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policy, and selected its directors; that on January 26, 1898, the defendant John J. Harrington caused the defendant Sayles, Zahn Company to be organized, for the purpose of taking over the business of the defendant Sol Sayles Company and of one Henry Zahn, and thereupon the property of the Sol Sayles Company and of Zahn was transferred to the Sayles, Zahn Company, which likewise was controlled by the defendant John J. Harrington; that the Sol Sayles Company received, in consideration of the transfer of its property, $50,000 of the capital stock of the Sayles, Zahn Company, and subsequently subscribed for $50,000 additional stock.

"It is further alleged that about February 1, 1899, the defendants Harrington, for the purpose of cheating and defrauding the Sol Sayles Company, and the complainants, of their interest in the assets of the Sayles, Zahn Company, fraudulently caused the Sol Sayles Company to execute and deliver to them, without any consideration whatsoever, its promissory notes, aggregating $23,700, which were utterly fictitious, and thereafter, and on October 3, 1902, the defendants Harrington, in furtherance of their fraudulent scheme, caused an action to be instituted and a judgment to be recovered against the Sol Sayles Company, for the amount of the said promissory notes and interest which was alleged to have accrued thereon, the Sol Sayles Company being in utter ignorance of the nature of the action and omitting to interpose any defense thereto.

"This scheme resulted in the recovery of a judgment against the defendant Sol Sayles Company on October 28, 1902, for $27,357.28, in favor of the defendants Harrington, who thereupon caused an execution to be issued to the sheriff of the county of New York, against the property and assets of the Sol Sayles Company, under which execution the said sheriff levied on the shares of stock in the Sayles, Zahn Company, and also two bonds of the New Jersey Steamboat Company, which belonged to the Sol Sayles Company, and sold all of the right, title and interest of the Sol Sayles Company in the said certificates of stock and in the said bonds, the said defendants

Statement of the Case.

196 U. S.

Harrington causing them to be purchased for their own benefit; said shares of stock being then, as the defendants Harrington well knew, and have ever since continued to be, worth upwards of $200,000.

"It further alleged that the complainants caused a demand to be made upon the defendants Harrington, that they transfer the said shares of stock and the said bonds to the Sol Sayles Company, but that they have refused to do so, and have insisted that these shares of stock and bonds are their personal and individual property, and that neither the Sol Sayles Company nor their complainants have any right, title or interest. in either the said shares of stock or the said bonds, or any part thereof.

"The twentieth paragraph of the bill of complaint is as follows:

""The complainants were and each of them was a shareholder of the defendant Sol Sayles Company at the time of the transactions herein complained of. This suit is not a collusive one to confer upon a court of the United States jurisdiction of a case of which it would not otherwise have cognizance. The complainants are unable to secure any corporate action on the part of the defendant Sol Sayles Company to redress the wrongs hereinbefore set forth, nor are they able to obtain any redress at the hands of the stockholders of the said defendant Sol Sayles Company. The board of directors of said corporation is under the absolute control and domination of the defendant John J. Harrington, and the said Harrington, by reason of having possession of a majority of the capital stock of the said corporation, likewise controls the action of the stockholders. Although requested for information with regard to the facts hereinbefore set forth, he has refused to give any information with regard thereto, and has declined to redress the wrongs of which complaint is herein made, or to give to the complainants any opportunity to lay before the board of directors or the stockholders of the defendant Sol Sayles Company the facts herein set forth.'"

196 U.S.

Argument for Appellees.

Mr. Charles A. Hess for appellants:

There is diversity of citizenship between complainants and defendants, the former being citizens of New Jersey and the latter of New York.

Appellees' contention that appellants are estopped or debarred from asserting the actual facts as to diversity of citizenship because stockholders are presumed to be citizens of the same State as the corporation, may on its face be good reasoning, but it is based entirely on a legal fiction, which has been indulged for the purpose of enabling the Federal courts to exercise jurisdiction over corporations. Legal fictions, however, are not always carried out to their logical conclusion, and this court has entertained jurisdiction in numerous instances, where precisely the same state of facts existed as in the present case. Among the more important precedents are the following: Dodge v. Woolsey, 18 How. 331; Hawes v. Oakland, 104 U. S. 450; Quincy v. Steel, 120 U. S. 241; Pollock v. Farmers' L. & T. Co., 157 U. S. 429; Cotting v. Kansas City Stock Yard Co., 183 U. S. 79; Utah-Nevada Co. v. DeLamar, 133 Fed. Rep. 113.

Even though complainants are seeking to maintain this action in the right of the Sol Sayles Company, in view of the trend of authority that fact is not entitled to weight as against the circumstances that such company is in fact a defendant. De Neufville v. N. Y. & Northern Ry. Co., 81 Fed. Rep. 10, 13.

Mr. Philip J. Britt and Mr. John J. Adams for appellees: There is no such diversity of citizenship between the complainants and defendants as is required under the Federal statutes. Complainants sue, not in their own right, but as stockholders of the Sol Sayles Company, and are, therefore, to be conclusively presumed, for purposes of jurisdiction, to be citizens of New York. See also rule 94 in equity.

