frsbog_mim_v18_0380.pdf
TRANSCRIPT
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 1/15
X-3742
IN THE
DISTRICT COURT
OF THE
UNITED STATES
FOR THE
EASTERN DISTRICT
OF
WASHINGTON
Northern Division
GEORGE T . BACON,
P l a i n t i f f
FEDERAL RESERVE BANS
OF SAN
FRANCISCO, a corpora t ion ;
THE FARMERS NATIONAL BAN.: OF
POMEROY,
a
corporation; FIRST
NATIONAL BA;?ix
OF
CLAR'ASTON,
a
co rpo ra t i on ;
a n d
GS0RGE
H.
WATERMAN,
Defendants.
No.
L-4205
DECISION
T he
p l a i n t i f f ,
a
r e s i d e n t
o f t h e
S t a t e
of
Idaho, seeks
t o
recover from
t h e
Federal Reserve Bank
of San
Franc i sco , Ca l i fo rn i a ;
t h e
Farmers National Bank
of
Pomsroy, 'ash ingt on;
t h e
First National Bank
of
Clerks t o n , Tashin_ t o n (each o f said National Baucis oeing organized under
t h e
laws
o f t h e
Uni ted S ta tes ) ;
a nd
George
H.
Waterman, President
o f the
Farmers National Bank
of
Pomeroy
an d
Vice President
o f t h e
Fi r s t Nat iona l
Bank
of
Cl ark sto n, damages al le ge d
t o
have been sustained
i n
excess
of
$5000.00.
The
Complaint
was
served
on an
employee
o f t h e
Spokane Branch
o f t h e Federal Reserve Bank on December 14 , 192 2 . The fo l lowing s t ipu-
l a t i o n was s i j i a d b y t h e a t t o r n e y s f o r t h e p l a i n t i f f a n d t h e a t t o rney f o r
t h e
Federal Reserve Bank
of San
Franc isco ,
was
approved
b y t h e
Jud
s
e
of
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 2/15
X-3742
t h i s c o u r t , a n d f i l e d i n t h e o f f i c e o f t h e c l e r k o f t h i s c o u r t on
December 3 0 ,
1922 ;
STIPULATION EXTENDING TIME
TO
PLEAD.
IT IS HEREBY STIPULATED by and between counsel f o r t h e p l a i n t i f f
i n t h e
aoove en t i t l ed ac t ion
a n d
counsel
f o r t n e
Federal Reserve Bank
of
San Franc i sco , on2 ©f t h e def en da nt s above named, th at sa id def end ant
Federal Reserve Lank
of
jSan Fr anc is co
may
t a k e
an d
have
t o a n d
inc lud ing
t h e
t h i r d
day of
Feb rua ry ,
1 ^ 2 3 ,
within Which
t o a n s . er t h e
complaint
on
f i l e
i n
sa id ac t ion
o r t o
f i l e suc .i o the r p l^a di iv
o r
p l e a d i n g s
o r
make such other
motion o r motions i n r e s p e c t t h e r e t o and i n r e s p e c t t o t h e cause o f ac t ion
s e t f o r t . i i n said complg-int a s said Federal Reserve Bank of S an Francisco
m a y , by i t s c o u n s e l , b e advis ed , inc luding ooj ec t i on s which may be r a i s e d
by sucn motions t o t n e j u r i s d i c t i o n o f t h e cou r t in -vhichsaid act ion i s
b r o u g h t .
On February 1 , I923 , spec ia l appearance w as f i l e d b y t h e a t torney
f o r t h e
Federal Reserve Bank
o f
Sail Fr an ci sc o
a s
fo l lows :
You wi l l p l ease en te r my spe cia l appearance a s a t t o r n e y f o r
Federal Reserve Bank of San F r a n c i s c o , one o f t he defendants above , i n
t h e above en t i t l ed cause , an d s e r v i c e o f a l l subsequent pa pe rs except
w r i t s o f p r o c e s s may b e made upon s ai d Fed er al Re ser ve Bank of San Fran-
c i s c o by leaving same /-ith V.. L. Partner, Manager Spokane Branch Federal
Reserve Bank of San Fra nci sco . Pos t Of fi ce Address: Spokane, Washington.
Aloe r t
C.
A.-mew,
At torney f o r Defendant Federal
Reserv. Ban /, of San Franc i sco .
T-iis appearance
i s o
x
.,
c i a l
a n d i s
made only
f o r t h e
purpose
of
u r g i n g
a
motion
t o
d i smiss
t h e
above en t i t l ed ac t ion
a s t o
t n i s d e f e n d a n t .
