Court Opinion

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Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

2-13-1995

Midlantic v Hansen
Precedential or Non-Precedential:

Docket 93-5120

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Recommended Citation
"Midlantic v Hansen" (1995). 1995 Decisions. Paper 46.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/46

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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT

                           ___________

                    Nos. 93-5120 and 93-5160
                          ___________

          MIDLANTIC NATIONAL BANK

                                 Appellee,

                         vs.

          E. F. HANSEN, JR.; G. EILEEN HANSEN; HANSEN
          BANCORP, INC.

                                 Appellants.

                           ___________

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF NEW JERSEY

                    (D.C. Civil No. 92-02670)

                           ___________

                      ARGUED MARCH 8, 1994

      BEFORE:   MANSMANN, LEWIS and SEITZ, Circuit Judges.

                    (Filed February 13, 1995)

                           ___________

David L. Braverman (ARGUED)
Fellheimer, Eichen & Braverman
One Liberty Place, 21st Floor
1650 Market Street
Philadelphia, PA 19103-7334

          Attorneys for Appellants
Richard W. Hill (ARGUED)
Gary A. Kruse
McCarter & English
100 Mulberry Street
Four Gateway Center
Newark, NJ 07101-0652

          Attorneys for Appellee

                            ___________

                        OPINION OF THE COURT
                            ___________

LEWIS, Circuit Judge.

          This case presents the jurisdictional question of the

citizenship of an inactive corporation under the federal

diversity statute.    We conclude that an inactive corporation is a

citizen of the state of its incorporation only.    Having so

concluded, and thus having determined that the district court

had, and we have, jurisdiction, we are also called upon to

address the meaning of the term "joint applicant" under the Equal

Credit Opportunity Act.    Because we agree with the district

court's conclusion that one of the defendants, Mrs. Eileen

Hansen, was a joint applicant for a loan for purposes of the Act,

we will affirm.

                                 I.

          Midlantic National Bank ("Midlantic") is a national

banking association with its principal place of business in

Edison, New Jersey.    Appellants Elmer and Eileen Hansen are

citizens of Pennsylvania and are the joint owners of all the

issued and outstanding stock of Hansen Bancorp, Inc. ("HBI").
HBI, now inactive, is a corporation organized under the laws of

the state of Delaware.   HBI owned the stock of two thrift

institutions, the Hansen Savings Bank of Florida and the Hansen

Savings Bank, SLA, in New Jersey.1

          Beginning in 1985, the Hansens obtained several loans

from Midlantic.    The Hansens used the first Midlantic loan to

finance the purchase of a New Jersey thrift institution, the

Raritan Valley Savings and Loan Association located in East

Brunswick, New Jersey.    As collateral for this loan, the Hansens

pledged the Raritan stock to Midlantic.    As part of their loan

application, the Hansens submitted a Consolidated Statement of

Net Worth and a Consolidated Income Statement.    The Notes to the

Consolidated Statement of Net Worth, which explain the basis of

consolidation, report that "E.F., Jr. and G.E. Hansen, his wife,

operate their business, Hansen Properties ("Hansen"), as a sole

proprietorship."    The Notes then list limited partnerships of

which the Hansens were the only partners or the only principals.

(Plaintiffs/Appellees' Appendix ("Pa.") at 487)    In addition, on

the Acquisition Agreement between Raritan Valley Financial

Corporation and the Hansens, the Hansens are listed as joint

purchasers of the Raritan stock.

          During 1987 and 1988 the Hansens used an additional

Midlantic loan to purchase a controlling interest in a Florida

1
 .    The Hansens refer to these thrift entities by different
names, calling the Florida thrift the Hansen Savings Midlantic of
Florida, and the New Jersey thrift the Hansen Savings Midlantic,
SLA.
thrift later renamed the Hansen Savings Bank of Florida (HSB of

FL).   This loan was secured by a pledge of HSB of FL stock.     At

this time the Hansens consolidated their indebtedness to

Midlantic into a single loan in the amount of $13 million.

