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Galva Foundry Co. v. Heiden

United States Court of Appeals, Seventh Circuit
Feb 13, 1991
924 F.2d 729 (7th Cir. 1991)

Summary

holding that the district court did not clearly err in finding that a defendant who lived in Illinois "all his life" and "bought a second home in Florida, which he and his wife have used as a vacation home," was a citizen of Illinois for diversity purposes

Summary of this case from Bruccoleri v. Gangemi

Opinion

No. 90-1468.

Argued January 14, 1991.

Decided February 13, 1991.

James R. Morrin, Wildman, Harrold, Allen Dixon, Chicago, Ill., James E. Konsky, Vonachen, Lawless, Trager Slevin, Peoria, Ill., for plaintiff-appellant.

Dean B. Rhoads, Edwin L. Durham, Sutkowski Washkuhn, Peoria, Ill., for defendant-appellee.

Appeal from the United States District Court for the Central District of Illinois.

Before CUMMINGS, POSNER, and KANNE, Circuit Judges.


The district judge dismissed this case for want of diversity jurisdiction because he concluded that on the day the complaint had been filed, the defendant, Ray Heiden, was a citizen of Illinois — a state of which the plaintiff, Galva Foundry, is unquestionably a citizen for diversity purposes (it is incorporated in Illinois). This conclusion must stand unless clearly erroneous. Lew v. Moss, 797 F.2d 747, 750 (9th Cir. 1986); Blakemore v. Missouri Pac. R. Co., 789 F.2d 616, 618 (8th Cir. 1986); Julien v. Sarkes Tarzian, Inc., 352 F.2d 845 (7th Cir. 1965); Casio, Inc. v. S.M. R. Co., 755 F.2d 528, 530 (7th Cir. 1985).

Although the diversity statute defines the state of a corporation's citizenship — a corporation is a citizen of both the state in which it is incorporated and the state in which it has its principal place of business, 28 U.S.C. § 1332(c)(1) — there is no statutory definition of an individual's state of citizenship. But the courts have held that it is the state of the individual's domicile, Gilbert v. David, 235 U.S. 561, 569, 35 S.Ct. 164, 166, 59 L.Ed. 360 (1915); Sadat v. Mertes, 615 F.2d 1176, 1180 (7th Cir. 1980) (per curiam); Julien v. Sarkes Tarzian, Inc., supra, 352 F.2d at 846; Rodriguez-Diaz v. Sierra-Martinez, 853 F.2d 1027, 1029 (1st Cir. 1988) — the state he considers his permanent home.

Unfortunately, in this age of second homes and speedy transportation, picking out a single state to be an individual's domicile can be a difficult, even a rather arbitrary, undertaking. Domicile is not a thing, like a rabbit or a carrot, but a legal conclusion, though treated as a factual determination for purposes of demarcating the scope of appellate review. And in drawing legal conclusions it is always helpful to have in mind the purpose for which the conclusion is being drawn. The purpose here is to determine whether a suit can be maintained under the diversity jurisdiction, a jurisdiction whose main contemporary rationale is to protect nonresidents from the possible prejudice that they might encounter in local courts. This argues for finding the defendant, Mr. Heiden, to be a domiciliary of the same state as the plaintiff, Galva — that is, Illinois. Heiden is a long-time resident of Illinois and unlikely therefore to encounter hostility in its state courts. And anyway he does not want to be in federal court. It is Galva that wants to be in federal court. Yet Galva is indisputably a citizen of Illinois.

Heiden, 68 years old when the suit was filed in 1989, was born and raised in Peoria, and has lived there all his life and worked there all his life until the events giving rise to this suit. Having risen through the ranks to become the president of Galva, in 1988 he quit the company and sold his stock in it. The suit charges that he defrauded the company. In 1966 Heiden had bought a second home in Florida, which he and his wife have used as a vacation home. In 1989, after leaving the employ of Galva, Heiden spent several months in Florida, dividing the balance of the year between Peoria and Europe. He is not at present working, but he maintains his home in Peoria, spends the greater part of the year there rather than in Florida, and retains his membership in both a country club and a church in Peoria.

In 1988, however, Heiden had registered to vote in Florida, had taken out a Florida driver's license, had stated in an application for a Florida tax exemption that he had become (as of that Year) a permanent resident of Florida, and had listed his Florida address as his permanent address on both his federal and Illinois income tax returns. He did all these things for tax purposes, mainly to shelter the proceeds of the sale of his stock in Galva from Illinois taxes, which are higher than Florida taxes — at least for Florida residents (the Florida constitution forbids the imposition of state income taxes on individuals who are citizens of the state). He may decide to retire to Florida eventually but for the foreseeable future he intends to spend most of the year in Peoria, as he has always done.

There is no question that before 1988 Heiden was a domiciliary of Illinois. The question is whether the steps he took in 1988 in order to beat Illinois taxes effected a change of domicile. We cannot say that the district judge made a clear error in concluding that they did not. Galva's argument that Heiden had residences in two states and by his actions chose one of them — Florida — to be his domicile is unacceptable because it makes changing one's domicile too easy. Anyone with residences in two or more states could change domicile continually, by changing his voter registration or his driver's license, in order to take advantage of changes in tax law or to opt in or out of federal diversity jurisdiction.

