Chapter LVI: Section 2: The judicial Power shall extend to all Cases, in Law (3)

A very important issue that presents itself in interstate litigation is the enforcement of the Court's decree, once it has been entered. In some types of suits, as Charles Warren has indicated, this issue may not arise; and if it does, it may be easily met. Thus a judgment putting a State in possession of disputed territory is ordinarily self-executing. But if the losing State should oppose execution, refractory State officials, as individuals, would be liable to civil suits or criminal prosecutions in the federal courts. Likewise an injunction decree may be enforced against State officials as individuals by civil or criminal proceedings. Those judgments, on the other hand, which require a State in its governmental capacity to perform some positive act present the issue of enforcement in more serious form. The issue arose directly in the long and much litigated case between Virginia and West Virginia over the proportion of the State debt of original Virginia owed by West Virginia after its separate admission to the Union under a compact which provided that West Virginia assume a share of the debt. The suit was begun in 1906, and a judgment was rendered against West Virginia in 1915. Finally in 1917 Virginia filed a suit against West Virginia to show cause why, in default of payment of the judgment, an order should not be entered directing the West Virginia legislature to levy a tax for payment of the judgment.[477] Starting with the rule that the judicial power essentially involves the right to enforce the results of its exertion,[478] the Court proceeded to hold that it applied with the same force to States as to other litigants,[479] and to consider appropriate remedies for the enforcement of its authority. In this connection, Chief Justice White declared: "As the powers to render the judgment and to enforce it arise from the grant in the Constitution on that subject, looked at from a generic point of view, both are federal powers and, comprehensively considered, are sustained by every authority of the federal government, judicial, legislative, or executive, which may be appropriately exercised."[480] The Court, however, left open the question of its power to enforce the judgment under existing legislation and scheduled the case for reargument at the next term, but in the meantime West Virginia accepted the Court's judgment and entered into an agreement with Virginia to pay it.[481]

Controversies Between a State and Citizens of Another State

The decision in Chisholm _v._ Georgia[482] that this category of cases included equally those where a State was a party defendant provoked the proposal and ratification of the Eleventh Amendment, and since then controversies between a State and citizens of another State have included only those cases where the State has been a party plaintiff or has consented to be sued. As a party plaintiff, a State may bring actions against citizens of other States to protect its legal rights or as _parens patriae_ to protect the health and welfare of its citizens. In general, the Court has tended to construe strictly this grant of judicial power which simultaneously comes within its original jurisdiction by perhaps an even more rigorous application of the concepts of cases and controversies than that in cases between private parties.[483] This it does by holding rigorously to the rule that all the party defendants be citizens of other States,[484] and by adhering to Congressional distribution of its original jurisdiction concurrently with that of other federal courts.[485]

NON-JUSTICIABLE CONTROVERSIES

The Supreme Court has refused to take jurisdiction of a number of suits brought by States because of the lack of a justiciable controversy. In cases like Mississippi _v._ Johnson[486] and Georgia _v._ Stanton,[487] the political nature of the controversy constituted the dominant reason. In others, like Massachusetts _v._ Mellon[488] and Florida _v._ Mellon,[489] the political issue, though present, was accompanied by the inability of a State to sue in behalf of its citizens as _parens patriae_ to contest the validity of an act of Congress when in national matters the National Government bore the relation of _parens patriae_ to the same persons as citizens of the United States. Moreover, a State may not bring a suit in its own name for the benefit of particular persons.[490]

