Case Name: CALVERT v. SOUTHERN RY. CO
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1900-08-10
Citations: 64 S.C. 139
Docket Number: 
Parties: CALVERT v. SOUTHERN RY. CO.
Judges: Mr. Justice Pope dissents and reserves the right to Me dissenting opinion hereafter.
Reporter: South Carolina Reports
Volume: 64
Pages: 139–162

Head Matter:
CALVERT v. SOUTHERN RY. CO.
Removal oe Causes — Foreign Corporation — Diverse Citizenship.— A Railroad corporation created- in and by a foreign State, and complying with the provisions of 22 Stat., 114, and of art. IX., sec. 8, of Constitution of 1895, as to foreign corporations becoming domestic corporations, can remove to the Circuit Court of the United States for the District of South Carolina under U. S. Statute, on ground of diverse citizenship, a suit commenced in State Courts by a citizen of this State against it. Court en banc. Messrs. Justices Pope and Gary and Circuit Judge Townsend dissent.
Before Gary, J., Abbeville, October, 1899.
Reversed.
Action by W. A. Calvert, administrator of D. C. Calvert, against Southern Ry. Co. From Circuit order refusing to sustain removal to 'Circuit Court of the United States, defendant appeals.
Mr. T. P. Cothran, for appellant, in argument before Supreme Court,
cited: On question of removal: 53 S. C., 246; 161 U. S., 545; 176 U. S., 659; 170 U. S., 100, 552; Rev. Stat. U. S., secs. 639 et seq.; Con. U. S., art. III., sec. 3; 49 s. c„ 539.
Mr. B. P. Abney, for appellant before Court en banc (o-ra-I argument).
Mr. Wm. N. Graydon, contra, both before Supreme Court and Court en banc (argument misplaced).
August 10, 1900.

Opinion:
The opinion by the Supreme Court was delivered by
Mr. Justice Jones.
This action was for $10,000 damages for alleged negligent killing of plaintiff's intestate by the defendant company on its line of railway, in Abbeville County, in this State. Before entering upon trial the defendant interposed objection to- the jurisdiction of the Court on the ground of defendant's right to- remove said cause to the Circuit Court of the United States, based upon the following agreed statement of facts:
"1. That the Southern Railwhy Company, on the 18th of June, 1894, became a corporation under the laws of the State of Virginia.
"2. That said Southern Railway Company has complied with the Constitution, art. IX.-, sec. 8, and with the acts of Assembly of said State, in reference to- foreign corporations doing business in this State, by filing with the secretary of State a certified copy of its charter, on the day of January, 1897, and by filing the same with the register of mesne conveyance of Abbeville County on April 1896.
"3. That on the day of July,- 1899, the defendant filed with the clerk of the Court of Common Pleas of Abbe-ville County its petition for removal of this cause to- the Circuit Court of the United States for the District of South Carolina, and accompanied said petition with a properly executed bond as required by law. Said petition and bond were filed within the time required by the Statutes of South Carolina for answering- the complaint herein.
"4. That thereafter, on the ' day of July, 1899, the defendant served upon plaintiff's attorneys its answer in this case.
"5. That within the time required by law the defendant filed with the clerk of the United States 'Circuit Court for the District of South Carolina a certified copy of the record in said cause, and procured the said cause to- be docketed in- said last named Court. The plaintiff does not waive its objection that such filing and docketing cannot be made until the State Court signs an order allowing removal of said cause to the United States Court.
May 6, 1902.
"6. That notwithstanding said proceedings for removal, the plaintiff has procured said cause to be docketed upon calendar No. I of the Court of Common Pleas for Abbeville County."
The Circuit Court overruled the objection, on the authority of Mathis v. R. R. Co., 53 S. C., 257, and from the order in the premises is this appeal. The question of the right of the defendant company to remove a similar cause on substantially the same state of facts was considered in the recent case of John Wilson, as administrator, v. Southern Railway Co., filed on the day of 1900, wherein the case of Mathis v. R. R. Co., supra, was overruled, and the right of defendant to remove on the ground of diverse citizenship and non-residence was sustained. That decision controls this case. Upon the filing of the required petition and bond for removal, the State Court has no- jurisdiction to proceed further. Marshall v. Holmes, 141 U. S., 595 ; Pelzer Mfg. Co. v. Sun Fire Office, 36 S. C., 213 ; Dunham v. Carson, 37 S. C., 279.
The judgment of the Circuit Court is reversed.