Heiden intended no change in the manner or style of his life, the center of gravity of which was and remains in Peoria, but only a change in his tax rate. The aura of fraud that surrounds his maneuverings in 1988 would help Galva if citizenship for diversity purposes could be acquired by estoppel — which Galva does not argue, and rightly so, for such an argument would be inconsistent with the rule that diversity is a jurisdictional requirement, which a defendant cannot, therefore, waive. But since citizenship cannot be acquired by estoppel, the aura of fraud hurts Galva. It shows that Heiden did not want to change his domicile. He just wanted to fool the taxing authorities in Florida and particularly Illinois (for it was Illinois taxes that he was trying to escape) into thinking he did. This is shady business but it cannot convert a suit between two residents of Illinois into a suit against a Floridian.

AFFIRMED.


Summaries of

Galva Foundry Co. v. Heiden

United States Court of Appeals, Seventh Circuit
Feb 13, 1991
924 F.2d 729 (7th Cir. 1991)

holding that the district court did not clearly err in finding that a defendant who lived in Illinois "all his life" and "bought a second home in Florida, which he and his wife have used as a vacation home," was a citizen of Illinois for diversity purposes

Summary of this case from Bruccoleri v. Gangemi

holding that defendant remained a citizen of Illinois despite the steps he took to move to Florida

Summary of this case from Kemph v. Mica Creek-Sagamore Capital Partners

holding that the defendant was domiciled in Illinois, where he lived most of the year, even though he took out a Florida driver's license, registered to vote in Florida, and listed Florida as his permanent address on his income tax returns

Summary of this case from Gravdahl v. Conwell

finding defendant domiciled in Illinois where, for tax purposes, he had obtained a Florida driver's license, registered to vote in Florida, and listed Florida as his permanent address on his taxes, but where “the center of gravity” of his life remained in Illinois

Summary of this case from Core VCT PLC v. Hensley

In Galva, similar to this case, the plaintiff, Ray Heiden, had homes in both Illinois and Florida, and the Seventh Circuit held that Heiden was domiciliary of Illinois for diversity purposes even though it was alleged he had moved from Illinois to Florida.

Summary of this case from Billhartz v. First Co.

In Galva, the Court affirmed the district court's finding that the plaintiff did not change his domicile from Illinois to Florida although the plaintiff had a residence in Florida, regularly spent time in Florida, had a driver's license and voter's registration in Florida, and had listed his Florida address on federal and state tax returns.

Summary of this case from Salem v. Egan

In Galva, the defendant, who was sixty-eight years old at the time the suit was filed in 1989, had lived in Illinois his whole life.

Summary of this case from Walsh Constr. Co. v. Chi. Explosive Servs., LLC

noting that diversity jurisdiction's "main contemporary rationale is to protect nonresidents from the possible prejudice that they might encounter in local courts"

Summary of this case from Darrough v. LTI Trucking Servs., Inc.

noting that "the state of the individual's domicile [is] the state he considers his permanent home"

Summary of this case from Buddha-Dhamma v. Stang

noting that diversity jurisdiction's "main contemporary rationale is to protect nonresidents from the possible prejudice that they might encounter in local courts"

Summary of this case from Davenport v. Toyota Motor Sales, USA, Inc.

In Galva, Judge Posner spoke of the inquiry into a party's domicile for diversity jurisdiction purposes as determining his "center of gravity."

Summary of this case from Ner Tamid Congregation v. Krivoruchko

changing voter registration, driver's license or tax status is not enough to confer citizenship for diversity purposes because it would be too easy to manipulate the court's jurisdiction

Summary of this case from Sargent v. Cassens Corporation

changing voter registration, driver's license, or tax status is not enough in itself to confer citizenship for diversity purposes because it would be too easy to manipulate the court's jurisdiction

Summary of this case from Cassens v. Cassens

noting that changing ones voter registration or obtaining a driver's license in a jurisdiction does not necessarily establish domicile in that jurisdiction

Summary of this case from Jankovic v. International Crisis Group

In Galva, the defendant maintained a residence in both Illinois and Florida. The defendant's Florida residence was nothing more than a vacation home and he spent most of the year in Illinois.

Summary of this case from Edick v. Poznanski

In Galva Foundry Co. v. Heiden, 924 F.2d 729, 730 (7th Cir. 1991), the United States Court of Appeals for the Seventh Circuit held that, when a party owns residences in two states, that party may not simply change his or her domicile "by changing his [or her] voter registration or his [or her] driver's license, in order to take advantage of changes in tax law or to opt in or out of federal diversity jurisdiction."

Summary of this case from Weith v. Weith
Case details for

Galva Foundry Co. v. Heiden

Case Details

Full title:GALVA FOUNDRY COMPANY, PLAINTIFF-APPELLANT, v. RAY F. HEIDEN…

Court:United States Court of Appeals, Seventh Circuit

Date published: Feb 13, 1991

Citations

924 F.2d 729 (7th Cir. 1991)

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