Page images
PDF
EPUB

Vol. IV.]

CLAFLIN v. HOUSEMAN.

[No. 2.

SUPREME COURT OF THE UNITED STATES.

[OCTOBER, 1876.]

OF THE POWER OF CONGRESS TO CONFER JURISDICTION UPON STATE COURTS. RIGHT OF ASSIGNEE IN BANKRUPTCY TO SUE IN STATE COURT.

[ocr errors]

CLAFLIN v. HOUSEMAN, Assignee.

Under the Bankrupt Act of 1867, the assignee might sue in the state courts to recover the assets of the bankrupt, no exclusive jurisdiction being given to the courts of the United States. Whether such exclusive jurisdiction is given by the Revised Statutes,

quære.

The laws of the United States are as much the law of the land in any state as state laws are; and although, in their enforcement, exclusive jurisdiction may be given to the federal courts, yet where such exclusive jurisdiction is not given, or necessarily implied, the state courts, having competent jurisdiction in other respects, may be resorted to.

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.

MR. JUSTICE BRADLEY delivered the opinion of the court. This action was brought in May, 1872, in the New York supreme court, county of Kings, by Julius Houseman, as assignee in bankruptcy of Comstock and Young, against Horace B. Claflin, under the 35th 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 13th 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 a writ of error under the Act of 1867, which supersedes the 25th section of the judiciary act.

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 has been 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

Vol. IV.]

CLAFLIN V. HOUSEMAN.

[No. 2.

the last term of this court in favor of the jurisdiction. Lathrop v. Drake, 91 U. S. Rep. 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 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 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. 518); but as the question was not directly involved in that case, it was more fully considered in Eyster v. Gaff, 91 U. S. R. 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 say: "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. 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 Ib. 193; Gilbert v. Priest, 8 Ib. 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 Wisc. 607; 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 14th section of the bankrupt act (R. S. sec, 5046),

[blocks in formation]
[ocr errors]

[No. 2.

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 The 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. The Bank, 9 Wheaton, 738, 815, 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, 319; Nugent v. Boyd, Ib. 426; Wood v. Jenkins, 10 Metc. 583.

Other analogous cases have occurred, and the same result has 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 enabled to sue in such courts. Nothing in the Constitution, fairly considered, forbids it.

be

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

Vol. IV.]

CLAFLIN V. HOUSEMAN.

[No. 2.

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 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. 249, 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 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.

A reference to some of the discussions, to which the subject under discussion has given rise, may not be out of place on this occasion.

Vol. IV.]

CLAFLIN v. HOUSEMAN.

[No. 2.

It was fully examined in the 82d 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 by 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 judicial 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 governments, 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."

These views seem to have been shared by the first Congress in drawing up the Judiciary Act of September 24th, 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 offences 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. Ibid. 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

« PreviousContinue »