1. Where the district court sustains a bill in equity against a
demurrer and, upon final hearing, renders a decree for the
plaintiff, a reversal ordered by the circuit court of appeals
purely because of an amendable deficiency of the bill, and
unaccompanied by any direction that the bill be dismissed or
implication forbidding its amendment, leaves the district court
free to permit the amendment, and the fact that the circuit court
of appeals, in denying a petition for rehearing, refused to direct
the allowance of the amendment signifies merely that it saw no
occasion to control the district court's discretion in the matter.
P.
254 U. S.
181.
2. The provision of the Judicial Code (§ 265, formerly
Rev.Stats., 720) forbidding any court of the United States to grant
an injunction to stay proceedings in any court of a state is
intended to give effect to the principle of comity and to prevent
unseemly interference with the orderly disposal of litigation in
the state courts, but not to hamper the federal courts in the
discharge of duties otherwise plainly cast upon them by the
Constitution and by the laws of Congress. P.
254 U. S.
182.
3. The inhibition does not forbid the federal courts to enjoin a
party from collecting a judgment obtained in a state court where
its enforcement would be contrary to recognized principles of
equity and the standards of good conscience. P.
254 U. S. 183.
See headnote 6,
infra.
4. An arrangement between a railroad company and an express
company whereby, in consideration of stipulated payments, the
former grants to the latter the exclusive privilege of conducting
the express business over its line, and transports, by cars
provided by it and attached to its passenger trains, the express
matter and accompanying messengers of the latter, besides
furnishing room in its stations for the express company's use, and
under which the latter assumes all risk of damage to its property
and express matter so transported and of injury to its agents and
employees while engaged in its business on the trains or property
of the railroad company, and agrees to indemnify that company
against claims for damages suffered by
Page 254 U. S. 176
such agents or employees while so engaged, does not create a
partnership relation, but constitutes the business of the express
company distinct from that of the railroad company, so that an
employee of the express company, while employed as its messenger on
an express car in course of transportation, cannot be treated as an
employee of the railroad company for the purpose of applying the
Employers' Liability Act. P.
254 U. S.
186.
5. The Employers' Liability Act, applicable to "every common
carrier by railroad," does not embrace an express company
conducting its business under such an arrangement with a railroad
company. P.
254 U. S.
187.
6. An express company operating over a railroad under an
agreement by which it assumed all risk of injury to its employees
while engaged in its business on the trains of the railroad company
and agreed to indemnify that company against such claims, employed
a messenger who, as a condition to his employment, assented to this
understanding and agreed on his part to assume all risk of injury
incident to his employment, from whatever cause arising. The
employee was injured by the negligence of the railroad company
while in discharge of his duties to the express company, and
recovered judgment against the railroad company in an action in a
state court in which the express company was not a party and could
not be heard. He was financially irresponsible.
Held that
his contract was valid, and bound him to the express company not to
assert such a liability against either company, and that the
express company was equitably entitled to enforce the obligation by
a suit against him in the district court (diverse citizenship being
present) in which collection of the judgment should be enjoined. P.
254 U. S.
188.
249 F. 109 reversed.
The case is stated in the opinion.
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
Oscar G. Taylor, an express messenger of Wells Fargo & Co. a
common carrier by express, received substantial
Page 254 U. S. 177
personal injuries through the derailment of an express car in
which he was working, and which was part of a passenger train
moving over the railroad of the St. Louis & San Francisco
Railroad Company in the State of Mississippi -- the derailment
resulting from negligence on the part of the railroad company and
its employees. To recover for these injuries, Taylor brought an
action against the railroad company in the Circuit Court of Monroe
County, Mississippi, and obtained a judgment for $4,000, which was
affirmed by the supreme court of the state without an opinion.
See St. Louis & S. F. Ry. Co. v. Taylor, 58 So.
485.
In his declaration in that case, Taylor explained and justified
his presence on the train and in the express car by alleging that
he was then in the employ of the express company as its messenger,
and, in the course of that employment, was in charge of express
matter which the railroad company was transporting for the express
company, that this transportation was in pursuance of a contract
between the two companies, and that, under the contract, the
express car was furnished by the railroad company and he, as the
express company's messenger, was permitted to accompany the express
matter carried therein.