          In February, 1989, the Hansens and Midlantic executed a

Second Amended and Restated Loan Agreement, by which terms the

Hansens and HBI were jointly and severally liable on a

$13,166,666.69 term note payable to Midlantic.   At the same time,

the Hansens signed a separate One Million Dollar Term Note

payable to Midlantic, under which they were also jointly and

severally liable.   One month later the Hansens signed an

additional note for two million dollars.   For all these loans the

Hansens pledged as security the stock in HBI and its

subsidiaries, HSB of FL and the Hansen Savings Bank, SLA.

          In March of 1989, the Hansens borrowed an additional

two million dollars from Midlantic, and in mid-1990, the Hansens

and Midlantic executed two Demand Notes for $100,000 each.

          By September of 1990, the Hansens were in default on

several of their Midlantic loans.   The parties then entered into

a Loan Coordination, Security and Intercreditor Agreement, in

which Midlantic agreed to postpone acceleration of sums due under

the already executed notes until the earlier of either June 30,

1991, or a default under the Intercreditor Agreement.    By 1992

the Hansens were in default on the Intercreditor Agreement.

          In January, 1992, the Office of Thrift Supervision and

the Resolution Trust Corporation seized control of the Hansens'

Florida and New Jersey thrifts.   HBI was rendered inactive by
this seizure.2    Midlantic initiated this collection action six

months later, on June 25, 1992, for the recovery of the amounts

loaned by Midlantic to the Hansens.    Midlantic's complaint bases

the existence of subject matter jurisdiction upon 28 U.S.C.

§ 1332.

          The district court denied a motion to dismiss for lack

of subject matter jurisdiction filed by the Hansens and, on

January 6, 1993, granted Midlantic's motion for summary judgment.

On January 26, 1993, the district court entered final judgment in

favor of Midlantic.    The Hansens filed their notice of appeal on

February 25, 1993.    In their appeal of the district court's entry

of summary judgment, the Hansens challenge the existence of

federal diversity jurisdiction as well as the propriety of

Midlantic's requiring Mrs. Hansen to sign the loan applications.

In turn, Midlantic claims that the Hansens failed to file a

timely notice of appeal.    Because we find that the Hansens'

notice of appeal was timely filed, we will consider the issues

raised therein.    Because we agree with the district court on all

of the issues raised, we will affirm.

2
 .    The Hansens explain that "[a]s HBI is a holding company,
and all of its holdings were seized, HBI was forced to cease
actively engaging in business at this time[,]" and that "[s]ince
the seizure, HBI has been an inactive corporation except for
activities relating to the institution of litigation against the
O[ffice of Thrift Supervision and other federal agencies."
(Appellants' brief at 16).
                               II.

          First, we must address whether the district court had

jurisdiction over the subject matter in this case.   We exercise

plenary review over issues of jurisdiction.   Mellon Bank v.

Farino, 960 F.2d 1217, 1220 (3d Cir. 1992).

          To satisfy the jurisdictional requirements of 28 U.S.C.

§ 1332(a)(1), the federal diversity statute, diversity must be

complete; that is, no plaintiff can be a citizen of the same

state as any of the defendants.   Carden v. Arkoma Assocs., 494
U.S. 185, 187 (1992); Quaker State Dyeing & Finishing Co. v. ITT

Terryphone Corp., 461 F.2d 1140, 1142 (3d Cir. 1972).   Whether

diversity jurisdiction exists is determined by examining the

citizenship of the parties at the time the complaint was filed.

See Smith v. Sperling, 354 U.S. 91, 93 n.1 (1957) (stating that

jurisdiction is tested by the facts as they exist when the action

is brought).   Thus, the question before us is whether HBI was a

citizen of New Jersey in June of 1992, when Midlantic filed its

complaint.   If so, diversity of citizenship would not be complete

since Midlantic is also a citizen of New Jersey.

          For purposes of diversity jurisdiction, "a corporation

shall be deemed to be a citizen of any State by which it has been

incorporated and of the State where it has its principal place of

business . . . ."   28 U.S.C. § 1332(c).   The Hansens contend that

HBI's principal place of business was New Jersey at the time
Midlantic filed its complaint.3   The five month period between

3
.     According to the Hansens, at the beginning of 1991, HBI

moved its headquarters from Pennsylvania to New Jersey.   In an

affidavit submitted to the district court in connection with the

Hansens' motion to dismiss, Jere A. Young, the Chairperson of the

Board and Chief Executive Officer of HBI, alleged the following

facts:   in early 1991, HBI transferred all of its books and

records, including all accounting and financial records, to New

Jersey; also in early 1991, all employees of HBI were either

terminated or transferred to executive positions with HBI's New

Jersey subsidiary, Hansen Savings Bank, SLA, or to Hansen Savings

Bank's Pennsylvania subsidiary; from the beginning of 1991, the

office of HBI's Chief Executive Officer was located in New

Jersey; and, finally, from early 1991, "substantially all of the

accounting, financial, corporate and legal activities of HBI were

conducted from HBI's headquarters in Hammonton, New Jersey."

