Mr. CLARK. You have raised there a question of constitutional law, and of course, these rules must be construed against the background of existing constitutional law.

I should conclude that the Delaware provision would conflict with the law that under the Constitution, you cannot give a corporation power to go into another State and then prevent it from becoming responsible for its obligations.

Mr. RAMSAY. That is exactly what you do by this provision, is it not? I believe you cannot do it.

Mr. CUMMINGS. That is exactly the way it is now.

Mr. CLARK. The rules have been written in an attempt to state the existing law. It may be, of course, that better language could have been chosen.

Mr. CELLER. Does not this rule affirmatively empower the State of Delaware to determine where that corporation can be sued, and can only be sued? I am a little doubtful about that myself, and I would like to get it clear.

Mr. CLARK. Again, I have to give you a construction which is my own individual opinion, but it seems to me the language is only used in an attempt to state existing law, and the theory of existing law in that regard is such that it would not permit that sort of a statute.

Mr. CELLER. Would it not be well for us to add some phraseology to make it consistent with your explanation?

Mr. CLARK. Perhaps it might be. I have no feeling that the language of these rules cannot be improved upon. I think they will be improved as practice and experience shows the need.

Might I say on that point that various organizations, including the American Bar Association by its vote, have urged the appointment of a standing advisory committee to consider all suggestions for changes in the rules, and while the Supreme Court has not acted on this proprosal, I think there is good expectation that such a committee may be created, and this sort of problem can then be taken up in that way. The CHAIRMAN. Dean Clark, it seems to me that these gentlemen have raised an important question that ought to be straightened out now. The language provides that the capacity of a corporation to sue or to be sued is to be determined by the law under which it was organized.

What does that mean? Does that mean that a corporation may be organized in a State and the legislature of that State provide the conditions and circumstances and procedure with reference to their being sued, and if they procure permission to do business in another State, assuming that the rules of the State of incorporation are unfavorable to service, that nothing can be done about it except to hold that the rule does not work, is not constitutional, or something like that?

Mr. ROBSION. This is a very vital matter, because in all these States, or a great majority of them, there is involved the question of the right of foreign corporations to sue or be sued.

The CHAIRMAN. We are trying to get at this through this conference among gentlemen who have had to do with the formation of these rules. The committee is endeavoring to find out about it.

Mr. CLARK. Let me say again that if the language can be improved, I see no reason why it should not be suggested to the Court that it be so improved. I am not sure yet, however, just how you are going to

phrase the rule to do other than what we have tried to do, which is to state the existing law.

I take it that it would be clear under existing law that if a State has organized a corporation and given it power to go into other States and do business there, it could not then, under the Constitution, say that it could not be sued.

Mr. CELLER. Your purpose was to give the right to sue a corporation in any State in which it was doing business?

Mr. CLARK. Oh, yes; but you could not say it quite so broadly as that, for you quickly get into the difficulty of having said too much. Mr. CELLER. Then the purpose of the committee was to give the right to an individual to sue a corporation in any State where it does business?

Mr. CLARK. Yes, in accordance with the present law under the Lupton case.

Mr. GUYER. Under the same rules as exist in Delaware.

Mr. HEALEY. What is your construction of the language "shall be determined by the law under which it was organized"?

Mr. CLARK. It seems to me that presents the question of the constitutionality of the right of suing in other States.

It seems to me that is best illustrated by the case of a governmental corporation which might not have in its certificate of incorporation the general right of suing. The language is designed to take care of that kind of a case.

Mr. HEALEY. That applies to all corporations, does it not?

Mr. CLARK. The same situation might arise under the law of a State as to certain kinds of governmental corporations.

Mr. ROBSION. This language covers all corporations.

Mr. HEALEY. It is mandatory; that is true.

The CHAIRMAN. May I make a suggestion that we pass that matter over and go ahead with the hearing. In the meantime, you gentlemen who have had to do most with the formation of the rules may take this under consideration and then we can take it up again. Mr. CELLER. My point was also in reference to having an explanation with reference to a suit against an unincorporated association. Mr. CLARK. Yes; that is in the last sentence, particularly in the last clause,

except that a partnership or other unincorporated association, which has no such capacity by the law of such State, may sue or be sued in its common name for the purpose of enforcing for or against it a substantive right existing under the Constitution or laws of the United States.

