Magna Oil & Refining Co. v. White Star Refining Co.

DAVIS, Circuit Judge. The plaintiff below, a Michigan corporation, brought suit against the defendant below, a Delaware corporation, to recover damages for breach of a contract dated October 22, 1919, wherein defendant agreed to sell and plaintiff to purchase 100,000 barrels of crude oil in approximately equal daily quantities during the period of 90 days beginning November 1, 1919, and ending January 28, 1920, at $1.60 per barrel, “time being the essence” of the contract. The plaintiff was to make all necessary arrangements to receive the oil at the wells of the seller during the period, and “to use their utmost endeavor to prevent delay.” The defendant agreed “to deliver all oil promptly,” and the plaintiff to accept it promptly and without delay, but was not to be “liable for not accepting same when inability to do so is tlie result of fires, strikes, or other causes beyond its reasonable control.” The oil was to be delivered at the defendant’s wells to the Empire Pipe Line Company, an independent common carrier, which had to lay its pipes a distance of about two miles, and connect them with the wells of the defendant company. The plaintiff made arrangements with the Pipe Line Company on October 22, 1919, the same day the agreement was executed, to lay the pipes and make connections with the wells of the defendant company. The Pipe Line Company, however, did not connect its pipes with the wells until on or about November 7 or 8, 1919, although urged to do so., In November, 1919, defendant delivered 803.84 and in December 1,223.92 barrels, making a total of 2,027.76 barrels. On or about January 31, 1920, defendant definitely and orally informed plaintiff that it would not make “any further deliveries on the contract.” From the time the pipe connections were made until January 31st, the plaintiff alleges it constantly urged the defendant to make deliveries in accordance with the terras of the contract, and suggests as a reason for its failure and refusal to do so that oil advanced in price almost daily from about the contract price, of $1.60, to $3 per barrel on January 6, 1920, and continued to advance until on February 27, 1920, it was $3.25, and in March following $3.50, per barrel. On the other hand, the defendant alleges that it was ready and willing to deliver, but the plaintiff could or would not receive, though urged to do so, and so on or about December 6, 1919, it repudiated the contract, but did as a mere matter of accommodation deliver 803.40 barrels afterward. It contends that it was anxious to deliver, because it was daily losing oil through seepage from its lands into adjoining lands, from which oil was being abstracted. It therefore filed a recoupment in damages against the plaintiff. [62] The defendant seems to rely mainly on its contention that the allegations in the declaration as to diverse citizenship of the corporations were insufficient to confer jurisdiction on a federal court. This point was stressed in the brief, and, notwithstanding that it was not raised below, it will be fully considered here, because it is a jurisdictional question. The plaintiff alleged in the introductory paragraph of the declaration that it was “a corporation existing under the laws of the state of Michigan,” and the defendant was “a corporation existing under the laws'of the state of Delaware.” It further appears in each of the three counts that the plaintiff is “a corporation existing under and by virtue of the laws of the state of Michigan,” and the defendant is “a corporation existing under and by virtue of the laws of the state of Delaware.” [5-7] These allegations are insufficient, defendant says, because “a corporation may exist under the laws of several states” at the same time. The averment in a formal pleading that a corporation exists under and by virtue of the laws of a state, by legal intendment, means that it legally exists. A corporation, the legal entity or person which exists by force of law, can have no existence beyond the limits of the state which creates it and endues it with faculties and powers. Ohio & Mississippi Railroad Co. v. Wheeler, 66 U. S. (1 Black) 286, 17 L. Ed. 130. It is a citizen of the state under whose laws it was created, and is deemed a person, but may do only what is authorized by its charter, while natural persons may do whatever is not forbidden by law. Railroad Co. v. Harris, 79 U. S. (12 Wall.) 65, 81, 20 L. Ed. 354. A corporation created in one state may not migrate from state to state, but may carry on business and exercise its charter powers in another state by complying with the laws of that state, without becoming a citizen thereof. [8] Authority of a corporation to carry on business in another state is most frequently given by general statutes applicable alike to all foreign corporations, but sometimes a special enabling statute is passed for a particular corporation.. This statute may confer practically the same powers upon a foreign corporation as it possesses in its