within two miles of the dwelling house of defendant in error and upon the Government lands around his premises. The defense, set up by demurrer, was, as in Bacon v. Walker, ante, p. 311, that those sections were void under the due process and equality clauses of the Fourteenth Amendment of the Constitution of the United States. The trial court rendered judgment for the defendant in error, which was affirmed by the District Court for Elmore County and by the Supreme Court of the State. 9 Idaho, 740.

The case was argued with Bacon v. Walker et al., and on the authority of that case the judgment is

Affirmed.

MR. JUSTICE BREWER and MR. JUSTICE PECKHAM dissent.

CITY OF CHICAGO v. MILLS.

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES

FOR THE NORTHERN DISTRICT OF ILLINOIS.

No. 286. Submitted December 21, 1906.-Décided February 4, 1907.

Although the certificate of the Circuit Court may not state exactly how the jurisdictional question certified arose, this court can ascertain it from the record together with the opinion of the court below made a part thereof.

The jurisdiction of the Circuit Court must be determined with reference to the attitude of the case at the date of the filing of the bill. When a citizen of one State has a cause of action against a citizen of another

State which he may lawfully prosecute in a Federal court, his motive in preferring a Federal tribunal, in the absence of fraud and collusion, is immaterial.

If it does not appear that there was any collusion within the meaning of the ninety-fourth rule in equity for the purpose of conferring jurisdiction, not otherwise existing, on the Circuit Court of the United States, that court does not lose its jurisdiction of a suit brought by a non-resident stockholder, after request to and refusal by the corporation, to enjoin VOL. CCIV-21

Argument for Appellant.

204 U.S.

the enforcement of an ordinance against the corporation, and of which the court would not have had jurisdiction had the corporation been complainant, because subsequent events make it to the interest of the corporation and its officers to make common cause with the complainant stockholder. An admission by complainant that he expected the action to be brought in the United States court does not necessarily show collusion to confer jurisdiction.

In this case held on the facts that no collusion between the stockholder bringing the suit and the corporation refusing to bring it was shown that deprived the Circuit Court of jurisdiction thereover.

143 Fed. Rep. 430 affirmed.

THE facts are stated in the opinion.

Mr. James Hamilton Lewis, Mr. Henry M. Ashton and Mr. David K. Tone for appellant:

The undisputed evidence in this record shows that this suit was collusively brought by Mr. Mills at the instigation of and for the benefit of the People's Gas Light and Coke Company, for the purpose of conferring jurisdiction upon a Federal court in a case where such jurisdiction was otherwise wanting.

When it is sought to determine whether a suit is collusively brought for the purpose of conferring jurisdiction upon a Federal court, the question of motive becomes an important

one.

Here there was every motive for instituting a collusive suit, for the conduct of the People's Company, and its officers and directors, prior to the filing of the bill of complaint by Mills, clearly demonstrated that an unsuccessful effort had already been made by them to confer upon a Federal court jurisdiction of the litigation in question.

The fact that in a case where the question of conferring jurisdiction upon a Federal court by getting up a collusive controversy is involved, the burden of proof is upon the complainant, is established by the well-considered case of Lehigh Mining & Manufacturing Co. v. Kelly, 160 U. S. 337.

There is no force in the contention that there was a real controversy between Mr. Mills and the directors of the People's Company when the bill in the cause was filed.

204 U.S.

Argument for Appellant.

The undisputed evidence in this record shows that the corporate rights were being adequately protected by the officers of the People's Company at the time the bill of complaint was filed, and therefore a stockholder had no standing in the Federal court.

Independently of any question of collusion, the undisputed evidence in this record shows that the corporate rights of the stockholders were adequately protected by the injunction in force in the case of the People's Gas Light and Coke Company v. The City of Chicago, then pending in this court. No stockholder had any standing in court to interfere, so long as no irreparable injury was suffered or threatened, and certainly not while the board of directors were proceeding in good faith and in the exercise of their best judgment in protecting the corporate rights. That provision is established by all the authorities.

The general rule is that a majority of the stockholders of a corporation, through its board of directors; are invested with the sole power to institute suits in behalf of the corporation and to redress corporate grievances and to determine when and in what courts such suits shall be instituted, and an individual stockholder has no standing for any such purpose. Hawes v. Oakland, 104 U. S. 450-457; Morawetz on Corp., § 238.

