1. Under the Bankrupt Act of March 2, 1867, 14 Stat. 517, the
assignee might sue in the state courts to recover the assets of the
bankrupt, no exclusive jurisdiction having been given to the courts
of the United States.
Quaere whether such exclusive
jurisdiction is given by the Revised Statutes.
3. The statutes of the United States are as much the law of the
land in any state as are those of the state, and although exclusive
jurisdiction for their enforcement may be given to the federal
courts, yet where it is not given, either expressly or by necessary
implication, the state courts, having competent jurisdiction in
other respects, may be resorted to.
3. In such cases, the state courts do not exercise a new
jurisdiction conferred upon them, but their ordinary jurisdiction,
derived from their constitution under the state law.
This action was brought in May, 1872, in the New York Supreme
Court, County of Kings, by Julius Houseman, as
Page 93 U. S. 131
assignee in bankruptcy of Comstock and Young, against Horace B.
Claflin, under the thirty-fifth section of the Bankrupt Act to
recover the sum of $1,935.57, with interest, being the amount
collected by Claflin on a judgment against the bankrupts, recovered
within four months before the commencement of proceedings in
bankruptcy. The ground of the action, as stated in the complaint,
was that they (the bankrupts) suffered the judgment to be taken by
default, with intent to give Claflin a preference over their other
creditors, at a time when they were insolvent and when he knew or
had reasonable cause to believe that they were insolvent and that
the judgment was obtained in fraud of the bankrupt law. The
defendant demurred to the complaint, assigning as cause first that
the court had no jurisdiction of the subject of the action;
secondly that the complaint did not state facts sufficient to
constitute a cause of action. Judgment was rendered for the
plaintiff on the thirteenth day of January, 1873, and was
subsequently affirmed both by the general term of the supreme court
and by the Court of Appeals. This judgment is brought here by writ
of error under the second section of the Act of Feb. 5, 1867, 14
Stat. 385.
Page 93 U. S. 133
MR. JUSTICE BRADLEY delivered the opinion of the Court.
The point principally relied on by the plaintiff in error is
that an assignee in bankruptcy cannot sue in the state courts.
It is argued that the cause of action arises purely and solely
out of the provisions of an act of Congress, and can only be
prosecuted in the courts of the United States, the state courts
having no jurisdiction over the subject. It is but recently settled
that the several district and circuit courts of the United States
have jurisdiction, under the bankrupt law, of causes arising out of
proceedings in bankruptcy pending in other districts. There had
been much doubt on the subject, but it was finally settled at the
last term of this Court in favor of the jurisdiction.
Lathrop
v. Drake, 91 U. S. 516. Had
the decision been otherwise, as for a long period was generally
supposed to be the law, assignees in bankruptcy, if the position of
the plaintiff in error is correct, would have been utterly without
remedy to collect the assets of the bankrupt in districts other
than that in which the bankruptcy proceedings were pending. Neither
the state courts nor the federal courts could have entertained
jurisdiction. The Revised Statutes, whether inadvertently or not,
have made the jurisdiction of the United States courts exclusive in
"all matters and proceedings in bankruptcy." Sec. 711. Whether this
regulation will or will not affect the cognizance of plenary
actions and suits it is not necessary now to determine. At all
events, the question of such cognizance must be met in this case,
and, being important in the principles involved, would
Page 93 U. S. 134
require much deliberate consideration had it not been already in
effect decided by the Court.
In the opinion of the Court in
Lathrop v. Drake, it was
taken for granted, and stated, that the state courts had
jurisdiction, p.
91 U. S. 518;
but as the question was not directly involved in that case, it was
more fully considered in
Eyster v. Gaff, 91 U. S.
521, and it was there decided that a state court is not
deprived of jurisdiction of a case by the bankruptcy of the
defendant, but may proceed to judgment without noticing the
bankruptcy proceedings if the assignee does not cause his
appearance to be entered or proceed against him if he does appear.
If there were anything in the Constitution to incapacitate the
state courts from taking cognizance of causes after the bankruptcy
of the parties, as the constitutional argument of the plaintiff in
error supposes, the proceedings in bankruptcy would
ipso
facto determine them. But on this subject, in
Eyster v.
Gaff the Court said:
"It is a mistake to suppose that the bankrupt law avoids, of its
own force, all judicial proceedings in the state or other courts
the instant one of the parties is adjudged a bankrupt. There is
nothing in the act which sanctions such a proposition."