(Defendants/Appellants' Appendix ("Da.") at 25).
the time when HBI ceased to conduct business activities and the

time Midlantic filed its complaint did not, the Hansens argue,

dissipate HBI's local character for diversity purposes.    HBI's

principal place of business for diversity purposes, according to

the Hansens, was HBI's last principal place of business, that is,

New Jersey.

          In addressing the jurisdictional question in this case,

we must resolve the issue of HBI's citizenship under 28 U.S.C.

§ 1332(c), bearing in mind that HBI was an inactive corporation

at the time the complaint was filed.4   The issue of the

citizenship under Section 1332(c) of an inactive corporation is

one of first impression in this circuit.   Essentially, the

question before us is whether an inactive corporation can be

deemed to have a "principal place of business" at all.

           We gave meaning to the phrase "principal place of

business" in Kelly v. United States Steel Corp., 284 F.2d 850 (3d

Cir. 1960), concluding that "corporate activities" determine the

corporation's principal place of business.   Kelly, 284 F.2d at

854.   Inasmuch as we consider the actual business activities of

the corporation to be determinative of the corporation's

principal place of business, we conclude that as a general

matter, an "inactive" corporation (that is, a corporation

conducting no business activities) has no principal place of

4
 .    By "inactive" corporation, we mean a corporation that has
ceased any and all business activities. In the Young Affidavit,
it is admitted that "[s]ince January 10, 1992, . . . HBI has had
no active subsidiary company and no business activities." (Da.
at 26-27).
business, and is instead a citizen of its state of incorporation

only.

          We thus further conclude that HBI, which was inactive

at the time Midlantic filed its complaint, had no principal place

of business under Section 1332 when this suit was commenced.

When this lawsuit was commenced, HBI was a citizen of its state

of incorporation only, namely, Delaware.   We therefore find that

complete diversity is present in this case.

          We acknowledge that the conclusion we reach today with

regard to the citizenship of an inactive corporation conflicts

with that reached by the Courts of Appeals for the Second and

Fifth Circuits, the only two of our sister courts of appeals to

have addressed the matter.

          The Second Circuit opined that when a corporation

ceases business activity, it is to be deemed a citizen both of

its state of incorporation and of the state in which "it last

transacted business . . . ."   Wm. Passalacqua Builders v. Resnick

Developers, 933 F.2d 131, 141 (2d Cir. 1991).   In so holding the

Second Circuit placed principal reliance upon notions of

congressional intent:
          To allow inactive corporations to avoid
          inquiry into where they were last active
          would give them a benefit Congress never
          planned for them, since under such a rule a
          defunct corporation, no matter how local in
          character, could remove the case to federal
          court based on its state of incorporation.

Wm. Passalacqua Builders, 933 F.2d at 141.5

5
 .    The Second Circuit also relied upon the fact that it had
previously rejected the argument of a bankrupt that the district
          The Fifth Circuit adopted a more flexible approach,

holding that while the place of an inactive corporation's last

business activity is relevant to the inquiry into the inactive

corporation's principal place of business, it is not dispositive

of the inquiry.    Harris v. Black Clawson Co., 961 F.2d 547, 551

(5th Cir. 1992).    Instead, the court suggested, the amount of

time elapsed between the date when the corporation ceased

business activities and the date of the suit should assist in

determining the relevance of the situs of the corporation's

now-ceased business activities to the determination of the

(..continued)
court lacked jurisdiction because New York was not a place of
business at least six months preceding the filing of the
bankruptcy petition. Id. (citing Fada of New York, Inc. v.
Organization Serv. Co., 125 F.2d 120 (2d Cir. 1942) (per curiam).
"Because New York had been a principal place of business, we
ruled[,]" the Wm. Passalacqua court observed, "that the
bankruptcy petition had been properly filed in New York." Id.