While the declaration said nothing more about the nature or
terms of that contract, it is important here to have them in mind.
The contract shows that it was intended to, and did, cover all
express business on and over the railroad company's road, both
within and without the State of Mississippi, for a specified
period, including the day when Taylor was injured. It gave to the
express company the exclusive privilege of conducting an express
business on and over the railroad, and obligated the railroad
company to refrain from conducting an express business. There were
provisions whereby the railroad company agreed (a) to transport, by
suitable cars, to be provided by it and attached to its passenger
trains, all express matter of the express company and the
messengers accompanying the
Page 254 U. S. 178
same, (b) to light and warm the cars and equip them with
necessary conveniences, and (c) to permit portions of its
stationhouses to be used by the express company for the reception,
safekeeping, and delivery of express matter. And there were other
provisions whereby the express company agreed (a) to make stated
payments -- usually a percentage of the gross earnings -- for the
facilities furnished and service rendered by the railroad company,
(b) to assume all risks, losses, and damages to its own property,
express matter, and valuable packages transported under the
contract, (c) to assume all risk and damage to its agents and
employees while engaged in its business on the trains or property
of the railroad company, and (d) to indemnify and hold harmless the
railroad company in respect of all claims for damages suffered by
such agents and employees while so engaged.
There was also a contract between Taylor and the express
company, spoken of as a messenger's agreement, wherein, following a
recital that he had full knowledge of the service required and the
conditions on which the railroad company would permit messengers to
accompany express matter on its trains, and that, with such
knowledge, he was desirous of becoming a messenger of the express
company, it was stipulated as a term or condition of his employment
that neither the express company nor the railroad company should
under any circumstances or in any case be liable for any injury
which he might receive while on the railroad company's trains as
such messenger, whether caused by negligence of the railroad
company or otherwise, and that he would assume all and every risk
incident to such employment, from whatever cause arising.
Promptly after Taylor sued the railroad company in the Circuit
Court of Monroe County, and before the case was brought to trial,
the express company presented to that court in that cause a
petition wherein it set out the contracts just described and asked
to be made a party defendant.
Page 254 U. S. 179
To this, the railroad company assented, but Taylor evidently
objected, and the petition was denied. The railroad company, by its
answer and evidence, sought to avail itself of the stipulation in
the messenger's agreement, in connection with those in the other
contract, but the court ruled against it, and Taylor obtained the
judgment before mentioned.
What has been recited will conduce to a right understanding of
another suit, the decree in which we are now to review.
The suit is in equity, and was brought by the express company
against Taylor in the District Court of the United States for the
Northern District of Mississippi. The federal jurisdiction rests on
diversity of citizenship, the express company being a corporation
and citizen of Colorado and Taylor a citizen of Mississippi
residing in the Northern District. The bill, with a supplement and
amendment, proceeds on the theory that, in suing the railroad
company and obtaining a judgment against it, which, as between that
company and the express company, must be paid by the latter as
stipulated in their contract, Taylor not only violated the
messenger's agreement, but perpetrated a legal fraud on the express
company; that the judgment is therefore one which, in equity and
good conscience, he has no right to enforce; that, if he be
permitted to enforce it, the express company will be without any
effective remedy in that he has no property which can be reached by
legal process (a fact which is both alleged and proved), and that
the express company, which was not a party to that case, and has
not been in any wise negligent or at fault, is in equity and good
conscience entitled to have the messenger's agreement respected and
to demand that the claims embraced in the inequitable judgment be
relinquished and the enforcement of the judgment enjoined. The
prayer conforms to that theory, and is in substance that Taylor be
required specifically to perform
Page 254 U. S. 180
and carry out the messenger's agreement, to execute a sufficient
release of all claims on account of the injuries received, and to
abstain from enforcing the judgment. General relief also is
prayed.
Taylor challenged the bill by a demurrer, which was overruled,
and, after a hearing, in due course the express company prevailed.
