Fox Film Corp. v. Muller, 296 U.S. 207 (1935)

Overview
Opinions

Annotation

Primary Holding

The Supreme Court cannot review a state court decision that rests on an adequate and independent state law ground, even if a federal question may have been implicated.

Facts

In a breach of contract dispute, Fox Film Corp. sought damages in state court from Muller, who allegedly had breached contracts regarding the showing of Fox films. A federal court had ruled in a different case that contracts that were virtually identical to these contracts were void for violations of the Sherman Antitrust Act. Specifically, the court had found them unenforceable because of a problematic arbitration clause that it viewed as so integral to the rest of each agreement that they were invalid in their entirety. The state court dismissed the claim on this basis, and the higher state courts agreed. Fox appealed on the basis that the case partially involved issues of state law.

Opinions

Majority

George Sutherland (Author)
Charles Evans Hughes
Willis Van Devanter
James Clark McReynolds
Louis Dembitz Brandeis
Pierce Butler
Harlan Fiske Stone
Owen Josephus Roberts
Benjamin Nathan Cardozo

This case was resolved when the state court determined that the invalid contract provisions could not be separated from the rest of the contract. Even if any federal questions remained, resolving them would not change the outcome of the case. While a federal court may have jurisdiction if state and federal issues are inextricably intertwined, they were clearly separate in this case, so no jurisdiction exists.

Case Commentary

Like the federal legislative system, the federal judiciary system is believed to be intended as a separate structure from its state counterpart, which makes federal courts reluctant to interfere with decisions at the state level. This view balances the need for nationwide consistency against the importance of allowing differences among diverse states and regions.

Syllabus

U.S. Supreme Court

Fox Film Corp. v. Muller, 296 U.S. 207 (1935)

Fox Film Corp. v. Muller

No. 47

Argued November 15, 1935

Decided December 9, 1935

296 U.S. 207

Syllabus

1. Where the judgment of a state court rests upon two grounds, one of which is federal and the other nonfederal in character, the jurisdiction of this Court fails if the nonfederal ground is independent of the federal ground and adequate to support the judgment. P. 296 U. S. 210.

2. Whether the provisions of a contract are nonseverable, so that, if one be held invalid the others must fall with it, is a question of general, and not of federal, law. P. 296 U. S. 210.

3. A ruling by a state supreme court that a concededly invalid arbitration clause in a contract between a motion picture distributor and an exhibitor (the same clause that was held invalid as a violation of the Sherman Act in Paramount Famous Corp. v. United States, 282 U. S. 30) was inseparable from the other provisions, and rendered the entire contract unenforceable, held a nonfederal ground adequate to support the judgment without regard to whether the court decided a federal question in determining the contract invalid also on another ground. P. 296 U. S. 210.

4. Enterprise Irrigation District v. Canal Co., 243 U. S. 157, distinguished. P. 296 U. S. 210.

Writ of certiorari to 194 Minn. 654, 260 N.W. 320, dismissed.

Certiorari, 295 U.S. 730, to review a judgment affirming a judgment denying recovery in an action for damages for breach of contract. A writ of certiorari previously granted in this case, 293 U.S. 550, to review an earlier

Page 296 U. S. 208

judgment of the state court, 192 Minn. 212, 255 N.W. 845, was dismissed as improvidently granted, it appearing that no final Judgment had been entered, 294 U.S. 696.

Opinions

Opinions & Dissents

U.S. Supreme Court

Fox Film Corp. v. Muller, 296 U.S. 207 (1935) Fox Film Corp. v. Muller
No. 47
Argued November 15, 1935
Decided December 9, 1935
296 U.S. 207

CERTIORARI TO THE SUPREME COURT OF MINNESOTA

Syllabus

2. Whether the provisions of a contract are nonseverable, so that, if one be held invalid the others must fall with it, is a question of general, and not of federal, law. P. 296 U. S. 210.

4. Enterprise Irrigation District v. Canal Co., 243 U. S. 157, distinguished. P. 296 U. S. 210.

Writ of certiorari to 194 Minn. 654, 260 N.W. 320, dismissed.

Page 296 U. S. 208

judgment of the state court, 192 Minn. 212, 255 N.W. 845, was dismissed as improvidently granted, it appearing that no final Judgment had been entered, 294 U.S. 696.

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

This is an action brought in a Minnesota state court of first instance by the Film Corporation against Muller to recover damages for an alleged breach of two contracts by which Muller was licensed to exhibit certain moving picture films belonging to the corporation. Muller answered, setting up the invalidity of the contracts under the Sherman Anti-Trust Act. It was and is agreed that these contracts are substantially the same as the one involved in United States v. Paramount Famous Lasky Corp., , aff'd, 282 U. S. 282 U.S. 30, that petitioner was one of the defendants in that action, and that the "arbitration clause," paragraph 18 of each of the contracts sued upon is the same as that held in that case to be invalid. In view of the disposition which we are to make of this writ, it is not necessary to set forth the terms of the arbitration clause or the other provisions of the contract.

