Court Opinion

ID: 3883733
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:14:21.857636+00
Date Added: 2024-06-11T13:37:01.500246
License: Public Domain

August 2, 1900. The opinion of the Supreme Court was delivered by
This action was brought in the Court of Common Pleas for Fairfield County for damages for the alleged negligent killing of plaintiff's intestate by the defendant corporation, and resulted in a judgment in favor of the plaintiff for $4,500. A petition and bond for the removal of the cause to the Circuit Court of the United States for the District of South Carolina on the ground of diverse *Page 164 
citizenship was duly filed, and on the call of the case for trial, the Court, Hon. O.W. Buchanan, presiding, was asked to proceed no further except to pass an order for removal. This was refused and notice of appeal and exceptions was immediately served. After judgment on the verdict of the jury, exceptions were taken to the order refusing to remove, to ruling compelling defendant to proceed to trial, and to the judgment and rulings of the Court.
The first question presented is whether there was error in refusing to remove the cause to the United States Court. The plaintiff was a citizen of South Carolina, and alleges in the complaint that the defendant was a corporation under the laws of this State. The petition for removal alleged that the defendant, at the commencement of the suit and at the filing of the petition, was a citizen and resident of the State of Virginia, being a corporation created under the laws of that State. It is not disputed that the defendant was originally created a corporation under the laws of Virginia, and thereafter complied with the act of the General Assembly of this State, approved March 19, 1896, 22 Stat., 114, 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." This act was construed, in connection with sec. 8, art. IX., of the Constitution, in the case of Southern Railway Co. v.Tompkins, 48 S.C. 58, wherein the Court, speaking by Judge Witherspoon, A.A.J., said: "A State by its legislature may impose upon foreign corporations, which seek to come within its limits to conduct their business, the condition that they shall be subjected to the duties and obligations of domestic corporations. In short, that they shall be, when so acting within the territorial limits of the State, domestic corporations for the purpose of jurisdiction. The question whether the legislature of a State has adopted and domesticated a corporation created by another State, is in any case purely a question of legislative intent. 6 Thompson on Corp., sec. 7890; Murfree on Foreign Corp., sec. 455. It *Page 165 
was competent for the legislature of this State to provide by the act under consideration for the adoption of foreign corporations as domestic corporations, without violating the section of the Constitution above quoted (sec. 8, art. IX.). The title of the act under consideration, and the third section thereof, clearly shows that such was the intention of the legislature. Under the third section of said act, a foreign corporation complying with the provisions of said act, ipsofacto becomes a domestic corporation, enjoying the rights and subject to the liabilities of domestic corporations `as fully as if it were originally created under the laws of this State.'" In that case it was also held that the Southern Railway Company had complied with said statute. Thereafter, in the case of Mathis v. Southern Railway Company, 53 S.C. 257, this Court held that said Southern Railway Company having become a domestic corporation by compliance with said act, was not entitled to the benefit of the provisions of the act of Congress of the United States governing the removal of causes from the State Courts to the United States Circuit Court, because of diverse citizenship. We have been induced to review the case of Mathis v. Southern Railway,supra, and after careful consideration have reached the conclusion that it is not in harmony with the recent decisions of the United States Supreme Court, by which this Court must be controlled on questions of this kind. The Mathis case was supposed to be in harmony with the decisions in MemphisR. Co. v. Alabama, 1 and 2 Supt. Ct. Rep., 432, wherein it seemed to hold that the Memphis and Charleston Railroad Company, previously incorporated in Tennessee and afterwards made an Alabama corporation by the statutes of Alabama, could not remove into the Circuit Court of the United States a suit brought against it in Alabama by a citizen of Alabama. But this Court failed to observe the distinction between the creation of a new corporation out of natural persons, and the mere adoption of a foreign corporation as a domestic corporation for local purposes. A corporation is indisputably presumed to be composed of citizens *Page 166 
of the State creating it, and, for purposes of federal jurisdiction, the citizenship of its corporators is imputed to the corporation. In the case of St. Louis  S.F. Ry. Co. v.James, 16 Sup. Ct. Rep., 627, the Supreme Court of the United States refused "to extend the doctrine of indisputable citizenship, so that if a corporation of one State, indisputably taken, for the purpose of federal jurisdiction, to be composed of citizens of such State, is authorized by the law of another State to do business therein, and to be endowed for local purposes with all the powers and privileges of a domestic corporation, such adopted corporation shall be deemed to be composed of citizens of the second State, in such sense as to confer jurisdiction on the Federal Court, at the suit of a citizen of the State of its original creation." As the right of removal depends upon diverse