Again:
"The debtor of a bankrupt, or the man who contests the right to
real or personal property with him, loses none of those rights by
the bankruptcy of his adversary. The same courts remain open to him
in such contests, and the statute has not divested those courts of
jurisdiction in such actions. If it has, for certain classes of
actions, conferred a jurisdiction for the benefit of the assignee
in the circuit and district courts of the United States, it is
concurrent with, and does not divest that of, the state
courts."
Pp.
91 U. S.
525-526.
The same conclusion has been reached in other courts, both
federal and state, which hold that the state courts have concurrent
jurisdiction with the United States courts of actions and suits in
which a bankrupt or his assignee is a party.
See Samson v.
Burton, 4 Bank.Reg. 1;
Payson v. Dietz, 8
id. 193;
Gilbert v. Priest, 8
id. 159;
Stevens v. Mechanics' Savings Bank, 101 Mass. 109;
Cook v. Whipple, 55 N.Y. 150;
Brown v. Hall, 7
Bush, 66;
Mays v. Man. Nat. Bank, 64 Penn. 74. There are
contrary cases, it is true, as
Brigham v. Claflin, 31 Wis.
607,
Page 93 U. S. 135
Voorhees v. Frisbie, 25 Mich. 476, and others, but we
think that the former cases are founded on the better reason.
The assignee, by the fourteenth section of the Bankrupt Act,
Rev.Stat. sec. 5046, becomes invested with all the bankrupt's
rights of action for property and actions arising from contract or
the unlawful taking or detention of or injury to property and a
right to sue for the same. The actions which lie in such cases are
common law actions, ejectment, trespass, trover, assumpsit, debt,
&c., or suits in equity. Of these actions and suits the state
courts have cognizance. Why should not an assignee have power to
bring them in those courts as well as other persons? Aliens and
foreign corporations may bring them. The assignee simply derives
his title through a law of the United States. Should not that title
be respected by the state courts?
The case is exactly the same as that of the Bank of the United
States. The first bank, chartered in 1791, had capacity given it
"to sue and be sued . . . in courts of record, or any other place
whatsoever." It was held, in
Bank v. Deveaux,
5 Cranch, 61, that this did not authorize the bank to sue in the
courts of the United States without showing proper citizenship of
the parties in different states. The bank was obliged to sue in the
state courts. And yet here was a right arising under a law of the
United States, as much so as can be affirmed of a case of an
assignee in bankruptcy. The second bank of the United States had
express capacity "to sue and be sued in all state courts having
competent jurisdiction, and in any circuit court of the United
States." In the case of
Osborn v.
Bank, 9 Wheat. 738, 815 [argument of counsel --
omitted], it was objected that Congress had not authority to enable
the bank to sue in the federal courts merely because of its being
created by an act of Congress. But the Court held otherwise, and
sustained its right to sue therein. No question was made of its
right to sue in the state courts.
Under the bankrupt law of 1841, with substantially the same
provisions on this subject as the present law, it was held that the
assignee could sue in the state courts.
Ex
Parte Christie, 3 How. 318,
44 U. S. 319;
Nugent v.
Boyd, 3 How. 426;
Wood v. Jenkins, 10 Met.
583.
Other analogous cases have occurred, and the same result has
Page 93 U. S. 136
been reached, the general principle being that where
jurisdiction may be conferred on the United States courts, it may
be made exclusive where not so by the Constitution itself, but if
exclusive jurisdiction be neither express nor implied, the state
courts have concurrent jurisdiction whenever, by their own
constitution, they are competent to take it. Thus the United States
itself may sue in the state courts, and often does so. If this may
be done, surely, on the principle that the greater includes the
less, an officer or corporation created by United States authority
may be enabled to sue in such courts. Nothing in the Constitution,
fairly considered, forbids it.
The general question whether state courts can exercise
concurrent jurisdiction with the federal courts in cases arising
under the Constitution, laws, and treaties of the United States has
been elaborately discussed both on the bench and in published
treatises -- sometimes with a leaning in one direction and
sometimes in the other -- but the result of these discussions has,
in our judgment, been, as seen in the above cases, to affirm the
jurisdiction, where it is not excluded by express provision or by
incompatibility in its exercise arising from the nature of the
particular case.
When we consider the structure and true relations of the federal
and state governments, there is really no just foundation for
excluding the state courts from all such jurisdiction.