The Federal Reserve Banr. , appearing solely f o r t h e pu rposes o f t he
motion, says t o t h e Court that t h e Federal Reserve Bank of San Franc i sco i s
create:*, by an Act of Congress known a s t h e Federa l Reserve A c t ; t h a t i t h a s
i t s e x i s t e n c e b y v i r t u e o f s a i d Act of Congress a n d Acts amendatory thereof;
t h a t
i t s
p r i n c i p a l o f f i c ^
an d
p l a c e
o f
b u s i n e s s
i s i n t h e
Ci ty
a n d
County
o f
San F r a n c i s c o , C a l i f o r n i a ; t h a t i t ho lds t h e meet ings of i t s s tockho lde r s ,
d i r e c t o r s a n d e x e c u t i v e o f f i c e r s , m a i n t a i n s i t s r eco rds , keeps i t s sea l ,
t r a n s a c t s
i t s
p r i n c i p a l bu s i n es s ,
i n
said City
a n d
County
a n d
S t a t e ;
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 3/15
t h a t
i t i s - a n
i n h a b i t a n t
o f t h e
s a i d S t a t e
a n d o f t h e
J u d i c i a l D i s t r i c t
o f
t h e
N o r t h e r n D i v i s i o n
o f
C a l i f o r n i a ,
a n d i s n o t a n
i n h a b i t a n t
o f t h e
S ta t e
o f
Washington
n o r o f t h e
E a s t e r n D i s t r i c t
o f
Washington . P r oo fs
a n d
a f f i -
d a v i t s
a r e
f i l e d t e nd i ng
t o
show:
Tha t pu r sua n t
t o t h e
p r o v i s i o n s
o f t h e
F e de r a l R e se r ve
A c t t h e
Board
of
D i r e c t o r s
o f
sa id R e se r ve B a nk e s t a b l i she d
a
branch
o f
s a i d
R e -
serve Bank
a t
Spokane ; tha t
t h e
powers
a n a
d u t i e s
a n d
f u n c t i o n s
o f
said
Spokane Branch
a r e
d e f i n e d
a n d
l i m i t e d
by i t s
b y - l a w s ;
a n d t n e
f u n c t i o n s ,
d u t i e s
a n d
o p e r a t i o n s
o f
sa id Spokane Branch
a r e
s u b j e c t
t o t h e
r u l e s , re g u -
l a t i o n s , s u p e r v i s i o n
a n d
f i n a l ap p r ov a l
o f t h e
Head Of f i ce
o f
sa id Rese rve
Bank; that
t h e
d i r e c t o r s
o f t h e
Branch Bank have power
t o
r e d i sc oun t f r om
member banks
o f t h e
Br a nch D i s t r i c t pa pe r unde r
t h e
p r o v i s i o n s
o f t h e
F e de r a l R e se r ve
A c t a n d
r e g u l a t i o n s
o f t h e
Federa l Rese rve Board , wi th in
l i m i t a t i o n s p r e s c r i b e d ; t h a t s a i d B ra nc h
a n k m a y
c l e a r
a n d
c o l l e c t c he c k s
f o r t h e
a c c o u n t s
o f
those drawn upon memoer
a n d
non-member oanKS located
w i t h i n
t h e
t e r r i t o r y a s s i g n e d
t o i t on t h e
sam,., p l an f ol l ow ed
b y t n e
Head
Office ,
T h e
Branch Bank
m a y n o t
engage
f o r i t s own
account
i n op en.
market
t r a n s a c t i o n s , b a n k e r s
1
a c c e p t a n c e s , t r a d e a c c e p t a n c e s , w a r r a n t s
o r
Govern-
ment bonds, except
t o t h e
o r d e r
a n d f o r t n e
a c c oun t
o f t n e
Head Off ice#
T n e
compensa t ion
of t h e
o f f i c e r s , c l e r k s
a n d
employees
o f t n e
Branca Bank
o r e
f i x e d
b y t h e
Head Of f i c e , sub je c t
t p t h e
a p p r o v a l
o f t h e
Federa l Rese rve
Board .
A l l
e x p e n d i t u r e s
o f t h e
Branch
B a m . , a r e
s u b j e c t
t o t n e
approva l
o f t n e
Head O f f i c e . Minutes
a r e t o b e
k e p t
b y t n e
Discount Committee
a n d
t r a n s m i t t e d
t o t h e
Head Of f i ce upon app rov a l ,
a n d
tiie Di sc ou nt Committee
i a
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 4/15
- 4 - X -3 7 4 2 ; - >-
vested with special powers prescribed by the Board of Directors of the
Head Office.
The Directors of tile Spokane Branc^ consist of five members,
t h e Manager of which is ex officio Chairman of the Board, and who is
appointed annually by and holds . off ice ' a t t he pleasure of the Board of
Directors of the Reserve Bank; two members of th e Board a r e appointed
annually by the Board of Directors of the Reserve Bank and hold off ice a t
t h e pleasure of the Reserve Board; two members a r e appointed annually by
and hold off ice a t t he pleasure of the Federal Reserve Board a t V'ashin^-
ton , D. C . ; th at sai d Board ac ts in an advisory capacity only and has no
power to determine policies o r maae f i n a l de ci si on s. That sa id Spokane
Branch i s only a business agency of said Reserve Bank and is so placed,
operated an d conducted f o r t n e convenience of member b a n K S s i tua t ed at a
distance so remote from t h e Head Office that ti U business of said member
banks with t h e Reserve Bank may be transacted -vitaout a ,reat loss of time..
The defendant contends teat i t hu.» n o t made a . enar al- appearance;
that th e action should be dismissed because th e Federal Reserve Bank of San
Francisco i s no t a n inhabi tant of this Distr ict ; . that th e provisions of the
Federal Reserve Act clo not enlarge th e j u r i s d i c t i o n of this Court as to the
Reserve Bank; while t h e pl ai nt i f f contends that t h e defendant bank h a s made
a, gener al appearance by the stipulation vvhich was fi led with - the approval
of the Jud_e, and that i t i s a n inhabitant of th is Jud ic ia l Dis t r ic t .