Mr. Justice Pope dissents and reserves the right to Me dissenting opinion hereafter.
• The remittitur was held up on petition for rehearing and for argument before Court en banc. The petition was granted and argument ordered to be had before Court en banc on August 1901.
The opinion of the Court en banc was delivered by
Mr. Justice Jones.
The question presented in this case is whether the defendant; Southern Railway Company, being sued in the State Court by a citizen of this State, was entitled to remove the cause to the United States Circuit Court upon the ground of diverse citizenship. It appears that a petition for removal, with a properly executed bond, was duly filed. The petition shows that the defendant company was incorporated under the laws of Virginia on the 18th day of June, 1894, and subsequently complied with the act approved March 9th, 1896, entitled "An act to provide the manner in which railroad companies incorporated under the laws of other States or countries may become incorporated in this State," by filing a certified copy of its charter in the office of the secretary of State, and causing a certified copy thereof to be recorded in the office of the register of mesne conveyances or clerk of the Court of Common Pleas in each county in which such corporation proposed to- carry on business or acquire property. The third section of said act provides, "That when a foreign corporation complies with the provisions and requirements of this act, it shall ipso facto become a domestic corporation, and'shall enjoy the rights and be subject to the liabilities of such domestic corporation; it may sue and be sued in the Courts of this State, and shall be subject to the jurisdiction of this State as fully as if it were originally created under laws of the State of South Carolina." 22 Stat., 114. The question, then, is whether a corporation originally created in one State and subsequently adopted in another State, becomes a "citizen" of the latter State for purposes of federal jurisdiction, so as to be entitled to remove the cause to the Federal Court, when the plaintiff is a citizen of the State adopting the foreigfi corporation. Strictly speaking, corporations are not citizens, but artificial persons or bodies. The Federal Courts, however, take jurisdiction of corporations by looking" beyond the artificial body to the individuals of which it is composed as the real parties in interest. The rule at one time prevailed that federal jurisdiction existed when all the corporation or stockholders were citizens of a State or States different from that of the adverse party. Bank v. DeVeaux, 5 Cranch, 61; Bank v. Slocomb, 14 Peters, 60. But the practical difficulty in applying this rule, in view of the unknown and ever vary ing list of changing stockholders, or the fact that federal jurisdiction over the vast interests represented by corporations could be wholly defeated by having but a single stockholder in every State wherein the corporation did business, doubtless lead to the rule which now prevails. Since the case of Louisville etc. R. R. v. Letson, 2 Howard, 497, it has been firmly established that there is an indisputable presumption that the corporators of a corporation are citizens of the State which originally created the corporation. St. Louis & S. F. Ry. Co. v. James, 161 U. S., 545; Louisville N. A. & C. Ry. Co. v. Louisville Trust Co., 174 U. S., 552.
' In the James case, supra, Etta James, a citizen of Missouri, brought an action for the negligent killing of her husband at Monett, in Missouri, where he resided, in the United States Circuit Court in Arkansas, against the St. Louis &c. R. R. Co., originally created a corporation in Missouri and domesticated in Arkansas, by compliance with the Arkansas statute, substantially as the act of 1896, supra. The defendant waived its personal privilege of being sued in the district of which he was an inhabitant, but raised the objection that the Circuit Court in Arkansas had no jurisdiction on ground that the defendant was not a citizen of Arkansas, but was a citizen of Missouri, of which State the plaintiff was a resident and citizen. The United States Supreme Court held, on the question proposed for determination, that the Missouri corporation by compliance with the Arkansas statute did not become an Arkansas corporation in such a sense as to make it a citizen of Arkansas, so as to subject it to* a suit in the Federal Circuit Court by a citizen of the State of its origin. The facts which may be said to distinguish the James case from the case at bar do> not seem to be at all material; for the question was one of citizenship, and the vital principle announced is that a corporation originally created in one State does not for purposes of federal jurisdiction become a citizen of another State by compliance with a statute of the latter State, with provisions like our statute of 1896. In the case of Louisville R. R. Co. v. Louisville Trust Co., 174 U. S., 552, a corporation created in Indiana brought an action in the Federal Court in Kentucky against several Kentucky corporations. There was a plea to the jurisdiction asserting that the plaintiff was a corporation and citizen of Kentucky, of which State the defendants were corporations. There was a contest as to whether the Indiana corporation had accepted the provisions of a Kentucky statute, which it was alleged constituted it a corporation of Kentucky. The Supreme Court, on the question of jurisdiction, said: "The acts done by the Louisville, New Albany and Chicago' Railway