JURISDICTION CONFINED TO CIVIL CASES

In Cohens _v._ Virginia[491] there is a dictum to the effect that the original jurisdiction of the Supreme Court does not include suits between a State and its own citizens. Long afterwards, the Supreme Court dismissed an action for want of jurisdiction because the record did not show the corporation against which the suit was brought was chartered in another State.[492] Subsequently the Court has ruled that it will not entertain an action by a State to which its citizens are either parties of record, or would have to be joined because of the effect of a judgment upon them.[493] In his dictum in Cohens _v._ Virginia, Chief Justice Marshall also indicated that perhaps no jurisdiction existed over suits by States to enforce their penal laws.[494] Sixty-seven years later the Court wrote this dictum into law in Wisconsin _v._ Pelican Insurance Co.[495] Here Wisconsin sued a Louisiana corporation to recover a judgment rendered in its favor by one of its own courts. Relying partly on the rule of international law that the courts of no country execute the penal laws of another, partly upon the 13th section of the Judiciary Act of 1789 which vested the Supreme Court with exclusive jurisdiction of controversies of a civil nature where a State is a party, and partly on Justice Iredell's dissent in Chisholm _v._ Georgia,[496] where he confined the term "controversies" to civil suits, Justice Gray ruled for the Court that for purposes of original jurisdiction, "controversies between a State and citizens of another State" are confined to civil suits.[497]

SUITS BY A STATE AS _PARENS PATRIAE_; JURISDICTION DECLINED

The distinction between suits brought by States to protect the welfare of the people as a whole and suits to protect the private interests of individual citizens is not easily drawn. In Oklahoma ex rel. Johnson _v._ Cook,[498] the Court dismissed a suit brought by Oklahoma to enforce the statutory liability of a stockholder of a State bank then in the process of liquidation through a State officer. Although the State was vested with legal title to the assets under the liquidation procedure, the State's action was independent of that and it was acting merely for the benefit of the bank's creditors and depositors. A generation earlier the Court refused jurisdiction of Oklahoma _v._ Atchison, Topeka & Santa Fe R. Co.[499] in which Oklahoma sought to enjoin unreasonable rate charges by a railroad on the shipment of specified commodities, inasmuch as the State was not engaged in shipping these commodities and had no proprietary interest in them.

SUITS BY A STATE AS _PARENS PATRIAE_; JURISDICTION ACCEPTED

Georgia _v._ Evans,[500] on the other hand, presents the case of a clear State interest as a purchaser of materials. Here, Georgia sued certain asphalt companies for treble damages under the Sherman Act arising allegedly out of a conspiracy to control the prices of asphalt of which Georgia was a large purchaser. The matter of Georgia's interest was not contested and did not arise. The case is primarily significant for the ruling that a State is a person under section 7 of the Sherman Act authorizing suits by "any person" for treble damages arising out of violations of the Sherman Act. A less clear-cut case, and one not altogether in accord with Oklahoma _v._ Atchison, Topeka & Santa Fe R. Co.,[501] is Georgia _v._ Pennsylvania R. Co.[502] in which the State, suing as _parens patriae_ and in its proprietary capacity, was permitted to file a bill of complaint against twenty railroads for injunctive relief from freight rates, allegedly discriminatory against the State and asserted to have been fixed through coercive action by the northern roads against the southern roads in violation of the 16th section of the Clayton Act. Although the rights of Georgia were admittedly based on federal laws, the Court indicated that the enforcement of the Sherman and Clayton acts depends upon civil as well as criminal sanctions. Moreover, the interests of a State for purposes of invoking the original jurisdiction of the Supreme Court were held, as in Georgia _v._ Tennessee Copper Co.,[503] not to be confined to those which are proprietary but to "embrace the so-called 'quasi-sovereign' interests which * * * are 'independent of and behind the titles of its citizens, in all the earth and air within its domain.'"[504]

GEORGIA _v._ PENNSYLVANIA RAILROAD

In the course of his opinion Justice Douglas, speaking for a narrowly divided Court, treated the alleged injury to Georgia as a proprietor as a "makeweight," and remarked that the "original jurisdiction of this Court is one of the mighty instruments which the framers of the Constitution provided so that adequate machinery might be available for the peaceful settlement of disputes between States and between a State and citizens of another State * * * Trade barriers, recriminations, intense commercial rivalries had plagued the colonies. The traditional methods available to a sovereign for the settlement of such disputes were diplomacy and war. Suit in this Court was provided as an alternative."[505] Discriminatory freight rates, said he, may cause a blight no less serious than noxious gases in that they may arrest the development of a State and put it at a competitive disadvantage. "Georgia as a representative of the public is complaining of a wrong which, if proven, limits the opportunities of her people, shackles her industries, retards her development, and relegates her to an inferior economic position among her sister States. These are matters of grave public concern in which Georgia has an interest apart from that of particular individuals who may be affected. Georgia's interest is not remote; it is immediate. If we denied Georgia as _parens patriae_ the right to invoke the original jurisdiction of the Court in a matter of that gravity, we would whittle the concept of justiciability down to the stature of minor or conventional controversies. There is no warrant for such a restriction."[506]