Davis, Heil & Davis, Attorneys f o r t h e P l a i n t i f f .
Albert C. l\ jaew, Attorney f o r Defendant, Federal Reserve Bank of San Francisco,
METERER, D i s t r i c t Judge. Appearances are of two kinds:
Special ,
f o r t h e
purpose
of
t e s t i n g
th e
su f f i c i ency
of
service
c r t he
j u r i s -
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 5/15
- 5 -
X-3742
d i c t i o n
ox
tr ie court ;
a n d
general , where
t h e
defendant waives defects
o f
s e r v i c e an d submits t o t h e ju r i sd i c t i on . Emphas is i s placed upon Rule 22
of th is Ci rc ui t , which provides i n substance tha t t h e special appearances
must embody a s ta tement tha t i f n o t sus t a ined t h e defendant wi l l en ter a
general appearance,
and
unl es s t hi s agreement
i s
included
t h e
spec ia l
appearance wil l o e considered a general appearance i n t h e cause . The
purpose of Rule <dc. i s f o r t n e p r o t e c t i o n o f t he p a r t i e s t o t h e cause and
txie Co ur t. Here
t h e
p a r t i
s
nave es tabl i shed
a
s ta tus wi th
t h e
Cour t ' s
approval . The purpose of tne r u l e i s s a t i s f i e d b y t h e s t i p u l a t i o n and
t n e oi de i. However, t n e con ten t ion o f t he p l a i n t i f f a s t o Rule 22 i s
of no ava i l , s ince the. Supreme Court i n Davidson Bros. v . United States
e x , r e l . Gibson, 213 U. S . 10 , says tna t i t w a s beyond t h e power o f t he
cour t t o make a n d enforce a r u l e wit. .', suca co nd it io ns a s would transform
an ob jec t ion t o trio . ju r i s d ic t io n in t o a waiver o f t n e o b j e c t i o n i t s e l f .
The s t i p u l a t i o n m o t b e tai>.en a s a whole. The i n t e n t an d purpose
o f t h e context a s a whole must control and so taken, t h e i n t e n t n o t t o
appear genera l ly i s apparent . Tne s t a t u s o f t he defendant i n this case
i s
d i f f e r e n t i a t e d f ro m t h a t
o f t he
defendant
i n
Everett Railway, Light
&
Power Co. v . Uni ted Sta tes , 2 J o F e d . 8 0 6 , emphasized by t he defendan t . I n
t.aat case t h e defendant appeared i n open court and on oral motion obtained
an enlargement of time i n whicn t o f i l e i t s appearance, motion o r answer .
T.ie a^poarance w as no t s p e c i a l nor was t h e r e a reservat ion that t i le motion
might be d i r e c t e d t o t h e c o u r t ' s j u r i s d i c t i o n b u t presumably to be d i r ec t ed
a g a i n s t
t h e
complaint
on the
m e r i t s
i n
shaping
t h e
i s s u e s .
I n t h e
i n s t a n t
case t n e ques t ion of j u r i s d i c t i o n i s s p e c i f i c a l l y r e se r ve d . The s t a t e
s t a t u t e ( S e c t i o n 2 4 1 , Comp. S t a t . Wash.) t o which t h e C o u r t ' s a t t e n t i o n
i s
d i r e c t e d
i s n o t ,
under
t h e
Conformity
Act
invo lv ing
t h e
j u r i s d i c t i o n
of
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 6/15
- 6 -
x-37^2
t h e Federa l Cour t s , cont ro l l ing .
Salmon Falls
Mfg . Co . v .
Midland Tire
Co.
Fed . 2 1 4 (C.C.)
B u t t h e de t e r mi na t i on of such question i s f o r t h e Federal Court
alone.
'ostern Loan Co. v . Butte Mining Co. ,
210 U. S.
Davidson Bros. v . U , S . e x r e l . G-iDson,
21 ; U. & 10 ,
S. P. Co. v . Denton, 146 U, S. 2 02,
Galveston R# R. Co# v. GonzaloS,
i ? i u . s . 4 9 6 .
Budris v . Coal C o . , 2 $ 1 Fed* 673*
Dahlgren
v .
P i e r c e ,
2 6 j Fe d . SUl .
Harlcness v . Hyde, §6 U» S# 476.
Sect ion 51 of th e Judicial Code (Comp. Stat. IO33) s o f a r
a s
here mater ial provides :
it* * * * no c i v i l s u i t s na i l b e Drought in an y d i s t r i c t
cour t aga ins t
a n y
person
by any
o r i g i na l p r oces s
o r
proceeding
i n
any o t he r d i s t r i c t t han t h ^ t wnereof lie i - an • i nhab i t an t } b u t wnere
t h e j u r i s d i c t i o n i s founded only on the fa c t tna t t rid ac t i on i s
between ci t izens of d i f f e r e n t S t a t e s , s u i t s n a i l be brought only
i n t h e
d i s t r i c t
o f t h e
r e s i dence
of
e i t h e r
t h e
p l a i n t i f f
o r t h e
d e f endant.
