Cates v. Allen/Dissent Brown

Mr. Justice BROWN, with whom was Mr. Justice JACKSON, dissenting.

This was a bill in equity filed in the state court by creditors, to set aside an alleged fraudulent assignment under a provision of the Mississippi Code which gives the chancery court of that state jurisdiction of bills by creditors who have not obtained judgments, or, having judgments, have not had executions returned unsatisfied, to set aside fraudulent conveyances of property, or other devices resorted to for the purpose of defrauding creditors. The case was removed to the circuit court of the United States under the act of 1875, the second section of which provides 'that any suit of a civil nature, at law or in equity, now pending or hereafter brought in any state court, where the matter in dispute exceeds, exclusive of costs, the sum or value of five hundred dollars, * *  * in which there shall be a controversy between citizens of different states, *  *  * either party may remove said suit,' etc.

In the opinion of the court this case is controlled by that of Scott v. Neely, 140 U.S. 106, 11 Sup. Ct. Rep. 712, in which it was held that the circuit courts of the United States, in Mississippi, could not, under this provision of the Code of that state, take jurisdiction of a bill in equity to subject the property of the defendants to the payment of a simple contract debt of one of them in advance of any proceedings at law, either to establish the validity and amount of the debt, or to force its collection, for the reason that in such proceedings the defendant is entitled, under the constitution, to a trial by jury of the existence or amount of the debt. While I freely concede the general rule to be as stated, that a bill of this kind will not be entertained without a prior judgment and execution at law,-I am unwilling to admit that the federal courts are incompetent to administer a state law which provides that such a bill may be filed by a simple contract creditor, where the requisite diversity of citizenship exists, and the requisite amount is involved. In a case where such a bill was filed in the state court the statute then in force gave to either party the absolute right of removal of the suit to the federal court, upon the clear assumption that the federal court had the same power to administer the law that the state court had. I freely concede that if the state system of jurisprudence should invest the court of chancery with an ordinary common-law jurisdiction, as, for example, with jurisdiction of an action upon a promissory note, such cause, when removed to the federal court, would simply be placed on the common-law side, and be tried by a jury. But in this case the jurisdiction of the federal court, as a court of chancery, may be supported, not only upon the ground that the proof of the debt is merely an incidental feature of the bill, but upon the further ground, stated in the statute, that 'the creditor in such case shall have a lien upon the property described therein from the filing of his bill,' etc.,-a fact which in Case v. Beauregard, 101 U.S. 688, was held to obviate the necessity of a prior judgment and execution.

I had always supposed it to be a cardinal rule of federal jurisprudence that the federal courts are competent to administer any state statute investing parties with a substantial right. As was said in Ex parte McNiel, 13 Wall. 236, 243: 'A state law cannot give jurisdiction to any federal court, but that is not a question in this case. A state law may give a substantial right of such a character that, where there is no impediment arising from the residence of the parties, the right may be enforced in the proper federal tribunal, whether it be a court of equity, of admiralty, or of common law. The statute, in such cases, does not confer the jurisdiction. That exists already, and it is invoked to give effect to the right by applying the appropriate remedy. This principle may be laid down as axiomatic in our national jurisprudence. A party forfeits nothing by going into a federal tribunal. Jurisdiction having attached, his case is tried there upon the same principles, and its determination is governed by the same considerations, as if it had been brought in the proper state tribunal of the same locality.' So, also, in Davis v. Gray, 16 Wall. 203, 221: 'A party by going into a national court does not lose any right or appropriate remedy of which he might have availed himself in the state courts of the same locality.

The wise policy of the constitution gives him a choice of tribunals.' So, also, in the case of Broderick's Will, 21 Wall. 503, 520, it is said, (page 520,) that 'while it is true that alterations in the jurisdiction of the state courts cannot affect the equitable jurisdiction of circuit courts of the United States, so long as the equitable rights themselves remain, yet an enlargement of equitable rights may be administered by the circuit courts as well as by the courts of the state.' In the case of Holland v. Challen, 110 U.S. 15, 3 Sup. Ct. Rep. 495, a statute of Nebraska providing that an action might be brought and prosecuted to a final decree by any person claiming title to real estate, whether in actual possession or not, against any person claiming an adverse estate or interest therein, for the purpose of determining such estate and interest, and quieting title, was held to be enforceable in the federal courts, although it dispensed with the general rule of equity that, in order to maintain a bill to quiet title, it was necessary that the party should be in possession, and that his title should have been established by law. The statute under consideration merely dispenses with the general rule of courts of equity,-that, in order to maintain a creditors' bill, a prior judgment and execution at law is necessary,-and the case appears to me to be directly in point.

In this case the court of equity proceeds to establish the debt, not as a personal judgment against the debtor, which may be sued upon in any other court, but for a purpose special to that case, in order to reach property which has been fraudulently conveyed, and to appropriate it to the payment of the debt. If the object of the proceeding were the establishment of a debt for all purposes, which should become res adjudicata in other proceedings, and be suable elsewhere as an established claim against the debtor, or were not a mere incident to the chancery jurisdiction, I can understand why the constitutional provision might apply. But in this case I see no more reason for requiring a common-law action to establish the debt than in case of the foreclosure of a mortgage, or the enforcement of a mechanic's hen, where proof of an existing debt is equally necessary to warrant a decree. In Stewart v. Dunham, 115 U.S. 61, 5 Sup. Ct. Rep. 1163, a bill in equity was filed by creditors in the chancery court of Mississippi under this statute, was removed to the circuit court of the United States, and was prosecuted to a decree in that court, although it is but just to say that no question seems to have been made with regard to the jurisdiction, in this particular. The same may be said of Dewey v. Coal Co., 123 U.S. 329, 8 Sup. Ct. Rep. 148, in which a bill under a similar statute of West Virginia was sustained in an opinion by Mr. Justice Mattews. Indeed, proceedings under these statutes, which are common to many of the states, are in the nature of an equitable attachment, and operate to impound the debtor's property for the payment of the claim.

The logical consequence of the position assumed by the court in this case is that it is compelled to remand the case for a reason entirely outside of the removal acts. and thus to deny to the removing party the benefit of the act. I understand the duty imposed by the fifth section of the act-to remand a cause which, it appears, 'does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court'-to be limited to disputes or controversies not within the jurisdiction of the circuit court, by reason of the requisite citizenship not really existing, or being collusively obtained, as in Hawes v. Oakland, 104 U.S. 450, or where, upon an examination of the record, the requisite amount is found not to have been involved, as in Walter v. Railroad Co., 147 U.S. 370, 13 Sup. Ct. Rep. 348.

I have never known of a federal court admitting its inability to do justice between the parties, and remanding the case upon that ground. In Thompson v. Railroad Companies, 6 Wall. 134, it appeared only that a civil action removed from a state court, which was essentially a common-law action, could not be proceeded with in a federal court as an equity case,-a proposition I certainly should not deny. Indeed, in that case it was said that 'as the action was a purely legal one, if they [the plaintiff] could have maintained it in their names in the state courts, they had an equal right to maintain it in their names when it arrived in the federal court.' The only error was in not proceeding with it as a common-law action in the federal court.

I am authorized to state that Mr. Justice JACKSON concurs in this dissent.