Bank of the United States v. Deveaux
9 U.S. 61, 5 Cranch 61, 3 L. Ed. 38 (1809)
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Rule of Law:
For the purpose of establishing federal diversity jurisdiction, a court will look beyond the corporate entity to the citizenship of its individual members (shareholders). A corporation can sue in federal court under its corporate name as long as all of its members are citizens of states different from the opposing parties.
Facts:
- The Bank of the United States was a corporation created by an act of the United States Congress.
- All of the individual members (shareholders) who composed the Bank of the United States were citizens of the state of Pennsylvania.
- Peter Deveaux and Thomas Robertson were citizens of the state of Georgia.
- Deveaux, a tax collector for the city of Savannah, and Robertson, a tax collector for Chatham County, Georgia, entered the Bank's office in Savannah and seized money to satisfy a state tax imposed on the bank.
Procedural Posture:
- The Bank of the United States brought an action against Peter Deveaux and Thomas Robertson in the United States Circuit Court for the District of Georgia.
- The defendants filed a plea in abatement, arguing that the Circuit Court lacked jurisdiction because a corporation is not a 'citizen' within the meaning of the Constitution's diversity clause.
- The judges of the Circuit Court were divided in their opinion on the question of law raised by the plea.
- The Circuit Court certified the question of jurisdiction to the Supreme Court of the United States for a final decision.
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Issue:
Does a corporation, composed of citizens of one state, have the ability to sue a citizen of another state in federal court under diversity jurisdiction?
Opinions:
Majority - Marshall, Ch. J.
Yes. While a corporation is an artificial entity and not itself a citizen, for jurisdictional purposes, the court can look through the corporate name to the citizenship of the individuals it represents. The U.S. Constitution grants federal courts jurisdiction over controversies between citizens of different states to protect against local bias. This protection should extend to individuals who choose to conduct business in the corporate form. The controversy is substantially between the members of the corporation and the opposing party. Therefore, when the members of a plaintiff corporation are all citizens of a state different from the defendant, the federal courts have diversity jurisdiction over the case.
Analysis:
This decision established the foundational principle that corporations could access federal courts through diversity jurisdiction, a crucial development for interstate commerce. By allowing courts to 'look through' the corporate veil to the citizenship of the shareholders, the Court treated the corporation as an aggregate of its members. This doctrine, while significant, proved cumbersome and was later superseded by the legal fiction established in Louisville, C. & C.R. Co. v. Letson (1844), which held that a corporation is presumed to be a citizen of its state of incorporation, simplifying the jurisdictional analysis.
