Gavin v. Hudson & Manhattan R. Co. Knoblock v. Hudson & Manhattan R. Co. Emma v. Hudson & Manhattan R. Co, 185 F.2d 104, 3rd Cir. (1950)
Gavin v. Hudson & Manhattan R. Co. Knoblock v. Hudson & Manhattan R. Co. Emma v. Hudson & Manhattan R. Co, 185 F.2d 104, 3rd Cir. (1950)
Gavin v. Hudson & Manhattan R. Co. Knoblock v. Hudson & Manhattan R. Co. Emma v. Hudson & Manhattan R. Co, 185 F.2d 104, 3rd Cir. (1950)
2d 104
GAVIN
v.
HUDSON & MANHATTAN R. CO.
KNOBLOCK
v.
HUDSON & MANHATTAN R. CO.
EMMA et al.
v.
HUDSON & MANHATTAN R. CO.
No. 10250.
No. 10251.
No. 10252.
This case raises the question of where a plaintiff may sue a two-state
corporation. The plaintiffs in the respective appeals are citizens of New Jersey.
They have sued the defendant in the federal court for the District of New Jersey
alleging it to be a corporation of the state of New York. The defendant replies
that it is incorporated in both New York and New Jersey1 and has successfully
asked for dismissal on the ground that there is no diversity of citizenship.
2
At the outset it is clear that we are necessarily dealing with a set of concepts
which takes us far from realities.2 The Hudson & Manhattan Railroad
enterprise, no matter how many certificates of incorporation hang on the walls
of its offices, is but one railroad with one set of operating employees. To call it
a citizen of any state is unreal. People are citizens, not corporations, and the
rights and duties that go with the concept of citizenship as applied to a human
being are not applicable to corporations. But citizenship for the purpose of
defining the place where suits may be brought in federal courts has been
assigned to the corporation through some rather elaborate fictions3 and we need
not now consider whether some other way to answer the jurisdiction question
could have been devised. We have been given a rule for litigation which, so far
as it goes, is clear and practical. If we had a similar clear and practical rule with
regard to the multiple incorporation situation there would be no occasion for
this appeal. We shall note what the decided cases have to say presently. But
first, let us consider the matter apart from authority.
Defendant says that these plaintiffs from New Jersey could sue the New York
defendant corporation in New York or that a New Yorker could come over to
New Jersey and sue the defendant as a New Jersey corporation.4 But, says
defendant, it cannot be sued in a federal court in New York by a New Yorker or
in New Jersey by a New Jerseyite.5 Such a rule if adopted may be an effective
means of promoting additional passenger business for the Hudson &
Manhattan, but we think it would be pretty hard to explain its reason to a
layman. Such a consideration should make us think twice before accepting the
result. If a legal rule fails to satisfy the untechnical requirements of ordinary
common sense the premises behind the rule had better be carefully examined.
What is needed here is a clear guide which will tell the parties where they may
sue in federal court and where they may not. There are no political, economic,
sociological or ethical considerations involved that we can see. The question is
not unlike that of the rules of the road for traffic. It can travel on the right, or it
can travel on the left, but a car driver must know which side he is to take. And
so here. Can these plaintiffs get into federal court in New Jersey or not? The
answer to this question does not settle the merits of their cases, and should not
involve elaborate research by court or counsel as a preliminary to the settlement
of the intrinsic right of plaintiffs to recover from defendant.
We think there are some facts which have been mentioned by courts in
situations similar to this which should be disregarded as irrelevant. The first is
the state in which the claim, whether for tort or breach of contract, arose. We
think it does not matter in determining the place where the plaintiff may sue
whether he was hurt by the defendant in New York or New Jersey.6 It is
perfectly obvious that there is only one operating group and its employees work
just as fully for one corporation as the other. It is little short of absurd to say
that the New York corporation commits the New York torts, if any, and the
New Jersey corporation the torts in New Jersey, if any.
6
We think this general rule can well apply to the question of suits in federal
courts. Plaintiffs declared against this railroad as a New York corporation. It
certainly is a New York corporation. Does the fact that it is also a New Jersey
corporation defeat federal jurisdiction in a suit in New Jersey by a New Jersey
citizen? If it does, then it would follow that if the corporation were
incorporated in six states or ten states, as could well be the case with an
interstate railroad, no citizen of any one of those states could sue the
corporation in federal court in his own state. He would have to cross the state
line and bring suit there. We see no good reason for demanding a result which
on its face seems to us so lacking in substance.
