Puerto Rico v. Russell & Co.

288 U.S. 476 · Supreme Court of the United States · 1933

Facts

The People of Puerto Rico sued Russell & Co., a sociedad en comandita, in Insular Court to recover land assessments. Individual members of Russell & Co., none of whom were citizens or domiciliaries of Puerto Rico, removed the case to federal court, arguing jurisdiction based on their non-residence and that the assessments violated the Organic Act. The federal court denied a motion to remand and ruled for Russell & Co., leading to an appeal.

Procedural history

The People of Puerto Rico filed suit in the Insular District Court of San Juan. The individual members of Russell & Co. specially appeared and removed the case to the United States District Court for Puerto Rico. That court denied a motion to remand and ruled in favor of Russell & Co., finding the assessments violated the Organic Act. The Court of Appeals for the First Circuit affirmed this decision, and the Supreme Court granted certiorari.

Issue

1. Does a Puerto Rican sociedad en comandita have the same status as a corporation for federal diversity jurisdiction purposes, meaning its domicile, not its members' citizenship, controls? 2. Does a suit to collect assessments, authorized by a federal act but based on local law, constitute a case arising under the laws of the United States for federal question jurisdiction?

Holding

1. Yes, a sociedad en comandita is treated as a juridical person like a corporation for federal jurisdiction, so its domicile controls. 2. No, the suit does not arise under federal law merely because a federal act authorized the method of collection or because the plaintiff is a federal entity.

Rule

For federal jurisdiction, a sociedad en comandita is considered a juridical person, and its domicile, not its members' citizenship, determines jurisdiction. A case arises under federal law only when the right to be established is federal, not merely because the plaintiff's authority to sue or the property involved derives from federal law.

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