     Fada is particularly instructive because the
     bankruptcy laws in effect at that time provided for
     jurisdiction either in the place of the corporation's
     domicile or in its principal place of business, and
     Congress amended § 1332(c) to follow these provisions
     in the bankruptcy laws.

Wm. Passalacqua Builders, 933 F.2d at 141 (citations omitted);
but see Moore's Federal Practice ¶ 0.77[3.-1], 104 ("In the
legislative history to the 1958 statute which injected the
"principal place of business" criterion into the diversity
statute, Congress specifically instructed courts to look to
bankruptcy precedent for guidance in interpreting the phrase.
Ample bankruptcy precedent existed, but consistent bankruptcy
precedent did not. Although the courts originally followed
bankruptcy precedent -- conflicts and all -- the ensuing three
decades have witnessed a significant emergence of general
principles and criteria for making the jurisdictional
determination.").
corporation's principal place of business.   But where the

corporation has been inactive in a state for "a substantial

period of time, in this case five years,"6 the Harris court

continued, that state, as a matter of law, is not the

corporation's principal place of business.    Harris, 961 F.2d at

551.

            Our conclusion is also in conflict with that of several

of the district courts to have considered the citizenship of an

inactive corporation.   Most of the district courts to address the

issue have found an inactive corporation to be the citizen both

of its state of incorporation and of its last principal place of

business.   See Comtec, Inc. v. National Technical Schools, 711 F.

Supp. 522, 525 (D. Ariz. 1989); China Basin Properties v.

Allendale Mut. Ins., 818 F. Supp. 1301, 1305 (N.D. Cal. 1992);

China Basin Properties v. One Pass, Inc., 812 F. Supp. 1038, 1040

(N.D. Cal. 1993.)   As principal support for their position, these

district courts proffer a plain meaning argument.
          [W]hen Congress amended section 1332 to
          include a corporation's principal place of
          business as its state of incorporation
          through the use of the conjunctive "and,"
          Congress could not have meant that a
          corporation's citizenship would be its
          principal place of business or its state of
          incorporation. If Congress intended such a
          result, it clearly could have expressly
          stated as such. Since there is nothing in
          section 1332 to suggest that a corporation's
          principal place of business should be ignored
          once that corporation becomes inactive, a

6
 .    The question of the substantiality of the duration of
inactivity, the court explained, must be determined on a case by
case basis. Id. at 551 n.10.
            strict reading of the statute requires this
            Court to utilize [the] last principal place
            of business in determining . . . [corporate]
            citizenship.

China Basin Properties, 818 F. Supp. at 1304-05; see also Comtec,
711 F. Supp. at 524 ("Section 1332(c) states that corporate

diversity is based on both the place of incorporation and

principal place of business.    By using the conjunction `and,'

Congress intended for all of the requirements of the statute to

be fulfilled.").

            We believe the interpretation of Section 1332(c) that

we adopt today most closely comports with the plain meaning of

the statute.    We do not find persuasive the argument that

Congress' use in 1332(c) of the conjunction "and" signifies that

Congress intended that the courts strain to locate a principal

place of business when no such place in reality exists.      We

reject the notion that implicit in the statute's terms is the

requirement that all corporations be deemed to have a principal

place of business.    Far more significant to a plain meaning

analysis, and thus far more indicative of congressional intent,

is the fact that in Section 1332 Congress provided that a

corporation is to be deemed a citizen of the state in which it

has its principal place of business.    Congress could easily have

provided that a corporation shall be deemed a citizen of the

state in which it "has or has had" its principal place of

business.    Clearly, however, Congress has provided no such thing.

            We are mindful of the concern expressed in Wm.

Passalacqua Builders and in several district court opinions, that
the conclusion we reach today may, in certain cases, result in

the subversion of the intent of Congress in amending

Section 1332.7    We believe, however, that the benefits of

certainty and clarity which obtain from the "bright line"

approach we adopt outweigh the potential for the harm identified

by the Second Circuit.

                                 III.

