ARGUED AND DETERMINED
UNITED sTATES CIRCUIT COURTS OF APPEALS AND THE CIRCUIT AND DISTRICT COURTS.
FRISBIE v. OHESAPEAKE & O. RY. 00. (Circuit Court, D.
¥ay 31, 1893.)
FEDERAL OOURTB-'JURIBDICTION-DIVERSE .CITIZENSHIP-CORPORATION.
An avennent that a corporation is a citizen of a certain state is Insuflic1ent to give a federal court jurisdiction. The averment should be that the CQrporation is (.rganized under the laws of a certain state.
SAME-DEFECTIVE PETITION FOR REMOVAL-WAIVER.
Where the petition for removal of a cause to a federal court avers that one party,iL corporation, is a citizen of a certain state, 'instead of averring that it Is organized under the laws of the state, a motion to remand should be granted, although plaintiff has appeared in the federal court, and demurred generally to the defendant's answer.
At Law. Suit in the circuit court of Bmcken county, Ky., by H. B. Frisbie against the Chesapeake & Ohio Railway OolIlpany. Defendant removed the cause to this· court. Plaintiff demurred to defendant's answer, and now moves to remand. Granted. C. B. Simrall, Alfred Mack, and J. T. Simon, for plaintiff. Hallam & Myers and W. n. Jackson, for defendant. Before LURTON, Circuit Judge, and BARR, District Judge. LURTON, Circuit Judge. This suit was begun in the circuit court of Bracken county, Ky., and on petition of the defendant, alleging that it is a controversy wholly between citizens of different states, it was removed to this court. The matter is now heard upon a motion by plaintiff to remand to the state, court, because there is no averment that the defendant company was a nonresident of Kentucky at the time the suit was begun. Such an averment is necessary, inasmuch as the right of removal upon the ground that the auit is wholly between citizens of different states is a right which, by the act of 1887, as by the act of 1888, be exercised only by "the defendant or'defendants therein being nonresidents of . that staJte." A petition f01"removal which fails to show that the dev.57]'.no.l-1
fendant was a nonresident when the suit was begun is fatally defective. Camprelle v. Balbach, 46 Fed. Rep. 81. It has been very earnestly urged by the counsel who have appeared for the defendant company that this defect in the petition has been waived by the plaintiff, who, after the filing of the record in this court, appeared and demurred orally to the answer of the defendant company,upOll the ground that the answer was insufficient in law and fact, and made no issue upon the cause of action stated in the petition of plaintiff. Pending consideration of this demurrer plaintiff moved to remand the cause to the state court for the reason hteretofore, stated, ..* '.demurrer for the reason that a,pleaqing does not state it cause of action or set up a valid defense, raises an issue, and is a trial oCtJ:!.e cause Alley v. Nott, 111 U. S. 472, 4 Sup. Ct. Rep. 495. Where the case stated in the transcript or in the petition for removal is one cognizable in the United States courts, as where it is averred that the suit is wholly between citi· zens of different states, and involving a sum within the jurisdiction of the court, the jurisdiction of the court would attach upon the appearance of the parties and the filing of a plea to the merits, notwithstanding theca-use was one which was not cognizable by the particular United States court to which it had been removed. The principle is that decided in, Railway Co. v. McBride, 141 U: S. 127, 11 Sup. Ct. Rep. 982,and in Ex parte Rchollenberger, 96 U. S. 369. In the first case cited it was held that, where a defendant appears and pleads tothE1 merits, he waives any right to question thereafter the jurisdiction of the court, on the ground that the suit had been brought in the wrong district. Plaintiff's contention is that this is a controversy wholly between himself, a citizen of Kentucky, and the defendant company, a citizen of Virginia; that it is therefore a cause within the general jurisdiction of the United States courts, and that plaintiff could have brought this suit within the district of Virginia, or in the diatrict of the plaintiff's residence, provided the defendant did not reside therein; that it is therefore a suit pending in the wrong district, yet, being a cause cognizable by the United States courts, is one cognizable by this particular court, if the jurisdiction of the particular court be conceded by a plea to the merits. This contention is probably well taken if the case appearing on the record is in fact one within the general cognizance of United States courts. Just at this point the case of defendant breaks down. The peti· tion of plaintiff states that the defendant company is a railroad corporation, but it does not aver the state of its origin. The answer is silent as to this. The petition for removal avers that "the suit is wholly between citizens of different states, to wit, between said petitioner, who avers that it was at the time of the bringing of this suit, and still is, a citizen of the state of Virginia, and the said plain,tiff, who, as your petitioner avers, was and still is a citizen, of the State of Kentucky." An averment that .b. corporation is a citizen ofa particular state is insufficient. A oorporation is not a citizen of a state, within the meaning of the OOnstitution. The averment
CENTRAL TRUST CO.