On appeal to the circuit court of appeals, that decree was reversed
and the suit remanded because, in that court's opinion, the bill
did not show that Taylor was not in the employ of the railroad
company or that he was solely in the employ of the express company.
Taylor v. Wells Fargo & Co., 220 F. 796. After the
mandate was received, Taylor conceiving that the decision of the
circuit court of appeals fully disposed of the merits, and was
final, requested the district court to enter a decree dismissing
the bill, and the express company requested leave to amend the bill
by correcting the defect pointed out by the circuit court of
appeals. Taylor's request was denied and that of the express
company was granted. The bill was accordingly amended so as to show
that Taylor was not in the employ of the railroad company, but was
on the train solely in virtue of his employment by the express
company, and that, in his declaration in the action against the
railroad company, he did not claim or allege any employment by that
company, but, on the contrary, claimed and alleged that it
permitted him to be on the train because he was accompanying the
express matter as the express company's employe. Taylor then filed
a new answer, and, on a further hearing, a decree for the express
company was entered. By it, the district court found that the
allegations of the bill, with its supplement and amendment, were
all true; declared that the institution of the action against the
railroad company and its prosecution to judgment constituted a
violation of the messenger's agreement and a legal fraud on the
express company; directed Taylor to carry out and perform the
messenger's
Page 254 U. S. 181
agreement and to execute, within a fixed time, an appropriate
instrument releasing the express company and the railroad company
from all claims for damages on account of his injuries, and
enjoined him from collecting or attempting to collect the judgment
against the railroad company. On a further appeal to the circuit
court of appeals, that decree was reversed with directions to
dismiss the bill.
Taylor v. Wells Fargo & Co., 249 F.
109. A writ of certiorari was then granted by this Court, 247 U.S.
515.
On the second appeal, the circuit court of appeals put its
decision entirely on the ground that the express company was a
"common carrier by railroad" within the meaning of the Employers'
Liability Act of April 22, 1908, c. 149, 35 Stat. 65, and
therefore, under § 5 of the act, the messenger's agreement was
void. Taylor advanced that and other grounds in asking a reversal,
but the court did not discuss the other grounds. All are pressed on
our attention, and we take them up in what seems the natural
order.
1. It is urged that the decision of the circuit court of appeals
on the first appeal was final, in that it disposed of all questions
in the suit and left nothing open to the district court but to
dismiss the bill. Had this been so, the circuit court of appeals,
on the second appeal, hardly would have failed to enforce its prior
decision. But that decision did not go as far as is claimed. It
turned on the sufficiency of the bill, and on that alone. The
district court had held the bill sufficient when challenged by a
demurrer. The circuit court of appeals held it insufficient, and,
for that reason, reversed the decree and remanded the suit. Had the
district court taken that view when acting on the demurrer, it
undoubtedly could, and probably would, have allowed an amendment
curing the defect. Could it not equally allow the amendment after
the circuit court of appeals pointed out the defect and remanded
the suit? It, of course, was bound to give effect to the decision
and
Page 254 U. S. 182
mandate of the circuit court of appeals, but that court did not
order the bill dismissed, nor give any direction even impliedly
making against the amendment. All that was disposed of was the
matter of the sufficiency of the bill. And recognition of this is
found in the last opinion of the circuit court of appeals, where it
is said that the first reversal was "based upon the insufficiency
of the pleadings." We think the decision on the first appeal was
not final, and that the district court was left free, in the
exercise of its discretion, to permit the amendment. Equity Rules
Nos.19 and 28;
In re Sanford Fork and Tool Co.,
160 U. S. 247,
160 U. S.
258-259;
Mutual Life Insurance Co. v. Hill,
193 U. S. 551,
193 U. S. 553;
Smith v. Adams, 130 U. S. 167,
130 U. S. 177. It
appears that, in denying a petition for a rehearing on the first
appeal, the circuit court of appeals refused to direct the
allowance of the amendment; but this signifies nothing more than
that no occasion was perceived for controlling the district court's
discretion in the matter.