The laws of the United States are laws in the several states,
and just as much binding on the citizens and courts thereof as the
state laws are. The United States is not a foreign sovereignty as
regards the several states, but is a concurrent, and, within its
jurisdiction, paramount sovereignty. Every citizen of a state is a
subject of two distinct sovereignties, having concurrent
jurisdiction in the state -- concurrent as to place and persons,
though distinct as to subject matter. Legal or equitable rights,
acquired under either system of laws, may be enforced in any court
of either sovereignty competent to hear and determine such kind of
rights and not restrained by its constitution in the exercise of
such jurisdiction. Thus, a legal or equitable right acquired under
state laws may be prosecuted in the state courts and also, if the
parties reside in different states, in the federal courts. So
rights, whether legal or equitable, acquired
Page 93 U. S. 137
under the laws of the United States, may be prosecuted in the
United States courts or in the state courts competent to decide
rights of the like character and class, subject, however, to this
qualification -- that where a right arises under a law of the
United States, Congress may, if it see fit, give to the federal
courts exclusive jurisdiction.
See remarks of MR. JUSTICE
FIELD in
The Moses
Taylor, 4 Wall. 429, and Story, J., in
Martin v. Hunter's
Lessee, 1 Wheat. 334, and of MR. JUSTICE SWAYNE in
Ex Parte
McNeil, 13 Wall. 236. This jurisdiction is
sometimes exclusive by express enactment and sometimes by
implication. If an act of Congress gives a penalty to a party
aggrieved without specifying a remedy for its enforcement, there is
no reason why it should not be enforced, if not provided otherwise
by some act of Congress, by a proper action in a state court. The
fact that a state court derives its existence and functions from
the state laws is no reason why it should not afford relief,
because it is subject also to the laws of the United States, and is
just as much bound to recognize these as operative within the state
as it is to recognize the state laws. The two together form one
system of jurisprudence which constitutes the law of the land for
the state, and the courts of the two jurisdictions are not foreign
to each other, nor to be treated by each other as such, but as
courts of the same country, having jurisdiction partly different
and partly concurrent. The disposition to regard the laws of the
United States as emanating from a foreign jurisdiction is founded
on erroneous views of the nature and relations of the state and
federal governments. It is often the cause or the consequence of an
unjustifiable jealousy of the United States government which has
been the occasion of disastrous evils to the country.
It is true, the sovereignties are distinct, and neither can
interfere with the proper jurisdiction of the other, as was so
clearly shown by Chief Justice Taney in the case of
Ableman v.
Booth, 21 How. 506, and hence the state courts have
no power to revise the action of the federal courts, nor the
federal the state, except where the federal Constitution or laws
are involved. But this is no reason why the state courts should not
be open for the prosecution of rights growing out of the laws of
the United States, to which their jurisdiction is competent, and
not denied.
Page 93 U. S. 138
A reference to some of the discussions, to which the subject
under consideration has given rise, may not be out of place on this
occasion.
It was fully examined in the eighty-second number of "The
Federalist," by Alexander Hamilton, with his usual analytical power
and far-seeing genius, and hardly an argument or a suggestion has
been made since which he did not anticipate. After showing that
exclusive delegation of authority to the federal government can
arise only in one of three ways -- either by express grant of
exclusive authority over a particular subject or by a simple grant
of authority, with a subsequent prohibition thereof to the states,
or lastly where an authority granted to the Union would be utterly
incompatible with a similar authority in the states -- he says that
these principles may also apply to the judiciary as well as the
legislative power. Hence he infers that the state courts will
retain the jurisdiction they then had unless taken away in one of
the enumerated modes. But as their previous jurisdiction could not
be possibility extend to cases which might grow out of and be
peculiar to the new constitution, he considered that, as to such
cases, Congress might give the federal courts sole jurisdiction. "I
hold," says he,
"that the state courts will be divested of no part of their
primitive jurisdiction further than may relate to an appeal, and I
am even of opinion that in every case in which they were not
expressly excluded by the future acts of the national legislature,
they will, of course, take cognizance of the causes to which those
acts may give birth. This I infer from the nature of judiciary
power and from the general genius of the system. The judiciary
power of every government looks beyond its own local or municipal
laws and, in civil cases, lays hold of all subjects of litigation
between parties within its jurisdiction, though the causes of
dispute are relative to the laws of the most distant part of the
globe. . . . When, in addition to this, we consider the state
governments and the national government, as they truly are, in the
light of kindred systems, and as parts of ONE WHOLE, the inference
seems to be conclusive that the state courts would have concurrent
jurisdiction in all cases arising under the laws of the Union where
it was not expressly prohibited. "
Page 93 U. S. 139
These views seem to have been shared by the first Congress in
drawing up the Judiciary Act of Sept. 24, 1789, for, in
distributing jurisdiction among the various courts created by that
act, there is a constant exercise of the authority to include or
exclude the state courts therefrom, and where no direction is given
on the subject, it was assumed in our early judicial history that
the state courts retained their usual jurisdiction concurrently
with the federal courts invested with jurisdiction in like
cases.
