court, notwithstanding the term of that court has gone by during which, under other circumstances, the record should have been entered. We have no hesitation in saying that in our opinion he can. As has been already seen, the jurisdiction was changed from one court to the other when the case for removal was actually made in the State court. The entering of the record in the Circuit Court after that was mere procedure, and in its nature not unlike the pleadings whic'h follow service of process, the filing of which is ordinarily regulated- by statute or rules of practice. The failure to file pleadings in time does not deprive the .court of the jurisdiction it got though the service of process, but inexcusable delay may be good ground for dismissing the cause for want of prosecution. • So here, if the petitioning party, without sufficient cause, fails to enter the record and docket the cause, the suit may be properly remanded for want of due prosecution under the removal; but if sufficient cause is shown for the delay, there is nothing in the statute to prevent the court from taking the case after the first day of the term and exercising its jurisdiction. Clearly it is within the judicial discretion of every court, on good cause shown, to set aside a default in filing pleadings on a statutory rule-day, and allow the omission to be supplied. This case seems to be analogous to that. Undoubtedly promptness should be insisted on by the courts of the United States,' and no excuse should be accepted for delay in entering a record after removal, unless it amounts to a clear justification or a waiver by the opposite party. It seems to us manifest that if the petitioning party is forced by his adversary to remain in the State court until he can, in a- proper way, secure a reversal of the order which keeps him there, the requirement of the law for entering the record in the Circuit Court at any time before the reversal actually takes'place must be- deemed to have been waived, and that for all the purposes of procedure in that court the time, when the- State court lets go its jurisdiction may be taken-as the time according to which the docketing -of the cause is to take place. Certainly the petitioning party ought not to be required to carry on his litigation in two courts- at the same time. He.may do so if he chooses; but if he elects to go on in thq State court after his petition for removal is disregarded, and take his chances of obtaining á reversal of any judgment that may be obtained, against him-, because he was wrongfully kept there,, he ought not to he deprived of a trial- in the proper jurisdiction because of the unwarranted act of his adversary,' or of the State court.

" The- judgment of the Court of Appeals in each- of these cases will be reversed,, and the causes remandéd to the Supreme Court of Appeals of Virginia with directions to reverse the judgments of the Circuit Court of the county, and transmit the eases to that court with instructions to vacate, all orders and judgments made or entered subsequently to the filing of the several petitions for removal and approval .of the bonds, and proceed no- further therein unless its jurisdiction .be restored by the action' of the Circuit Court of. the - United States. or this court.

So ordered.