2. Section 265, Judicial Code, formerly § 720, Rev.Stats.,
provides that:
"The writ of injunction shall not be granted by any court of the
United States to stay proceedings in any court of a state except in
cases where such injunction may be authorized by any law relating
to proceedings in bankruptcy,"
and this is relied on as showing that the district court could
not entertain the suit. That court held the provision not
applicable, and the circuit court of appeals said nothing on the
subject on either appeal, possibly because, in a similar case, it
had held the provision without application.
Is the suit one to stay proceedings in a state court in the
sense of that provision? If it is, the district court erred in not
dismissing the bill on that ground.
Haines v. Carpenter,
91 U. S. 254;
Dial v. Reynolds, 96 U. S. 340;
United States v. Parkhurst-Davis Co., 176 U.
S. 317. If it is not, the court rightly entertained the
suit and proceeded to an adjudication of the merits, for the
citizenship of the
Page 254 U. S. 183
parties and the amount in controversy were within the
jurisdictional requirements.
The provision has been in force more than a century, and often
has been considered by this Court. As the decisions show, it is
intended to give effect to a familiar rule of comity, and, like
that rule, is limited in its field of operation. Within that field,
it tends to prevent unseemly interference with the orderly disposal
of litigation in the state courts and is salutary; but to carry it
beyond that field would materially hamper the federal courts in the
discharge of duties otherwise plainly cast upon them by the
Constitution and the laws of Congress, which, of course, is not
contemplated. As with many other statutory provisions, this one is
designed to be in accord with, and not antagonistic to, our dual
system of courts. In recognition of this, it has come to be settled
by repeated decisions and in actual practice that, where the
elements of federal and equity jurisdiction are present, the
provision does not prevent the federal courts from enjoining the
institution in the state courts of proceedings to enforce local
statutes which are repugnant to the Constitution of the United
States,
Ex parte Young, 209 U. S. 123;
Truax v. Raich, 239 U. S. 33;
Missouri v. Chicago, Burlington & Quincy R. Co.,
241 U. S. 533,
241 U. S. 538,
241 U. S. 543,
or prevent them from maintaining and protecting their own
jurisdiction, properly acquired and still subsisting, by enjoining
attempts to frustrate, defeat, or impair it through proceedings in
the state courts,
French v. Hay,
22 Wall. 250;
Julian v. Central Trust Co., 193 U. S.
93,
193 U. S. 112;
Chesapeake & Ohio Ry. Co. v. McCabe, 213 U.
S. 207,
213 U. S. 219;
Looney v. Eastern Texas R. Co., 247 U.
S. 214,
247 U. S. 221, or
prevent them from depriving a party, by means of an injunction, of
the benefit of a judgment obtained in a state court in
circumstances where its enforcement will be contrary to recognized
principles of equity and the standards of good conscience,
Marshall v. Holmes, 141 U. S. 589;
Ex parte Simon, 208 U. S. 144;
Page 254 U. S. 184
Simon v. Southern Ry. Co., 236 U.
S. 115;
Public Service Co. v. Corboy,
250 U. S. 153,
250 U. S. 160;
National Surety Co. v. State Bank of Humboldt, 120 F.
593.
Marshall v. Holmes, just cited, was a suit in equity to
enjoin one who had obtained judgments in a state court from
enforcing them, that relief being sought on the ground that they
were secured by fraud which was not discovered until after they
were rendered, and the question distinctly presented was whether
the suit was one which the circuit court of the United States could
entertain and decide, the requisite diversity of citizenship and
amount in dispute being present. This Court, after adverting to
prior decisions stating the familiar doctrine that
"any fact which clearly proves it to be against conscience to
execute a judgment, and of which the injured party could not have
availed himself in a court of law, or of which he might have
availed himself at law, but was prevented by fraud or accident,
unmixed with any fault or negligence in himself or its agents, will
justify an application to a court of chancery,"
and also showing that such a suit is not one to review or revise
the action of the court rendering the judgment, but is a new and
independent suit for equitable relief, answered the question by
saying:
"These authorities would seem to place beyond question the
jurisdiction of the circuit court to take cognizance of the present
suit, which is nonetheless an original independent suit because it
relates to judgments obtained in the court of another jurisdiction.
