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L. 708, chap. 126), to the agreement or com- The record discloses no instructions to pact between the states of New Jersey and the jury requested by defendant below, and New York respecting their territorial limits no exceptions were taken by it to the charge and jurisdiction, vested exclusive jurisdic of the court, which was not included in the

the sea adjoining the two states, does not raise a bill of exceptions or case made. Federal question which will sustain a writ of Defendant moved the court to direct a vererror from the Federal Supreme Court to a dict in its favor upon the following grounds: state court, where there is nothing in the

“Defendant claims the right, under the agreement and confirmatory state statutes abdicating rights in favor of the United statute of the United States confirming and States, and the transaction simply amounted approving the agreement as to boundaries to fixing the boundaries between the two between the state of New York and the state states.

of New Jersey, to be free in navigating the 2. A contention, on a motion for a directed ver- main sea to the eastward of Sandy Hook

dict, that the cession to the United States, in N. J. act March 12, 1846,

of jurisdiction over peninsula, from the operation of any law a certain strip of land at Sandy Hook, vested of the state of New Jersey giving a right of in the United States exclusive legislative ju- action for injuries causing death, and claims risdiction over the littoral waters extending 3 that, under the statutes aforesaid, the jumiles to the eastward of the coast line, pre risdiction of that state extends only to the sents a question respecting the exclusive legis- main sea; that is to say, low-water mark lative power of Congress under U. S. Const. art. I., & 8, cl. 17, which will sustain a writ along its exterior coast line, and to a line of error from the Federal Supreme Court to a drawn from headland to headland across the state court.

entrance to the bay of New York. It thereB. The public laws of New Jersey are in force fore asks the court to direct the jury to re

in the littoral waters of Sandy Hook penin- turn a verdict for the defendant, on the sula below low-water mark, whether enacted prior or subsequently to the cession to the ground that it appears by uncontradicted United States, by N. J. act March 12, 1846, evidence that the collision between the of jurisdiction over a portion of that penin- steamship Alene and the schooner James sula for military purposes.

Gordon Bennett, to recover damages for

which this suit is brought, occurred upon [No. 411.)

the main sea and to the eastward of the Submitted January 16, 1905. Decided Feb. Sandy Hook peninsula, and at a distance of ruary 20, 1905.

more than a mile to the eastward of low

water mark upon the exterior line thereIN N ERROR to the Supreme Court of the

of. State of New York to review a judgment of that court at a term held in and for the of the purchase by the United States of the

“Defendant claims the right, by reason County of New York, in favor of plaintiff, Sandy Hook peninsula, and the cession to in an action to recover damages for death occasioned by the sinking of a vessel as the the United States by the state of New Jerresult of a collision in waters alleged to be sey of jurisdiction over the same, and the subject to the exclusive legislative jurisdic-long

continued use of that peninsula, and of tion of the United States, which judgment the main sea to the eastward of it, for miliwas affirmed by the Appellate Division of tary purposes, to be free in navigating the the Supreme Court for the First Depart from the operation of any law of the state

main sea to the eastward of that peninsula ment, leave to appeal to the Court of Ap- of New Jersey, giving a right of action for peals being denied. On motion to dismiss

injuries causing death, and claims that the or affirm, Affirmed.

main sea to the eastward of said peninsula Statement by Mr. Chief Justice Fuller: to a distance of 3 miles from the shore is

: This action was brought in the supreme subject to the exclusive jurisdiction of the court of New York by Minnie Grube, as ad- United States. It therefore asks the court

. ministratrix of John Grube, against the to direct the jury to return a verdict for the Hamburg American Steamship Company, to defendant on the ground that it appears by

, recover damages for his death, under the uncontradicted evidence that the collision statute of New Jersey in that behalf, occa- between the steamship Alene and the schoonsioned by the sinking of the James Gordon er James Gordon Bennett, to recover damBennett, a vessel owned by a New Jersey ages for which this suit is brought, occurred corporation, by the steamship Alene, belong- upon the main sea and to the eastward of ing to the steamship company. There was the Sandy Hook peninsula, and at a disa conflict of evidence as to the place of the tance of more than a mile to the eastward of collision, evidence being given, on the one low-water mark, upon the exterior line hand, that it occurred in waters beyond the thereof." 3-mile limit of the coast of the state of New The court denied the motion, and defendJersey, and, on the other, that it occurred ant excepted. The jury found a general verwithin the 3-mile limit along that coast. dict for plaintiff below, and assessed the damages. Judgment was entered thereon, may be regarded as having been properly inwhich was affirmed by the appellate divi- voked by the second proposition, we feel sion of the supreme court, and a writ of justified in declining to sustain the motion error from the court of appeals was denied. to dismiss; and, retaining jurisdiction, we This writ of error was then allowed, and think the judgment must be affirmed. the case submitted on motions to dismiss or The jurisdiction of the United States over affirm.

