## Facts

- A partnership (Swan, Rose & Co.) filed a contract action in an Ohio state court against two railroad corporations, seeking damages for alleged breaches of a railroad construction contract.
- After the case was at issue, the railroad defendants petitioned to remove to federal circuit court on diversity grounds.
- The removal petition alleged one railroad was an Ohio corporation and the other was consolidated under Ohio and Michigan law.
- The petition alleged two partners were Pennsylvania citizens, one partner had been a Michigan citizen but died during the litigation, and the petitioners asserted the administrator of the deceased partner’s estate was not a necessary party.
- As to the remaining partner (McMann), the petition alleged only “according to petitioners’ recollection” that he was an Ohio citizen when the suit began, that he was not an Ohio citizen at removal, and that his current citizenship was unknown.
- The state court granted removal; the federal circuit court denied a motion to remand, tried the case on the merits, and entered judgment for the partnership.
- The railroads sought Supreme Court review by writ of error.

## Issues

1. Whether a removed case may proceed in federal court when the record does not affirmatively show complete diversity of citizenship.
2. Whether, for removal on diversity, diversity must exist both when the action is commenced and when removal is sought.
3. Whether lack of federal subject-matter jurisdiction can be waived by the parties’ litigation of the merits.
4. Whether costs may be assessed against the party who wrongfully removed the case when it must be remanded for want of jurisdiction.

## Decision

- The Supreme Court held that federal jurisdiction must affirmatively appear on the face of the record; it cannot rest on inference, uncertainty, or incomplete allegations of citizenship.
- The Court held that, in diversity removals, the requisite diversity must have existed both at the commencement of the suit and at the time of removal.
- The Court held that subject-matter jurisdiction is non-waivable and must be noticed by the court on its own initiative, even if the parties want the federal court to decide the merits.
- The Court concluded the removal record failed to show the necessary citizenship facts (including complete diversity) and therefore the circuit court lacked jurisdiction.
- The Court ordered the cause remanded to the circuit court with directions to remand it to the state court and awarded costs against the removing railroads.

## Legal Principles

- Federal courts may exercise judicial power only when jurisdiction is affirmatively shown in the record.
- In cases removed from state court on diversity, diversity must exist at both the time the action is filed and the time of removal.
- Parties cannot confer federal subject-matter jurisdiction by consent, waiver, or litigation conduct; courts must address jurisdiction defects sua sponte.
- When a case is wrongfully removed and remanded for lack of jurisdiction under the removal statute, costs may be awarded against the removing party.

## Conclusion

Because the removal papers failed to establish complete diversity at the relevant times, the federal circuit court lacked subject-matter jurisdiction; the Supreme Court directed remand to state court and imposed costs on the party that improperly removed the action.


Mansfield, Coldwater & Lake Mich. Ry. Co. v. Swan, 111 U.S. 379 (1884)