11
Sect ion
54 of th e
J ud ic ia l Code pro vid es :
it The d i s t r i c t c o u r t s s h a l l nave o r i g i n a l j u r i s d i c t i o n ***
o f a l l
s u i t s
of a
c i v i l n a t u r e ,
a t
common
law or in
equi ty
* * * *
where t h e mat te r i n controversy exceeds , exclus ive of i n t e r e s t
and
cos t s ,
th e sum or
value
of
tnree thousand dol la r s ,
an d ( a )
ar i ses under t h e C ons t i t u t i on o r laws o f t h e Uni ted S ta tes , o r
t r ea t i es made , o r wnicn shall b e made, under tn e ir a ut no ri ty ;
o r (0 ) i s between ci t izens of d i f f e r e n t S t a t e s ; * * * * * **'«
T he f i r s t i n qu i r y, i s t h e ac t i on o n e a r i s i ng unde r (a )
t h e laws o f t h e Uni ted S ta tes insofar a s i t a f f e c t s t h e Federal
Reserve Bank, must b e answered i n t h e a f f i r m a t i v e .
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 7/15
- 7 -
£-3742
American Bann
&
Trus t
C o . v .
Federa l
Reserve Bank of A t l a n t a , 2$6 U.
S*
3 5 0 .
T he conclusion follows Osborn v« Bank of U n i t e d S t a t e s , 9 Vdieat*
1}6 . The American Bank & Tru st Company ca se , sup ra , a l so d e f i -
n i t e l y d e c i d e s
t . . a t
subd,
1 6 ,
Sec t ion
2 4 , o f t h e
Judic ia l Code
does
n o t
reaou forward
a n d
i n c l u d e
t h e
Federal Reserve Banks within
t h e pnra .se na t i ona l banking ass oc i a t i ons *
n
T ne nex t inqu i ry i s , i s t n e defendant Reserve Bank a n
i n n a b i t a n t o f t h e S ta tu of C a l i f o r n i a . T he p r i n c i p a l p l a c e
o f
b u s in e s s
o f t n e
defendant Reserve Bank
i s i n S an
F r a n c i s c o ,
a l l
o f tn e b u s in e s s i s di re c t ed f rom th a t o f f i c e except such a s i s
reviewed o y th e Federal Reserve Board, a n d t h e o f f i c e r s r e s i d e
t n e r e .
T he
c o n t e n t i o n
o f t h e
p l a i n t i f f
i s
t h a t
t h e
Reserve
Banz, boing orga nis ed under t h e lavvS a nd C o n s t i t u t i o n o f th e
Uni ted S ta te s , i s n o t a l o c a l out a domes t ic corpora t ion , an d
t n e purpose o f opera t ing vi tAin a g iv e n d i s t r i c t :m k e s t h e
te rm inhabi tant
1 1
co-ex tens ive wi th
t h o
d i s t r i c t
and n o t o f
o n e pa r t i c u l a r p la ce wi tn in such zone o r t e r r i t o r y *
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 8/15
- 8 - X-3742
Many cases
a r e
c i t e d ,
a l l o f
which
a.ro
'predicated, upon
t h e
c i t i z e n -
ship
o r
h a o i t a t
o f a
c o r p o r a t i o n
o f a
p a r t i c u l a r s t a t e .
McCormick Harvesting Co . v . ' f a the r s
(1890) ,
1 3 4
U . S .
4 1 .
i : . parte Shaw (1392), 14^ U. S. 4 44 ;
12 S u p . c t . 9 3 5 '
I n r e Keasby & Mat t i son C o . ,
l 6 o
U. S.
2 2 2 ; 4 0 L . E d . 4 0 2 ;
1 6
S u p . C t . 2 7 3 -
Macon Grocery C o . v . At lant ic C.L.R. Co.
(1909) , 215 U. S . 5 0 I ; 3 0 S u p . C t . I g 4 ;
General Investment
C o . v .
L.Ivl.S.
By. Co.
(1922) , 4 3 Sup• C t . R e p . 1 0 6 -
Wilson v . Western Union T e l . C o . (lggg) ,
3 4 F e d . 5 0 I .
H a l s t e a d
v .
Manning (lggg),
3 4 F e d . 5 6 5 ,
Gorirrally & J e f f e r y Mfg . Co . v . Poj.e Mfg . Co .
(1388) , 34 F e d . g i g ; a f f i r m e d i n
P r e s t o n
v .
F i re Ex t ingu i she r
Co -
(1588)
,
3 b F e d . 7 2 1 .
Anderson v . Germain e t a l . ( l 3 9 l ) , 4 g F e d . 295*
Sunderland Bros. v . C. R. I . & P . Co. By .
(1908) ,
153
F e d . 3 7 8 .
Memphis Cotton
O i l C o . v I . C. Co.
(1903) , 1 6 4 F e d . 2 $ 0 .
Impe r i a l Co l l i e ry C o. v . C. & 0 . R y. Co.
(1909) , 1 7 1 F e d . 5 3 9 .
Cound v . A. T. & 3 . F . Rv . Co. (1909),
1 7 3 F e d . 5 2 7 .
Smith
v .
D e t r o i t
& T. S . L. R . Co.
(1909),
1 7 5 F e d . 5 0 6 .
Whit taker
v . I . C. Ry. Co-
(1910)
,
1 7 o F e d . 1 3 u .