25 S. 0.-23.

Sandy Hook is derived from the act of the

legislature of New Jersey of March 12, 1846, Mr. Everett P. Wheeler for plaintiff in set forth below.I N. J. Laws 1846, p. 146. error.

In 1806 and 1817 deeds of the land included Mr. Gilbert D. Lamb for defendant in in Sandy Hook were given the United States, error.

being simple conveyances of real estate for

named money consideration. Mr. Chief Justice Fuller delivered the

The New Jersey act of 1846 was merely opinion of the court:

one of cession, and the operation of the gen The assertion by plaintiff in error that eral laws of New Jersey was reserved as Federal questions were decided by the action therein provided. Ft. Leavenworth R. R. of the courts below turns on the denial of Company v. Lowe, 114 U. S. 525, 29 L. ed. the motion to direct a verdict on the two 264, 5 Sup. Ct. Rep. 995; Chicago, R. I. & grounds above set forth.

P. R. Co. v. McGlinn, 114 U. S. 542, 29 L. As to the first ground, the contention is ed. 270, 5 Sup. Ct. Rep. 1005. that the act of Congress of June 28, 1834 (4 Moreover, as was held by the circuit court Stat. at L. 708, chap. 126), giving consent of appeals for the second circuit, in Midto the agreement or compact between the dleton v. La Compagnie Générale Transatstates of New Jersey and New York in re- lantique, 41 C. C. A. 98, 100 Fed. 866, the spect of their territorial limits and juris- act did not purport to transfer jurisdiction diction, dated September 16, 1833, vested over the littoral waters beyond low-water exclusive jurisdiction in the Federal gov- mark, and for the purposes of this case the ernment over the sea adjoining the two public laws of New Jersey must be regarded states. But there is absolutely nothing in as obtaining there, whether enacted prior or the agreement and confirmatory statutes ab- subsequent to the cession. dicating rights in favor of the United States,

Judgment affirmed. and the transaction simply amounted to fixing the boundaries between the two states. N. Y. Laws 1834, p. 8, chap. 8; N. J. Laws ever, over such district (not exceeding 10 miles 1834, p. 118. The first proposition raised square) as may, by cession of particular states

and the acceptance of Congress, become the seat no Federal question.

of government of the United States, and to exAs to the second ground, the contention is ercise like authority over all places purchased that the cession by New Jersey to the United by the consent of the legislature of the state in States of jurisdiction over a certain strip which the same shall be, for the erection of of land at Sandy Hook vested in the United forts, magazines, arsenals, dockyards, and other

needful buildings." States exclusive legislative jurisdiction over $1. “That the jurisdiction in and over all that the littoral waters extending 3 miles to the portion of Sandy Hook, in the county of Mon. eastward of the coast line thereof.

mouth, owned by the United States, lying north Yet there was evidence introduced on be- of an east and west line through the mouth of half of defendant that the collision took Young's creek at low water, and extending

across the island or cape of Sandy Hook from place outside of that limit; and the trial shore to shore, and bounded on all other sides by court was not requested to instruct the jury the sea and Sandy Hook bay, be, and the same is that, if they found the collision to have oc- hereby, ceded to the said United States for mil. curred within that limit, the verdict should itary purposes; and the said United States shall

retain such jurisdiction so long as the said tract be for the defendant.

shall be applied to the military or public purThe charge of the court is not before us, poses of said United States, and no longer." nor was any exception taken to any part of 2. “That the jurisdiction ceded in the 1st secit, and the verdict and judgment must be tion of this act shall not prevent the execution held to have been rendered on the facts ac- on the said tract of land of any process, civil or cording to law. Hamburg-American 8. s. criminal, under the authority of this state, exCo. v. Lennan, 194 U. S. 629, 48 L. ed. 1157, cept so far forth as such process may affect any

of the real or personal property of the United 24 Sup. Ct. Rep. 857.