To the foregoing rule should be added the qualification that where a corporation refuses to act and that refusal is arbitrary and wrongful and without just cause and a demand is made upon the corporation to act and it still refuses, a stockholder may institute a suit in his own name in behalf of himself and other stockholders to protect corporate rights. The mere allegation that a demand has been made upon the corporation and it refuses to act is insufficient to authorize a stockholder to begin suit. It must further appear that the refusal was wrongful, constituting a breach of trust, for although the corporate officers may have acted erroneously in refusing to bring a suit, that is not sufficient to authorize the stockholders to

Argument for Appellee.

204 U. S.

proceed, so long as it appears that the corporate officers were acting in good faith, with reasonable diligence, and in the exercise of their sound discretion. Memphis City v. Dean, 8 Wall. 64, 73; Dodge v. Woolsey, 18 How. 345; Wallace v. Lincoln Savings Bank, 89 Tennessee, 633; Samuel v. Holladay, 1 Woolw., U. S. C. Ct. 400; Morawetz on Corp., § 244; Hawes v. Oakland, 104 U. S. 457, 460, 462.

Mr. William D. Guthrie, Mr. John J. Herrick and Mr. I. K. Boyesen for appellee:

The decree in the prior suit dismissing the bill for want of jurisdiction, was not a bar to a new suit in a court of the United States by the company itself, nor in any event for divisional relief under the contract, if the company elected to demand it. The company itself, therefore, could have filed in a court of the United States substantially the same bill of complaint that Mills originally filed, praying divisional relief under its alleged contract right. It follows that diversity of citizenship was not essential or controlling as the basis of the jurisdiction. of the Circuit Court, and that so far as jurisdiction as a Federal court was concerned, there was really no occasion or motive for collusion. There can be no collusion without reason or motive or to subserve some purpose. Simpson v. Union Stock Yards Co., 110 Fed. Rep. 799, 801; Illinois Central R. R. v. Adams, 180 U. S. 28, 33, 37; Ball v. Rutland R. Co., 93 Fed. Rep. 513, 515; Kimball v. Cedar Rapids, 99 Fed. Rep. 130.

The question of collusion is, of course, to be determined by the conditions existing when Mr. Mills requested the board of directors and the stockholders of the People's Company to institute a new suit, and when he filed his bill, June 8, 1903, and not by subsequent developments. Mollan v. Torrance, 9 Wheat. 537, 539. See also Kirby v. American Soda Fountain Co., 194 U. S. 141, 145; Hardenbergh v. Ray, 151 U. S. 112, 118; Colorado Central Mining Co. v. Turck, 150 U. S. 138, 144; Mexican Central Ry. v. Pinkney, 149 U. S. 194, 200.

MR. JUSTICE DAY delivered the opinion of the court.

This case is here upon a question of jurisdiction of the Circuit Court of the United States for the Northern District of Illinois to entertain the suit. 26 Stat. 826. The case originated in a bill filed in that court by the complainant, Darius O. Mills, a citizen of California, as a stockholder in the People's Gas, Light and Coke Company, a corporation of the State of Illinois, to restrain the city of Chicago from enforcing a certain ordinance limiting the right of the gas company as to charges for furnishing gas.

Complainant averred a demand of the directors that an action be brought by the company to restrain the city from enforcing the ordinance, and alleged compliance with the ninety-fourth equity rule, and the refusal of the company to bring the action.

The original bill alleged that the ordinance impaired the obligation of the contract contained in the charter of the gas company, in contravention of the contract clause of the Federal Constitution; and, also, that the ordinance was illegal in that the city had no power to pass it.

The ordinance thus complained of was adopted by the city of Chicago, October 15, 1900, and provided that charges for gas in excess of 75 cents per 1,000 cubic feet should be illegal, and fixed a penalty of not less than $25 or more than $200 for each and every violation of the ordinance.

The objection made to the jurisdiction of the Circuit Court, and which is said to be established in the record and duly presented here, is based upon the allegation that the suit by Mills was brought in the Federal court by collusion between him and the gas company, and for the fraudulent purpose of invoking the jurisdiction of the Federal court concerning a controversy which was really between the company and the city of Chicago, parties lacking the requisite diversity of citizenship to maintain the suit in the Federal courts.

The record discloses that the appeal was allowed to this