Controversies Between Citizens of Different States

THE MEANING OF "STATE"; HEPBURN _v._ ELLZEY

Despite stringent definitions of the words "citizen" and "State" and strict statutory safeguards against abuse of the jurisdiction arising out of it, the diversity of citizenship clause is one of the more prolific sources of federal jurisdiction. In Hepburn _v._ Ellzey,[507] Chief Justice Marshall, speaking for the Court, confined the meaning of the word "State," as used in the Constitution, to "the members of the American confederacy" and ruled that a citizen of the District of Columbia could not sue a citizen of Virginia on the basis of diversity of citizenship. In the course of his brief opinion Marshall owned that it was "extraordinary that the courts of the United States, which are open to aliens, and to the citizens of every State in the union should be closed" to the residents of the District, but the situation, he indicated, was "a subject for legislative, not for judicial consideration."[508] The same restrictive rule was later extended to citizens of territories of the United States.[509]

Extension of Jurisdiction by the Act of 1940

Whether Chief Justice Marshall had in mind a constitutional amendment or an act of Congress when he spoke of legislative consideration is not clear. At any rate, not until 1940 did Congress enact a statute to confer on federal district courts jurisdiction of civil actions (involving no federal question) "between citizens of different States, or citizens of the District of Columbia, the Territory of Hawaii, or Alaska and any State or Territory."[510] In National Mutual Insurance Co. _v._ Tidewater Transfer Co.,[511] this act was sustained by five judges, but for widely different reasons. Justice Jackson, in an opinion in which Justices Black and Burton joined, was for adhering to the rule that the District of Columbia is not a State, but held the act to be valid nevertheless because of the exclusive and plenary power of Congress to legislate for the District and its broad powers under the necessary and proper clause.[512] Justice Rutledge, in a concurring opinion, in which Justice Murphy joined, agreed that the act was valid and asserted that the Ellzey case should be overruled.[513] Chief Justice Vinson in a dissent in which Justice Douglas concurred[514] and Justice Frankfurter in a dissent in which Justice Reed joined[515] thought the act invalid and would have adhered to the rule in the Ellzey case. The net result is that the Ellzey case still stands insofar as it holds that the District of Columbia is not a State, but that under Congressional enactment citizens of the District may now sue citizens of States in the absence of a federal question, on the basis of no statable constitutional principle, but through the grace of what Justice Frankfurter called "conflicting minorities in combination."[516]

CITIZENSHIP, NATURAL PERSONS

For purposes of diversity jurisdiction State citizenship is determined by domicile or residence, for the determination of which various tests have been stated: removal to a State, acquiring real estate there, and paying taxes;[517] residence in a State for a considerable time;[518] and removal to a State with the intent of making it one's home for an indefinite period of time.[519] Where citizenship is dependent on intention, acts may disclose it more satisfactorily than declarations.[520] The fact that removal to another State is motivated solely by a desire to acquire citizenship for diversity purposes does not oust the federal courts of jurisdiction so long as the new residence is indefinite or the intention to reside there indefinitely is shown.[521] But a mere temporary change of domicile for the purpose of suing in a federal court is not sufficient to effectuate a change in citizenship.[522] Exercise of the right of suffrage is a conclusive test of citizenship in a State, and the acquisition of the right to vote without exercising it is sufficient to establish citizenship.[523]

CITIZENSHIP, CORPORATIONS

In Bank of United States _v._ Deveaux,[524] Chief Justice Marshall declared: "That invisible, intangible, and artificial being, that mere legal entity, a corporation aggregate, is certainly not a citizen; and consequently cannot sue or be sued in the courts of the United States, unless the rights of the members, in this respect, can be exercised in their corporate name." He proceeded then to look beyond the corporate entity and hold that the bank could sue under the diversity provisions of the Constitution and the Judiciary Act of 1789 because the members of the bank as a corporation were citizens of one State and Deveaux was a citizen of another. This holding was reaffirmed a generation later, in Commercial and Railroad Bank of Vicksburg _v._ Slocomb,[525] at a time when corporations were coming to play a more important role in the national economy. The same rule, combined with the rule that in a diversity proceeding all the persons on one side of a suit must be citizens of different States from all persons on the other side,[526] could in the course of time have closed the federal courts in diversity cases to the larger corporations having stockholders in all or most of the States.