10
The Supreme Court authorities do not help us very much. If there were a
Supreme Court decision directly on the subject of course we should follow it.
We find language which tends to support the plaintiffs here.9 But we can also
find some which certainly can be argued to the contrary.10 And it is interesting
that there has been no Supreme Court consideration of the problem since 1912.
11
Our conclusion is that these New Jersey plaintiffs can sue this company in New
Jersey as a New York corporation, and that the District Court in holding the
contrary, was incorrect. We think the rule we are declaring is more consonant
with the general rules governing these multistate corporations and we think it is
better in practice because it does not require useless ritual in instituting a suit
away from home. We admit, however, that a different view of the matter has
been expressed by two Courts of Appeals in other circuits.11
12
The plaintiffs urge several other grounds for reversal in which we think there is
no merit. We find no estoppel against the defendant.12 Nor do we see any
possibility of settling this case as a question of venue. We think it goes to the
legal right of a plaintiff to get into a United States court in New Jersey. If that
court has, under the law, no authority to entertain this lawsuit we think the only
thing for a judge to do is to dismiss it. But here, as already indicated, we think
the court did have authority to hear the plaintiffs' cases.
13
The judgments of the District Court will be reversed and the cases remanded
for further proceedings not inconsistent with this opinion.
Notes:
1
In one of the cases defendant merely denied that it was a New York
corporation. We may take judicial notice of the legislative action making a
consolidated corporation from the three predecessor associations. See Town of
Bethel v. Atlantic Coast Line R. Co., 4 Cir., 1936, 81 F.2d 60, certiorari denied,
1936, 298 U.S. 682, 56 S.Ct. 952, 80 L. Ed. 1402; Peterborough R. R. v.
Boston & M. R. R., 1 Cir., 1917, 239 F. 97
At the end of the section discussing the fictions on which diversity rules of
federal jurisdiction over corporations have been built, Professor Bunn says:
"This is one of the things that causes scientists and other literal-minded people
to say that lawyers believe in magic. We may not admit that fully, but we shall
indeed have to confess that there is nothing unlawyerlike in using fictions to
accomplish a result." Bunn, Jurisdiction and Practice of the Courts of the
United States 3 (5th ed. 1949). Compare the development of rules concerning
jurisdiction over suits for foreign torts in English courts. Goodrich, Conflict of
Laws (3d ed. 1949) 270
4
So held in Pennsylvania R. v. St. Louis, Alton & Terre Haute R. Co., 1886, 118
U.S. 290, 6 S.Ct. 1094, 30 L.Ed. 83; Muller v. Dows, 1876, 94 U.S. 444, 24 L.
Ed. 207; Boston & M. R. R. v. Breslin, 1 Cir., 1935, 80 F.2d 749, certiorari
denied, 1936, 297 U.S. 715, 56 S.Ct. 590, 80 L.Ed. 1000; Boston & M. R. R. v.
Hurd, 1 Cir., 1901, 108 F. 116, certiorari denied, 1902, 184 U.S. 700, 22 S.Ct.
939, 46 L.Ed. 765; cf. Chicago & M. W. Railway Co. v. Whitton, 1871, 13
Wall. 270, 20 L.Ed. 571
For cases in which the language might indicate that the place of injury is
important see Patch v. Wabash R. Co., 1907, 207 U.S. 277, 283, 28 S.Ct. 80, 52
L.Ed. 204; St. Louis & San Francisco Ry. v. James, 1896, 161 U.S. 545, 560,
16 S.Ct. 621, 40 L.Ed. 802; Winn v. Wabash R. Co., C.C.W.D.Mo.1902, 118
F. 55, 65; Missouri Pac. Ry. v. Meeh, 8 Cir., 1895, 69 F. 753, 758-59. But
courts which have been faced with the problem have held it immaterial.