That was, of course, an attempt to state, or at least not to repeal, the rule of the Coronado case. It was the endeavor of those of us who worked on the drafting of the rules not to change the law in that respect.

That is the case of the United Mine Workers of America v. The Coronado Coal Company, found in 259 United States 344. That was a suit against the United Mine Workers of America as a group, and also against the district organization of that labor union and individuals.

Mr. RAMSAY. In connection with that, referring to rule 4 (d) (3)Mr. CLARK. That is with reference to the service of process. Mr. RAMSAY. Yes. Is not that going to be a great field of litigation? Who is the officer you are serving on?

Mr. CLARK. That is subparagraph (3) of section (d) of rule 4.
Mr. RAMSAY. That is right.

Mr. CLARK. It says service shall be made

upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant.

Mr. RAMSAY. That pertains to the same matter that is in rule 17, only that says that you can serve it on some officer. The State laws provide for service on a particular man. Who is going to know who are the officers of an unincorporated organization? How are you going to serve such an officer?

Mr. CLARK. Of course, the provisions as to service have been designed to include some, and if possible, all State laws. Again I cannot say that the rule is unduly extended.

Mr. RAMSAY. If you men who wrote these rules cannot say, how can we country jakes practicing law in West Virginia know if you who wrote them do not know?

Mr. CLARK. I feel embarrassed because I was only one member of the committee, and it is difficult for me to put myself in the position of asserting that these rules mean only thus and so. They have gone out of our hands.

The CHAIRMAN. The best you can do is to say what they mean to

you.

Mr. MICHENER. What did they mean when they went out of your hands? If you wrote them you ought to be able to tell what they meant when they left you.

Mr. CLARK. The various drafts of the rules were changed from time to time as they were presented in the committee conferences. This rule was the subject of a great deal of discussion and was finally put into this form as a result of discussions of the whole group, the 15 members of the committee. It is true too that the Court itself made various changes in the rules. I think it did not change this particular rule but it did pass on all the rules.

Mr. RAMSAY. These go far beyond rules. This undertakes to pass substantive law, passing on the rights of litigants through the courts; they go way beyond rules and pleadings, all of them.

Mr. CLARK. We did not understand that it did.

Mr. RAMSAY. Have we not just been discussing two matters that do that very thing?

Mr. CLARK. If I may be permitted to say so, you gentlemen have been considering these rules as though they did change substantive law. That, of course, was not our plan and we do not think that is their meaning. We have provided in various places that there shall not be that kind of change. For example, there is a rule near the end that nothing in the rules shall affect the jurisdiction of the district

courts.

Mr. RAMSAY. But it wipes out all the Federal statutes that have been passed on the question of pleadings and practice for 150 years if they are in conflict with these rules of procedure.

Mr. CLARK. Yes; but only if they are procedural. That, of course, is the basis we tried to go on, that these are all rules of procedure.

60098-38-ser. 17- -2

With reference to the point about unincorporated associations, Chief Justice Taft in the Coronado case, said the question was merely one of procedure in that case the suing in the association name of the defendants in that case. But we felt that there was at least enough doubt as to whether it was procedure or substance, so that we tried not to affect any change. That is, we tried to retain the same sort of provision as was set forth in the Coronado case.

Mr. RAMSAY. AS I understand, if you are going to sue an unorganized corporation, company, or whatever you call it, a fraternity or a labor union, you can sue them in the name of the labor union only. What judgment would you take there? Could you take a judgment against all the labor unions in that union in the United States?

Mr. CLARK. Of course, that is a question that we did not try to settle.

Mr. RAMSAY. That is the question to be settled right here now.