Thus, by the Judiciary Act, exclusive cognizance was given to
the circuit and district courts of the United States of all crimes
and offenses cognizable under the authority of the United States,
and the same to the district courts, of all civil causes of
admiralty and maritime jurisdiction, of all seizures on water under
the laws of impost, navigation, or trade of the United States, and
of all seizures on land for penalties and forfeitures incurred
under said laws. Concurrent jurisdiction with the state courts was
given to the district and circuit courts of all causes where an
alien sues for a tort only in violation of the law of nations or a
treaty of the United States, and of all writs at common law where
the United States are plaintiffs; the same to the circuit courts,
where the suit is between a citizen of the state where the suit is
brought and a citizen of another state, where an alien is a party,
&c. Here, no distinction is made between those branches of
jurisdiction in respect to which the Constitution uses the
expression
"all cases," and those in respect to which the
term "all" is omitted. Some have supposed that wherever the
Constitution declares that the judicial power shall extend to "all
cases" -- as all cases in law and equity arising under the
Constitution, laws, and treaties of the United States; all cases
affecting ambassadors, &c. -- the jurisdiction of the federal
courts is necessarily exclusive; but that where the power is simply
extended "to controversies" of a certain class -- as,
"controversies to which the United States is a party," &c. --
the jurisdiction of the federal courts is not necessarily
exclusive. But no such distinction seems to have been recognized by
Congress, as already seen in the Judiciary Act, and subsequent acts
show the same thing. Thus, the first patent law for securing to
inventors
Page 93 U. S. 140
their discoveries and inventions, which was passed in 1793, gave
treble damages for an infringement, to be recovered in an action on
the case founded on the statute in the circuit court of the United
States, "or any other court having competent jurisdiction" --
meaning, of course, the state courts. The subsequent acts on the
same subject were couched in such terms with regard to the
jurisdiction of the circuit courts as to imply that it was
exclusive of the state courts, and now it is expressly made so.
See Patent Acts of 1800, 1819, 1836, 1870, and
Rev.Stat.U.S., sec. 711;
Parsons v. Barnard, 7 Johns. 144;
Dudley v. Mayhew, 3 Comst. 14;
Elmer v. Pennel,
40 Me. 434.
So with regard to naturalization -- a subject necessarily within
the exclusive regulation of Congress -- the first act on the
subject, passed in 1790, and all the subsequent acts, give plenary
jurisdiction to the state courts. The language of the act of 1790
is "any common law court of record in any one of the states,"
&c. 1 Stat. 103. The act of 1802 designates
"the supreme, superior, district, or circuit court of some one
of the states, or of the territorial districts of the United
States, or a circuit or district court of the United States."
2 Stat. 153.
So, by acts passed in 1806 and 1808, jurisdiction was given to
the county courts along the northern frontier of suits for fines,
penalties, and forfeitures under the revenue laws of the United
States. 2 Stat. 354, 489. And by Act of March 3, 1815, cognizance
was given to state and county courts generally of suits for taxes,
duties, fines, penalties, and forfeitures arising under the laws
imposing direct taxes and internal duties. 3 Stat. 244.
These instances show the prevalent opinion which existed that
the state courts were competent to have jurisdiction in cases
arising wholly under the laws of the United States, and whether
they possessed it or not in a particular case was a matter of
construction of the acts relating thereto. It is true that the
state courts have in certain instances declined to exercise the
jurisdiction conferred upon them, but this does not militate
against the weight of the general argument.
See United States
v. Lathrop, 17 Johns. 4.
See especially the able
dissenting opinion of Mr. Justice Platt,
id., 11.