Newell v . B . & 0 . Ry . Co . (1910) , 1 3 1 F e d . 6 9 3 ,
S . P . Co . v . Arl in gton Heights Fr ui t Co.
(1911) , 1 9 1 F e d . 1 9 1 .
Trapp v . B . & 0 . R y . Co . (1922) , 2 3 3 F e d . 6 5 5 .
I t i s primer l a w t h a t a l o c a l c o r p o r a t i o n is a, c i t i z e n o f t h e s t a t e o f i t s
c r e a t i o n , a n d t h e ge ne ra l ru l e i s t h a t t h e domic i l e of a loc a l c o rpora t i on
i s i n tha t c oun ty , c i t y o r town i n which i t h a s i t s ge ne ra l o r p r i n c i p a l o f f i c e
a n d conducts i t s ' bu s i nes s .
First Nat ional Bank
o f
E v e r e t t
v .
Wilcox, 72 Wash. 473•
Chie f Jus t ice Wai te , i n E x Par te Sch011enberger , 96 U. S . 36 9 ,
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 9/15
- 9 -
X-3742
said that a c o r p o r a t i o n can have i t s legal home only a t t h e place where
i t i s
placed under
t h e
a u t h o r i t y
o f i t s
c h a r t e r ,
bu t may
have
i t s
agents
transact business anywhere , vai lsss prohibi ted b y i t s c h a r t e r o r excluded
b y
lo ce l laws.
In h a b i t a n t
i s
l e g a l ly e q u iv a l e n t
to on e who h a s
e s t a b l i sh e d
a domic i le . S tandard Dic t ionar y .
In h a b i t a n t — One who h a s h i s domici le i n a p l ac e . Bouvie r
Law Dic t ionary ,
One may be des igna ted an in h a b i t a n t of that place which c o n -
s t i t u t e s t h e p r i n c i p a l s e a t o f h i s res idence , o f h i s bus iness , pursu i t s
an d
c o n ne c t i on s . P h i l l i p s
v .
Boston,
183
Mass.
31^ ; 67 N . E . 25 0 .
A c o rp o ra t io n i s regarded a s an in h a b i t a n t of the d is t r ic t where
i t s p r i n c i p a l o f f i c e i s s i t u a t e - P e o p l e , a t . v . Marens, l l 6 N . Y .
Supp.
189 , 192 .
The Supreme Court i n Galveston R* E. Co. v. Gonzales, 1 5 1 U . S .
4 9 6 , said:
I n t h e case of a c o rp o ra t io n t h e q u e s t i o n o f in hab it anc y must
b e
determined,
n o t b y t h e
r e s id e n c e
of any
p a r t i c u l a r o f f i c e r
b u t b y t h e
p r i n c i p a l o f f i c e s o f t h e corporat ion, where i t s books a r e k e p t a n d i t s
corpora te bus iness i s tr an sa ct ed , even though i t r a y t r a n s a c t i t s most
important business
i n
ano ther p lace .
I t i s b u t a
c o r o l l a r y
o f t h e
propo-
si t ion la id down i n t h e three cases above referred t o , t h a t i f t h e corpo-
r a t i o n b e c re a t e d b y t h e laws o f t h e s t a t e i n which there a re two j u d i c i a l
d i s t r i c t s , i t should be considered a n in h a b i t a n t o f t h a t d i s t r i c t i n
which
i t s
g e n e ra l o f f i c e s
a r e
s i t u a t e d
a n d i n
which
i t s
genera l bus iness ,
a s d i s t i n g u i sh e d f ro m i t s lo c a l b u s in e s s , i s done .
The Supreme Court i n Shaw v . Quincy Mining C o . , 1 4 5 U . S . 4 4 4 ,
sa id :
The wo rd ' i n h a b i t a n t ' * * * w as * * * u s e d , n o t i n a n y
larger meaning than c i t izen,
b u t t o
avoid
t h e
in c o n g ru i ty
o f
speaking
of
a c i t i z e n of anything lass than a state when t h e i n t e n t i o n was to cover
n o t only a d is t r ic t which inc luded a whole s ta te , b u t a l s o tw o d i s t r i c t s
i n o n e
s t a t e .
* * * .
As to n a t u r a l p e r so n , ' t h e r e f o r e , i t cannot be denied that t h e
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 10/15
- 1 0 -
X-3742
e f f e c t
of
t h i s
a c t * * * i s
that
t h e
p hr as e ' d i s t r i c t
o f t h e
res idence
o f
1
a person i s equiva len t t o ' d i s t r i c t whereof he i s m i n h a b i t a n t ' *** .
I n t h e case of a corpora t ion t h e reasons a r e , t o s a y t h e l e a s t , qu i te a s
s t rong
f o r
hold ing tha t
i t can sue and be
sued only
i n t h e
s t a t e
and
d i s t -
r i c t
i n
which
i t h a s
been incorporated,
o r i n t h e
s t a t e
of
which
t h e
other par ty
i s a
c i t i z e n .
The
defendant Federal
Be
se rve Bank
i s n o t a
c i t i z e n
o f
C a l i f -
o r n i a , i t being incorporated under an Act of Congress; i t s a c t i v i t i e s a r e
n o t
confined
t o a
s ing l e s t a t e
o r
l o c a l i t y ,
b u t a r e
c a r r i e d
on in
d i f f e r e n t
s t a t e s .
