When plaintiff in error asserts that the state court has not
given due faith and credit to a prior judgment of a federal court
between the same parties, he asserts a right under the Constitution
of the United States and a federal question is raised, and, unless
manifestly frivolous, the writ of error will not he dismissed.
In this case, the consideration given to the federal question by
the state court demonstrates that it is not so far frivolous as to
sustain a motion to dismiss.
Where the action is based on counts upon a contract and also
upon
quantum meruit and the evidence to sustain the latter
is ruled out, the action rests solely on the contract, and the
right to maintain it is determined as though brought solely on the
contract.
Where an action was dismissed by the circuit court of the United
States on the sole ground that plaintiff, a foreign corporation,
could not sue owing to noncompliance with a state statute, the
effect to be given to that judgment in a subsequent action between
the same parties in the state court after a curative statute has
been enacted raises a federal question.
Where the state, by statute, gives a person the right to avoid a
contract for a purpose of its own and not because of the merits of
the obligation, it may, so long as the matter remains
in
fieri, take that right away, and so
held that a
curative statute allowing foreign corporations who had not complied
with the registration statute to sue, on complying therewith, on
contracts made before registration, is within the power of the
state, and a judgment entered in an action on a contract in the
state court brought after the curative statute does not deny full
faith and credit to a judgment of the federal court entered in an
action between the same parties dismissing the complaint on same
cause of action solely on the ground that plaintiff had not
complied with the registration laws.
Page 219 U. S. 93
The Act of Pennsylvania of May 3, 1907, P.L. 205, validating
contracts made by foreign corporations which had not complied with
registration laws, was within the power of the state, and in this
case was held to apply to a contract which the courts theretofore
had refused to enforce on account of the noncompliance with such
registration laws.
227 Pa.St. 90 affirmed.
The facts, which involve the validity of a statute of
Pennsylvania validating contracts made by foreign corporations and
the effect to be given to a judgment of the federal court, are
stated in the opinion.
Page 219 U. S. 96
MR. JUSTICE McKENNA delivered the opinion of the Court.
This is the second action between the parties, defendant in
error being plaintiff in both, and the purpose of both being the
recovery of $332,750.98 upon an award of James H. McRoberts, chief
engineer of the railroad company, made under the circumstances
hereinafter detailed. In the present action, the declaration
contains a count upon a
quantum meruit.
The first action was brought in the United States Circuit Court
for the Western District of Pennsylvania. A verdict was directed
for the plaintiff (defendant in error here) for the full amount of
the award, subject to the court's decision upon a point reserved.
Subsequently judgment
non obstante was entered for the
defendant (plaintiff in error here). One of the grounds of the
motion, and, as it was the only one considered, it is not necessary
to give the others, was that the action could not be maintained
because the plaintiff (defendant in error here), being a foreign
corporation (it was incorporated under the laws of West Virginia),
did not register as required by the statute of Pennsylvania before
making the contract on which the action was based.
An act passed in 1874 provided that no foreign corporation
should do business in the state until it had established an office
or offices and appointed an agent or agents for the transaction of
business therein. And it was made unlawful for such corporation to
do any business until it had filed in the office of the secretary
of the commonwealth a statement, under seal, signed by the
president and secretary, showing the title and object of the
corporation,
Page 219 U. S. 97
the location of its offices, and the names of its agents. A
certificate of the secretary of the commonwealth of such filing was
required to be kept for public inspection in every office.
Transacting business without complying with the provisions of the
act was made a misdemeanor.
An act was passed in 1889 which provided that any limited
partnership, bank, joint stock association organized under the laws
of the commonwealth, or under the laws of any other state, and
doing business in the commonwealth, should register, in the office
of the auditor general, the place of its business and post office
address, the names of certain of its officers, and the amount of
capital authorized and the amount paid. Such registration was also
required of every corporation then engaged in business in the
commonwealth. Annual registration was required thereafter. A
penalty of $500 was imposed for violations of the act.
The plaintiff had not registered at the time the contract
involved in the act was made. It, however, subsequently
registered.
It was held, following the decisions of the courts of
Pennsylvania, that the statutes made unlawful business transactions
within the state by a foreign corporation which had not complied
with their provisions. And it was said:
"Nor does the award of the engineer have any efficacy in this
case. Authority on his part to act, and the obligation of parties
to abide by his decision, rests in both cases on the provision of a
contract which is
contra legem. The law will not enforce
an award based on an illegal contract.
Benton v.
Singleton, 114 Ga. 556."
The opinion concluded as follows:
"Upon the whole, therefore, we are of opinion that, by reason of
the nonregistration of the plaintiff corporation prior to the
contract here involved, the verdict for plaintiff cannot be
sustained. Judgment will
Page 219 U. S. 98
therefore be entered in favor of the defendant
non obstante
veredicto, but said judgment shall not bar any subsequent suit
or proceeding by the plaintiff for services performed."
The circuit court of appeals, to which the case was carried,
also expressed the view, applying, as it said, the decisions of the
courts of the state, that the contract was illegal, and its
illegality made void the award made under it. The judgment of the
circuit court was affirmed.
