Where diversity of citizenship does not exist and the
jurisdiction of the circuit court rests solely on the ground that
the cause of action arose under the Constitution of the United
States, an appeal lies directly to this Court under § 5 of the
Judiciary Act of 1891, and if an appeal should be presented to the
circuit court of appeals and there go to decree, this Court will
reverse the decree not on the merits, but by reason of want of
jurisdiction in that court. It is not the intention of the
Judiciary Act of 1891 to allow two appeals in cases of that
description.
Page 189 U. S. 72
The doctrine of
res judicata, under the decisions of
the highest court of Tennessee, is not applicable to taxes for
years other than those under consideration in the particular case.
The effect of a prior judgment of a state court as
res
judicata is a question of state, and not of federal, law.
Where a former judgment pleaded has no force or effect in the
state courts of Tennessee as exempting a corporation from certain
taxes other than as a bar to the identical. taxes litigated in that
suit, the courts of the United States can accord it no greater
efficacy.
The Union & Planters' Bank of Memphis was incorporated under
a charter granted by the General Assembly or the State of Tennessee
in 1858, which contained the following provision: "That said
company shall pay an annual tax of one-half of one percent on each
share of stock subscribed, which shall be in lieu of all other
taxes." The corporation was located in the City of Memphis, Shelby
County, Tennessee, and that city, pursuant to an act of the
Legislature of Tennessee, assessed an
ad valorem tax for
the year 1899, for municipal purposes, on the capital stock of the
bank. The bank thereupon filed its bill in the Circuit Court of the
United States for the Western Division of the Western District of
Tennessee, in which it was alleged that the law under which the
assessment was made impaired the obligation of the contract created
by the above-quoted clause of the charter. The bill further averred
that, in a former litigation between the bank and the city, wherein
it was sought to enforce a municipal assessment of taxes on the
capital stock of the bank for the years 1888, 1889, and 1890, it
was adjudged by the Supreme Court of Tennessee that, by the
provision aforesaid, the capital stock of the corporation was
exempt from all general taxation. The record and judgment in that
suit were set out in full, and pleaded as a final judicial
determination of the bank's exemption from the payment of
ad
valorem taxes on its capital stock, and it was averred that
the judgment so pleaded was based on the identical claim of
exemption now asserted, and on identically the same facts and
conditions under which this assessment was made.
The prayer was that the assessment be cancelled, and complainant
be declared to be exempt from the payment to the city of
ad
valorem taxes on its capital stock.
Page 189 U. S. 73
Defendants demurred, and the demurrer was sustained and the bill
dismissed November 6, 1900, whereupon complainant prayed and
perfected an appeal to, and also took a writ of error from, the
United States Circuit Court of Appeals for the Sixth Circuit, and
the case was docketed there on or about November 27, 1900.
On February 11, 1901, complainant prayed, and was granted an
appeal from the decree of the circuit court directly to this Court,
the record was filed here, March 23, 1901, and the case is now No.
67.
The case in the circuit court of appeals was heard June 10,
1901, and the decree below was affirmed October 21, 1901. 111 F.
561. Thereupon complainant, appellant in that court, prosecuted an
appeal from its decree to this Court, and the case was docketed
here January 13, 1902, and is now No. 221.
Both cases were submitted, as one case, on printed briefs.
MR. CHIEF JUSTICE FULLER delivered the opinion of the Court.
Diversity of citizenship did not exist, and the jurisdiction of
the circuit court rested solely on the ground that the cause of
action arose under the Constitution of the United States. The
appeal lay directly to this Court under § 5 of the Judiciary Act of
March 3, 1891, and not to the circuit court of appeals.
American Sugar Refining Company v. New Orleans,
181 U. S. 277.
Nevertheless, an appeal having been prosecuted to the latter court,
and having there gone to decree, an appeal was allowed to this
Court because the judgment was not made final in that court by
section six of the act. But the case being here, and the
jurisdiction of the circuit court having
Page 189 U. S. 74
depended on the sole ground that it arose under the
Constitution, we are constrained to reverse the decree of the
circuit court of appeals, not on the merits, but by reason of the
want of jurisdiction in that court. If this were not so, the right
to two appeals would exist in every similar case, notwithstanding,
as we have repeatedly held, that such was not the intention of the
act.
