FEDERAL JURISDICTION OVER CORPORATIONS.

The next case- The Bank v. Deveaux-is important and interesting as being the first case that came before the Supreme Court of the United States involving the question whether under the Judiciary Article of the Constitution (art. III, sec. 2) the Federal courts could be invested by Congress in any case with jurisdiction over corporations, and if so whether the Judiciary Act (sec. 11) did confer such jurisdiction in the case before the court. Neither the Constitution nor the Judiciary Act mentions "corporations," "citizens" only are mentioned, and the jurisdiction of the Federal court on this ground was limited by the Judiciary Act to a case where "the suit is between a citizen of the State where the suit is brought and a citizen of another State" (sec. 11). The case of The Bank v. Deveaux presented the question whether a private corporation - the Bank - could bring an original suit in the Federal court. The Supreme Court held that a corporation per se was not a "citizen," but also held that it represented citizens, and that in fact and in law the suit was between persons suing in their corporate character and the individual defendant. On this ground the jurisdiction of the Federal courts over corporations could only be maintained where all the members were citizens of one State or of some State other than that of the defendant. This narrow view remained unshaken for years, and it had the necessary effect of depriving the Federal courts in almost every instance of any jurisdiction over corporations, by whose

agency the great business enterprises of the country had at length come to be carried on.

The view taken by Chief Justice Marshall in the opinion in The Bank v. Deveaux was subsequently modified to the effect that "a suit by or against a corporation in its corporate name may be presumed to be a suit by or against citizens of the State which created the corporate body, and no averment or denial to the contrary is admissible for the purpose of withdrawing the suit from the jurisdiction of a court of the United States."1

The result thus finally reached was doubtless essential to carry out the full purpose of the Constitution in providing for a Federal judiciary, but the serious difficulties arising out of the word "citizen " in the Constitution in reaching that result are among the most impressive illustrations of the important part which fiction plays in the development of every system of jurisprudence.'

It was not easy to hold directly that "a corporation was a citizen," but it is in effect so held by the fiction which the court has adopted that all of the shareholders or members of a corporation are conclusively presumed to be citizens of the State which created the corporation, a presumption which in most instances is directly contrary to the fact.

The Supreme Court has since held that the word "person" in the Fourteenth Amendment of the Constitution included "corporations." On the like principles the court might have held that a corporation was a juristic person or citizen of the State that created it, and as such was a citizen within the meaning and purpose of the

1 The Ohio & Mississippi Railroad Company v. Wheeler, 1 Black,

U. S. Supreme Court Reports, 286.

2 Curtis, Jurisdiction of the United States Courts, ch. V.

Constitution and Judiciary Act; but that result was in the course of judicial evolution reached in a more easy and indirect way, by the adoption of the fiction above stated.

The opinion of the Chief Justice, aside from its importance, has the added interest of being the first of the cases in the Supreme Court which dealt with the difficult subject of Federal judicial power over corporations, and as being one of the very few instances in which the views or opinions of Chief Justice Marshall were modified if not overruled, which in this instance was done with his

concurrence.

The Bank of the United States v. Deveaux and Others. February Term, 1809.

[5 Cranch's Reports, 61-92.]

The propositions of law decided in this case are thus stated by Mr. Justice Curtis in his edition of Decisions of the Supreme Court of the United States:

Whether a corporation aggregate can be sued in the courts of the United States depends upon the citizenship of its members.

The charter of the Bank of the United States does not enable that bank to sue in the courts of the United States.

The facts in the case were as follows:

In 1805 the State of Georgia passed a law taxing a branch bank of the United States at Savannah. The Bank of the United States was established under an Act

of Congress. The tax was not paid, and the State officers entered the bank and seized $2,000 in money. The bank sued Deveaux, the State officer who authorized the entry and also the one who made the entry, in trespass, before the United States Circuit Court for the District of Georgia. The declaration contained in averment was that the plaintiffs "are citizens of the State of Pennsylvania, and that the said Deveaux and Robinson are citizens of the State of Georgia." The defendants pleaded to the jurisdiction of the court that the body corporate which brought the action was not competent to sue in a Federal court. To this plea to the jurisdiction the plaintiffs demurred, and the court gave judgment in favor of the defendants, sustaining the plea. The case came in due course of law to the Supreme Court of the United States,?

11 Statutes at Large, 191, chapter 10, approved February 25, 1791. That Congress has power to incorporate a bank and establish branches in the States, see McCulloch v. Maryland, 4 Wheat. 316, and the opinion of Chief Justice Marshall therein contained in this volume. As to the power of the States to tax banks established by Congress, see same case and also post, opinion of Marshall, Chief Justice, in Osborn v. Bank of the United States, 9 Wheat. 738.

Inasmuch as in this case the plaintiff bank was chartered by the Act of Congress, no reason is perceived why, under the later decisions of the Supreme Court, the plaintiff being a Federal corpora2 The court was constituted as follows:

JOHN MARSHALL, Chief Justice.

SAMUEL CHASE,

BUSHROD WASHINGTON,

WILLIAM JOHNSON,

BROCKHOLST LIVINGSTON,

Associate Justices.

Justice Livingston, having an interest in the question, gave no opinion.

Horace Binney, R. G. Harper and Mr. Ingersoll appeared for the plaintiffs.

P. B. Key and Walter Jones appeared for the defendants.

which decided the two questions stated in the opinion of the court, which was delivered by Chief Justice Marshall.

MARSHALL, Chief Justice. Two points have been made in this cause.

1. That a corporation, composed of citizens of one State, may sue a citizen of another State in the Federal courts.

Opinion.

2. That a right to sue in those courts is conferred on this bank by the law which incorporates it.

The last point will be first considered.

The judicial power of the United States, as defined in the Constitution, is dependent, 1st. On the nature of the case; and 2d. On the character of the parties.

Jurisdiction of Circuit Court under the Judiciary Act.

By the judicial act, the jurisdiction of the Circuit Courts is extended to cases where the constitutional right to plead and be impleaded in the courts of the Union depends on the character of the parties; but where that right depends on the nature of the case, the Circuit Courts. derive no jurisdiction from that act, except in the single case of a controversy between citizens of the same State, claiming lands under grants from different States.

Unless, then, jurisdiction over this cause has been given to the Circuit Court by some other

Unless jurisdiction is given by some other than he judicial act, the Circuit Court has no jurisdiction.

than the judicial act, the Bank of the United States had not a right to sue in

that court, upon the principle that the case arises under a law of the United States.

tion, the Federal courts did not have jurisdiction on the ground of subject-matter, irrespective of the citizenship of the parties. See Pacific Railroad Removal Cases, 115 U. S. Supreme Court Reports, 1, and cases in the Supreme Court there cited. Post, p. 512.