It was indeed intimated by Mr. Justice Story,
obiter
dictum, in delivering the opinion of the Court in
Martin v. Hunter's
Lessee,
Page 93 U. S. 141
1 Wheat. 334,
14 U. S. 337,
that the state courts could not take direct cognizance of cases
arising under the Constitution, laws, and treaties of the United
States, as no such jurisdiction existed before the Constitution was
adopted. This is true as to jurisdiction depending on United States
authority, but the same jurisdiction existed (at least to a certain
extent) under the authority of the states. Inventors had grants of
exclusive right to their inventions before the Constitution was
adopted, and the state courts had jurisdiction thereof. The change
of authority creating the right did not change the nature of the
right itself. The assertion, therefore, that no such jurisdiction
previously existed must be taken with important limitations, and
did not have much influence with the court when a proper case arose
for its adjudication.
Houston v.
Moore, decided in 1820, 5 Wheat. 1, was such a
case. Congress, in 1795, had passed an act for organizing and
calling forth the militia, which prescribed the punishment to be
inflicted on delinquents, making them liable to pay a certain fine,
to be determined and adjudged by a court-martial, without
specifying what court-martial. The Legislature of Pennsylvania also
passed a militia law, providing for the organization, training, and
calling out the militia, and establishing courts-martial for the
trial of delinquents. The law in many respects exactly corresponded
with that of the United States, and, as far as it covered the same
ground, was for that reason held to be inoperative and void.
Houston, a delinquent under the United States law, was tried by a
state court-martial, and it was decided that the court had
jurisdiction of the offense, having been constituted, in fact, to
enforce the laws of the United States which the state legislature
had reenacted. But the decision (which was delivered by Mr. Justice
Washington) was based upon the general principle that the state
court had jurisdiction of the offense irrespective of the
authority, state or federal, which created it. Not that Congress
could confer jurisdiction upon the state courts, but that these
courts might exercise jurisdiction on cases authorized by the laws
of the state and not prohibited by the exclusive jurisdiction of
the federal courts. Justices Story and Johnson dissented, and
perhaps the Court went further in that case than it would now. The
act of Congress having
Page 93 U. S. 142
instituted courts-martial, as well as provided a complete code
for the organization and calling forth of the militia, the entire
law of Pennsylvania on the same subject might well have been
regarded as void. Be this as it may, it was only a question of
construction, and the Court conceded that Congress had the power to
make the jurisdiction of its own courts exclusive.
In
Cohens v.
Virginia, 6 Wheat. 415, Chief Justice Marshall
demonstrates the necessity of an appellate power in the federal
judiciary to revise the decisions of state courts in cases arising
under the Constitution and laws of the United States in order that
the constitutional grant of judicial power, extending it to all
such cases, may have full effect. He said,
"The propriety of entrusting the construction of the
Constitution and laws made in pursuance thereof to the judiciary of
the Union has not, we believe, as yet been drawn in question. It
seems to be a corollary from this political axiom that the federal
courts should either possess exclusive jurisdiction in such cases
or a power to revise the judgment rendered in them by the state
tribunals. If the federal and state courts have concurrent
jurisdiction in all cases arising under the Constitution, laws, and
treaties of the United States, and if a case of this description
brought in a state court cannot be removed before judgment nor
revised after judgment, then the construction of the Constitution,
laws, and treaties of the United States is not confided
particularly to their judicial department, but is confided equally
to that department and to the state courts, however they may be
constituted."
See the subject further discussed in 1 Kent's Com. 395,
&c., Sergeant on the Const. 268; 2 Story on the Const., sec.
1748, &c.; 1 Curtis's Com., secs. 119, 134, &c.
The case of
Teal v. Felton was a suit brought in the
state court of New York against a postmaster for neglect of duty to
deliver a newspaper under the postal laws of the United States. The
action was sustained by both the supreme court and Court of Appeals
of New York, and their decision was affirmed by this Court. 1
Comst. 537; 12 How. 292. We do not see why this case is not
decisive of the very question under consideration.
Without discussing the subject further, it is sufficient to
say,
Page 93 U. S. 143
that we hold that the assignee in bankruptcy, under the Bankrupt
Act of 1867 as it stood before the revision, had authority to bring
a suit in the state courts wherever those courts were invested with
appropriate jurisdiction suited to the nature of the case.
Judgment affirmed.