Source: https://m.openjurist.org/241/us/295
Timestamp: 2019-09-17 08:42:18
Document Index: 646675886

Matched Legal Cases: ['§ 1', '§ 3', '§ 11', '§ 1', '§ 1', '§ 1', '§ 24', '§ 991', '§ 24', '§ 5', '§ 6']

241 U.S. 295 - Bankers Trust Company v. Texas & Pacific Railway Company
BANKERS TRUST COMPANY, as Trustee, Appt.,
TEXAS & PACIFIC RAILWAY COMPANY and New Orleans Pacific Railway Company.
1. Upon reading § 1 of the act of 1871 it is plain that the words 'by that name . . . shall be able to sue and be sued, plead and be impleaded, defend and be defended, in all courts of law and equity within the United States' were not intended in themselves to confer jurisdiction upon any court. As the context shows, Congress was not then concerned with the jurisdiction of courts, but with the faculties and powers of the corporation which it was creating; and evidently all that was intended was to render this corporation capable of suing and being sued by its corporate name in any court of law or equity—Federal, state, or territorial—whose jurisdiction as otherwise competently defined was adequate to the occasion. Had there been a purpose to take suits by and against the corporation out of the usual jurisdictional restrictions relating to the nature of the suit, the amount in controversy, and the venue, it seems reasonable to believe that Congress would have expressed that purpose in altogether different words. The case of Bank of United States v. Deveaux, 5 Cranch, 61, 85, 3 L. ed. 38, 44, is well in point. A provision in the act incorporating the bank (chap. 10, § 3, 1 Stat. at L. 191), much like that here relied upon, was invoked as in itself entitling the bank to sue in a circuit court of the United States, but that view was rejected in an opinion by Chief Justice Marshall, wherein it was said:
2. Under the Constitution Congress undoubtedly possesses power to invest the subordinate Federal courts with original jurisdiction of all suits at law or in equity arising under the Constitution, laws, or treaties of the United States, and, if the act of February 13, 1801, chap. 4, § 11, 2 Stat. at L. 89, be not noticed because of its early repeal (chap. 8, § 1, 2 Stat. at L. 132), it is true, as sometimes has been said,1 that this power was broadly exercised for the first time by the act of March 3, 1875, chap. 137, § 1, 18 Stat. at L. 470. By that act Congress in express terms gave the circuit courts original jurisdiction, concurrent with the courts of the several states, of all suits of that nature, where the value of the matter in dispute, exclusive of costs, was in excess of $500, and this jurisdiction remained with the circuit courts until January 1, 1912, when they were abolished, save as the act of March 3, 1887, chap. 373, § 1, 24 Stat. at L. 552, required that the value of the matter in dispute, exclusive of interest and costs, be in excess of $2,000. Upon the discontinuance of the circuit courts this jurisdiction was transferred to the district courts by § 24 of the Judicial Code [36 Stat. at L. 1091, chap. 231, Comp. Stat. 1913, § 991], subject to a restriction that thereafter the value of the matter in controversy should exceed $3,000, exclusive of interest and costs.
As long ago as Osborn v. Bank of United States, supra, it was settled that a suit by or against a corporation chartered by an act of Congress is one arising under a law of the United States, and this because, as was said in that case, pp. 823, 825: 'The charter of incorporation not only creates it [the corporation], but gives it every faculty which it possesses. The power to acquire rights of any description, to transact business of any description, to make contracts of any description, to sue on those contracts, is given and measured by its charter, and that charter is a law of the United States. This being can acquire no right, make no contract, bring no suit, which is not authorized by a law of the United States. It is not only itself the mere creature of a law, but all its actions and all its rights are dependent on the same law. Can a being, thus constituted, have a case which does not arise literally, as well as substantially, under the law? Take the case of a contract, which is put as the strongest against the bank. . . . The act of Congress is its foundation. The contract could never have been made, but under the authority of that act. The act itself is the first ingredient in the case, is its origin, is that from which every other part arises. That other questions may also arise, as the execution of the contract, or its performance, cannot change the case, or give it any other origin than the charter of incorporation. The action still originates in, and is sustained by, that charter.'
It results that if the general jurisdictional provision, now embodied in § 24 of the Judicial Code, respecting suits arising under the laws of the United States, were alone to be considered, it would have to be held that the district court had jurisdiction of the present suit as one falling within that class by reason of the incorporation of the Texas & Pacific Railway Company under a law of the United States. But § 5 of the act of January 28, 1915, must also be considered. It is a later enactment, is shown by the title to be amendatory of the Judicial Code, and, as has been seen, declares that 'no court of the United States shall have jurisdiction of any action or suit by or against any railroad company upon the ground that said railroad company was incorporated under an act of Congress.' These are direct and comprehensive words, and, when read in the light of the settled course of decision just mentioned, must be taken as requiring that a suit by or against a railroad company incorporated under an act of Congress be not regarded, for jurisdictional purposes, as arising under the laws of the United States, unless there be some adequate ground for so regarding it other than that the company was thus incorporated. Plainly, there was a purpose to effect a real change in the jurisdiction of such suits. Counsel for plaintiff concede that this is so. But they urge that all that is intended is to eliminate the mere creation of a railroad corporation under an act of Congress as a ground for regarding the suit as arising under the laws of the United States. In this there is an evident misapprehension of what constitutes incorporation, as also of the real basis of the jurisdiction affected. A corporation is never merely created. Being artificial, possessing no faculties or powers save such as are conferred by law, and having in legal contemplation no existence apart from them, its incorporation consists in giving it individuality and endowing it with the faculties and powers which it is to possess. It is upon this theory that the decisions have proceeded. The ruling has been that a suit by or against a Federal corporation arises under the laws of the United States, not merely because the corporation owes its creation to an act of Congress, but because it derives all of its capacities, faculties, and powers from the same source. This is shown in the quotation before made from Osborn v. Bank of United States, supra, and also in the following excerpt from Shoshone Min. Co. v. Rutter, 177 U. S. 505, 509, 510, 44 L. ed. 864, 866, 867, 20 Sup. Ct. Rep. 726: 'A corporation has no powers and can incur no obligations except as authorized or provided for in its charter. Its power to do any act which it asumes to do, and its liability to any obligation which is sought to be cast upon it, depend upon its charter, and when such charter is given by one of the laws of the United States there is the primary question of the extent and meaning of that law. In other words, as to every act or obligation the first question is whether that act or obligation is within the scope of the law of Congress; and that being the matter which must be first determined, a suit by or against the corporation is one which involves a construction of the terms of its charter; in other words, a question arising under the law of Congress.' And so, when due regard is had for the terms of the amendatory section of 1915 and for the real basis of the jurisdiction affected, the conclusion is unavoidable that what is intended is to make the fact that a railroad company is incorporated under an act of Congress,—that is to say, derives its existence, faculties, and powers from such an act,—an entirely negligible factor in determining whether a suit by or against the company is one arising under the laws of the United States.
The case of Male v. Atchison, T. & S. F. R. Co. 240 U. S. 97, 60 L. ed. ——, 36 Sup. Ct. Rep. 351, does not make for a different conclusion, because it was not a suit by or against a railroad company incorporated under an act of Congress, and because it arose and was pending in this court prior to the amendatory act of 1915, and by § 6 of that act was excepted from its provisions.