Bank of the United States v. Deveaux

Supreme Court of the United States · 1809 · Corporations

CorporationsFederal jurisdictionDiversity jurisdictioncorporationcitizenshipdiversityfederal courtsparty status

Facts

The Bank of the United States, a corporation created by federal law, brought suit in federal circuit court against a citizen of another state. The defendant challenged jurisdiction by plea in abatement. The Bank argued first that its incorporating act gave it a right to sue in federal court, and second that a corporation composed of citizens of one state could sue a citizen of another state in the federal courts. The jurisdictional averment was made in the corporate pleading.

Issue

Did the Bank's charter itself confer a right to sue in the federal courts? If not, may a corporation, though not itself a citizen, invoke federal diversity jurisdiction by relying on the citizenship of the individuals who compose it and sue in its corporate name?

Rule

A clause authorizing a corporation to "sue and be sued" gives only capacity to litigate in courts otherwise having cognizance of the cause and does not itself enlarge federal jurisdiction unless Congress expressly says so. Although a corporation aggregate is not itself a citizen, federal courts may, on a question of jurisdiction, look beyond the corporate name to the character of the individuals composing it; if those members are citizens of a different state from the opposing party, the suit falls within controversies between citizens of different states, and an averment to that effect in the corporate name is sufficient.

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River Harbor Insurance Society was created by a federal statute that authorizes it to make contracts, hold property, and "sue and be sued, plead and be impleaded, in any court of record." It files an action in federal circuit court in Richmond against Owen Pike for $40 on a promissory note and argues that the charter itself gives the federal court jurisdiction.

Is the federal court's subject-matter jurisdiction proper on that basis alone?

Explanation. The majority held that a charter clause authorizing a corporation to "sue and be sued" does not itself enlarge federal jurisdiction. It merely allows the corporation to appear in any court that already has cognizance of the cause. The Court emphasized that if Congress intends to confer access to federal court, it says so expressly. (Derived from Bank of the United States v. Deveaux (1809).)