             We next address the timeliness of the Hansens' notice

of appeal.    We find United States v. Schaefer Brewing Co., 356
U.S. 227 (1958), to be dispositive.     Indeed, this case mirrors

Schaefer Brewing Co. in two significant respects:     first, as was

the case in Schaefer Brewing Co., the case before us is one for

the recovery of money only; second, as was the case in Schaefer

Brewing Co., the district court's opinion and accompanying order

granting summary judgment did not expressly or by reference

specify the exact amounts Midlantic was entitled to recover

thereon.
           While . . . there is no statute or rule that
           specifies the essential elements of a final
           judgment, and this Court has held that "[n]o
           form of words and no peculiar formal act is
           necessary to evince [the] rendition [of a
           judgment]," yet it is obvious that a final
           judgment for money must, at least, determine,
           or specify the means for determining, the
           amount; and an opinion, in such a case, which
           does not either expressly or by reference
           determine the amount of money awarded reveals

7
 .    It has been observed that through the principal place of
business provision, "Congress purported to preclude what was in
fact a local entity from suing (or being sued by) a local citizen
in federal court simply because it was chartered in another
state." Moore's Federal Practice ¶ 0.77[3.-4].
             doubt, at the very least, whether the opinion
             was a "complete act of adjudication" . . . or
             was intended by the judge to be his [or her]
             final act in the case.

Schaefer Brewing Co., 356 U.S. at 233-34 (citations omitted)
(emphasis in original).

             Because the district court's January 7 opinion and

order did not determine the exact amount of money Midlantic was

entitled to receive pursuant to the issuance of summary judgment

in its favor, we have little difficulty concluding that it

neither embodies the essential elements of a judgment for money

nor demonstrates the district court's intention that it

constitute its final acts in this case.    See Mauriello v. Univ.

of Med. & Dentistry of N.J., 781 F.2d 46, 49 (3d Cir. 1986)

(quoting Schaefer Brewing Co. for the proposition that to be

final, a judgment for money must, at least, determine, or specify

the means of determining, the amount of money awarded).      We

conclude that the district court's January 7 order does not

constitute a "judgment" or "order" within the terms of Fed. R.

App. P. 4(a), and that it is instead the district court's

January 27 "Final Judgment" which constituted its final act in

this case.    We therefore hold that the Hansens' February 25

notice of appeal was timely filed because it was filed within 30

days after the date of entry of the judgment or order appealed

from.

                                 IV.

             Having determined that the district court had, and we

have, jurisdiction over this case, we move to the remaining issue
on appeal:   whether the district court erred in granting summary

judgment in favor of Midlantic.

          The Hansens appeal the grant of summary judgment

against them in light of their affirmative defense that Midlantic

violated the Equal Credit Opportunity Act, 15 U.S.C. § 1691 (the

"ECOA") and Regulation B, 12 C.F.R. §§ 202.1 et seq.   The Hansens

claim that the existence of this affirmative defense raises a

genuine issue of material fact which precluded the granting of

summary judgment against them.

          The district court rejected the Hansens' ECOA defense,

finding that Mrs. Hansen was a bona fide joint applicant for the

Midlantic loans.8   We agree with the district court's assessment

of Mrs. Hansen's status and will affirm the district court's

rejection of the Hansens' ECOA defense.9

8
 .    The district court, as an initial matter, noted that a
substantial argument can be made that a violation of the ECOA
cannot be interposed as an affirmative defense, but must instead
be pleaded as a counterclaim. In fact, the courts are split on
the question whether the ECOA may be used as an affirmative
defense or may be asserted as a counterclaim only. Compare
American Security Midlantic v. York, 1992 WL 237375 (D. D.C.
Sept. 1, 1992); FDIC v. Notis, 602 A.2d 1164 (Me. 1992) and In re
Remington, 19 B.R. 718 (Bankr. D.Co. 1982), with Riggs Nat. Bank
of Washington, D.C. v. Linch, 829 F. Supp 163 (E.D. Va. 1993);
CMF Virginia Land, L.P. v. Brinson, 806 F. Supp. 90 (E.D. Va.
1992) and United States v. Joseph Hirsch Sportswear Co. Inc.,
1989 WL 20604 (E.D. N.Y. Feb. 28, 1989). We do not address this
issue because of our disposition of the Hansens' ECOA claim on
other grounds.

