296 U.S. 268 (1935), 32, Milwaukee County v. M. E. White Co.

Docket Nº:No. 32
Citation:296 U.S. 268, 56 S.Ct. 229, 80 L.Ed. 220
Party Name:Milwaukee County v. M. E. White Co.
Case Date:December 09, 1935
Court:United States Supreme Court
 
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Page 268

296 U.S. 268 (1935)

56 S.Ct. 229, 80 L.Ed. 220

Milwaukee County

v.

M. E. White Co.

No. 32

United States Supreme Court

Dec. 9, 1935

Argued November 12, 13, 1935

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

1. A suit by or on behalf of a State upon a judgment for taxes is a suit of a civil nature within the meaning of § 24, Jud.Code, defining the jurisdiction of the District Courts. P. 270.

2. The obligation to pay taxes is not penal; it is a statutory liability, quasi-contractual in nature, enforceable, if there be no exclusive statutory remedy, in the civil courts by the common law action of debt or indebitatus assumpsit. This was the rule established in the English courts before the Declaration of Independence. P. 271.

3. The objection that the courts in one State will not entertain a suit to recover taxes due to another or upon a judgment for such taxes goes not to the jurisdiction, but to the merits, and raises a question which District Courts are competent to decide. P. 272.

4. Even if full faith and credit are not commanded, there is nothing in the Constitution and laws of the United States which requires a court of a State to deny relief upon a judgment recovered in another State because it is for taxes. P. 272.

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5. Where suits to enforce the laws of one State are entertained in the courts of another on the principle of comity, the federal District Courts sitting in that State may and should entertain them if to do so will not infringe federal law or policy. P. 272.

6. Assuming that the courts of one State, and federal court therein, are not required by the Constitution, Art. IV, § 1, and the Act of Congress passed thereunder, to entertain suits to recover taxes levied under the statutes of another State, they cannot deny full faith and credit to judgments recovered in the other State for such taxes. P. 275.

7. The opinion in Wisconsin v. Pelican Insurance Co., 127 U.S. 265, is disapproved insofar as it can be taken to suggest that full faith and credit are not required with respect to a judgment unless the original cause of action would have been entitled to like credit. P. 278.

In answer to a question certified by the court below, on an appeal from a judgment of the District Court dismissing an action in Illinois based on a judgment for taxes recovered by the plaintiff County in Wisconsin.

STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

This case comes here under § 239 of the Judicial Code, 28 U.S.C. § 346, on certificate of the Court of Appeals for the Seventh Circuit, which presents a question of law concerning which the instructions of this Court are desired for the proper decision of the case.

The relevant facts, as stated by the certificate, are that the appellant, Milwaukee county, a county and citizen of Wisconsin, brought suit in the District Court for Northern Illinois against M. E. White Company, appellee,

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a corporation and citizen of Illinois, to recover on a judgment for $52,165.84 which appellant had duly recovered and entered against the appellee in the circuit court of Milwaukee county, Wisconsin, a court of general jurisdiction. The judgment is said to be for taxes duly assessed against appellee, under Wisconsin statutes, upon income received from its business transacted within the State under state license. The District Court dismissed the cause on the ground that, as the suit was in substance brought to enforce the revenue laws of Wisconsin, it could not be maintained in the District Court in Illinois.

The question certified is as follows:

Should a United States District Court in and for the Illinois, having jurisdiction of the parties, entertain jurisdiction of an action therein brought based upon a valid judgment for over $3,000 rendered by a court of competent jurisdiction in the Wisconsin against the same defendant, which judgment was predicated upon an income tax due from the defendant to the State of Wisconsin?

Appellee insists that the question should be answered in the negative (1) because [56 S.Ct. 231] such a suit is not within the judicial power conferred upon District Courts by the Constitution and laws of the United States, and (2) because a judgment for taxes constitutes an exception to the requirement of the Constitution and statutes of the United States that full faith and credit be given in each state to the public acts and judicial proceedings of every state.