The
Supreme Court
i n
Bankers' Trust
Co . v .
Texas
& P a c . R y . ,
supra ,
a t
page
3 0 9 ,
said:
Of
course
i t i s a
c i t i z e n
o f th e
United States
i n t h e
sense
t h a t
a
corporat ion organized under
t h e
laws
of one of the
s t a t e s
i s a
c i t i z e n
o f
t h a t s t a t e ,
b u t i t i s n o t
wi th in
t h e
clause
o f t h e
Fourteenth
Amendment, which declares that native born
a n d
n a t u r a l i z e d c i t i z e n s
o f
t h e United St ate s sha l l b e c i t i z e n s o f the s ta te where in they re s i de , n o r
h a s Congress said that i t s h a l l b e regarded a s posse s s ing s t a t e c i t i z en -
sh ip
f o r
j u r i s d i c t i o n a l p u r p o s e s ,
as i s one in
r e s p e c t
of
national banks
b y
s e c t i o n
2 4 , p a r . l 6 , o f t h e
Judicial Code
* * * ,n
Under
t h e
Federal Reserve Bank
Act (38
S t a t .
L . 2 $ l ) , t h e
Secre ta ry
o f t h e
Treasury, Secretary
of
Agr i cu l tu r e ,
a n d t h e
Comptroller
o f t h e
Currency, act ing
a s The
Reserve Bank Or ga ni za ti on Committee ,
sha l l des igna te n o t le ss than e i gh t n o r more than twelve c i t ies t o b e
•knwon
a s
Federal Reserve Ci t ies ,
and
sha l l d iv ide
t h e
cont inental Uni ted
S ta t e s , i nc lud ing Alaska , i n to d i s t r i c t s , each
t o
contain only
one of
such
r e s e r v e c i t i e s . The committee shall supervise t h e o r g a n i z a t i o n i n each
of the
c i t i e s de s igna t ed
of a
Federal Reserve Bank, which shall include
i n i t s
t i t l e
t h e
name
o f t h e
c i t y
i n
which
i t i s
s i t ua t ed . (Sec t i on
2 . )
Each Federal Reserve Bank shall establish branch banks within
t h e
Federal Reserve Dist r ic t
i n
which
i t i s
l o ca t ed . Such bran ch banks
s h a l l
b e
opera ted
by a
Board
o f
Dir ect ors under rule s
and
r e g u l a t i o n s
a p -
proved b y t h e Federal Reserve Board, four o f s a id d i r e c t o r s t o b e selected
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 11/15
- 1 1 -
X-37^2
b y t h e Reserve Bank a n d t h r e e by t he Fe der al Reserve Board, a n d t o hold
o f f i c e d u r i n g t h e p l e a s u r e r e s p e c t i v e l y o f t h e parent bank a n d t h e Federal
Reserve Board
. The
Reserve Bank shal l designate
one of the
d i r e c t o r s
a s
manager . (Sect ion 3»)
When t h e Federa l Rese rve Di s t r i c t s have been es t ab l i shed by t he
organizat ion commit tee
a
c e r t i f i c a t e
i s
f i l e d w i t h
t h e
Comptrol ler
of the
Currency showing t h e geograph ica l l imi t s of such d i s t r i c t s a n d t h e
Federa l Reserve c i ty designated i n each of such d i s t r i c t s . The Federa l
Reserve Board consists o f t h e S e c r e t a r y o f t h e Treasury a n d t h e Comptroller
o f t h e Currency a s e x off icio members, and f i v e members ap po in te d b y t h e
P r e s i d e n t ,
The
Reserve Board
i s
empowered
a t i t s
d i s c r e t i o n
t o
examine
t h e accounts , books an d a f f a i r s of every Federal Reserve Bank and every
member bank, a n d shal l publ i sh weekly a statement showing t h e cond i t ion
of
each Federal Reserve Bank,
and a
conso l ida t ed s t a t emen t
o f a l l
Federal
Reserve Banks, The powers o f Federal Reserve Banks a r e p r e s c r i b e d and
l i m i t e d b y t h e Federal Reserve Board
v ; i v i
r e l a t i o n t o d e a l i n g s i n com -
merc ia l paper , go ld t r a ns ac t i on s , bonas anu notes, commercial exchange,
d i s c o u n t r a t e s , f o r e i g n a c c o un t s a n d a g e n c i e s , a n d a l l r e l a t i o n s p e r -
t a i n i n g
t o t h e
b u s i n e s s
f o r
which they
a r e
organized* (Se ct i on
14*)
The F ed era l Reserve Bank de ri ve s a l l o f i t s r igh t s f rom t h e laws
of Congress, a n d a s u i t a g a i n s t i t o n accoun t of i t s conduct ar ises under
t h e
laws
o f t he
Uni ted Sta tes , (Osborn
v .
Bank
of
Uni t ed S ta t e s ,
9
Wheat.