States of America within the said tract; nor This being the situation, we hesitate to re-shall it prevent the operation of the public laws tain jurisdiction. Nevertheless, as clause of this state within the bounds of the said tract, 17 of § 8 of article I. of the Constitutiont so far as the same may not be incompatible with

the free use and enjoyment of the said premises f“The Congress shall have power ... to by the United States for the purposes above exercise exclusive legislation in all cases whatso- specified."


(196 U. S. 579) BERTHA DOCTOR and Katherine Sayles, defendant as would confer jurisdiction upon Appts.,

the United States circuit court for the southern district of New York in the cause

within the meaning of the United States ReJOHN HARRINGTON, Dennis A. Harring vised Statutes, and that, in arranging the

ton, Sol Sayles Company, and Sayles, parties to this cause relatively to the conZahn Company.

troversy, the Sol Sayles Company must be

grouped on the side of the complainants, Courts-jurisdiction of Federal

of Federal circuit with the result that citizens of the same court-diversity of citizenship. state would thus be parties on both sides of

the litigation, and thus deprive this court 1. The presumption that the stockholders of a of jurisdiction.”

corporation are citizens of the state which The bill is very voluminous, and, as it is created it does not preclude them from as- agreed by appellees that the statement of serting their actual citizenship to sustain appellants substantially states its allegation, the jurisdiction of a Federal circuit court of a suit brought by them as such stockholders. we quote from appellants' brief as follows:

“This action was brought by the appel2. The fact that the ultimate interest of a cor

porate defendant may be the same as that of lants, as stockholders of the Sol Sayles the complaining stockholders does not require, Company, a corporation organized under the in arranging the parties to a cause, for the laws of the state of New York, for the purpurpose of determining the jurisdiction of a Federal circuit court, invoked on the ground pose of vacating and setting aside a judg.

ment obtained by the appellees Harring. of diversity of citizenship, that such corporation be grouped on the side of complain. ton against the Sol Sayles Company in the ants, where the bill alleges that the corpora- supreme court of the state of New York, on tion is under a control antagonistic to com October 28, 1902, and the levy and sale unplainants, and is made to act in a way detri- der an execution issued thereunder, and of mental to their rights.

requiring the appellees Harrington to de

liver to the Sol Sayles Company certain [No. 477.]

shares of stock in the Sayles, Zahn Com

pany, and certain bonds, belonging to the Submitted January 25, 1905. Decided Feb. Sol Sayles Company, which had been sold ruary 20, 1905.

under such execution, and for other equitable relief.

“In substance, the complainants allege in APPEAL from the Citment Scatherine Dile their bill of complaints that they are t citie United States for

zens of , New Jersey; that trict of New York to review the dismissal, defendants Harrington are citizens of the for lack of the requisite diversity of citi state of New York, and that the defendants zenship, of a suit brought by some of the Sol Sayles Company and Sayles, Zahn Comstockholders of a corporation, in which the pany are likewise citizens of said state, both corporation is made a party defendant. Re- being incorporated under the laws of that versed.

state; that the Sol Sayles Company was or

ganized with a capital stock of $100,000, Statement by Mr. Justice McKenna: divided into 1,000 shares of the par value of

The bill in this case was dismissed by the $100 per share, of which the complainants circuit court on the ground that it had no owned 500 shares and the defendants Harjurisdiction upon the fact alleged, and certi- rington 500 shares; that, by an arrangefied to this court the question of jurisdic-ment made between the owners of the stock, tion. The following is the question certi- the voting power on a majority thereof was fied.

given to the defendant John J. Harrington, “Whether or not the complainants' bill who directed the management of the affairs of complaint showed that there was such di- of the corporation, dictated its policy, and versity of citizenship between the parties selected its directors; that on January 26, complainant and parties defendant in this 1898, the defendant John J. Harrington cause as would be sufficient, under the pro- caused the defendant Sayles, Zahn Company visions of the United States Revised Stat- to be organized, for the purpose of taking utes, to confer jurisdiction upon the United over the business of the defendant Sol Sayles States circuit court for the southern district Company and of one Henry Zahn, and thereof New York, of this cause.'

upon the property of the Sol Sayles ComThe court further certified that it entered pany and of Zahn were transferred to the a decree dismissing the bill, "holding that Sayles, Zahn Company, which likewise was it appeared from the said bill of complaint controlled by the defendant John J. Harthat there was no such diversity of citizen- rington; that the Sol Sayles Company reship between the parties complainant and 'ceived, in consideration of the transfer of its property, $50,000 of the capital stock | is not a collusive one to confer upon a court of the Sayles, Zahn Company, and subse of the United States jurisdiction of a case quently subscribed for $50,000 additional of which it would not otherwise have cogstock.