SOUTH ATLANTIC & O. R. CO.
should be that it was a corporation cre'<tted by the laws of a particular state. In In$urance Co. v. French, 18 How. 404, and in Muller v. Dows, 94 U. S. 444, a similar averment was held bad.. In the latter case Mr. Justice Strong said:
"A corporation itself can be a citizen 01 no state in the sense in wblch the word 'citlzen' Is used in the constitution of the United States. A suit may be brought In the federal courts by or agaInst a corporation, but in such a case it Is regarded as a suit brought by or against the stockholders of the corporation, and for the purpose of jurisdiction it is conclusively presumed that all the stockholders are citizens of the state, Which, by its laws, created the corporation. It is therefore necessary that it be made to appear that the artificial being was brought into existence by the law of some state (lther than that of which the adverse party is a citizen. Such an llverment Is usually made in the introduction or In the stating. part of the bll1. It Is always there made, If the bill is formally drafted. But if made anywhere In the pleadings, it is sufficient."
The defective averment is not corrected elsewhere in the pleadings. In this view of the case it becomes unnecessary to consider whether a corporation can reside elsewhere than in the state of its creation. This question seems to be finally settled in the negative by the late cases of Shaw v. Mining Co., 145 U.S. 4:44, 12 Sup. Ct. Rep. 935, and Southern Pac. Co. v. Denton, 146 U. S. 202, 13 Sup. at. Rep. 44. In this view it would seem that an averment that a corporation had been created by the laws of another state would necessarily imply that it was a nonresident of the state in which the plaintiff resided. The motion to remand must be allowed for the defect in the averment as to the state under whose law the defendant company came into being. Where a cause. is cognizable in a United States court the jurisdiction of the particular court may be waived, but where it is an action nm within the general jurisdiction of any United States court the defect is not waived or jurisdiction con· ferred by appewance or consent.
OENTRAL TRUST 00. OF NEW YORK T. SOUTH ATLANTIO & O. R. CO. VIRGINIA, T. & C. STEEL & IRON 00. v. BRISTOL LAND 00. (Circuit Court, W. D. Virginia. July 21, 1893.) Nos. 180. 182.
COURTS - CONCURRENT STATE AND FEDERAL JURISDICTION SUBJECT-MATTER. .
Where a state and a federal court have concurrent jurisdiction of a con· troversy. the court which first takes control of the subject-matter and of the parties cannot be ousted of Its jurisdiction by SUbsequent proceedings instituted in the othel' court. Riggs v. Johnilon Co.· 6 Wall. 166, followed. When a state court has lawfully appointed a receiver a corporation, and such receivership still exists, a federal court should not take jurisdic<tion of a suit by other complainants for the appointment of a receiver.
FEDERAL COURT WILL NOT
SAME-ApPOINTMENT OF RECEIVER.
RECEIVERS - ApPOINTMENT BY STATE COURT THEl\EAFTER ApPOINT.
A Virginia circuit judge appointed a receiver of a certain corporation, who' took peaceable possession of the property, and conducted the bUsi··