Then an act of the Legislature of Pennsylvania was passed
entitled
"An Act Validating Contracts, Bonds, or Obligations Made by
Corporations of Other states, Without First Having Established
Known Places of Business and Designating Authorized Agents for the
Transaction of Their Business Within This Commonwealth, and
Providing for the Enforcement of the Same."
P.L. 205.
Thereupon this action was brought not only upon the award made
by James H. Roberts, but also for work and labor done as upon a
quantum meruit. Among other defenses, the judgment in the
United States circuit court was pleaded as a bar to the action
notwithstanding the Act of May 23, 1907. The trial court was of
opinion that the act "cured the defect in plaintiff's contract,"
and accordingly the judgment was not a bar to the action. The court
also ruled against the other defenses, and entered judgment for
plaintiff (defendant in error here). It was sustained by the
supreme court of the state on the ground that the adjudication in
the circuit court
"settled nothing with respect to the merits of this case; all
that was there adjudicated was the plaintiff's right to maintain
its action as an unregistered foreign corporation."
The supreme court further decided that
"the effect of the Act of May 23, 1907, was to remove the
impediment created by the prior act to the enforcement of the
contract, and the plaintiff had at once acquired the right to
maintain an action thereon. "
Page 219 U. S. 99
The action of the state court, deciding against the judgment of
the United States circuit court as a bar, constitutes the federal
question in the case, the contention of plaintiff in error being
that due faith and credit were denied the judgment. A motion,
however, is made to dismiss the writ of error on the ground that no
federal question is presented by the record, or alternatively to
affirm the judgment.
The motion to dismiss is based on the contention that the
judgment of the circuit court reserved to plaintiff a right of
action for the services performed, and that, the supreme court of
the state having decided that the present action was within the
reservation, it gave, not denied, the same faith and credit it
would have given to a state judgment rendered under similar
circumstances.
When a party asserts that due faith and credit have not been
given to a judgment rendered in an action between him and the other
party, he asserts a right under the Constitution of the United
States, and necessarily this raises a federal question. This is the
assertion in the present case, and the consideration which the
Supreme Court of Pennsylvania give it demonstrates that it is not
so far frivolous as to sustain a motion to dismiss. The motion is
therefore denied. On the other hand, we cannot say that the motion
to dismiss is without color, and pass therefore to the merits, for
the determination of which a fuller statement of the facts becomes
necessary.
The West Side Belt Railroad Company, which we shall refer to as
the railroad company, entered into a contract with one Petrie to
construct an extension of its road. Petrie engaged to construct and
complete the proposed work in the manner and within the time called
for by the specifications, and the railroad company agreed to pay
for the work the sum of $400,000. The contract was dated April 25,
1901. On the twenty-fourth of May following, Petrie, with the
consent of the railroad company, entered
Page 219 U. S. 100
into a contract with the Pittsburgh Construction Company,
referred to herein as the construction company, to do the work.
This contract was a transcript of the contract between Petrie and
the railroad company, except as to the consideration. Following the
signatures of the parties, this appears:
"For value received, the Westside Belt Company and John S.
Scully and T. S. Barnsdall do hereby guarantee and become surety
for the payment of the money mentioned in this contract as the same
becomes due and payable."
Under the contract John H. McRoberts was made the final
arbitrator to determine all matters in dispute, and disputes arose
which were submitted to him. He, after full hearing, made an award
in favor of the construction company in the sum of $332,750.98.
The construction company brought the action to which we have
referred in the circuit court of the United States against the
railroad company, Scully and Barnsdall, on their contract of
guaranty for the amount of the award. The proceedings in the
circuit court, and its judgment, and that of the circuit court of
appeals, have been stated.
An act of May 23, 1907, mentioned above, provided that contracts
made by foreign corporations should be binding, and might be
enforced in the courts of the commonwealth, provided the
corporation had subsequently and prior to the passage of the act
complied with the laws of the commonwealth by establishing a known
place of business in the state, and designating authorized agents
for the transaction of its business, and before commencing any suit
upon such contract, bond, or obligation, and had paid all taxes
that would have accrued to the commonwealth if it had complied with
the laws at the time of beginning business.
After the passage of the act this action was brought. The
declaration contained two counts, one for the recovery of the sum
of $332,750.98, with interest, for services performed
Page 219 U. S. 101
and materials furnished, conclusively evidenced by the award of
James H. McRoberts, and the other upon a
quantum meruit
for the value of the work done and materials furnished, as of the
date of the performing and furnishing the same. Judgment was
rendered for the construction company, as we have stated.
The decision in this case turns upon a comparison of the two
actions, and the effect of the Act of May 23, 1907.
