79 Notre Dame L. Rev. 1925 (2003-2004)
The Tidewater Problem: Article III and Constitutional Change

handle is hein.journals/tndl79 and id is 1937 raw text is: THE TIDEWATER PROBLEM: ARTICLE III AND
James E. Pfander*
The Supreme Court's 1949 decision in National Mutual Insurance
Co. v. Tidewater Transfer Co.' poses an enduring puzzle for students of
the law of federal jurisdiction. The case began when the National Mu-
tual Insurance Company-a District of Columbia corporation-
brought suit in federal district court in Maryland. The plaintiff corpo-
ration invoked the federal court's diversity jurisdiction, relying upon a
then recently enacted statute that defined citizens of the District (and
other territories) as citizens of a State for diversity purposes.2 This
definition ran headlong into the restrictive terms of Article III itself,
which provides for the assertion of jurisdiction over disputes between
citizens of different States.3 It also bumped into an early Marshall
*  Prentice H. Marshall Professor of Law, University of Illinois College of Law.
My thanks to Thomas Lee, Ron Rotunda, and Jay Tidmarsh for helpful comments,
and to the editors of the Notre Dame Law Review for the invitation to participate in the
Federal Courts, Practice and Procedure Issue. Special thanks to David Shapiro, for his
many contributions to the field, for his comments on this Article, and for his kind
words along the way.
1 337 U.S. 582 (1949).
2 As amended, the 1940 diversity statute extended the jurisdiction of the district
courts to civil actions between citizens of different states or citizens of the District of
Columbia, the Territory of Hawaii, or Alaska, and any State or Territory. See Act of
Apr. 20, 1940, ch. 117, 54 Stat. 143 (codified as amended at 28 U.S.C. § 1332 (2000)).
For the legislative history of the statute, see infra notes 178-82 and accompanying
3 The diversity grant of jurisdiction, as it has come to be known, extends the
judicial power of the United States to controversies between Citizens of different
States. U.S. CoNsT. art. III, § 2. Of an immense literature, see, Thomas D. Rowe, Jr.,
Abolishing Diversity Jurisdiction: Positive Side Effects and Potential for Further Reforms, 92
HARv. L. REv. 963 (1979); and David L. Shapiro, Federal Diversity Jurisdiction: A Survey
and a Proposal, 91 HARv. L. REv. 317 (1977). Corporations have been deemed citizens
of their state of incorporation, and more recently of the state in which they have their
principal place of business. For more on corporate citizenship, see infra Part IV.


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