The court of first instance held that each contract sued upon violated the Sherman Anti-Trust Act, and dismissed the action. In a supplemental opinion, that court put its decision upon the grounds, first, that the arbitration plan is so connected with the remainder of the contract that the entire contract is tainted, and second that the contract

Page 296 U. S. 209

violates the Sherman Anti-Trust law. The state Supreme Court affirmed. 192 Minn. 212, 255 N.W. 845. We granted certiorari, 293 U.S. 550, but, when the case was called for argument, it appeared that no final judgment had been entered, and the writ was dismissed as improvidently granted. 294 U.S. 696. The case was then remanded to the state supreme court and, the judgment having been made final and again affirmed by the state Supreme Court on the authority of its previous opinion, 194 Minn. 654, 260 N.W. 320, we allowed the present writ. 295 U.S. 730.

In its opinion, the state supreme court, after a statement of the case, said (192 Minn. at 214):

"The question presented on this appeal is whether the arbitration clause is severable from the contract, leaving the remainder of the contract enforceable or not severable, permeating and tainting the whole contract with illegality and making it void."

That court then proceeded to refer to and discuss a number of decisions of state and federal courts, some of which took the view that the arbitration clause was severable, and others that it was not severable, from the remainder of the contract. After reviewing the opinion and decree of the federal District Court in the Paramount case, the lower court reached the conclusion that the holding of the federal court was that the entire contract was illegal, and, upon that view and upon what it conceived to be the weight of authority, held the arbitration plan was inseparable from the other provisions of the contract. Whether this conclusion was right or wrong we need not determine. It is enough that it is at least not without fair support.

Respondent contends that the question of severability was alone decided, and that no federal question was determined by the lower court. This contention petitioner challenges, and asserts that a federal question was involved and decided. We do not attempt to settle the dispute,

Page 296 U. S. 210

but, assuming for present purposes only that petitioner's view is the correct one, the case is controlled by the settled rule that, where the judgment of a state court rests upon two grounds, one of which is federal and the other nonfederal in character, our jurisdiction fails if the nonfederal ground is independent of the federal ground and adequate to support the judgment. This rule had become firmly fixed at least as early as Klinger v. Missouri, 13 Wall. 257, 80 U. S. 263, and has been reiterated in a long line of cases since that time. It is enough to cite, in addition to the Klinger case, the following: Enterprise Irrigation District v. Canal Co., 243 U. S. 157, 243 U. S. 163-165; Petrie v. Nampa Irrigation District, 248 U. S. 154, 248 U. S. 157; McCoy v. Shaw, 277 U. S. 302; Eustis v. Bolles, 150 U. S. 361.

Whether the provisions of a contract are nonseverable, so that, if one be held invalid, the others must fall with it, is clearly a question of general, and not of federal, law. The invalidity of the arbitration clause which the present contracts embody is conceded. It was held invalid by the federal District Court in the Paramount case, and its judgment was affirmed here. The question therefore was foreclosed, and was not the subject of controversy in the state courts. In that situation, the primary question to be determined by the court below was whether the concededly invalid clause was separable from the other provisions of the contract. The ruling of the state supreme court that it was not is sufficient to conclude the case without regard to the determination, if, in fact, any was made, in respect of the federal question. It follows that the nonfederal ground is adequate to sustain the judgment.

The rule announced in Enterprise Irrigation District v. Canal Co., supra, and other cases to the effect that our jurisdiction attaches where the nonfederal ground is so interwoven with the other as not to be an independent

Page 296 U. S. 211

matter does not apply. The construction put upon the contracts did not constitute a preliminary step which simply had the effect of bringing forward for determination the federal question, but was a decision which automatically took the federal question out of the case, if otherwise it would be there. The nonfederal question in respect of the construction of the contracts and the federal question in respect of their validity under the Anti-Trust Act were clearly independent of one another. See Allen v. Southern Pacific R. Co., 173 U. S. 479, 173 U. S. 489-492. The case, in effect, was disposed of before the federal question said to be involved was reached. Chouteau v. Gibson, 111 U. S. 200; Chapman v. Goodnow, 123 U. S. 540, 123 U. S. 548. A decision of that question then became unnecessary, and, whether it was decided or not, our want of jurisdiction is clear.

Writ dismissed for want of jurisdiction.

THE CHIEF JUSTICE took no part in the consideration or decision of this case.

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