The action is brought in the right of the corporation. Davenport v. Dows, 18 Wall. 626; Dewing v. Perdicaris, 96 U. S. 197; Porter v. Sabin, 149 U. S. 473; Dickerman v. Northern

Argument for Appellees.

196 U. S.

Trust Co., 176 U. S. 188; Alexander v. Donohoe, 143 N. Y. 203; Flynn v. Brooklyn City R. R. Co., 158 N. Y. 493. As to different classes of stockholders' actions and where the damages belong to the corporation and not to individual stockholders see Niles v. N. Y. C. & H. R. R. Co., 176 N. Y. 119; Smith v. Hurd, 12 Metc. 371; Allen v. Curtis, 26 Connecticut, 456. As to the status of corporations as citizens and the stockholders being of the same State as that under whose laws the corporation is organized see Bank of U. S. v. Deveaux, 5 Cranch, 61; Hope Ins. Co. v. Boardman, 5 Cranch, 57; Sullivan v. Fulton Steamboat Co., 6 Wheat. 540; Breithaupt v. Bank of Georgia, 1 Pet. 238; Commercial Bank v. Slocomb, 14 Pet. 60; Louisville &c. R. R. Co. v. Letson, 2 How. 497, 558; Marshall v. B. & O. R. R. Co., 16 Ohio St. 314, 328; Drawbridge Co. v. Shepherd, 20 How. 227, 233; Ohio & Miss. R. R. v. Wheeler, 1 Black, 286, 296; Muller v. Dows, 94 U. S. 444; Steamship Co. v. Tugman, 106 U. S. 118, 121; Memphis & Charleston R. R. v. Alabama, 107 U. S. 581; Shaw v. Quincy Mining Co., 145 U. S. 444, 451; St. Louis & San Francisco Railway Co. v. James, 161 U. S. 545; Barrow S. S. Co. v. Kane, 170 U. S. 100; Southern Ry. Co. v. Allison, 190 U. S. 326; Great Southern Fire Proof Hotel Co. v. Jones, 177 U. S. 456; Taylor v. Illinois Central Ry. Co., 89 Fed. Rep. 119; Thomas v. Board of Trustees, 195 U. S. 207; cases cited by appellants and Hanchett v. Blair, 100 Fed. Rep. 817, are not in point, and as to rule 94 in equity see Davis & Farnum Mfg. Co. v. Los Angeles, 189 U. S. 220.

The complainants are suing solely for the benefit of the Sol Sayles Company and that corporation, although in form a defendant, is, in legal effect, on the same side of the controversy as the complainants. Arapahoe County v. Railway Co., 4 Dillon, 277; Walden v. Skinner, 101 U. S. 589; and see also as to where defendants may be on same side as complainants, Covert v. Waldron, 33 Fed. Rep. 311; The Removal Cases, 100 U. S. 457; Pacific Railroad v. Ketchum, 101 U. S. 289; Harter v. Kernochan, 103 U. S. 562; Evers v. Watson, 156 U. S. 532;

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Brown v. Truesdale, 138 U. S. 389, 395; Merchants Cotton Press Co. v. N. A. Ins. Co., 151 U. S. 385; Wilson v. Oswego Agency, 151 U. S. 63; Cilly v. Patton, 62 Fed. Rep. 498; Board of Trustees v. Blair, 70 Fed. Rep. 414; Consol. Water Co. v. Babcock, 76 Fed. Rep. 642; Shipp v. Williams, 62 Fed. Rep. 4; Gardner v. Brown, 21 Wall. 36; Pittsburg, C. & St. L. Ry. Co. v. B. & O. R. R. Co., 61 Fed. Rep. 705; Boston Safe Dep. & Tr. Co. v. Racine, 97 Fed. Rep. 817; Old Colony Trust Co. v. Altanta Ry. Co., 100 Fed. Rep. 798; 1 Foster's Federal Practice, 64.

The lack of jurisdiction of the court can be raised at any stage of the litigation, and even though the appellees had not raised the question, the court could, of its own motion, have dismissed the cause for want of jurisdiction. Grace v. Am. Cen. Ins. Co., 109 U. S. 278, 283; Mexican Cen. R. R. Co. v. Pinkney, 149 U. S. 194; Thomas v. Board of Trustees, 195 U. S. 207.

Mr. George H. Yeaman by leave of the court filed a brief as amicus curiæ contending that diversity of citizenship did not exist and that the Circuit Court had no jurisdiction of the


MR. JUSTICE MCKENNA, after stating the case, delivered the opinion of the court.

To sustain the action of the Circuit Court in dismissing the bill the argument is as follows: (1) By a conclusive presumption of law the stockholders of a corporation are deemed to be citizens of the State of the corporation's domicile. (2) Granting that the complainants are citizens of New Jersey, yet as they are suing for the Sol Sayles Company, a New York corporation, that corporation, although in form a defendant, is in legal effect on the same side of the controversy as the complainants, and since it is a citizen of the same State as the other defendants, the Circuit Court had no jurisdiction, as the suit

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