• Last updated on November 11, 2022

The Supreme Court’s ruling enhanced the power of the federal courts by changing the definition of state residency for corporations.

Under diversity jurisdiction, New York resident Letson sued the Louisville, Cincinnati, and Charleston Railroad Co., chartered in South Carolina, in federal circuit court for breach of contract. The railroad claimed that the federal court lacked jurisdiction because the railroad had shareholders in New York. In United States v. Deveaux[case]Deveaux, United States v.[Deveaux, United States v.] (1809), the Supreme Court stated that, for purposes of diversity jurisdiction, a corporation’s home was the same as that of all its shareholders. Justice James M. WayneWayne, James M.;Louisville, Cincinnati, and Charleston Railroad Co. v. Letson[Louisville, Cincinnati, and Charleston Railroad Co. v. Letson] wrote the unanimous 5-0 decision of the Court, overturning its 1809 decision and granting jurisdiction. Wayne held that a corporation had its home only in the state in which it was chartered, thereby opening the federal courts to corporations to sue and be sued. This had both advantages and disadvantages for corporations, but its immediate impact was to increase the jurisdictional power of federal courts. This jurisdiction was later restricted somewhat. This decision was rendered by a smaller than usual number of justices because Justice Smith Thompson had died. Chief Justice Roger Brooke Taney and Justices Peter V. Daniel and John McKinley did not participate.Diversity jurisdiction;Louisville, Cincinnati, and Charleston Railroad Co. v. Letson[Louisville, Cincinnati, and Charleston Railroad Co. v. Letson]

Contracts clause

Corporations

Diversity jurisdiction

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