Southern Ry. v. Allison, 1903, 190 U.S. 326, 23 S.Ct. 713, 47 L.Ed. 1073;
Boston & M. R. R. v. Breslin, 1 Cir., 1935, 80 F.2d 749, certiorari denied,
1936, 297 U.S. 715, 56 S.Ct. 590, 80 L.Ed. 1000; Boston & M. R. R. v. Hurd, 1
Cir., 1901, 108 F. 116, certiorari denied, 1902, 184 U.S. 700, 22 S.Ct. 939, 46
L.Ed. 765; Murphy v. Hudson & Manhattan R. Co., D.C.E. D.N.Y.1942, 45
F.Supp. 720; Case v. Atlanta & C. A. L. Ry., W.D.S.C. 1915, 225 F. 862
Cf. Memphis & Charleston R. Co. v. Alabama, 1882, 107 U.S. 581, 2 S.Ct.
432, 27 L.Ed. 518; Town of Bethel v. Atlantic Coast Line R. Co., 4 Cir., 1936,
81 F.2d 60, certiorari denied, 1936, 298 U.S. 682, 56 S.Ct. 952, 80 L.Ed. 1402;
Peterborough R. R. v. Boston & M. R. R., 1 Cir., 1917, 239 F. 97. But cf.
Louisville, New Albany & Chicago Ry. v. Louisville Trust Co., 1899, 174 U.S.
552, 19 S.Ct. 872, 43 L.Ed. 1081; Walters v. Chicago, B. & Q. R. Co.,
C.C.D.Neb. 1900, 104 F. 377, affirmed per curiam, 1902, 186 U.S. 479, 22
S.Ct. 941, 46 L.Ed. 1266
Nor do we think it important whether the combination is a merger or
consolidation, but see Atlantic Coastline R. Co. v. Dunning, 4 Cir., 1908, 166 F.
850, 855, or whether the charter was issued to natural persons or to a corporate
entity, but see St. Louis & San Francisco Ry. v. James, 1896, 161 U.S. 545,
565, 16 S.Ct. 621, 40 L.Ed. 802; Carolina & N. W. Ry. v. Town of Clover,
W.D.S.C.1929, 34 F.2d 480, 487; Geoffroy v. New York, N. H. & H. R. Co.,
D.C.R.I.1926, 13 F.2d 947, affirmed 1 Cir., 1927, 16 F.2d 1017.
8
The Missouri Pacific Ry. v. Castle, 1912, 224 U.S. 541, 32 S.Ct. 606, 56 L.Ed.
875; Martin's Adm'r v. B. & O. R. R. Co., 1894, 151 U.S. 673, 14 S.Ct. 533, 38
L.Ed. 311; Goodlett v. Louisville & Nashville R. R., 1887, 122 U.S. 391, 7
S.Ct. 1254, 30 L.Ed. 1230; Pennsylvania R. R. v. St. Louis, Alton & Terre
Haute R. R., 1886, 118 U.S. 290, 6 S.Ct. 1094, 30 L. Ed. 83; Atlantic Coastline
R. Co. v. Dunning, 4 Cir., 1908, 166 F. 850
See Southern Ry. v. Allison, 1903, 190 U.S. 326, 338, 23 S.Ct. 713, 47 L.Ed.
1078; Nashua & Lowell Ry. v. Boston & Lowell Ry., 1890, 136 U.S. 356, 372,
375, 382, 10 S.Ct. 1004, 34 L.Ed. 363; Ohio & Miss. R. Co. v. Wheeler, 1861,
1 Black 286, 297, 17 L.Ed. 130
10
See Patch v. Wabash R. Co., 1907, 207 U.S. 277, 283, 28 S.Ct. 80, 52 L.Ed.
204; Louisville, New Albany & Chicago Ry. v. Louisville Trust Co., 1899, 174
U.S. 552, 563, 19 S.Ct. 817, 43 L.Ed. 1081; Memphis & Charleston R. Co. v.
State of Alabama, 1882, 107 U.S. 581, 585, 2 S.Ct. 432, 27 L.Ed. 518; Muller
v. Dows, 1876, 94 U.S. 444, 447, 24 L.Ed. 207; Chicago & N. W. Railway Co.
v. Whitton, 1871, 13 Wall. 270, 283, 20 L. Ed. 571
11
12