citizenship, we take it that the United States Court, upon the principle announced above, would not extend the doctrine of indisputable citizenship to a corporation originally created in one State and afterwards adopted as a domestic corporation in another State, so as to make such adopted corporation a "citizen" also of the second State. This, we think, is made clear by the following language of the Court in the James case, referring to an act by the legislature of Arkansas similar to the South Carolina act, under which defendant became a domestic corporation: "It is true, that by the subsequent act of 1889, by the proviso to the second section, it was provided that every railroad corporation of any other State, which had theretofore leased or purchased any railroad in Arkansas, should within sixty days from the passage of the act file a certified copy of its articles of incorporation or charter with the secretary of State, and shall thereupon become a corporation of Arkansas, anything in its articles of incorporation or charter to the contrary notwithstanding; and it appears that the defendant company did accordingly file a copy of its articles of incorporation with the secretary of State; but whatever may be the effect if such legislation in the way of subjecting foreign railroad companies to control and regulation *Page 167 
by the local laws of Arkansas, we cannot concede that it availed to create an Arkansas corporation out of a foreign corporation in such a sense as to make it a citizen of Arkansas, within the meaning of the Federal Constitution, so as to subject it as such to a suit by a citizen of the State of its origin. In order to bring such an artificial body as a corporation within the spirit and letter of that Constitution, as construed by the decisions 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 legislature in question, created a corporation, and that, therefore, the citizenship of the individual corporators is imputable to the corporation." By reference to the South Carolina Statute referred to, it will be seen that it did not undertake to create a new corporations out of natural persons, but merely provided a mode by which foreign corporations might become domestic corporations. Sec. 3 provides: "That when a foreign corporation complies with the provisions and requirements of this act (by filing in the office of the secretary of State a copy of its charter, paying therefor such fees as may be required by law, and causing a copy of such charter 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 company or corporation desires or proposes to carry on its business or acquire or own property), it (the foreign corporation) 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 the laws of the State of South Carolina." Inasmuch as this legislation and the proceedings thereunder created no new corporation out of natural persons, but merely domesticated or adopted an existing corporation, there can be no "citizenship" of corporators imputed to the corporation *Page 168 
as adopted, except the indisputable citizenship of the original corporation. So in the case of Louisville  C. Ry. Co. v.Trust Co., 19 Sup. Ct. Rep., 817, the Court, citing James' case, supra, held that for purposes of federal jurisdiction, a corporation remains a citizen of the State originally creating it, notwithstanding it be afterwards also made a corporation of another State.
In the argument of the case of William McCabe v. Southern Railway Company, which was heard during the present term, and involved also the question of removal, counsel for appellant, Messrs. Andrew Crawford and J.S. Muller, raised a point not directly raised in this case at bar, but which we deem proper to be considered now, viz: whether the defendant can be considered a "non-resident" of this State, in the sense of the federal statute of 1887-8, governing removal of causes. In the first place, the petition for removal alleges that the defendant is a non-resident of this State. This allegation of fact was not traversed, and, as we understand, is not properly traversible except in the Circuit Court of the United States after removal; therefore, for the purposes of the present contention, it appears as a fact that the defendant is a non-resident of this State. In the second place, while "citizenship" and "residence" are not always synonymous, we are of opinion that a foreign corporation, though domesticated in this State, being a citizen of the State originally creating it, must be deemed to have its domicile or residence in the State of its creation, and so is a non-resident of this State, in the sense of the statute governing removals, whatever may be the view as relating to mere local matters not affecting federal jurisdiction. As stated in Ex parte Shaw,12 Sup. Ct. Rep., 937: "The legal existence, the home, the domicile, the habitat, the residence, the citizenship of a corporation, can only be in the State by which it was created, although it may do business in other States whose laws permit it."
We must, therefore, hold that the defendant was entitled to remove the cause to the Circuit Court of the United States, *Page 169 
being a citizen and resident of Virginia, and that it was error to proceed with the trial in the State Court.
This conclusion renders it unnecessary to consider any other question presented.
The judgment of the Circuit Court is reversed.
MR. JUSTICE POPE dissents, and reserves the privilege of hereafter filing a dissenting opinion.
Remittitur stayed on petition for rehearing and submission to Court en banc. The petition was granted and case ordered submitted to Court en banc, August, 1901.
May 6, 1902. The opinion of the Court en banc was delivered by