What Does "Located" Mean? (And When Does That Meaning Change?)

Wachovia Bank, N. A. v. Schmidts

A business is “’deemed to be a citizen of any state by which it has been incorporated’ and, since 1958, also “of the State where it has its principal place of business” for the purpose of federal-court diversity jurisdiction. National banks specifically are “deemed citizens of the States in which they are respectively located.” The question presented here is whether or not a plaintiff is entitled to a federal forum (to which they are entitled when there is ‘complete diversity’ between the citizenships of the parties) when suing a national bank that maintains a branch in the same state in which the plaintiff is a resident, while being incorporated elsewhere.

The whole issue comes down to a question about the meaning of the word “located.” Congress originally gave automatic federal jurisdiction to national banks, but changed that rule in 1882 to put national banks “on the same footing as the banks of the state where they were located.” In 1887 all banks became “citizens of the States in which they are respectively located.” The Court of Appeals interpreted this term to be congruent with its ordinary meaning, its meaning in precedents regarding subject matter jurisdiction (as opposed to venue jurisdiction), and to have a discrete meaning from “established.”

The unanimous court ruled that (1) the term “located” is a “chameleon word” and that “there is no enduring rigidity about the word;” (2) Congress had in the past, and gave no reason to believe it did not at present, use the words “located” and “established” as synonyms; and (3) that subject matter jurisdiction and venue jurisdiction are different enough in purpose and concept to attach different meaning to the same word. So, effectively, the same word (“located”) will now encompass two oppositional concepts, depending on the context in which it is used. Interesting.

“The tendency to assume that a word which appears in two or more legal rules, and so in connection with more than one purpose, has and should have precisely the same scope in all of them, runs all through legal discussions. It has all the tenacity of original sin and must be constantly guarded against.”