299 U.S. 109 (1936), 29, Gully v. First National Bank
|Docket Nº:||No. 29|
|Citation:||299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70|
|Party Name:||Gully v. First National Bank|
|Case Date:||November 09, 1936|
|Court:||United States Supreme Court|
Argued October 19, 1936
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE FIFTH CIRCUIT
1. To constitute a case arising under the Constitution or laws of the United States within the meaning of the removal statute, Jud.Code, § 28, 28 U.S.C. 71, a right or immunity created by the Constitution or laws of the United States must be an essential element of the plaintiff's cause of action; the right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another; a genuine and present controversy, not merely a possible or conjectural one, must exist with
reference thereto, and the controversy must be disclosed upon the face of the complaint, unaided by the answer, by the petition for removal, or by allegations in the complaint itself which go beyond a statement of the plaintiff's cause of action and anticipate or reply to a probable defense. P. 112.
2. A suit brought upon a state statute does not arise under an Act of Congress or the Constitution of the United States because prohibited thereby or because permitted thereby. P. 116.
3. In a suit in a state court brought by a state tax collector against a national bank which, in acquiring assets of another national bank, had assumed and covenanted to pay the debts and liabilities of the latter, the complaint alleged that among the debts so assumed were moneys owing by the insolvent bank for taxes assessed upon its shares or capital stock, its surplus and undivided profits, exclusive of the value of its real estate; that, in law, all taxes thus assessed were debts owing by the shareholders of the insolvent bank which that bank was under a duty to pay as their agent out of moneys then in its possession, and that the defendant bank, in violation of its covenant, failed to pay the taxes of the insolvent one, which it had thus assumed and made its own liability. Held not removable as a case arising under the Constitution or laws of the United States, because
(1) The suit is upon a contract having its genesis in the law of the State, enforcement of which has no necessary connection with the existence of a controversy arising under federal law. P. 114.
(2) While the tax sought to be recovered, to be valid and therefore within the contract sued upon, must be consistent with the federal statute permitting state taxation of national bank shareholders (R.S. § 5219; 12 U.S.C. 548), just as it must be consistent with the Federal Constitution, its basis is a statute of the State. Furthermore, the state statute in this case (Code, Miss., § 3138), is in apparent harmony with the permissive federal Act. If not in accord with the state statute, the tax would be void for that reason, and if, on evidence, it were shown that that statute had been obeyed, there might be no room to contend that the federal law had been infringed. That a federal question may lurk in the background is not enough to warrant removal. P. 115.
81 F.2d 502 reversed.
Certiorari, 298 U.S. 60, to review the affirmance of a judgment dismissing a suit to recover state taxes. The suit had been removed from a state court.
CARDOZO, J., lead opinion
MR. JUSTICE CARDOZO delivered the opinion of the Court.
Whether a federal court has jurisdiction of this suit as one arising under the Constitution and laws of the United States is the single question here.
Petitioner, plaintiff in the court below, sued the respondent in a state court in Mississippi to recover a money judgment. The following facts appear on the face of the complaint: in June, 1931, the assets of the First National Bank of Meridian, a national banking association, were conveyed to the respondent, the First National Bank in Meridian, under a contract whereby the debts and liabilities of the grantor, insolvent at the time and in the hands of a receiver, were assumed by the grantee, which covenanted to pay them. Among the debts and liabilities so assumed were moneys owing to the petitioner, the state collector of taxes, or now claimed to be owing to him, for state, county, city, and school district taxes. In form, the assessment was imposed upon the shares or capital stock of the bank, its surplus and undivided profits, exclusive of the value of the real estate. In law, so the pleader states, all taxes thus assessed were debts owing by the shareholders, which the bank was under a duty to pay as their agent out of moneys belonging to them, then in its possession.
The new bank, in violation of its covenant, failed to pay the taxes of the old bank, which it had thus assumed and made its own. Judgment is demanded for the moneys due under the contract.
A petition was filed by the respondent for the removal of the cause to the federal court upon the ground that the suit was one arising "under the Constitution or laws of the United States." Judicial Code § 28, 28 U.S.C. § 71. Cf. Judicial Code § 24(1)(a), 28 U.S.C. § 41(1)(a). The state court made an order accordingly, and the federal District Court denied a motion to remand. Later, after a trial upon the merits, the complaint was dismissed. The Circuit Court of Appeals for the Fifth Circuit affirmed the judgment of dismissal, overruling the objection that the cause was one triable in the courts of Mississippi. 81 F.2d 502. The decision was put upon the ground that the power to lay a tax upon the shares of national banks has its origin and measure in the provisions of a federal statute (R.S. § 5219, 12 U.S.C. § 548), and that, by necessary implication, a plaintiff counts upon the statute in suing for the tax. Because of the importance of the ruling, this Court granted certiorari "limited to the question of the jurisdiction of the District Court."
How and when a case arises "under the Constitution or laws of the United States" has been much considered in the books. Some tests are well established. To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. Starin v. New York, 115 U.S. 248, 257; First National Bank v. Williams, 252 U.S. 504, 512. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. Id.; King County v. Seattle School District, 263
U.S. 361, 363-364. A genuine and present controversy, not merely a possible or conjectural one, must exist with reference thereto (New Orleans v. Benjamin, 153 U.S. 411, 424; Defiance Water Co. v. Defiance, 191 U.S. 184, 191; Joy v. St. Louis, 201 U.S. 332; Denver v. New York Trust Co., 229 U.S. 123, 133), and the controversy must be disclosed upon the face of the...
To continue readingFREE SIGN UP