An action was brought in the Circuit Court of Mississippi
against the Commercial & Railroad Bank of Vicksburg,
Mississippi, by parties who were citizens of the State of
Louisiana. The defendants pleaded in abatement, by attorney, that
they are an aggregate corporation, and that two of the stockholders
resided in the State of Mississippi. The affidavit to the plea was
sworn to by the cashier of the bank, before the "Deputy clerk." It
was not entitled as of any term of the court. The plaintiffs
demurred to the plea.
Held that the appearance of the
defendants in the circuit court by attorney was proper, and that if
any exceptions existed to this form of the plea, they should have
been urged to the receiving of it when it was offered, and are not
causes of demurrer.
Held that the Circuit Court of
Mississippi had no jurisdiction of the case.
The artificial being, a corporation aggregate, is not as such a
citizen of the United States; yet the courts of the United States
will look beyond the mere corporate character to the individuals of
whom it is composed, and if they were citizens of a different state
from the party sued, they are competent to sue in the courts of the
United States; but all the corporators must be citizens of a
different state from the party sued. The same principle applies to
the individuals composing a corporation aggregate when standing in
the attitude of defendants, which does when they are in that of
plaintiffs.
The act of Congress passed February 28, 1839, entitled "an act
in amendment of the acts respecting the judicial system of the
United States," did not contemplate a change in the jurisdiction of
the courts of the United States, as it regards the character of the
parties as prescribed by the Judiciary Act of 1789, as that act has
been expounded by the Supreme Court of the United States, which is
that each of the plaintiffs must be capable of suing, and each of
the defendants capable of being sued.
Cora A. Solocomb, Robert Richards, and Romanzo W. Montgomery,
styling themselves citizens of Louisiana trading under the firm of
Slocomb, Richards & Company, sued the President, Directors, and
Company of the Commercial & Railroad Bank of Vicksburg, styling
them citizens of the State of Mississippi, living and resident in
the Southern District thereof, being a banking company,
incorporated by the Legislature of the State of Mississippi,
located in the Southern District aforesaid. The suit was upon a
certificate of deposit for three thousand five hundred and
forty-one dollars and thirty-four cents.
To the declaration of the plaintiffs, averring as above stated,
the defendants put in the following plea:
"The said defendants by attorney come and say, that this Court
ought not to have or take further cognizance of the action
aforesaid, because they say that they are a corporation aggregate,
and were at the time this suit was instituted, and yet so continue
to be, and that the corporators, stockholders, or company, are
composed of citizens of other and different states, to-wit, that
William M. Lambeth, and William E. Thompson, citizens of the State
of Louisiana,
Page 39 U. S. 61
are now, and were at the time this suit was instituted,
stockholders and corporators therein, and this,"
&c.
The following affidavit was subjoined to the plea:
"James Roach, acting cashier for the Commercial & Railroad
Bank of Vicksburg, the defendants in the above case, makes oath and
says the above plea is true in substance and fact."
"J. ROACH"
"Sworn to, and subscribed before me this 4 November, 1839."
"GEORGE W. MILLER,
Deputy Clerk"
To this plea the plaintiffs demurred, and assigned the following
special causes, to-wit:
1. The said plea in abatement is not properly entitled to any
term of this Court.
2. The affidavit in support of said plea is not sufficient, nor
is the same properly attested.
3. The matters set forth in said plea are not sufficient to
abate the plaintiffs' suit.
The demurrer was sustained and judgment rendered for the
plaintiffs.
The defendants prosecuted this writ of error.
Page 39 U. S. 63
MR. JUSTICE BARBOUR delivered the opinion of the Court.
This was an action on the case in assumpsit, brought by the
defendants in error, citizens of Louisiana, against the plaintiffs
in error.
The defendants in the court below appeared by attorney and
pleaded to the jurisdiction of the court, averring in their plea
that they were a corporation aggregate, and that their corporators,
stockholders, or company were composed of citizens of other and
different states, to-wit that William M. Lambeth and William E.
Thompson, citizens of Louisiana, were, at the time that the suit
was instituted and at the time of filing the plea, stockholders and
corporators therein.
The plaintiffs in the court below demurred to this plea,
assigning specially several causes of demurrer as follows:
1. That the plea was not properly entitled of any term of the
court.
2. That the affidavit in support of the plea was not sufficient,
nor was it properly attested.
3. That the matters set forth in the plea were not sufficient to
abate the plaintiffs' suit.
The court sustained the demurrer and gave judgment against the
defendants, for three thousand five hundred and seventy-five
dollars and fifty-four cents in damages, being the amount of the
principal and interest of a certificate of deposit on which the
suit was brought, and for the costs. To reverse this judgment this
writ of error is brought.
In examining the correctness of the judgment of the court upon
the demurrer, we throw out of consideration the two first causes
assigned, because if there were any irregularity in the particulars
stated, they could at most only be urged as objections to the
receiving of the plea, but could not be relied upon as grounds of
demurrer, the office of which is to put in issue the legal effect
of a plea, after it has been received.
The third cause assigned, which was that the plea was not
sufficient
Page 39 U. S. 64
to abate the plaintiffs' suits, raises the only question to be
decided; and that is whether, upon the state of the parties as
appearing upon the record, the court had jurisdiction of the
case.
It will be observed that the plaintiffs were citizens of
Louisiana, so averred to be in the declaration, and two of the
members of the corporation sued were also citizens of Louisiana.
They are so averred to be in the plea, and the demurrer admits the
truth of this averment. The eleventh section of the Judiciary Act
of 1789 gives to the circuit courts of the United States
jurisdiction in cases where "the suit is between a citizen of the
state where the suit is brought and a citizen of another
state."
