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HONG KONG DEPOSIT & GUAR. CO. v. HIBDON

February 25, 1985

HONG KONG DEPOSIT AND GUARANTY COMPANY LIMITED, MICHAEL J. JOHNSON and EOGHAN M. McMILLAN, AS LIQUIDATORS OF HONG KONG DEPOSIT AND GUARANTY COMPANY LIMITED, Plaintiffs, against MILTON L. HIBDON AND JOHN M. SHAHEEN, Defendants; HONG KONG DEPOSIT AND GUARANTY COMPANY LIMITED, MICHAEL J. JOHNSON AND EOGHAN M. McMILLAN, AS LIQUIDATORS OF HONG KONG DEPOSIT AND GUARANTY COMPANY LIMITED, BIL VILA) BANK LIMITED, AND STANLEY UREN, AS LIQUIDATOR OF BIL (VILA) BANK LIMITED, Plaintiffs, against BRADFORD A. SHAHEEN, Defendant.


The opinion of the court was delivered by: WEINFELD

EDWARD WEINFELD, D.J.

These are consolidated actions brought by the liquidators of an insolvent Hong Kong corporation, Hong Kong Deposit & Guaranty Co. ("HKDG"), which is also named as a plaintiff, to recover alleged loans to the individual defendants, Milton L. Hibdon, John M. Shaheen, and Bradford A. Shaheen. Defendants move, pursuant to Fed. R. Civ. P. 12(b)(1), to dismiss plaintiffs' claims for lack of subject matter jurisdiction. Defendants argue that plaintiffs HKDG is not a citizen or subject of a "foreign state" within the meaning of Article III of the Constitution or 28 U.S.C. § 1332(a)(2), because Hong Kong has not been granted formal recognition by the executive branch of the United States government. *fn1"

 Plaintiffs' response is two-fold. First, plaintiffs contend that the relevant citizenship is that of HKDG's liquidators who are named plaintiffs in the consolidated actions, and are British subjects. Second, plaintiffs contend that even if the bankrupt corporation's citizenship is determinative, HKDG is a citizen of subject of both Hong Kong, which according to plaintiffs, is a "foreign state," and Great Britain.

 DISCUSSION

 The subject matter jurisdiction of this Court is governed, in the first instance, by Article II of the Constitution, which states in pertinent part:

 The Judicial Power shall extend to all Cases . . . between a State, or the Citizens thereof, and foreign States, Citizens or Subjects; *fn2"

 and, as well, by 28 U.S.C. § 1332(a)(2), which provides in pertinent part:

 The district courts shall have original jurisdiction of all civil actions . . . between --

 (2) citizens of a State and citizens or subjects of a foreign state. *fn3"

 The Court need not reach the constitutional question whether Hong Kong, an entity with a unique international status, is in fact a "foreign state" within the meaning of Article III. To sustain their argument that this Court lacks subject matter jurisdiction, defendants must first establish that the Hong Kong citizenship of HKDG controls the jurisdictional determination. The Court finds to the contrary: the relevant citizenship is not that of the now defunct Hong Kong corporation, but rather, that of the individual liquidators, who are citizens of subjects of Great Britain, an entity which clearly is a "foreign state" within the meaning of the pertinent constitutional and statutory provisions.

 It is well-established that where a representative sues on behalf of another, it is the representative's citizenship that determines diversity and alienage jurisdiction. *fn4" As our Court of Appeals has stated:

 the general common law rule [is] that courts will look to the citizenship of a trustee, receiver, administrator, or other representative, and not the party which he represents, in determining diversity jurisdiction. *fn5"

 That rule has been applied in cases involving United States' receivers *fn6" as well as a foreign trustee in bankruptcy suing on behalf of a bankrupt foreign corporation. *fn7" In Clarkson Co., Ltd. v. Shaheen, our Court of Appeals, following the general rule, found that a Canadian "trustee appointed under a law other than the Federal Bankruptcy Act may use his own citizenship in claiming diversity jurisdiction unless that law imposes its own restrictions." *fn8" Similarly, here, the relevant citizenship for determining subject matter jurisdiction is that of the liquidators, who have been duly appointed under Hong Kong law, and who, by statute, have the right to bring and defend actions on behalf of HKDG. *fn9"

 In an attempt to avoid the force of the traditional rule, defendants contend that Hong Kong law "forbids" the liquidators from asserting their own citizenship. They rely upon a Hong Kong statute which provides that liquidators may bring suit "in the name and on behalf of the company." *fn10" Based on that statute, defendants argue that Hong Kong law requires liquidators to bring actions in the "name" of the company, and that "a fortiori" the ...


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