Domicile Vs. Incorporation

Written by erika johansen
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Domicile Vs. Incorporation
Domicile and incorporation are used to impose jurisdiction in civil suits. (Justice image by MVit from Fotolia.com)

Jurisdiction in U.S. state courts generally requires sufficient contact between the individual or corporation and the state in which either is being sued. Domicile and incorporation are concepts that allow a court to decide whether it is constitutionally proper to subject an individual or corporation to jurisdiction within a particular state.

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Constitutional Issues

A plaintiff's decision on where to bring suit will often depend on the applicable state law. For a court's assertion of jurisdiction to be proper under the U.S. Constitution, the defendant must have sufficient contact with the forum state to make the court's exercise of jurisdiction fair and reasonable. Domicile and incorporation within a certain state are two measuring sticks by which courts will generally find assertion of that state's jurisdiction to be constitutionally acceptable. However, each state has its own rules of civil procedure, and legal advice is recommended for domicile and incorporation issues.

Domiciliary Jurisdiction

Domicile refers to the state in which an individual's permanent home is maintained. In-state domicile is sufficient systematic and continuous activity to justify assertion of jurisdiction by a court of that state. Most state courts will grant jurisdiction over individuals who are domiciled in that state, even if the person is served with process out-of-state. Even if a person has two homes, he will generally be found domiciled in only one state; assessment of which residence constitutes his domicile will be a matter for the court. Note, however, that U.S. citizens will generally be subject to jurisdiction in U.S. federal courts, even if domiciled abroad.

Incorporation

Incorporation refers to the process whereby a corporation becomes licensed to do business in a state. To incorporate instate, a corporation must file a corporate charter with the Secretary of State and receive a certificate of incorporation. Corporations are legally required to maintain an office and a registered agent for purpose of service-of-process in each state of incorporation. Today, most businesses incorporate in only one state, and "register to do business" in others.

Incorporation Jurisdiction

Before 1958, corporations were considered citizens of their states of incorporation only. Today, however, corporations will be constitutionally subject to jurisdiction in many states in which they "purposely avail themselves of the privileges and benefits of conducting business in state." Corporations are considered citizens of every state and foreign country of incorporation, and can be sued anywhere they are incorporated.

Application of Law

In addition to jurisdiction, domicile and incorporation are often used to determine which law can be fairly applied to a case. For instance, individual capacity to sue or be sued (meaning whether a defendant is legally fit to maintain suit) will be assessed according to the law of the defendant's domicile state, while corporate capacity to sue or be sued will be assessed based on the law of the incorporation state.

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