While it cannot require the state court itself to set aside or
vacate the judgments in question, it may, as between the parties
before it, if the facts justify such relief, adjudge that Mayer
shall not enjoy the inequitable advantage obtained by his
judgments. A decree to that effect would operate directly upon him,
and would not contravene that provision of the statute prohibiting
a court of the United States from granting a writ of injunction to
stay proceedings in a
Page 254 U. S. 185
state court. It would simply take from him the benefit of
judgments obtained by fraud."
Simon v. Southern Ry. Co., supra, was a suit in a
circuit court of the United States to enjoin the enforcement of a
judgment in a state court on the ground that it was obtained by
fraud and without notice, and the defendant invoked the provision
in § 265. The circuit court took jurisdiction and awarded the
relief sought. That decision was affirmed by the circuit court of
appeals, and, on a further appeal, was sustained by this Court. At
that time, this Court considered the provision in the light of its
origin and purpose, reviewed the prior decisions, and, in an
extended opinion having the approval of the entire Court,
reaffirmed the ruling in
Marshall v. Holmes.
National Surety Co. v. State Bank of Humboldt, supra,
was a suit in a federal court to obtain like relief in respect of a
judgment in a state court on the ground that, through a mistake of
a public officer, for which he alone was responsible, the judgment
had been rendered without opportunity for putting in a defense, and
this when there was one which was both meritorious and complete.
The suit was not brought by the judgment defendant, but by one who
was obligated to pay the judgment if it was enforced. The bill was
dismissed because of the provision now relied on, but that decision
was reversed by the circuit court of appeals in a well considered
opinion wherein it was said that, in cases otherwise within the
jurisdictional statute,
"the circuit courts of the United States have the same
jurisdiction and power to enjoin a judgment plaintiff from
enforcing an unconscionable judgment of a state court which has
been procured through fraud, accident, or mistake that they have to
restrain him from collecting a like judgment of a federal
court;"
that the bill presented a new and justiciable case which had not
been presented to nor decided by the state court, and did not "fall
under the ban of the section of the statute under consideration,"
and
Page 254 U. S. 186
that
"[i]n this case, all these facts concur -- the judgment which it
is against conscience to allow to be used to extort money that is
not owing from a defendant remediless at law, the complete
meritorious defense to the claim on which this judgment is based,
the fact that the defendant in the judgment was prevented from
availing itself of its defense to the cause of action by an
unavoidable accident, and the absence of any negligence of the
defendant or of its agents. These facts appeal with compelling
force to the conscience of a chancellor. They have been presented
to a court to which the Constitution and the acts of Congress have
granted the power, and upon which they have imposed the duty, to
grant the relief to which the complainants are equitably entitled,
and the decree which dismissed their bill must be reversed."
Without pursuing the subject further, we hold that the present
suit is not one to stay proceedings in a state court in the sense
of § 265.
3. Does the Employers' Liability Act affect the validity of the
messenger's agreement?
The act provides that "every common carrier by railroad" shall
be liable in damages for the injury or death of any of its
employees occurring while it is engaged and he is employed in
interstate commerce and resulting in whole or in part from the
negligence of any of its officers, agents, or employees, or from
any defect or insufficiency, due to its negligence, "in its cars,
engines, appliances, machinery, track, roadbed," etc., and, in § 5,
it declares that any contract whereby a common carrier exempts
itself from "any liability created by this act" shall to that
extent be void.
In his declaration in the state court, Taylor did not claim that
he was in the employ of the railroad company, and his judgment was
not obtained on that theory. Here, it is shown with certainty that
he was not in that company's employ. True, he urges that the
contract between the two
Page 254 U. S. 187
companies shows a co-proprietorship or sort of partnership
between them which made him an employee of both, but the contract
discloses no basis for the claim or for distinguishing his case
from that of the Pullman porter recently before us.
Robinson v.
Baltimore & Ohio R. Co., 237 U. S. 84. Here,
the businesses of the companies concerned were quite as distinct in
point of control and otherwise as they were there. That here the
railroad company provided the express car is not material, for it
is measurably equalized by other differences. In both cases, the
railroad company provided the motive power and the train
operatives. The messenger here, like the porter there, was on the
train as an employee not of the railroad company, but of another by
whom he was employed, directed, and paid, and at whose will he was
to continue in service or be discharged.