9
 .    The Hansens also claim that the district court erred in not
allowing them to continue discovery in connection with their ECOA
affirmative defense. However, this claim is of no moment
because, as we discuss infra, we agree with the district court
that Mrs. Hansen was a joint applicant.
          Our review of a district court's entry of summary

judgment is plenary.   Public Interest Research of NJ v. Powell

Duffryn Terminals, Inc., 913 F.2d 64 (3d Cir. 1990).    In

reviewing the entry of summary judgment, we take the non-movant's

allegations as true and draw all inferences in favor of the non-

movant.   Berner Int'l Corp. v. Mars Sales Co., 987 F.2d 975 (3d

Cir. 1993).

          The ECOA was enacted to protect consumers from

discrimination by financial institutions.    See United States v.

Am. Future Sys., Inc., 743 F.2d 169, 174 (3d Cir. 1984).      In

particular, the ECOA provides that "[i]t shall be unlawful for

any creditor to discriminate against any applicant, with respect

to any aspect of a credit transaction . . . on the basis of . . .

marital status."   15 U.S.C. § 1691(a)(1).   To further protect

consumers, Regulation B, promulgated by the Federal Reserve Board

pursuant to the ECOA, provides that "a creditor shall not require

the signature of an applicant's spouse or other person, other

than a joint applicant, on any credit instrument if the applicant

qualifies under the creditor's standards of creditworthiness for

the amount and terms of the credit requested."    12 C.F.R.

§ 202.7(d)(1) (1992) (emphasis supplied).    A "joint applicant" is

"someone who applies contemporaneously with the applicant for

shared or joint credit" and not someone "whose signature is

required by the creditor as a condition for granting the credit

requested."   Official Staff Interpretation to § 202.7(d)(1).

          The Hansens claim that Mr. Hansen was the "only true

applicant" for the Midlantic loans and that Midlantic therefore
violated the ECOA when it required Mrs. Hansen to co-sign the

loan applications.   The district court disagreed with the

Hansens' ECOA argument, finding, as a matter of fact, that:
          Mrs. Hansen was a co-owner of HBI, the
          holding company that acquired the Florida and
          New Jersey banks and whose stock was pledged
          to secure acquisition financing. The Hansens
          submitted consolidated statements of income
          and net worth for their loan application and
          included an explanatory note which detailed
          the joint ownership of their assets.
          Finally, and perhaps most importantly, G.
          Eileen Hansen and Elmer F. Hansen, Jr. are
          both parties to the Acquisition Agreement for
          Raritan Savings Bank, the first bank acquired
          through Midlantic financing. While Mrs.
          Hansen may not have had a major role in the
          day-to-day operations of HBI or any of its
          subsidiary banks, she clearly had an equal
          stake with Mr. Hansen in the assets which
          secured Defendants' borrowing. Under these
          circumstances, Mrs. Hansen was a bona fide
          joint applicant for the loans and the ECOA
          does not protect her from liability upon
          plaintiff's claims in this suit.

(D.Ct. op. January 6, 1993 at 10; Pa. at 538).

          The district court observed that this case differed

from other cases in which violations of the ECOA or Regulation B

were found to have occurred.   In those cases, the district court

noted, the spouses who were required to sign the notes were not

connected to the underlying transactions for which the loans were

sought.   See, e.g., Marine American State Bank v. Lincoln, 433
N.W.2d 709, 711 (Iowa 1988) (wives of applicants neither officers

nor shareholders in business and had no material participation in

its activities); American Security Bank v. York, 1992 WL 237375

(D. D.C. Sept. 1, 1992) (applicants applied for loan for their
business; wives had no ownership interest in business and played

no role in loan negotiations).

           We agree with the district court that Mrs. Hansen was a

"joint applicant."    Though the Hansens claim that Mr. Hansen

sought the loans alone, several of the loans were for the

purchase and financing of Raritan, of which the Hansens were

joint purchasers.    All of the assets listed on the statement of

net worth supplied to Midlantic for the loan to purchase Raritan

were jointly owned.    The list of loans the Hansens applied for

and the affidavit of Barbara Parker, the Midlantic employee who

served as account officer for Raritan, indicate that the Hansens

jointly purchased Raritan and that Midlantic relied on documents

setting forth jointly owned properties in granting the loan (Da.