1. By § 24(1) of the Judicial Code, 28 U.S.C. § 41(1), District Courts are given original jurisdiction "of all suits of a civil nature at common law or in equity" where there is the requisite diversity of citizenship and the amount in controversy exceeds $3,000. In this grant of jurisdiction of causes arising under state as well as federal law, the phrase "suits of a civil nature" is used in contradistinction to "crimes and offenses," as to which the jurisdiction

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of the District Courts is restricted by § 24(2) to offenses against the United States. Thus, suits of a civil nature within the meaning of the section are those which do not involve criminal prosecution or punishment, and which are of a character traditionally cognizable by courts of common law or of equity. Such are suits upon a judgment, foreign or domestic, for a civil liability, of a court having jurisdiction of the cause and of the parties, which were maintainable at common law upon writ of debt, or of indebitatus assumpsit.1

Even if the judgment is deemed to be colored by the nature of the obligation whose validity it establishes, and we are free to reexamine it, and, if we find it to be based on an obligation penal in character, to refuse to enforce it outside the State where rendered, see Wisconsin v. Pelican Insurance Co., 127 U.S. 265, 292 et seq., compare Fauntleroy v. Lum, 210 U.S. 230, still the obligation to pay taxes is not penal. It is a statutory liability, quasi-contractual in nature, enforceable, if there is no exclusive statutory remedy, in the civil courts by the common law action of debt or indebitatus assumpsit. United States v. Chamberlin, 219 U.S. 250; Price v. United States, 269 U.S. 492; Dollar Savings Bank v. United States, 19 Wall. 227, and see Stockwell v. United States, 13 Wall. 531, 542; Meredith v. United States, 13 Pet. 486, 493. This was the rule established in the English courts before the Declaration of Independence. Attorney General v. Weeks, Bunbury's Exch. Rep. 223; Attorney General v. Jewers and Batty, id., 225; Attorney General v. Hatton,

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id., 262; Attorney General v. ____, 2 Ans.Rep. 558; see Comyn's Digest (Title "Dett," A, 9); 1 Chitty on Pleading, 123; cf. Attorney General v. Sewell, 4 M. & W. 77.

The objection that the courts in one state will not entertain a suit to recover taxes due to another or upon a judgment for such taxes is not rightly addressed to any want of judicial power in courts which are authorized to entertain civil suits at law. It goes not to the jurisdiction, but to the merits, and raises a question which District Courts are competent to decide. See Illinois Central R. Co. v. Adams, 180 U.S. 28; General Investment Co. v. New York Central R. Co., 271 U.S. 228, 230; Becker Steel Co. v. Cummings, ante, p. 74.

That defense is without merit if full faith and credit must be given the judgment. But even if full faith and credit is not commanded, there is nothing in the Constitution and laws of the United States which requires a court of a state to deny relief upon a judgment because it is for taxes. A state court, in conformity to state policy, may, by comity, give a remedy which the full faith and credit clause does not compel. Young v. Masci, 289 U.S. 253; [56 S.Ct. 232] Bond v. Hume, 243 U.S. 15; cf. Tennessee Coal, Iron & R. Co. v. George, 233 U.S. 354, 355; Clark Plastering Co. v. Seaboard Surety Co., 259 N.Y. 424, 182 N.E. 71; Herrick v. Minneapolis & St. Louis Ry. Co., 31 Minn. 11, 16 N.W. 413; Healy v. Root, 11 Pick. 389; Schuler v. Schuler, 209 Ill. 522, 71 N.E. 16. A suit to recover taxes due under the statutes of another state has been allowed without regard to the compulsion of the full faith and credit clause. Holshouser Co. v. Gold Hill Copper Co., 138 N.C. 248, 50 S.E. 650. The privilege may be extended by statute. See Laws N.Y.1932, c. 333. Where suits to enforce the laws of one state are entertained in the courts of another on the principle of comity, the federal District Courts sitting in that state may entertain them and should if they do not infringe federal law

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or policy. Union Trust Co. v. Grosman, 245 U.S. 412, 418; Bond v. Hume, supra; Northern Pacific R. Co. v. Babcock, 154 U.S. 190, 197-198; Dennick v. Railroad Co., 103 U.S. 11; see Bradford Electric Light Co. v. Clapper, 286 U.S. 145, 161.

2. The faith and credit required to be given to judgments does not depend on the Constitution alone. Article IV, § 1, not only commands that "full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State," but it adds "Congress may be general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof." And Congress has exercised this power, by Act of May 26, 1790, c. 11, 28 U.S.C. § 687, which provides the manner of proof of judgments of one state in the courts of another, and specifically directs that judgments

shall have such faith and credit given to them in every court within the United States as they have by law or usage in the courts of the State from which they are taken.

Such exception as there may be to this all-inclusive command is one which is implied from the nature of our dual...

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