Corporations Chartered by Congress

Corporations Chartered by Congress

In Osborn v. Bank of the United States,1 Chief Justice Marshall seized upon the authorization for the Bank to sue and be sued as a grant by Congress to the federal courts of jurisdiction in all cases to which the bank was a party.2 Consequently, upon enactment of the 1875 law, the door was open to other federally chartered corporations to seek relief in federal courts. This opportunity was made actual when the Court in the Pacific R.R. Removal Cases 3 held that tort actions against railroads with federal charters could be removed to federal courts solely on the basis of federal incorporation. In a series of acts, Congress deprived national banks of the right to sue in federal court solely on the basis of federal incorporation in 1882,4 deprived railroads holding federal charters of this right in 1915,5 and finally in 1925 removed from federal jurisdiction all suits brought by federally chartered corporations on the sole basis of such incorporation, except where the United States holds at least half of the stock.6

Corporations Chartered by Congress and the U.S. Constitution

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This text about Corporations Chartered by Congress is based on “The Constitution of the United States of America: Analysis and Interpretation”, published by the U.S. Government Printing Office.

Notes

[Footnote 1] 22 U.S. (9 Wheat.) 738 (1824).

[Footnote 2] The First Bank could not sue because it was not so authorized. Bank of the United States v. Deveaux, 9 U.S. (5 Cr.) 61 (1809). The language, which Marshall interpreted as conveying jurisdiction, was long construed simply to give a party the right to sue and be sued without itself creating jurisdiction, Bankers Trust Co. v. Texas & P. Ry., 241 U.S. 295 (1916), but, in American National Red Cross v. S. G., 505 U.S. 247 (1992), a 5-to-4 decision, the Court held that, when a federal statutory charter expressly mentions the federal courts in its “sue and be sued” provision, the charter creates original federal-question jurisdiction as well, although a general authorization to sue and be sued in courts of general jurisdiction, including federal courts, without expressly mentioning them, does not confer jurisdiction.

[Footnote 3] 115 U.S. 1 (1885).

[Footnote 4] § 4, 22 Stat. 162.

[Footnote 5] § 5, 38 Stat. 803.

[Footnote 6] See 28 U.S.C. § 1349.