Document: 446 U.S. 458 100 S.Ct. 1779 64 L.Ed.2d 425 NAVARRO SAVINGS ASSOCIATION, Petitioner,v.Lawrence F. LEE, Jr., et al. No. 79-465. Argued March 18, 1980. Decided May 19, Syllabus* Held : Respondents, as individual trustees of a business trust organized under Massachusetts law, may invoke the diversity jurisdiction federal courts on basis their own citizenship without regard to beneficiaries. A court must rest only upon real parties controversy, and trustee is party controversy for purposes when (as do respondents here) he possesses certain customary powers hold, manage, dispose assets benefit others. Cf. Bullard v. Cisco, 290 179, 54 177, 78 L.Ed. 254. Respondents are active whose control over held in names substantial. That depart from conventional forms other respects has no bearing this determination. Nor does trust's resemblance enterprise alter distinctive rights duties trustees. Pp. 460-466. 5 Cir., 597 F.2d 421, affirmed. Bernus Wm. Fischman, Houston, Tex., petitioner. James A. Ellis, Dallas, respondents. Mr. Justice POWELL delivered opinion Court. 1 The question whether citizenship, rather than that beneficial shareholders. 2 * eight Fidelity Mortgage Investors, law.1 They hold title estate investments Fidelity's shareholders.2 declaration gives exclusive authority property "free any power Shareholders, same extent if Trustees were sole owners Trust Estate right. . "3 have transact business, execute documents, "sue be sued name or Trust."4 invest funds trust, lend money, initiate compromise lawsuits relating affairs.5 3 In 1971, lent $850,000 Texas firm return promissory note payable themselves was secured part by commitment letter which petitioner Navarro Savings Association agreed cover its obligation 1973, called make "takeout" loan. refused, action followed. amended complaint, filed United States District Court Northern Texas, sought approximately $175,000 damages breach contract. Federal premised citizenship. 28 U.S.C. § 1332.6 complaint asserted—and agree—that citizen each respondent another State. stipulated, however, some shareholders residents. 4 dismissed want subject-matter jurisdiction. 416 F.Supp. 1186 (1976). Concluding every State reside, lacked complete required Strawbridge Curtiss, Cranch 267, 435 (1806). Appeals Fifth Circuit reversed. 421 (1979). It interest because they had full manage sue behalf. Since existed among actual directed proceed trial merits. We granted certiorari, 444 962, 447, 62 374 (1979), we now affirm. II controversies between "Citizens different States" virtue 1332(a)(1) U.S.Const., Art. III, 2. Early history, established "citizens" plaintiff grounds substantial controversy. McNutt Bland, How. 9, 15, 11 159 (1844); see Marshall Baltimore & Ohio R. Co., 16 314, 328-329, 14 953 (1854); Coal Co. Blatchford, Wall. 172, 20 179 (1871). Thus, disregard nominal formal E. g., supra, at 14; 6 C. Wright Miller, Practice Procedure 1556, pp. 710-711 (1971). early cases persons could Artificial "invisible" legal creatures not citizens Bank Deveaux, 61, 86-87, 91, 38 (1809).7 Although corporations suing long been "deemed" citizens, n. 7, unincorporated associations remain mere collections individuals. When "persons composing such association" collective name, determines court. Great Southern Fire Proof Hotel Jones, 177 449, 456, 690, 693, 44 842 (1900) (limited partnership association); Steelworkers Bouligny, Inc., 382 145, 86 272, 15 217 (1965) (labor union); Chapman Barney, 129 677, 9 426, 32 800 (1889) (joint stock company). 7 contends form masks an association individuals who joint investments. observes features operations also characterize association: centralized management, continuity enterprise, unlimited duration. Arguing substance association, reasons lawsuit III 8 need reject argument shares attributes association. respects, resembles corporation. But case involves neither nor express court's jurisdiction.8 As 1808, stated entitled bring actions Chappedelaine Dechenaux, 306, 308, 629. Rule Civil 17(a) provides procedural purposes.9 Yet similar principles governed before advent uniform rules procedure.10 1870, declared properly founded diverse "is defeated fact whom represent disqualified." Wall., 175 (mortgage contract). "[T]he residence those equitable interest" simply irrelevant. Bonnafee Williams, 574, 577, 732 (1845) (note third party). rule applies "the beneficiaries many." Dodge Tulleys, 144 451, 12 728, 36 501 (1892) (dictum) (railroad deed).11 10 189, 180, 254 (1933), "numerous widely scattered" investors conveyed bonds committee formed protective agreement. agreement did use terminology. Nevertheless, "rights, expressly assigned" members "necessarily" made them Ibid. gave committeemen "full deposited bonds," it defined disposal them." Refusing analogize collection agency, concluded "[t]he necessary immaterial." Id., 190, S.Ct., 181.12 reaffirms others.13 powers. At all relevant times, operated authorized take assets, shareholders, capacity capacity. seek running holder names. 9,500 voice initial investment decision. can disposition intervene affairs except most extraordinary situations.14 conclude these trustees.15 There allegation sham collusion. See 1359; U.S., 187-188, 180 5. "naked trustees" act "mere conduits" remedy flowing How., 13-14; Browne Strode, 303, 108 (1809). title; assets; litigation. short, For more 150 years, law permitted meet standard right, find reason forsake principle today. judgment 13 Affirmed. BLACKMUN, dissenting. reader Court's conclusory might wonder why heavily burdened tribunal chose review case. Most assuredly, so merely reaffirm, ante, 462, Chief Marshall's ruling bench 629 (1808), effect aliens serving respectively residuary legatee representative estate, "although trustees," against Georgia citizen. Rather, I thought certiorari resolve significant conflict Courts concerning establishing jurisdiction, determined looking shareholders.1 believe analysis applied resolving correct, but applying would reach result. feel approach used Court, result reaches, comports with trusts, precedents recognizes "shares association," "also corporation." Ante, 462. concludes, based reading portions Declaration Trust, "express trust." Taken either proposition general common-law trusts,2 interpretation conclusion nearly automatic evident scant reasoning implies. 17 Hecht Malley, 265 144, 68 949 (1924), described terms come accepted classic definition, 16A Eickhoff, Fletcher Cyclopedia Law Private Corporations 8228 (1979): 18 "The 'Massachusetts Trust' organization, common State, consisting essentially arrangement whereby trustees, accordance instrument managed time holders transferable certificates issued showing into divided. These certificates, resemble corporation transferred like manner, entitle share ratably income property, and, termination proceeds. 19 "Under decisions instruments create pure trusts partnerships, according way conduct committed charge. If principals free certificate management created; associated together managing agents, relation created. Williams Milton, 215 Mass. 1, [102 N.E. 355]; Frost Thompson, 219 360, 365 [106 1009]; Dana Treasurer, 227 562, 565 [116 941]; Priestley 230 452, 455 [120 100]. "These trusts—whether partnerships—are unincorporated. statute; derive power, privilege statute. statutes, recognize existence impose them, 'associations,' obligations liabilities." (Footnotes omitted.)3 146-147, 463. 21 Based Amended Restated App. A40, seemingly unconcerned considerations state "are substantial." 465. trustees' quarrel. fails recognize, lodges Article 2.1 elected annual shareholder meetings majority voted. A47. 2.2 removed office, cause, vote outstanding shares. 6.7 vests two powers: ability call special meeting request less 20% shares, requirement sale, lease, exchange, 50% affirmative approval A67. significantly, 8.2 reserves right terminate meeting, 8.3 amend itself. A79-A80. 22 leading decision nature Inhabitants 102 355 (1913). inquired personal Boston Personal Property taxed property. concluding indenture created true observed way, meetings, force trust. 10, N.E., 358. emphasized, parties' intent partnership, evidenced controlling. "It what making decisive." 12, 359. 23 365, 106 1009, 1010 (1914), distilled following test: 24 "A providing holding assignable representing partnership. Whether one depends holders, subject partnership." 