Louisville, Cincinnati, & Charleston Rail-Road v. Letson

43 U.S. 497 · Supreme Court of the United States · 1844

Facts

Louisville, Cincinnati, & Charleston Rail-Road Company, a corporation, was sued by Letson, a citizen of New York. The corporation had members who were citizens of North Carolina, and the State of South Carolina was also a member. Additionally, two other corporations in South Carolina, whose members included citizens of the same state as Letson, were members of the rail-road company. The lawsuit was brought in the Circuit Court of the United States for the district of South Carolina, the corporation's locality. The defendant corporation challenged the court's jurisdiction based on the diverse citizenship of its members.

Procedural history

The case came before the Supreme Court on a transcript of the record from the Circuit Court of the United States for the district of South Carolina. The Circuit Court's judgment was affirmed by the Supreme Court.

Issue

The legal question is whether a corporation can be sued in federal court by a citizen of another state if not all of its members are citizens of the state where the corporation is located and the suit is brought. Specifically, it asks if the citizenship of individual corporate members determines diversity jurisdiction.

Holding

The Supreme Court affirmed the Circuit Court's judgment, holding that a corporation is to be deemed a citizen of the state that created it and where it does business for purposes of federal diversity jurisdiction. This allows a citizen of another state to sue the corporation in federal court.

Rule

A corporation created by and doing business in a particular state is considered an artificial person and an inhabitant of that state, capable of being treated as a citizen for the purpose of suing and being sued. This means that for diversity jurisdiction, the court looks to the state of incorporation and business, not the citizenship of all individual members. The court explicitly overruled prior cases that required examining the citizenship of every corporator. This rule is also supported by the Act of February 28, 1839, which expanded jurisdiction and was intended to address previous jurisdictional limitations.

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