Page:The Green Bag (1889–1914), Volume 12.pdf/142

 Federal Jurisdiction in Equity.

119

FEDERAL JURISDICTION IN EQUITY. DOCTRINE THAT THE FEDERAL COURTS MAKE THEIR OWN RULES OF PROPERTV AND OF SUBSTANTIVE RIGHT IN EQUITY PROCEEDINGS WITHOUT REGARD TO THE LAWS OF THE STATES. BY SEYMOUR D. THOMPSON.

vigorous opinion, on the ground that, in cases in equity the courts of the United Federal District Judge I'arlange, sitting at States are not bound by the statutes or rules circuit in equity, that the circuit court of of decision of the particular State in which the United States may, when so sitting, the suit may have arisen, and that in this charge an equitable lien upon the assets oí particular case the plaintiff did not offer to do equity, by paying into the court what an insolvent in the course of judicial adminis tration, although no such right of lien may was justly due for the principal and lawful exist under the law of the State, and although interest of the loan which he had received the effect of creating it may be to displace from the defendant.1 The Supreme Court of the United States the claims of general creditors who, under the State law, would otherwise be entitled to have lately affirmed this decision without a ratable distribution out of the assets of dissent, proceeding on the ground that the insolvent. This decision was affirmed usury is a statutory offense, that the object by Inthea supreme later case, court a bill of the in equity Unitedwas States.2 filed of the suit in equity was to secure the relief afforded by the statute law of Minnesota, inaState court in Minnesota praying for the and that, in dealing with a question thus cancellation of certain notes and a mortgage arising, the courts of the United States must securing them, on the ground of usury. Un be governed by the laws of the State where der the law of Minnesota, as construed by the transaction took place, and must follow the courts ofthat State, the plaintiff was en the construction put upon those laws by the titled to this relief, and without tendering or courts of the State.2 paying into the court what was actually due It is submitted that the Supreme Court, from him to the holder of the notes and and Judges Caldwell and Thayer, are right mortgage, together with lawful interest. The upon principle, but that Judge Sanborn is suit was removed by the defendant into the right according to previous authority. Sec Circuit Court of the United States, and the tion thirty-four o£ the Federal Judiciary court granted the relief prayed for, declar Act contains this provision : " That the laws ing the notes and mortgage to be void, and of the several States, except where the Con enjoining .the defendant from taking any ac stitution, treaties, or statutes of the United tion or proceeding to enforce the same.3 States shall otherwise require or provide, On appeal to the United States Circuit shall be regarded as rules of decision in trials Court of Appeals, this decision was affirmed, at common law in the courts of the United Judges Caldwell and Thayer voting to affirm, States, in cases where they apply." On the and Judge Sanborn dissenting in a terse and other hand, the original. Federal Process Act N Burdoit etc. Refining Company v. Fer

I ris Sugar Man. Co.,1 it was held by Mr.

'78 Fed. Rep. 417.
 * Burdon etc. Refining Co. v. Payne, 167 U. S. 127.

' Krumseig v. Missouri etc. Trust Co., 7 1 Fed. Rep. 350.

1 Missouri etc. Trust Co. г: Krumseig, 77 Fed. Rep. 32; s. c. 22 C. C. A. I. 2 Missouri etc. Trust Co. v. Krumseig, 172 U. S. 351.