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ZONOLITE CO. v. UNITED STATES

September 28, 1962

The ZONOLITE COMPANY, Plaintiff,
v.
UNITED STATES of America et al., Defendant



The opinion of the court was delivered by: SORG

This is an action under the provisions of 28 U.S.C.A. §§ 1336, 1398, 49 U.S.C.A. § 17(9), and 5 U.S.C.A. § 1009, to set aside an order of the Interstate Commerce Commission, dated December 14, 1961, by which the Commission denied the plaintiff's claim for reparation of freight charges on numerous shipments of crude vermiculite. In its answer the United States stated that it would not participate in the defense of the Commission's order nor would it oppose it. The Interstate Commerce Commission and 46 railroads who were defendants in the proceedings before the Commission were granted leave to intervene as defendants in this action. Both the Commission and the intervening railroads have moved to dismiss the complaint under the provisions of 28 U.S.C.A. § 1398 which states as follows:

'Except as otherwise provided by law, any civil action to enforce, suspend or set aside in whole or in part an order of the Interstate Commerce Commission shall be brought only in the judicial district wherein is the residence or principal office of any of the parties bringing such action.'

 Plaintiff's complaint alleges that it is a 'corporation duly organized and existing under the laws of the State of Montana, having its principal office and place of business at Chicago, Illinois, and having processing plants at numerous points in the United States, including one at Sharpsburg, Pennsylvania, thus making said plaintiff a resident of this judicial district * * *'.

 Plaintiff admits that its principal place of business is not in this district but is in Chicago, Illinois. The intervening defendants contend that a corporation 'resides' only in a judicial district of the state of its incorporation and that plaintiff has no 'residence' in this judicial district by reason of its processing plant at Sharpsburg, Pennsylvania.

 In Seaboard Rice Milling Company v. Chicago, Rock Island & Pacific Railway Co., 270 U.S. 363, 46 S. Ct. 247, 70 L. Ed. 633 (1926) the court stated:

 'It is immaterial whether the general federal jurisdiction in the present suit is founded upon diversity of citizenship alone, or whether the suit is also one arising under the laws of the United States, since neither the Milling Company nor the Railway Company is a resident of the Eastern District of Missouri; a corporation being, within the meaning of the jurisdictional statutes, a resident of the State in which it is incorporated, and not a resident or inhabitant of any other State, although it may be engaged in business within such other State.'

 In Suttle v. Reich Bros. Const. Co., 333 U.S. 163, 166, 68 S. Ct. 587, 589, 92 L. Ed. 614 (1947) the court stated as follows:

 '* * * The sole issue of this case relates to the construction of the term 'residence,' appearing in the particular federal venue statutes under consideration, as it applies to a foreign corporation.

 'The 'residence' of a corporation, within the meaning of these statutes has frequently been the subject of consideration by this Court for a period of over half a century. Shortly after Congress had enacted § 51 of the Judicial Code in substantially its present form, this Court declared that the 'residence' of a corporation, within the meaning of the venue statutes, is only in 'the State and district in which it has been incorporated.' Thus in Shaw v. Quincy Mining Co., 145 U.S. 444, 450 (12 S. Ct. 935, 36 L. Ed. 768) (1892), it was said: 'This statement has been often reaffirmed by this court, with some change of phrase, but always retaining the idea that the legal existence, the home, the domicil, the habitat, the residence, the citizenship of the corporation can only be in the State by which it was created, although it may do business in other States whose laws permit it.'

 'For almost sixty years, in an unbroken line of decisions, this Court has applied the same construction. That view was reaffirmed as recently as 1946 in the opinion of the Court in Mississippi Publishing Corp. v. Murphree, 326 U.S. 438, 441 (66 S. Ct. 242, 90 L. Ed. 185).

 'Congress has revealed a similar understanding of the term 'residence' when enacting special venue statutes in situations in which it was intended that, at the election of the plaintiff, a corporation should become amenable to suit either in the State of incorporation or in States in which it is carrying on corporate activities. In those statutes, Congress has provided that the venue of such suits should be located not only in the district in which the corporation is a 'resident' or an 'inhabitant,' but also in districts in which it may be 'found,' 'transacts business,' or has an agent to receive service of process.'

 28 U.S.C.A. § 1391(c) provides as follows:

 'A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.'

 Section 1398 is a special statute fixing the venue for actions brought to review orders of the Interstate Commerce Commission and makes venue depend upon the 'residence' of the plaintiff. Section 1391(c) is a general venue statute applicable to suits against corporations as defendants and as such has no application to and does not enlarge the meaning of the provisions of Section 1398. As the court stated in ...


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