frsbog_mim_v18_0380.pdf

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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


of San

Franc isco ,

was

approved

b y t h e

Jud

s

e

of

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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


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


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


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

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- 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 -

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- 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

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- 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 .

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- 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 *

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- 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 ,

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- 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

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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


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

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- 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

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- 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


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


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

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- 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

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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 .

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- 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-

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