home state. If the purpose of the Legislature in passing the statute for a particular corporation is to make the corporation of another state its own, it thereby creates a new corporation with a new existence. Each corporation, it may be, with the same name and powers in each state, exists independently under and by virtue of the laws of its own state. This results in two separate, legal entities, alike in name and powers, but each existing under the laws of its own state quoad hoc any property within its territorial jurisdiction. If the purpose is not to create, but simply to enable, permit, and control, the corporation is not a citizen of the enabling state, but remains a foreign corporation. Ohio & Mississippi Railroad Co. v. Wheeler, supra; Railroad Co. v. Alabama, 107 U. S. 581, 584, 2 Sup. Ct. 432, 27 L. Ed. 518. [9] The creation of a corporation is the beginning of its existence, but for the purpose of jurisdiction in a federal court on the ground of diverse citizenship, the beginning of existence is not enough. Continuance is necessary. The full allegation, in pleading the citizenship of [63] a corporation, is that it is a corporation created and existing under the laws of the state in question. This is illustrated in the case of the Sun Printing & Publishing Association v. Edwards, 194 U. S. 377, 24 Sup. Ct. 696, 48 L. Ed. 1027. It was alleged in the declaration that the association was a corporation “duly organized and existing under the laws of New York.” The averment, however, is often made and held sufficient that the corporation was simply “created” — -a past act —under the laws of the state, hut the presumption and, legal intendment are that the corporation was not only created, but continues to exist, under the laws of the state. Likewise the statement that a corporation “exists” under and by virtue of the laws of a state intends to import the fact that it not only exists, but also began its existence — was created — under and by virtue of the laws of that state, and so, in legal intendment, “created by, organized under, or existing under” the laws of a state are equivalent phrases. Mathieson Alkali Works v. Mathieson, 150 Fed. 241, 80 C. C. A. 129. “If the declaration sets forth facts from which the citizenship of the parties may be presumed or legally inferred, it is sufficient.” Marshall v. Baltimore & Ohio Railroad Co., 57 U. S. (16 How.) 314, 14 L. Ed. 953. [10] Where jurisdiction in a federal court depends upon diverse citizenship, the whole record may be looked to for the purpose of curing a defective averment of citizenship, and if the requisite citizenship is anywhere expressly alleged, or facts stated which in legal in-tendment constitute such averment, it is sufficient. Sun Printing & Publishing Association v. Edwards, supra. [11] At the' beginning of the trial the following admission was made: ‘Air. liillcs: H your honor please, the plaintiff and defendant, respectively, aro willing to admit the corporate existence of the parties as alleged in tho declaration and their citizenship. “The Court: Ts it so understood, Mr. Layton? “Mr. Layton: Tes, sir.” This was, in our opinion, an intended admission that the parties were corporations and citizens created and existing under the laws of the respective states mentioned in the declaration. The truth of their citizenship as such has been nowhere challenged, and if the question of the sufficiency of the averment had been raised in the District Court, an amendment could and doubtless would have been made. We therefore conclude that on this branch of the case there is nothing to disturb the judgment of the District Court. [12] The other assignments refer to alleged errors in charging the jury and in refusing to charge requests. At the close of the charge the judge stated that: “The charge of the court, embraces in substance all of the propositions suggested by counsel, in so far as those propositions are, in my opinion, properly applicable to the case.” Counsel for defendant neither noted an exception to the refusal to charge requests, nor did he note an exception to any particular part of the charge, but simply noted an “exception to the charge of the court.” This was a general exception, which is contrary to rule 10 of this court [64] (224 Fed. vii, 137 C. C. A. vii). It provides that the party excepting shall state distinctly and separately the several matters in the charge to which he excepts, and only such matters shall be included in the bill of exceptions. Experience has confirmed the wisdom of this rule, and assignments of error not based upon such exceptions, this court has held, will not be considered. Barnes & Tucker Coal Co. v. Vozar, 227 Fed. 25, 141 C. C. A. 579; Pennsylvania Railroad Co. v. Repine, 272 Fed. 898. [13] In this case, however, the learned trial judge in a most carefully prepared and comprehensive charge clearly analyzed the facts, fully stated the issues, and correctly expounded the law. The verdicti of the jury settles the facts, and the judgment of the District Court is affirmed.