8 2 8 0 I t h a s t h e r i g h t t o s u e a n d b e sued i n a l l c o u r t s o f l a w o r equi ty
w i t h i n t h e Uni t ed S t a t e s . (Sec t ion 4 , ) There i s n o t a sugges t ion tha t
in t ima tes any th ing o the r t han Federa l r e l a t ion# The defendant Federal
Bank bears t h e same r e l a t i on t o t h e Uni t ed S ta t e s , o r a t l e a s t t o t h e F e d -
e r a l R e s e r v e D i s t r i c t , a s a corpora t ion does t o t h e s t a t e o f i t s c r e a t i o n * I t
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 12/15
- 1 2 -
X-3742
i s a
c rea tu re
o f th e
Congress.
I t i s a
c i t i z e n ,
if i t may b e so
termed,
o f
t h a
Uni ted S ta tes .
I t i s
t r an sa c t in g bus iness under
and by
v i r t u e
of
n a t i o n a l a u t h o r i t y .
The
h a b i t a t
of the
bank
i s
f i x e d
b y t h e
c e r t i f i c a t e
of
o rgan i za t i on ,
a n d
es tab l i shed th roughout
t h e
r eco rd ,
as San
Francisco
•
Sec t ion , supra., h a s genera l appl ica t ion to a l l non- r e s iden t
defe ndan ts , incl uding cor por at i ons tha t seek advantage of i t s p rov i s ions ,
except national banks (Act of Ju ly 12 , 1885) and railway corporations
organized under federal law (Act o f June 28, 1915> 32 S t a t . L . 583*) ®
i e
pe r t i nen t c l ause
of
th i s s ec t i on fo rb id s
any
su i t
t o b e
brought
in any
d i s t r i c t other than tha t whereof
t h e
defendant
is an
inhabi tan t un less
founded only
o n
d i v e r s i t y
o f
c i t i z e n s h i p , t h e n
i n t h e
d i s t r i c t
o f the
res idence
of the
p l a i n t i f f
o r t h e
residence
o f the
de fe nd an t. Only means
(Webster) e xc lu si ve , nothing more,
so in any
event
t h e
j u r i s d i c t i o n
here must
b e
determined
b y t h e
h a b i t a t
o f the
defendant Reserve Bank.
ICeasley
e t c , v . U . S . , 1 6 0 U . S . 2 2 1 ,
City
of
Memphis
v .
Board
of
Di rec to r s ,
2 2 8 F e d . 8 0 2 .
Van
Dresser
v . 0 . R» & N. By . C o . , 4o Fe d . 2 02 ,
must have
been determined upon
t h e
j u r i s d i c t i o n
o f t h e
cour t
a s
f ixed p r io r
t o t h e
Act o f
August
13 , 1888 2 5
S t a t .
L . 433) ,
which pr ior
A c t
included
t h e
phrase
o r i n
which
h e
maybe fou nd. Judge Eanf ord,
o n
pa ge 203» s ai d:
I
hold that
i t i s
l i a b l e
to be
sued
i n t h e
na t i ona l cou r t s
i n
a n y
d i s t r i c t w he re in
i t may b e
found doing business
a nd
having
a n a
gen t
o r representative upon whom service of process c a n b e made.
I t i s fundamental t h at t h e cou r t h a s j u r i s d i c t i o n o n l y a s f ixed
an d l imi t ed b y t h e Congress, an d i t s duty i s pl ai n . Chief Ju st ic e
Marshall i n Bank v . DeVeaux, 9 S . 6 l (Cranch) said:
The d u t i e s o f t h e cour t to exerc i se ju r i sd ic t ion vdaere i t i s
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 13/15
- 1 3 -
X-3742
c o n f e r r e d . a n d
n o t t o
usurp
i t
where
i t i s n o t
c o n fe r r e d ,
a r e o f
equal
ob l iga t ion .
1 1
There
a r e
doubtless reasons
why the
Federal Reserve Bank should
oe considered an i n h a b i t a n t o f e ve ry d i s t r i c t i n vihich a branch i s e s -
t a b l i s h e d , b u t t h a t i s a mat te r of L e g i s l a t i o n b y t h e Congress. The la w
contemplates th at every cor pora t io n o r organ iza t ion sha l l have b u t o n e
h a b i t a t ,
and
t h a t s h a l l
b e i n t h e
d is t r ic t where
i t s
g e n e ra l o f f i c e s
a r e
l o c a t e d an d where t h e c e r t i f i c a t e o f o rg a n iz a t io n f ix e s i t a n d t h e general
business done.
The Supreme Court i n t h e n a t t e r of Dunn, 2 12 U. S.
yjb
i n which
i t was contended that t h e defendan t i n t h e pending sui t concerning the
con t roversy
was a
r e s i d e n t
of the
Southern Di s t r i c t
of New
York,
t h e
Court ,
a t
page
3 3 8 ,
held that
t h e
record d isc losed tha t
t h e
company main-
t a in e d an o f f i c e i n Dallas County, Texas, and t h a t t h e Senior Vice
Pres iden t l ived i n D a l l a s , and t h a t f o r many years t h e company h a d d e s i g -
nated Dallas a s i t s g e n era l o f f i c e , t h a t a l l o f t h e a c t s o f t h e Board o f
Direc to rs taken i n New York City were sub se que nt ly af fi rm ed b y t h e
meeting
o f t h e .
Board
i n
Dallas before they were considered affect ive ,
and
held that
t h e
corporat ion could
b e
sued
i n t h e
E a s t er n D i s t r i c t
of
Texas.