It was assumed by the trial court and also by the supreme court
that the action in the circuit court was between the same parties
and upon the same cause of action as this one. Making that
assumption, the trial court said the question was did the Act of
May 23 "revitalize the contract, which the United States court
declared invalid?" And, construing the statute, decided that it was
its intention to legalize every contract, bond, or obligation of a
foreign corporation which had not complied with the laws of the
state, but subsequently had done so, and paid all of the taxes
which would have accrued. "The act makes no distinction," the court
said, "between contracts which have been litigated and those which
have not been litigated," and, as it was found that the plaintiff
(defendant in error) had complied with all the requirements of the
statute, it was held that the defect in the contract was cured and
the judgment of the circuit court was no bar to recovery. The
supreme court pronounced the ruling correct, and, we may assume,
approved the grounds upon which it was based. It is true the
learned court discussed the judgment more than it did the Act of
May 23, but this, we infer, was for the purpose of showing that the
judgment in the circuit court was rendered not upon the
controversies which arose between the parties in consequence of the
contract, its terms, the extent or manner of its performance, or
the liability of the railroad company upon its contract of
guaranty, but "was based," as the court said, "exclusively on
the
Page 219 U. S. 102
plaintiff's disability to maintain the action because of its
failure to register within the state before the contract sued upon
was entered into," and that therefore the judgment did not preclude
a consideration of the Act of May 23 or take from it the power to
"revitalize" the contract. We agree, therefore, with the railroad
company that the effect of the Act of May 23 constitutes "the real
and only issue in the case."
That the action could be maintained without it is not contended.
It is true that the declaration contained a count upon a
quantum meruit, in order to bring the case within the
reservation of the judgment of the circuit court, but evidence to
sustain it was ruled out upon the objection of plaintiff in error
on the ground substantially that the contract furnished its own
measure of damages, "ascertained in the manner set forth" in the
contract -- that is, by an appraisement and award -- and that the
evidence offered was a "contradiction of the written contracts in
the case," and therefore incompetent. The
quantum meruit
therefore is out of the case, and the action rests on the contract,
as the action in the circuit court did, and the judgment in the
latter, adjudging its invalidity, is a bar to the present action
unless such effect has been taken from it by the Act of May 23,
1907. And this is admitted. Indeed, defendant in error asserts that
it was assumed by everybody at the trial, but it is insisted that
the effect of the act is not a federal question, but solely one for
the state courts. In this we cannot concur. It is an element in the
consideration of the question whether due faith and credit were
given to the judgment of the circuit court, and we are brought to
the consideration of the curative effect of the act.
In
Watson v.
Mercer, 8 Pet. 88, such an act was sustained
against a charge that it divested vested rights and impaired the
obligation of a contract. The act considered made valid the deeds
of married women which were invalid
Page 219 U. S. 103
by reason of defective acknowledgments, and avoided a judgment
in ejectment rendered against one of the parties to the action
because of such a defect in a deed relied on for title. The
controversy was between the successor by descent of the married
woman and the grantee in the deed. It was said in the argument that
the descents had been confirmed by two judgments of the supreme
court of the state against the deed, adjudicating it to be void on
points involving its validity, which judgments, it was contended,
were conclusive evidence that the deed was no deed, and that the
rights acquired by descent were absolute vested rights. The act was
nevertheless sustained, as we have stated.
Satterlee v.
Matthewson, 2 Pet. 380, is to the same effect.
Title was set up as a defense in an action of ejectment to which
the plaintiff replied that, conceding it to be older and better
than his, it nevertheless could not be set up against him, as the
defendant was his tenant. The trial court took that view, and the
supreme court of the state reversed it on the ground that, by the
statute law of the state, the relation of landlord and tenant could
not subsist under a Connecticut title. Before the second trial of
the case, the legislature of the state (Pennsylvania) passed a law
providing that the relation of landlord and tenant should exist
under such titles. This Court affirmed the judgment of the supreme
court of the state, sustaining the law.
The doctrine of
Satterlee v. Matthewson and
Watson
v. Mercer was repeated in
Randall v.
Kreiger, 23 Wall. 137,
90 U. S. 150.
In
Gross v. United States Mortgage Company,
108 U. S. 477, the
same principles were applied to sustain an act of the State of
Illinois making valid a mortgage which was inoperative under the
provisions of prior laws. So also
Ewell v. Daggs,
108 U. S. 143.
In
Utter v. Franklin, 172 U. S. 416, it
was decided that
Page 219 U. S. 104
an act of Congress validating a defect in bonds of the Territory
of Arizona was within the power of Congress.
The principle of the cases is declared to be by Mr. Justice
Matthews, in
Ewell v. Daggs, supra,
"that the right of a defendant to avoid his contract is given to
him by statute, for purpose of its own and not because it affects
the merits of his obligation, and that whatever the statute gives
under such circumstances, as long as it remains
in fieri,
and not realized by having passed into a completed transaction, may
by a subsequent statute be taken away. It is a privilege that
belongs to the remedy, and forms no element in the rights that
inhere in the contract."
And such view of curative statutes is entertained by the Supreme
Court of Pennsylvania, as indicated by its opinion in the present
case and the cases there cited.
The federal question having been correctly decided, the judgment
is
Affirmed.