nizance. The complainants are unable to "It is further alleged that about February secure any corporate action on the part of 1, 1899, the defendants Harrington, for the the defendant Sol Sayles Company to repurpose of cheating and defrauding the Sol dress the wrongs hereinbefore set forth, nor Sayles Company and the complainants of are they able to obtain any redress at the their interest in the assets of the Sayles, hands of the stockholders of the said deZahn Company, fraudulently caused the Solfendant Sol Sayles Company. The board of Sayles Company to execute and deliver to directors of said corporation is under the them, without any consideration whatsoever, absolute control and domination of the deits promissory notes, aggregating $23,700, fendant John J. Harrington, and the said which were utterly fictitious, and thereafter, Harrington, by reason of having possession and on October 3, 1902, the defendants Har- of a majority of the capital stock of the said rington, in furtherance of their fraudulent corporation likewise controls the action of scheme, caused an action to be instituted, the stockholders. Although requested for and a judgment to be recovered against the information with regard to the facts hereSol Sayles Company, for the amount of the inbefore set forth, he has refused to give any said promissory notes and interest which information with regard thereto, and has was alleged to have accrued thereon, the declined to redress the wrongs of which comSol Sayles Company being in utter ignorance plaint is herein made, or to give to the of the nature of the action, and omitting to complainants any opportunity to lay before interpose any defense thereto.

the board of directors or the stockholders “This scheme resulted in the recovery of a of the defendant Sol Sayles Company the judgment against the defendant Sol Sayles facts herein set forth."" Company on October 28, 1902, for $27,357.28, in favor of the defendants Harrington, Jr. Charles A. Hess for appellants. who thereupon caused an execution to be Messrs. Philip J. Britt and John J. issued to the sheriff of the county of New Adams for appellees. York, against the property and assets of the Mr. George H. Yeaman as amicus Sol Sayles Company, under which execution curiæ. the said sheriff levied on the shares of stock in the Sayles, Zahn Company, and also two Mr. Justice McKenna, after stating the bonds of the New Jersey Steamboat Com- case, delivered the opinion of the court: pany, which belonged to the Sol Sayles Com- To sustain the action of the circuit court pany, and sold all of the right, title, and in- in dismissing the bill the argument is as terest of the Sol Sayles Company in the follows: (1) By a conclusive presumption said certificates of stock and in the said of law the stockholders of a corporation are bonds, the said defendants Harrington caus- deemed to be citizens of the state of the ing them to be purchased for their own bene- corporation's domicil. (2) Granting that fit; said shares of stock being then, as the the complainants are citizens of New Jerdefendants Harrington well knew, and have sey, yet, as they are suing for the Sol Sayles ever since continued to be, worth upwards Company, a New York corporation, that corof $200,000.

poration, although in form a defendant, is, “It further alleged that the complainants in legal effect, on the same side of the concaused a demand to be made upon the de. troversy as the complainants, and since it fendants Harrington, that they transfer the is a citizen of the same state as the other said shares of stock and the said bonds to defendants, the circuit court had no juristhe Sol Sayles Company, but that they have diction, as the suit does not involve a conrefused to do so, and have insisted that these troversy between citizens of different states. shares of stock and bonds are their personal 1. This is based on the assumption adoptand individual property, and that neither ed by this court, that stockholders of a corthe Sol Sayles Company nor their complain-poration are citizens of the state which creants have any right, title, or interest in ated the corporation,-an assumption physieither the said shares of stock or the said cally possible, but hardly true in a single inbonds, or any part thereof.

stance; and appellants here contend that it “The twentieth paragraph of the bill of should be classed with the fictions of the complaint is as follows:

law, and subject to one of their fundamental “ The complainants were and each of maxims, and cannot be carried beyond the them was a shareholder of the defendant reasons which caused its adoption necessaSol Sayles Company at the time of the rily require. It is, however, more of a pretransactions herein complained of. This suit sumption than a fiction, but whether we re

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gard it as either, it cannot be pushed to the cial power.” Against the further step end contended for by appellees.