25 Guided principles, "Buena Vista Fruit Company" This followed two-thirds remove appoint others fill resulting vacancies, Moreover, bylaws. provisions demonstrate 366, 1010. Buena Company. 26 variety contexts, Supreme Judicial continued observe line, drawn Frost, relative trust.4 appears me lodged Fidelity—the elect major investments, it—clearly dictate falls side line. And convert relationship trusteeship agency. stated: person stands perhaps sense trustee. speaking accuracy agent principal's convenience holds property." Mass., 6, 356. Howe Chmielinski, 237 532, 534, 130 56, 56 (1921). 27 suggest state-law fully dispositive jurisdictional presented here, infra, certainly relevant.5 casts very doubt premise, namely, Petitioner argues controlled confluence emanating past decisions, present opinion, relegates footnote. first case, Morrissey Commissioner, 296 344, 289, 80 262 (1935), dealt tax treatment entity "ordinary trust," observed: 29 "In 'business trusts' object conserve particular incidental powers, traditional type provide medium sharing gains. convenient method become dealings development tracts land, construction improvements, purchase, sale properties; securities property; production, manufacture, commodities; commerce, sorts business; where beneficially interested, joining plan outset, later participation arrangement, advantages union interests enterprise." 357, 295. 30 distinctions, along similarities corporation, led "association," taxable, corporations, companies, insurance 2(a)(2) respective Revenue Acts 1924 1926, ch. 234, 43 Stat. 253, 27, 9. 31 establishes follows then second (1965). unanimous labor union's members. Bouligny limited unions, enunciates unmistakably broad. rejected invitation commentators eradicate distinction "citizenship" hand, unions associations, hand. id., 149-150, 274. "of view arguments, however appealing, addressed inappropriate forum, pleas extension hitherto uncovered broad categories litigants ought Congress courts." 150-151, 274-275. recognized pertinence problem found distinguishable. noted directly applicable situation seeks establish entity. adopted view, earlier suggested commentary,6 decide organization class members, determine case-by-case comprises interest. Focusing attention designated having activities, behalf sued. 427 (CA5 1979). 33 consistent prior decisions. much prefer simplistic adopts. am particularly troubled intimation treated differently functionally analogous associations—partnerships, like. fear that, bottom, enterprises hinges locus 459, 464-466, formalistic criterion little realistic assessment degrees activities exercised 34 While accept Appeals' persuaded, approach, cannot ignore pervasive measure possess taken Part I, supra.7 factor, my principal going issue here bondholders' cited relied 463-464. Though doubt, light circumstances should exist case.8 therefore dissent contrary. 35 vacate remand consideration respondents' claimed alternative bases reached Appeals. syllabus constitutes prepared Reporter Decisions reader. Detroit Lumber 200 321, 337, 282, 287, 50 499. merged Delaware 1978, 25(c) permits original continue Jurisdiction turns facts existing suit commenced. Louisville, N. Louisville 174 552, 556, 817, 818, 1081 (1899). Investors (hereinafter Trust), A44-A45. 3.1, A49-A50. 1.1, A45. 3.2, A50-A55. Section provides: district shall civil matter exceeds sum value $10,000, costs, ." our consider claim 1331 attempt 23.2. overruled C., Letson, 497, 353 (1844), Deveaux resurrected (1854). artificial citizen, "act [corporate] faculties [the] corporate name" presumed reside incorporation. 