As respects the express company, it appears not merely that
Taylor was in its employ, but also that the injuries were received
while it was engaged and he was employed in interstate commerce,
and so the question is presented whether the act embraces a common
carrier by express which neither owns nor operates a railroad, but
uses and pays for railroad transportation in the manner before
shown. The district court answered the question in the negative,
and the circuit court of appeals in the affirmative. A negative
answer also has been given in a like situation by the Court of
Errors and Appeals of New Jersey,
Higgins v. Erie R. Co.,
89 N.J.L. 629, and a recent decision by the Supreme Court of
Minnesota makes persuasively for that view.
State ex rel. Great
Northern Express Co. v. District Court, 142 Minn. 410.
In our opinion, the words "common carrier by railroad," as used
in the act, mean one who operates a railroad as a means of carrying
for the public -- that is to say, a railroad company acting as a
common carrier. This view not only is in accord with the ordinary
acceptation of the words,
Page 254 U. S. 188
but is enforced by the mention of cars, engines, track, roadbed,
and other property pertaining to a going railroad (
see Southern
Pacific Co. v. Jensen, 244 U. S. 205,
244 U. S.
212-213); by the obvious reference in the latter part of
§§ 3 and 4 to statutes requiring engines and cars to be equipped
with automatic couplers, standard drawbars, and other appliances
intended to promote the safety of railroad employees (
see San
Antonio & Arkansas Pass Ry. Co. v. Wagner, 241 U.
S. 476,
241 U. S.
484); by the use of similar words in closely related
acts which apply only to carriers operating railroads, c. 196, 27
Stat. 531; c. 225, 35 Stat. 476; c. 208, 36 Stat. 350, and by the
fact that similar words in the original Interstate Commerce Act had
been construed as including carriers operating railroads but not
express companies doing business as here shown, 1 I.C.C. 349;
United States v. Morsman, 42 F. 448;
Southern Indiana
Express Co. v. United States Express Co., 88 F. 659, 662; 92
F. 1022.
And see American Express Co. v. United States,
212 U. S. 522,
212 U. S. 531,
212 U. S.
534.
As Taylor was not an employee of the railroad company and the
express company was not within the Employers' Liability Act, it
follows that the act has no bearing on the liability of either
company or on the validity of the messenger's agreement.
4. There being no statute regulating the subject, it is settled
by the decisions of this Court, and is recognized in other
jurisdictions, that the messenger's agreement was a valid and
binding contract whereby Taylor agreed to assume all risk of injury
incident to his employment, from whatever cause arising, assented
to the contractual arrangement between the two companies in respect
of such injuries, and became obligated to the express company to
refrain from asserting any liability against it or the railroad
company on account of any such injuries.
Express Cases,
117 U. S. 1;
Baltimore & Ohio Southwestern Ry. Co. v. Voigt,
176 U. S. 498, and
cases cited;
Santa Fe,
Page 254 U. S. 189
Prescott & Phoenix Ry. Co. v. Grant Bros. Construction
Co., 228 U. S. 177;
Robinson v. Baltimore & Ohio R. Co., supra; Perry v.
Philadelphia, Baltimore & Washington R. Co., 24 Del. 399;
McKay v. Louisville & Nashville R. Co., 133 Tenn. 590;
Fowler v. Pennsylvania R. Co., 229 F. 373. In violation of
that agreement, he wrongfully sought and obtained a judgment
against the railroad company, which, as between the two companies,
the express company is bound to pay. The judgment was obtained in
an action to which that company was not a party and wherein it
could not be heard. He is financially irresponsible, and if the
judgment is collected, the express company, which has not been in
any wise negligent or at fault, will be remediless. In these
circumstances, that company is entitled, in equity and good
conscience, as is shown by the cases before cited, to a decree
holding him to his agreement and depriving him of his present
inequitable advantage, and to that end enjoining him from
collecting the judgment.
It follows that the decree of the district court was right, and
that the circuit court of appeals erred in reversing it.
Decree reversed.