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HERRMANN v. EDWARDS

June 14, 1915

HERRMANN
v.
EDWARDS



APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF MISSOURI

White, McKenna, Holmes, Day, Hughes, Van Devanter, Lamar, Pitney, McReynolds

Author: White

[ 238 U.S. Page 111]

 MR. CHIEF JUSTICE WHITE delivered the opinion of the court.

If the statutes which control the question for decision in this case and their significance as settled by the decisions of this court long prior to the commencement of this suit be at once stated, it will serve to clarify and facilitate the analysis of the issue to be decided. Section 4 of the act of Congress of August 13, 1888 c. 866, 25 Stat. 433, provided as follows (p. 436):

"That all national banking associations established under the laws of the United States shall, for the purposes of all actions by or against them, real, personal or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located; >and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same State.> The provisions of this section shall not be held to affect the jurisdiction of the courts of the United States in cases commenced by the United States or by direction of any officer thereof, or cases for winding up the affairs of any such bank." (A line is drawn through certain words for reasons hereafter referred to.)

This section was but a reenactment of an identical provision contained in § 4 of the act of Congress of March 3, 1888 (c. 373, 24 Stat. 552, 554) and again this was but the reenactment of an identical provision contained in § 4 of the act of July 12, 1882 (c. 290, 22 Stat. 162, 163).

Under the provisions of the Act of 1882 long prior to their reenactment in 1888 it had been conclusively established that because a corporation was a national bank created under an act of Congress gave it no greater right to remove a case than if it had been organized under a state law. Leather Manufacturers' Bank v. Cooper, 120 U.S. 778. And after the reenactment in 1888 a case

[ 238 U.S. Page 112]

     (Whittemore v. Amoskeag National Bank, 134 U.S. 527) was decided involving a controversy controlled by the Act of 1882 but the decision of which was necessarily also an interpretation of the Act of 1888, as the two were identical. The case was this: A stockholder of a national bank on his own behalf and of all others who might join, sued in a Circuit Court of the United States, the directors of the bank, making the bank also a party defendant, to hold the directors liable for an act of alleged mal-administration committed by them. The prayer was that the directors be decreed to pay back to the bank for the benefit of its stockholders the amount of money lost by the bank as the result of their misconduct. There was no diversity of citizenship upon which the jurisdiction of the Circuit Court could rest and therefore its power to entertain the case rested alone upon the fact that the defendant bank was a national banking association, that the other defendants were directors of such an association and that the liability sought to be enforced arose from misconduct on their part in relation to their duties to the bank. The Circuit Court, not passing upon these questions, dismissed the bill because there had not been a compliance with Equity Rule 94. But this court concluding that the Act of 1882 excluded jurisdiction as a Federal court, the action of the court below in dismissing for want of compliance with the Equity Rule was reversed and the case remanded with directions to dismiss for want of jurisdiction as a Federal court. Of course this conclusion involved deciding that in the absence of a Federal controversy concerning the interpretation of some provision of the National Bank Act raising what might be considered by analogy a Federal question in the sense of § 709, Rev. Stat., a mere assertion of liability on the part of directors for wrongs for which they might be responsible at common law, afforded no basis for jurisdiction. Indeed, that this conception was the one upon which the decision was

[ 238 U.S. Page 113]

     rested is shown by the fact that in the course of the opinion it was pointed out that neither the provisions of § 5209, Rev. Stat., providing for criminal punishment of directors of national banks in certain cases, nor § 5239, Rev. Stat., giving certain powers to the Comptroller of the Currency in certain instances, were involved in the cause of action so as to give rise to a Federal question upon which the jurisdiction could be based.

This ruling during the many years which have elapsed has never been questioned and the fundamental principle upon which it rested has been applied in various aspects. Petri v. Commercial Bank, 142 U.S. 644; Ex parte Jones, 164 U.S. 691, 693; Continental National Bank v. Buford, 191 U.S. 119; Yates v. Jones National Bank, 206 U.S. 158; Thomas v. Taylor, 224 U.S. 73.

By § 24 of the Judicial Code of 1911 the jurisdiction of the district courts is provided for. The sixteenth paragraph of that section gives those ...


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