urged by appellees we encounter the ConstiThe reason of the presumption (we will tution of the United States. 80 denominate it) was to establish the citi- 2. The ninety-fourth rule in equity con. zenship of the legal entity for the purpose templates that there may be, and provides of jurisdiction in the Federal courts. Be- for, a suit brought by a stockholder in a fore its adoption difficulties had been en corporation, founded on rights which may countered on account of the conditions un properly be asserted by the corporation. And der which jurisdiction was given to those the decisions of this court establish that courts. A corporation is constituted, it is such a suit, when between citizens of diftrue, of all its stockholders; but it has a ferent states, involves a controversy cog. legal existence separate from them,-rights nizable in a circuit court of the United and obligations separate from them; and States. The ultimate interest of the corpomay have obligations to them. It can sue ration made defendant may be the same as and be sued. At first this could be done that of the stockholder made plaintiff; but in the circuit court of the United States the corporation may be under a control an. only when the corporation was composed of tagonistic to him, and made to act in a way citizens of the state which created it. Bank detrimental to his rights. In other words, of United States v. Deveaux, 5 Cranch, 61, his interests and the interests of the corpo3 L. ed. 38; Hope Ins. Co. v. Boardman, 5 ration may be made subservient to some ilCranch, 57, 3 L. ed. 36. But the limitation legal purpose. If a controversy hence arise, came to be seen as almost a denial of juris- and the other conditions of jurisdiction exdiction to or against corporations in the ist, it can be litigated in a Federal court. Federal courts, and in Louisville, C. & C. In Detroit v. Dean, 106 U. S. 537, 27 L. R. Co. v. Letson, 2 How. 497, 11 L. ed. 353, ed. 300, 1 Sup. Ct. Rep. 500, Dean, who was prior cases were reviewed, and this doctrine a citizen of New York and a stockholder in laid down:

the Mutual Gaslight Company, a Michigan “That a corporation created by and doing corporation, in order to protect its right and business in a particular state is to be property against the threatened action of a deemed, to all intents and purposes, as a third party, brought suit against the latter person, although an artificial person, and the corporation in the circuit court of capable of being treated as a citizen of that the United States for the eastern district of state, as much as a natural person.” And Michigan. This court ordered the bill dis"when the corporation exercises its powers missed, not because Dean and the corporain the state which chartered it, that is its tion had identical interests, but because the residence, and such an averment is sufficient refusal of the directors of the corporation to to give the circuit courts jurisdiction.” sue was collusive. The right of a stockhold.

The presumption that the citizenship of er to sue a corporation for the protection of the corporators should be that of the domi- his rights was recognized, the condition only cil of the corporation was not then formu- being the refusal of the directors to act, lated. That came afterwards, and overcame which refusal, it is said, must be real, not the difficulty and objection that the legal feigned. Hawes v. Oakland (Hawes v. Concreation, the corporation, could not be a tra Costa Water Co.) 104 U. S. 450, 26 L. citizen within the meaning of the Consti- ed. 827, was cited, where a like right was tution. Marshall v. Baltimore & O. R. Co.decided to exist. See also Dodge v. Woolsey, 16 How. 314, 14 L. ed. 953. This, then, was 18 How. 331, 15 L. ed. 401; Davenport v. its purpose, and to stretch beyond this is to Dous, 18 Wall. 626, 21 L. ed. 938; Memphis stretch it to wrong. It is one thing to give v. Dean, 8 Wall. 73, 19 L. ed. 328; Greento a corporation a status, and another thing wood v. Union Freight R. Co. 105 U. S. to take from a citizen the right given him 16, 26 L. ed. 963; Quincy v. Steel, 120 U. S. by the Constitution of the United States. 241, 30 L. ed. 624, 7 Sup. Ct. Rep. 520. It Disregarding the purpose of the presump- was said that in Dodge v. Woolsey, that the tion, it is easy to represent it, as counsel refusal of the directors to sue caused them does, as illogical if not extended to every and Woolsey, who was a stockholder in a stockholder; but as easy it would be to show corporation of which they were directors, its falseness if so applied. But such charges “to occupy antagonistic grounds in respect and countercharges are aside from the to the controversy, which their refusal to question. To the fact and place of incorpo- sue forced him to take in defense of his ration the law attaches its presumption for rights.” Dodge v. Woolsey was modified by a special purpose. Perhaps, as intimated in Hawes v. Oakland, as to what circumstances St. Louis & 8. T. R. Co. v. James, 161 U. S. would justify a suit by a stockholder if the 545, 563, 40 L. ed. 802, 808, 16 Sup. Ct. directors refuse to sue. See also Quincy Rep. 621, this "went to the verge of judi- v. Steel, 120 U. S. 241, 30 L. ed. 624, 7 Sup.

Ct. Rep. 520.

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