The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-04-28
Did the Federal Courts Posses Any
JurIsdio uon?


The recent contest over the distribu-
ton Of the Northern Securities assets
bids fair TO leave It's traces in our gov
eTnmental system, as well as in financial
Affairs. 1t may seem paradoxical, and
yet there is much support for the propo-
sition that the Federal courts did not
possess any legal power TO interfere at
any time with the action of the North
ern Securities Company in the disposal
OF its constituent stocks. AZ a body
polite, formed under State authority,
that corporation Is immune from inter-
ference with it's internal affairs by the
courts of any other sovereign, including
the Federal judiciary.
The principle involved has been fully
recognized, as barring trespasses upon
infra-corporate affairs by the courts Of
sister States. But its application to the
relations between the Federal and State
authorities has not been so fully dis
Cerned. Yet the principle which eK-
Cludes the interposition OF any nom
domestic Governmental authority over
the affairs Of corporations is just as ap-
plicable to the Federal courts as to the
courts Of other States. It rests upon the
broad doctrine that the control Of these
creatures Of legislation, In the exercise
Of their intrinsic functions, pertains
solely TO the creative power-which can
fully administer and discipline them.
In the opinion Of the Supreme Court,
in the Government suit against the
Northern Securities Company, this ex-
clusion Of the Federal courts from subject
matter jurisdiction over State corpora
tons was sufficiently outlined in the
following terms:
"Ths Federal court may not have power 70 for
felt the charter OF the Securities COMPANY Il may
not declare how 10 shares OF stock may be trans
feTTed on " books: nor prohibh u from acquiring
real estate; nor diminish nor increase its capital
stock Al tbsSs and lire matteu win Be regulated
By the STATE which created the company
The Supreme Court thus recognized,
rs 1t had previously done In the suit Of
the State Of Wisconsin %. Pelican In
surHnoe Company, that the necessary
difference Of citizenship does not alone
constitute all the requisites TO justify
the action Of the Federal courts in mat
ters Of domestic and corporate concern
20 the individual States. In the former
case II distinctly applied this principle
20 controversies affecting the structure
and organic Anairp Of State corpora
tions.
This IL not the place to indicate In de-
tail the nature Of this important limita-
tion upon Federal power, 80 as to show
Ste application TO the case Of Hartman
%. the Northern Securities Company.
Suffice Il 10 say that the litigation in
question involved the essential nature
OF that corporation, the character Of its
membership, and the distribution Of
nearly all the assets held by II. In short,
most Of the elements Of corporate or
ganism were involved, and no courts
- other than those Of New Jersey would
Eeem TO have been competent 20 inter-
vene in the premises. But II should be
added that this point Of subject matter
jurisdiction was not raised by any party
TO the litigation. Naturally the complain
ants would not suggest IL, and the re-
spondents probably preferred success
on the merits Of the dispute, The curl
Gus reflection remains that these great
properties have been impounded for
more than year past by the orders Of
tribunals that were legally poWerless 10
interfere.
The Northern Securities lawsuit has