328; St. Louis S. James, 161 545, 621, 627, 40 802 (1896). endured until 1958, statute explicitly "a deemed incorporated place business." Act July 25, 2, 72 415 (codified 1332(c)). dissenting post, 471-472, 4, 476, asserts treat Neither below questions law. Assuming observations cast black "[m]any trusts. " Restatement (Second) Trusts Comment b, p. (1959). Many not. Our task determine, fall former latter category. "rough symmetry" "real serve produce identical outcomes cases. Note, Diversity Unincorporated Business Entities: Real Party Interest Jurisdictional Rule, L.Rev. 243, 247-250 (1978); appropriate circumstances, example, file 17(a). To diversity, rely never analogized entities Even espoused Cranch, explained doctrine status "When [persons name] said substantially mean liken capable being , whole himself. proprietor, represents himself, sues his right." Thomas Board Trustees, 195 207, 24, 49 160 (1904), Navarro, there considered university. Rejecting contention depended 215-217, 27-28. discuss "trust" possible amount claims bondholders too small satisfy $3,000 threshold effect. unpaid coupons worth about $350,000. 180-181, 177. simplicity principle, 475, virtues. importance definition [that] will invite extensive litigation jurisdiction," although "differentiations appear somewhat arbitrary." American Institute, Study Division 128 (1969). "Jurisdiction self-regulated breathing; waste resources." Currie, U.Chi.L.Rev. (1968). proposed dissent, 475-476, 476-472, serious difficulties trustees; Declaration; approve half estate. Arts. 2.2, 6.7, 8.2, 8.3, A47, A67, No bind 6.2, A49, A64. believes intervention "pervasive [shareholder] Post, 476. Therefore, resides. "control" strip 463-465. Indeed, property—short partial liquidation Internal Code, Compare below, 1979), rev'g (ND Tex.1976), Belle View Apartments Realty ReFund 602 668 (CA4 Riverside Memorial Mausoleum, Inc. UMET 581 (CA3 1978), aff'g 434 58 (ED Pa.1977). dealing context partnerships. conflicts body recent holdings uniformly looked determining suits brought National City Fidelco Growth 124 Pa.1978); Independence White, 120 (Or.1978); Lincoln Associates 351 Tex.1976); Heck P. Ross Enterprises, 414 971 Ill.1976); Carey U. Industries, 794 Chase Manhattan Pendley, 405 593 Ga.1975); Jim Walter Empire-Madison, 401 Larwin Riverdrive Mall, 392 97 (SD Tex.1975); Fox Prudent Resources 81 Pa.1974). An accord trust" rationale Simson Klipstein, 823 (NJ 1920). reference works include within scope: "Although many yet applied, kind best connection associations." Scott, (3d ed. 1967). current statutory requirements governing voluntary written contained Mass.Gen.Laws Ann., 182, §§ 1-14 (West 1958 Supp.1980). Treasurer Receiver General, (1918), associated, fixed 10% empowered vacancies number place. given direct (1921), despite stood shareholders' reserved loan company company's officers directors, amemd repeal bylaws, bylaws "left ultimate created." First New Bedford Chartier, 305 316, N.E.2d 733, 736 (1940). Ryder's Case, 341 661, 664, 171 476-477 (1961). Bouchard People's 253 351, 148 895, 899 (1925), "involve[d] total indirectly, select conduct. Gutelius Stanbon, 39 621 (1st Cir. 1930), provided elected, time, 625. One note, four mentioned Gutelius, lacking possessed Investors. effectively creates purposes. Street Hall, 311 299, 41 (1942), give minority dissolve will. Typically, lower faced "corporation" meaning statute, 1332(c), turned pertinent organized. See, e. Baer Services Automobile Assn., 503 393, 394-395 (CA2 1974). contrast, today evidently enables concerns Erie Tompkins, 304 64, 78-80, 822-823, 82 1188 (1938). assistance precise itself debts incurred 1958); 304, 30, 34. laws Massachusetts, not, course, 455, 692, (1900); Wright, Cooper, Procedure: 3630, 840-841, nn. (1975). Appeals, F.2d, 427, placed reliance student Comment, Limited Partnerships Jurisdiction, 45 384 (1978). turn, credited Judge Hunter Carlsberg Corp. Cambria Loan 554 1254, 1262-1266 1977), real-party-in-interest count U.Chi.L.Rev., 402-404. partners. Second contrary is, partners alone determinative. Colonial Bache 358 178, cert. denied, 385 87 40, (1966). read expressing lead respect shareholder-partners. 693. Nonetheless, purposes, hesitate characterization controlling weight. seems preferable test utilized factor seem especially principal. supra. author suggests involving complicated framework clearly defines responsibilities notes, factors determination parties. include: "(1) (2) (3) modify (4) (5) trustees." 416. case; addition, condition dispositions approval.

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