Mr. CELLER. In the Coronado case on this question, you will find the defendants are not only the union but the officers of the union. For example, that suit is against the United Mine Workers of America and its officers together with district 21 of the United Mine Workers of America and its officers, 27 local unions in district 21 and their officers, together with 65 individuals. While it is true that the Court in its decision seemed to indicate that an unincorporated labor organization would be suable as such, nevertheless in that case there were officers interpleaded of this very union cited in the name of the United Mine Workers of America together with district lodges. You go a little further in your rule and say that you could sue that unincorporated organization merely in its name without including the officers. Are you not affecting a rather drastic change? Why do you do that? Mr. CLARK. In the first place, I do not think we are making any change.

Mr. RAMSAY. If you are permitted to do this, cannot you bring in, let us say, and sue the Eagles in Steubenville, Ohio, and get a judgment there against them for $10,000 which they have not got? Then cannot you pursue the main body of Eagles and take the dues from the main body all over the United States and collect that judgment when they knew nothing about the transaction at all?

Mr. CLARK. It goes back under this rule to the question whether there is a substantive right existing under the laws of the United States. If you are enforcing a common substantive right, which is a sort of limited thing, that would be true. I do not know how you could get a substantive right in your case. In the Coronado case the court works out the substantive right from the Sherman Anti-Trust Act. You would have to have some sort of Federal statute as a basis for working out any right of that kind. It all comes back-and the rule is already drawn on that basis-to the fact that the suit is only to enforce a common substantive right. This is the language we adopted and, the way we took to reach that result.

Mr. RAMSAY. But you did a different thing actually. Do you not think the matter of those substantive rights is a matter for Congress rather than the Supreme Court?

Mr. CLARK. Yes, I do, and if we had changed them I would agree with you, but I do not follow why you think it is a change, when we make the rule depend on a substantive right developed from somewhere outside of these rules themselves.

The CHAIRMAN. I notice this language in rule 4, section (d), paragraph (3):

Upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name

That qualifies everything that follows. Are you not getting jurisdiction of an organization or a corporation that under the law is subject to suit under a common name?

Mr. CLARK. That is the clear intention.

Mr. MURDOCK. Does not that section say that you can sue under a common name, actually under that name, taking the two together? Mr. RAMSAY. It makes it so that you can sue the local union. I believe that is what it was put in there for, to sue the labor union and make the national labor union responsible for the acts of the local union.

Mr. CLARK. Under the Sherman Act and as to the substantive rights there created, that would be the true meaning of the Coronado

case.

Mr. RAMSAY. It was put in there just for that purpose, to get around the fact that they are not embraced.

Mr. CLARK. May I add further that under that case, as I understand it, you would not be able to levy on the assets of any individual. The judgment against the group only goes against the group assets, from what the Court said in that case.

Mr. RAMSAY. That is true, but you cannot levy on the man who has paid dues in New York for a suit brought in Louisiana and take those dues to pay the judgment rendered in Louisiana.

Mr. CLARK. You cannot take his dues unless they have been collected by the national authorities of the union.

Mr. RAMSAY. As soon as they went into the national organization they were subject to that judgment. You cannot take a judgment against a man as you can here and hold him liable and his property liable.

Suppose he has a property right in the lodge room? He has $1,000 and suit is brought. He is subject to whatever judgments are rendered there.

The CHAIRMAN. If you bring the suit against the concern and he is interested in the concern, how are you going to avoid that?

Mr. RAMSAY. Require the suit to be summoned on every member. Mr. CUMMINGS. May I ask Mr. Mitchell to speak on these various matters?

STATEMENT OF HON. WILLIAM D. MITCHELL, CHAIRMAN OF THE ADVISORY COMMITTEE ON RULES FOR CIVIL PROCEDURE APPOINTED BY THE SUPREME COURT

Mr. MITCHELL. The committee invited some of the advisory committee and two or three of us are here in response to that invitation. I have not much of anything to volunteer, but if you like I can make a few comments by comparing the provisions of this bill of Mr. Ramsay's with the code of rules.

The CHAIRMAN. We will appreciate it very much.

Mr. MITCHELL. The Attorney General has made a very clear statement of the history of these rules and the way they were prepared.