%• a t t e n t i o n i s c a l l e d t o Farmer ' s & Mer cha nt' s Bank v . Federal
Reserve Bank, 28 6 F e d . ^>6b. The i ssue before t h e cour t w as s t a t e d by
Judge Cochran a t t h e opening o f h i s d e c i s io n a s fo l lows:
. This c au se
i s
b e fo re
t h e
court
o n t h e
defendant bank's motion
t o quash t h e se rv i c e of process upon i t o n t h e ground that i t i s a
n a t io n a l c o rp o ra t io n and was n o t a t t he time of such serv ice doing bu si -
ness i n t h i s s t a t e a s r e q u i r e d i n order t o su b je c t i t t o s u i t t h e r e i n .
On
page
5^7
Judge Says:
I t i s conceded a s i t must b e th a t a t t h e t ime th is su i t was
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 14/15
t
X-3742
brought t h e ind iv idua l de fendan t was a c t i n g f o r t h e defendant bank a s
i t s
agent
a n d h a d
been
so
a c t i n g
f o r i t * f o r
over
a
year
and a
ha lf b efo re
t h e s u i t was b ro u g h t . The defendan t bank ' s pos i t ion i s t h a t t h e doing
of bus iness i n t h i s s t a t e o f a p a r t i c u l a r c h a ra c t e r a t t h e time suit was
brought was e s s e n t i a l t o j u r i s d i c t i o n and that such act ion o n i t s behalf
would n o t c o n s t i t u t e b u s in e s s of th a t c h a ra c t e r . As t o whe ther th i s p o -
s i t i o n
i s
sound
i s t h e
ques t ion before
m e ,
( I ta l ics Mine)
The i ssue i s d i s s imi l a r f ro m t h e issue presented here . The hab i tancy of
t h e bank i n th a t d i s t r i c t a p pe ar s t o have been waived, a nd t h e sole issue
was the motion t o quash t h e s e r v i c e of the summons, a s n o t a u th o r i z e d ,
because n o t served upon a person authorized to be s e r v e d ,
a
£ i t h e business
requ i red
of th e
p a r t i c u l a r c h a r a c t e r
was no t
done.
I n t h e
instant case
t h e r e i s no q u e s t io n a s t o t h e s u f f i c i e n c y o f t h e se rv i c e i f t h e defendant
i s suable i n t h i s d i s t r i c t , i t n o t having waived th e r i g h t t o exemption
from s u i t . Aside from th e fo rego ing quo ta t ions a s t o t h e issue there
presen ted
t h e
t h r e a d
o f t h e
thought
i s
carr ied throughout
t h e
d e c i s io n .
The sy n th e s i s y i e ld e d b y t h e cases examined a n d analyzed by Judge Cochran
i s i l l u s t r a t e d a t page 5 7 3 , where i t i s said:
The p l a i n t i f f ' s s i e volo i s n o t s u f f i c i e n t of i t s e l f t o confer
j u r i s d i c t i o n . The corporat ion must b e suab le th e r e . ( I t a l i c s Mine)»
There i s t h e r e f o r e a dua l i sm;-a rea l dua l i sm- i n a l l such cases . But i t
i s n o t t h e
dua l i sm her e to for e cons idered .
I t i s
t h i s :
The
corpora t ion
must be suable i n t h e f o r e i g n j u r i s d i c t i o n ; i . e . , i t mist b e reasonable
a n d n o t a r b i t r a r y f o r i t t o b e sued there in a n d process must have been
served the re in
on an
au thor ized agen t .
A t page. 5 8 1 t h e Court said:
This brings me to th e 11 d e c i s io n s i n t h e cases i n wh ic h ju r i s -
d i c t i o n was u p h e ld . I n u p h o ld in g ju r i sd i c t i o n , i t must b e taken that the
court decided n o t only that t h e requirements a s to se rv ice of process was
m e t b u t t h a t t h e defendant w as suab le i n t h e j u r i s d i c t i o n i n which suit
was brought . * * *
On
page
5 8 9 t h e
thought
i s
repea ted
a s
fo l lows:
But in order t o t h e ex is tence of j u r i s d i c t i o n , i t i s n o t s u f -
f i c i e n t t h a t s e r v i c e of process o n t h e c o r p o r a t i o n ' s r e p r e s e n t a t i v e
t h e r e i n
b e h a d . T h e
corporat ion must
b e
suable
i n t h e
f o r e i g n j u r i s d i c t i o n .
7/17/2019 frsbog_mim_v18_0380.pdf
http://slidepdf.com/reader/full/frsbogmimv180380pdf 15/15
- 1 5 - X-3742
( i t a l i c s M i n e . ) , and in order to t h i s i t irust be reasonab le tha t d e -
fendant should b e su b je c t t o s a l t t h e r e i n .
Serv ice of process in the instant uas6 was made upon an au thor ized agen t ,
b u t t h e defendant Federal Ee se rv e Bank was no t suable i n t h i s d i s t r i c t
by s t a tu to ry l imi t a t i o n s u n d e r S e c - , J u d . Code, and by the bank
under a special appearance invoking t h e p ro v i s io n s of Sec , $1 , the
court
i s
concluded.
(sign ed) Jeremi ah Net er er
U. S. Dis t r ic t Judge-