Robinson v. Caldwell, 165 U.
S. 359;
Loeb v. Trustees, 179 U.
S. 472;
American Sugar Refining Company v. New
Orleans, supra.
In
Pullman's Palace Car Company v. Central Transportation
Company, 171 U. S. 138, an
appeal was taken to this Court and also to the circuit court of
appeals, and a motion was made in each court to dismiss the appeal,
whereupon, by reason of the circumstances, we granted a writ of
certiorari, and brought up the record from the latter court before
it had proceeded to decree. The question as to which was the
correct route to reach this Court became immaterial, and we
disposed of the ease on its merits. But in the present case, the
circuit court of appeals went to decree, and we are obliged to deal
with the appeal therefrom, in doing which the jurisdiction of that
court necessarily comes under review.
The questions on the merits are, however, presented for
disposition on the direct appeal from the circuit court.
In
Shelby County v. Union and Planters' Bank, (1895)
161 U. S. 149, it
was decided that the capital stock of the bank was not exempt from
ad valorem taxation by the provision of the charter in
question, and was liable to be taxed as the state might determine.
Bank of Commerce v. Tennessee, 161 U.
S. 134.
But the bank objects that, notwithstanding this Court has thus
held that the exemption asserted does not exist, it must
nevertheless be recognized in this case as existing, because it was
so determined by the judgment pleaded as
res judicata. The
judgment thus relied on as a bar to this assessment is reported in
Memphis v. Union and Planters' Bank, (1892) 91 Tenn. 546,
which involved the assessment of municipal taxes for the years 1887
to 1891 inclusive, on the capital stock of the bank, and a
privilege tax for the years 1889, 1890, and 1891.
Page 189 U. S. 75
The Supreme Court of Tennessee there held, in deference to the
supposed scope of the decisions of this Court in
Farrington v.
Tennessee, (1877)
95 U. S. 679, and
in
Bank v. Tennessee, (1881)
104 U.
S. 493, that the bank was exempted by the charter from
being assessed by the state, county, or municipality for any taxes
except as specified.
In
Bank v. Memphis, (1898) 101 Tenn. 154, the
conclusion announced in
Shelby County v. Bank,
161 U. S. 149, was
followed, and it was held to be the settled rule in Tennessee that
the plea of
res judicata is only applicable to the taxes
actually in litigation, and is not conclusive in respect to taxes
assessed for other and subsequent years.
State v. Bank, 95
Tenn. 231.
As the judgment relied on as
res judicata was not so
regarded in
Shelby County v. Bank, it could not be
properly so regarded in the present case; but, apart from that, it
is enough that in Tennessee the doctrine of
res judicata
is not applicable to taxes for years other than those under
consideration in the particular case, inasmuch as what effect a
judgment of a state court shall have as
res judicata is a
question of state or local law, and the taxes involved in this suit
are taxes for years other than those involved in the prior
adjudication.
Phoenix Fire and Marine Insurance Company v.
Tennessee, 161 U. S. 174.
In
New Orleans v. Citizens' Bank, 167 U.
S. 371, referred to by appellant's counsel, no claim was
made that the judgment relied on would not have been
res
judicata in the state courts, and attention was particularly
called to the fact that the rule in Louisiana was in accord with
the conception of
res judicata expounded in that case.
As the judgment pleaded had no force or effect in the Tennessee
state courts other than as a bar to the identical taxes litigated
in the suit, the courts of the United States can accord it no
greater efficacy.
Cooper v. Newell, 173 U.
S. 555;
Metcalf v. Watertown, 153 U.
S. 671;
Chicago & Alton R. Co. v. Wiggins Ferry
Co., 108 U. S. 18;
Rev.Stat. § 905.
The litigation over the alleged exemption has been protracted,
and many decisions have been rendered in this Court and in the
highest tribunal of Tennessee in respect of it. They are
reviewed
Page 189 U. S. 76
by Lurton, J., in the circuit court of appeals, 111 F. 561.
Decree of the Circuit Court in No. 67 affirmed.
Decree of the circuit court of appeals in No. 221 reversed,
with a direction to dismiss the appeal and writ of error.