at 195).   In addition, there were loans for the Florida and New

Jersey thrifts, subsidiaries of HBI, of which the Hansens were

the joint owners.    Furthermore, contrary to the Hansens'

assertion that Mrs. Hansen had nothing to do with the business,

the statement of net worth stated, "E.F. Jr. and G. Eileen

Hansen, his wife, operate their business, Hansen Properties

("Hansen") as a sole proprietorship."    (Pa. at 486).   Finally,

even though there were no properties pledged that were solely

owned by Mrs. Hansen (indeed she had no income and no substantial

assets of her own (Hansen affidavit, Pa. at 391)), all properties

pledged were jointly owned.    These facts constitute powerful

evidence that the Midlantic loans were jointly applied for and

were secured by jointly owned assets and compel the conclusion

that Mrs. Hansen, at the very least, was a de facto joint
applicant for the loans in question.   See Riggs National Bank of

Washington, D.C. v. Webster, 832 F. Supp. 147, 151 (D. Md. 1993)

(wife of individual loan applicant held to be a de facto joint

applicant where loan was for refinancing and renovation of a

building owned by her and financial statement submitted by

applicant included both jointly owned properties and properties

she solely owned).

                               V.

          Having determined that we have, and the district court

had, jurisdiction over this case, and for the above-stated
reasons, we will affirm the district court's entry of summary

judgment in favor of Midlantic and against the Hansens and HBI.
Midlantic National Bank v. E. F. Hansen, Jr.;
G. Eileen Hansen; Hansen Bancorp, Inc.
Nos. 93-5120 & 93-5160

SEITZ, Circuit Judge, dubitante.
          I agree with the majority that our court has appellate

jurisdiction of these appeals.     However, I have serious doubt as

to the standard that should be adopted by our court to determine

the citizenship of an inactive corporation for diversity

jurisdiction purposes.

          The diversity statute, which confers jurisdiction on

federal courts in certain circumstances, is of considerable age.

Its principal purpose is to provide a federal forum where out of

state citizens, including corporations, could presumably avoid

the prejudices of local courts and juries.

          Before 1958, a corporation was deemed a citizen of the

state in which it was incorporated for purposes of diversity.     In

the 1950s, Congress became concerned with the ease with which

corporations removed essentially "local" cases to the federal

courts based solely on their place of incorporation.10    In 1958,

Congress amended the diversity statute to provide that "a

corporation shall be deemed to be a citizen of any State by which

it has been incorporated and of the State in which it has its

principal place of business." 28 U.S.C. § 1332(c) (amended

10
 . The legislative history to the 1958 amendment of section
1332(c) centered around the perceived evil of allowing an
essentially local corporation to remove a case to the federal
court simply because the corporate charter was obtained in
another state. See S. REP. NO. 1830, 85th Cong., 2d Sess. 2
(1958), reprinted in 1958 U.S.C.C.A.N. 3099, 3102.
portion emphasized).   However, neither the amendment itself nor

the legislative history to section 1332(c) refers to the

citizenship of an inactive corporation.

          The general view in the federal courts that have

addressed the present issue is that an inactive corporation is a

citizen of both the state where it is incorporated and the state

where it had its last principal place of business. See, e.g.,

Harris v. Black Clawson Co., 961 F.2d 547 (5th Cir. 1992); Wm.

Passalacqua Builders, Inc. v. Resnick Developers South Inc., 933
F.2d 131 (2d Cir. 1991).11   This rule seems to embrace Congress'

intent to deny a federal forum to "local" corporations in actions

involving local citizens.

          On the other hand, the majority's bright line test

certainly has simplicity to recommend it, and it may reflect the

reality that an inactive corporation has no business activities,

let alone a principal place of business.   However, the rule seems

to run counter to the congressional purpose underlying the 1958

amendment to the diversity statute.

          The issue here is one that Congress should address.

After weighing the conflicting considerations, I remain doubtful

as to the proper application of section 1332(c).   In view of my

11
 .    In Harris, the Fifth Circuit adopting a more flexible
approach, stated, "[A]s a matter of law, where a corporation has
been inactive in a state for a substantial period of time, in
this case five years, that state is not the corporation's
principal place of business." Harris, 961 F.2d at 551 (footnote
omitted). The court added that the question of substantiality
must be determined case-by-case. Id. at 551 n.10.
doubt, it would serve no purpose for me to address the other

issues in the case.