This Court was called upon at an early period to construe this
section of the Judiciary Act in relation to the very question
raised by the pleadings in this case.
In the case of
Strawbridge v.
Curtis, 3 Cranch 267, it decided that where there
are two or more joint plaintiffs and two or more joint defendants,
each of the plaintiffs must be capable of suing each of the
defendants in the courts of the United States, in order to support
the jurisdiction. And what is more particularly applicable to this
case, in the case of
Bank of the United States v.
Deveaux, 5 Cranch 61, this Court decided that a
corporation aggregate, composed of citizens of one state, might sue
a citizen of another state in the circuit courts of the United
States; that is, they in effect decided, that although the
artificial being, a corporation aggregate, was not a citizen, as
such, and therefore could not sue in the courts of the United
States as such, yet the Court would look beyond the mere corporate
character, to the individuals of whom it was composed, and if they
were citizens of a different state from the party sued, they were
competent to sue in the courts of the United States. But still,
upon the principle of
Strawbridge v. Curtis all the
corporators must be citizens of a different state from the party
sued. And the doctrine of both these cases has ever since been held
to be the law of this Court. It is perfectly clear that the same
principle applies to the individuals composing a corporation
aggregate, when standing in the attitude of defendants, which does
when they are in that of plaintiffs.
The application of these doctrines to this case would seem to be
decisive of its fate unless there is something in other points
which were argued at the bar to obviate their force. For it has
already been stated that the plaintiffs in the court below were
citizens of the State of Louisiana and two of the members of the
corporation sued were also citizens of Louisiana, so that some of
the defendants being citizens of the same state with the
plaintiffs, it follows that although each of the plaintiffs was
capable of suing, yet each of the defendants was not capable of
being sued in the Circuit Court of Mississippi.
But it was contended at the bar that whatever might have been
the original ground of objection to the jurisdiction of the court,
the
Page 39 U. S. 65
defendants had appeared by attorney, and that such an appearance
waived all objection to the jurisdiction of the court. This is
admitted to be a well established rule in pleas of this sort, in
courts of general jurisdiction where the plea is interposed by
individual defendants. We deem it unnecessary, for the purposes of
this case, to inquire what would be the effect of an appearance by
attorney of an individual defendant in pleading such a plea in the
circuit courts of the United States, which are of limited
jurisdiction. But we are clearly of opinion that in the case of a
corporation aggregate, no waiver of an objection to jurisdiction
could be produced by their appearing and pleading by attorney
because, as such a corporation cannot appear but by attorney, to
say that such an appearance would amount to a waiver of the
objection would be to say that the party must from necessity
forfeit an acknowledged right by using the only means which the law
affords of asserting that right.
It was further contended that all objection to the state of the
parties in this case was obviated by the Act of Congress, passed
February 28, 1839, entitled "An act in amendment of the acts
respecting the judicial system of the United States."
The first section of that act provides
"That where in any suit at law or in equity commenced in any
court of the United States, there shall be several defendants, any
one or more of whom shall not be inhabitants of, or found within
the district where the suit is brought, or shall not voluntarily
appear thereto, it shall be lawful for the court to entertain
jurisdiction, and proceed to the trial and adjudication of such
suit between the parties who may be properly before it, but the
judgment or decree rendered therein shall not conclude or prejudice
other parties, not regularly served with process or not voluntarily
appearing to answer."
We consider the true construction of this act to be this:
The eleventh section of the Judiciary Act, after having
prescribed the jurisdiction of the circuit courts, as it regards
the character of the parties, by way of personal exemption,
declares
"That no civil suit shall be brought before either of said
courts against an inhabitant of the United States, by any original
process, in any other district than that whereof he is an
inhabitant, or in which he shall be found, at the time of serving
the writ."
Under the operation of this clause many difficulties occurred in
practice, in cases both in law and equity, in which, by the
principles governing courts both of law and equity, it was
necessary to join several defendants, some of whom were and others
were not inhabitants of the district in which the suit was
brought.
The act of 1839 was intended to remove these difficulties by
providing that the persons not being inhabitants or not found
within the district may either not be joined at all with those who
were, or if joined, and they did not waive their personal exemption
by a voluntary appearance, the court may go on to judgment or
decree against the parties properly before it as if the others had
not been joined.
Page 39 U. S. 66
But it did not contemplate a change in the jurisdiction of the
courts as it regards the character of the parties as prescribed by
the Judiciary Act and as expounded by this Court -- that is, that
each of the plaintiffs must be capable of suing and each of the
defendants capable of being sued -- which is not the case in this
suit, some of the defendants being citizens of the same state with
the plaintiffs.
There is another reason why this act of 1839 cannot apply to
this case. It expressly declares that the judgment or decree shall
not conclude or prejudice other parties not regularly served with
process or not voluntarily appearing to answer. Now the defendants
in this case being a corporation aggregate any judgment against
them must be against them in their corporate character, and the
judgment must be paid out of their corporate funds, in which is
included the interest of the two Louisiana stockholders, and
consequently such a judgment must of necessity prejudice those
parties in direct contravention of the language of the law.
We are of opinion that the judgment of the circuit court was
erroneous in sustaining the plaintiffs' demurrer to defendants'
plea. It is therefore
Reversed, and the case is remanded to the circuit court to
be proceeded in according to law.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Southern
District of Mississippi and was argued by counsel. On consideration
whereof it is now here ordered and adjudged by this Court that the
judgment of the said circuit court in this cause be and the same is
hereby reversed with costs, and that this cause be and the same is
hereby remanded to the said circuit court with directions to
proceed therein according to law and justice in conformity to the
opinion of this Court.