Company under the statute of Kentucky, while affording ample evidence that it had accepted the grants thereby made, can hardly affect the question whether the terms of these 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 to1 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 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." It is true, that the Southern Railway Company became a corporation of South Carolina by compliance with the act of 1896, Southern Railway Co. v. Tompkins, 48 S. C., 49; but as shown above, this fact is not material on the question whether the Southern Railway Company thereby became a citizen of South Carolina 'for purposes of federal jurisdiction, when it appeared that said corporation was originally created in and thereby became a citizen of Virginia. Let us for a moment examine the act of 1896, supra. By its title it purports to provide the manner in which railroad corporations, companies incorporated in other States, may become incorporated in this State. By the third section, quoted already, it is provided that when the foreign corporation complies with the provisions and requirements of the act, it (the foreign corporation) shall ipso facto become a domestic corporation, &c. The act does not provide for the creation of a new and distinct corporation out of natural persons or othercorporations, whose citizenship could be imputed to the new corporation, but it operates solely on the foreign corporation, as to which there is an indisputable presumption that its corporators are citizens of the State originally creating it. So to speak, the only corporator in the South Carolina corporation is the foreign corporation or its corporators, conclusively presumed to be citizens of Virginia. It would seem clear in such case that the indisputable presumption of citizenship which attaches to the foreign corporation for purposes of federal jurisdiction would follow it on its mere adoption as a domestic corporation in another State. Keeping in mind that the mere fact that the Southern Railway Company became a South Carolina corporation, is not conclusive as to the question of citizenship, as shown in the Louisville Trust Company case, supra, and keeping in mind that the Federal Courts look beyond the mere corporate entity and impute to the corporation the citizenship of its corporators, it would seem inevitable that the indisputable presumption of citizenship attaching to a foreign corporation would not be overthrown by another contrary indisputable presumption, the foreign corporation by filing a certified copy of its charter with the secretary of State and the county recording officer, ipso facto became a domestic corporation. Quite a different question was presented in Memphis & C. R. R. v. Alabama, 2 Sup. Ct. Rep., 432; for by the Alabama statute, which sought to incorporate the Memphis and Charleston Railroad Company, there being a railroad of the same name incorporated in Tennessee, it was provided, among other things, that books of subscription to the capital stock should be opened in Alabama, so as to afford the citizens thereof an opportunity to take stock. This and other provisions of the act shows that the Alabama corporation, although of the same name as the Tennessee corporation, was to be a new corporation, composed of natural persons and organized under the laws of Alabama, and hence was not entitled to remove to the Federal Court a suit against it by the State of Alabama for the use of Jackson County therein. Says Mr. Justice S'hiras, in the James case, supra, speaking for the Court, in language quoted with approval in the Louisville Trust Company case, supra, by Mr. Justice Gray, delivering the opiniop therein: "In order to bring such an artificial body as a corporation within the spirit and letter of that Constitution, as construed by the decision of this Court, it would be necessary to create it out of natural persons, whose citizenship of the State creating it could be imputed to. the corporation itself. But it is not pretended in the present case that natural persons resident in and citizens, of Arkansas, were, by the legislation in question, created a corporation, and that, therefore, the citizenship of the individual corpora-tors is imputable to. the corporation."
The question being a federal question, the State Court is bound to follow the decisions thereon by the United States Supreme Court, the tribunal invested with power to. finally determine such questions; and under our interpretation of the decisions of that Court, we can reach no other conclusion than that the Southern Railway Company is not a citizen of South Carolina, but is a citizen of Virginia for purposes of federal jurisdiction. This presents a case of diverse citizenship, which entitled the defendant company to' remove the cause to the Federal Court. The State Circuit Court having denied this right and proceeded with the trial, committed reversible error, for it is well settled that when a sufficient case for rertroval is made in the State Court, the rightful jurisdiction of the State Court comes to. an end, and no further proceedings can be properly had unless in some form its jurisdiction is restored. R. R. Co. v. Koontz, 104 U. S., 5; Kern v. Huidekoper, 103 U. S., 485.
Under this view, the judgment of the Circuit Court should be reversed, and it is so adjudged.
Mr. Chile Justice McIvEr and Circuit Judge Aldrich concur.
Circuit Judge Watts concurs, for reasons stated by him in Wilson v. Southern Ry.
Mr. Justice Pope and Circuit Judge Townsend dissent.