If such corporations were to have the benefits of diversity jurisdiction, either the Deveaux or the Strawbridge rule would have to yield. By 1844, only four years after the Slocomb Case, the interests of corporations in docketing cases in the federal courts as citizens of different States appeared more important to the Supreme Court than the weight to be attached to precedents, even those set by John Marshall, and in Louisville, Cincinnati, and Charleston R. Co. _v._ Letson,[527] both the Deveaux and Slocomb cases were overruled. After elaborate arguments by counsel, the Court, speaking through Justice Wayne, held that "a corporation created by and doing business in a particular State, is to be deemed to all intents and purposes as a person, although an artificial person, an inhabitant of the same State, for the purposes of its incorporation, capable of being treated as a citizen of that State, as much as a natural person."[528]

In the Letson Case the emphasis is upon the place of incorporation of a joint stock company as something completely separate from the citizenship of its members. In succeeding cases, however, this fiction of corporate personality has undergone modifications so that a corporation, though still a citizen of the State where it is chartered, is such by virtue of the jurisdictional fiction that all the stockholders are citizens of the State which by its laws created the corporation.[529] This presumption is conclusive and irrebuttable and resembles in many ways the English jurisdictional fiction that for providing remedies for wrongs done in the Mediterranean "the Island of Minorca was at London, in the Parish of St. Mary Le Bow in the Ward of Cheap."[530] This fiction creates a logical anomaly, which the Letson rule had avoided, in those cases in which a stockholder of one State sues a corporation chartered in another State. Although all stockholders are conclusively presumed to be citizens of the State where the corporation is chartered, an individual stockholder from a different State may nevertheless aver his actual citizenship so as to maintain a diversity suit against the corporation.[531] These rulings lead to some extraordinary results, as John Chipman Gray has indicated: "The Federal courts take cognizance of a suit by a stockholder who is a citizen, say, of Kentucky, against the corporation in which he owns stock, which has been incorporated, say, by Ohio. Since he is a stockholder of an Ohio corporation, the court conclusively presumes that he is a citizen of Ohio, but if he were a citizen of Ohio, he could not sue an Ohio corporation in the Federal courts. Therefore the court considers that he is and he is not at the same time a citizen of Ohio, and it would have no jurisdiction unless it considered that he both was and was not at the same time a citizen both of Ohio and Kentucky."[532]

The Black and White Taxicab Case

These fictions of corporate citizenship make it easy for corporations to go into the federal courts on matters of law that are purely local in nature, and they have availed themselves of the opportunity to the full. For a time the Supreme Court tended to look askance at collusory incorporations and the creation of dummy corporations for purposes of getting cases into the federal courts,[533] but as a result of the Kentucky Taxicab Case,[534] decided in 1928, the limitation of collusion lost much of its force. Here the Black and White company, a Kentucky corporation, dissolved itself and obtained a charter as a Tennessee corporation in order to get the benefit of a federal rule which would condone an exclusive contract with a railroad to park its cabs in and around a station whereas the State rule forbade such contracts. The only change made was of the State of incorporation. The name of the company, its officers, and shareholders, and the location of its business all remained the same. Yet no collusion was found, and the company received the benefit of the federal rule--a measure of salvation by being born again in Tennessee. The odd result in the Taxicab Case, whereby citizens of Kentucky could conduct business there contrary to State law with the sanction of the Supreme Court of the United States, did not stem solely from the rule that the citizenship of a corporation is determined by the State of its incorporation, but also from this rule combined with the rule of Swift _v._ Tyson,[535] another by-product of diversity jurisdiction.

THE LAW APPLIED IN DIVERSITY CASES: SWIFT _v._ TYSON