KEY, J.
About
the year 1880, the complainant railroad undertook to build a
line of road from Chattanooga, Tenn., to Rome, Ga. The
contract for the building of the road was first made with J
C. Stanton & Co., but, before much work was done, J. C
Stanton & Co. surrendered their contract, and it was
canceled, and a new contract was made with the defendants.
They were to complete the road ready for the rolling stock
within a year, and were to be paid per mile $8,000 of the
paid-up capital stock, and $22,000 in the first-class
mortgage bonds of the company. The bonds and stocks were to
be issued, as needed, at the request of the defendants. This
contract was reduced to writing, and executed by the parties.
There is no dispute as to this contract, which was written
but complainants alleged that there was an oral understanding
and agreement made at the same time, that the defendants
would pay all the debts of the railroad and also the debts
and expenditures made by J. C. Stanton & Co. under their
contract. Defendants deny that there was any such oral
contract, and insist that it would not be binding.
Complainants filed their bill, alleging that the debts
mentioned in their bill were to be paid under this agreement.
The cause began and was for some time prosecuted in the state
court.
Our
attention must first be directed to a demurrer which was
disposed of in the supreme court of the state.
Defendants' counsel insists that the judgment of the
court upon the demurrer was erroneous upon principle and upon
authority, is not conclusively binding on this court, and
should be disregarded. In Duncan v. Gegan, 101 U.S.
812, the court held that--
'The
transfer of the suit from the state court to the United
States court did not vacate what had been done in the state
court previous to the removal. The circuit court, when a
transfer has been effected, takes the case in the condition
it was when the state court was deprived of its jurisdiction.
The circuit court has no more power over what was done before
the removal than the state court would have had if the suit
had remained therein. It takes the case up where the state
court left it off.'
Section
721, Rev. St., provides that the laws of the several states,
except where the constitution, treaties, or statutes of the
United States otherwise require or provide, shall be regarded
as rules of decision in trials at common law in the courts of
the United States, in cases where they apply. It has been
said:
'This
court does not claim any supervisory or appellate power
over the state court or judge. It merely entertains
jurisdiction of this suit because of the citizenship of the
plaintiff, and, being thus called on to administer a law of
the state of Georgia, it will, if possible, follow the
decision of the state judge. A state statute, when it
appertains to rights and titles in things having a
permanent locality, and a construction is placed upon it by
the highest state court, becomes a rule of decision in the
federal courts; but the rule does not apply to contracts.
' Guano Co. v. Morrison, 2 Woods, 395-406.
Justice
CLIFFORD states the matter thus:
"Infinite
mischief would ensue,' says MARSHALL, C. J.,
'should this court observe a different rule in
construing the statutes of a state from that established by
the judicial authority of the state. McKeen v.
Delancy's Lessee, 5 Cranch, 22. In cases depending
on the statutes of a state, the federal courts adopt the
construction given to the statute by the highest court of
the state, where that construction is settled, and can be
ascertained. Polk v. Wendal, 9 Cranch. 98;
Elmendorf v. Taylor, 10 Wheat. 157.' '
Merrill v. City of Portland, 4 Cliff. 138-147.
The
supreme court of the United States announces this doctrine:
'Since
the ordinary administration of the law is carried on by the
state courts, it necessarily happens that, by the course of
their decisions, certain rules are established which become
rules of property and action in the state, and have all the
effect of law, and which it would be wrong to disturb. This
is especially true with regard to the law of real estate
and the constructions of state constitutions and statutes.
Such established rules are always regarded by the federal
courts, no less than by the state courts themselves, as
authoritative declarations of what the law is. But where
the law has not been thus settled, it is the right and duty
of the federal courts to exercise their own judgment, as
they always do in reference to the doctrines of commercial
law and general jurisprudence. So, when contracts and
transactions have been entered into, and rights have
accrued thereon under a particular state of the decisions,
or when there has been no decision of the state tribunals,
the federal courts properly claim the right to adopt their
own interpretation of the law applicable to the case,
although a different interpretation may be adopted by the
state courts after such rights have accrued. But, even in
such cases, for the sake of harmony, and to avoid
confusion, the federal courts will lean towards an
agreement of views with the state courts, if the questions
seem to them balanced with doubt. Acting on these
principles, founded as they are on comity and good sense,
the courts of the United States, without sacrificing their
own dignity as independent tribunals, endeavor to avoid,
and in most cases do avoid, any unseemly conflict with the
well-considered decisions of the state courts. '
Burgess v. Seligman, 107 U.S. 34, 35, 2 S.Ct. 10.
The
doctrine asserted in this case is sustained and declared in
Enfield v. Jordan, 119 U.S. 680, 7 S.Ct. 358, and
in many other cases, but it applies to cases that are alike
in their principles and features, but yet different cases
for decision, and having been determined by the state and
federal tribunals, each forum deciding its case for itself;
and the question is how far the federal court in its case
is to follow the decision of a state in a like case.
Whether or not a state court is followed in its decision in
the federal court has no effect upon the suit decided by
the state court. The decision stands as the law of the
case. The last decisions referred to have no application to
the case on trial. This case was brought in the state
court. The defendants came into that court, and filed a
demurrer to the bill. The chancellor sustained the
demurrer, and ordered the bill dismissed. From that decree
complainants appealed to the supreme court of the state,
its highest judicial tribunal. The supreme court reversed
the action of the chancellor, overruled the demurrer, and
sent the case back for answer to the merits. It is now
insisted that the action of the supreme court was erroneous
and the action of the chancellor right, and this court, it
is insisted, should so determine, or, at least, disregard
the decision of the supreme court as not binding on this
court. After the case was sent back to the chancery court,
the defendants removed it to this court upon the ground
that, because of local prejudice or influence, they could
not obtain justice in the state courts. The state courts
had lawful and complete jurisdiction of the case until it
was removed to this court. The chancellor had authority,
and it was his duty, to hear and decide upon the matters
raised by the demurrer, and the supreme court had
authority, and it was its duty, to pass upon the action of
the chancellor, and affirm or reverse it. When the cause
came to this court, it came bodily. None of it remained in
the state court. It came here the same case that it was in
the state court, and in precisely the condition the state
court left it when this court took it in hand. Under the
twenty-fifth section of the judiciary act, as modified by
an act approved February 5, 1867, (14 St.at Large, 385,)
where there is drawn in question the validity of a treaty
or statute of, or an authority exercised under, the United
States, and the decision is against their validity; or
where there is drawn in question the validity of a statute
of, or an authority exercised under, any state on the
ground of their being repugnant to the constitution,
treaties, or laws of the United States, and the decision is
in favor of their validity; or of the constitution, or of a
treaty or statute or commission held under the United
States, and the decision is against the title, right,
privilege, or exemption specially set up or claimed by
either party under such clause of the constitution, treaty,
statute, or commission,--the final judgment or decree of
the highest court of the state may be re-examined and
reversed or affirmed in the supreme court of the United
States upon a writ of error as from a circuit court of the
United States. A district or circuit court of the United
States has no appellate or supervisory authority over any
decision, decree, or judgment of a state court; nor does
the supreme court of the United States have such, except as
provided
for in the twenty-fifth section of the judiciary act,
referred to, and the act of 1867.
Besides
the decisions mentioned, there are numerous decisions of the
federal courts-- an unbroken line-- to the effect that the
judgments and decrees of state courts cannot be reviewed or
supervised by the federal courts except where a writ of error
lies, as above indicated. This court is bound to respect the
decision of the supreme court of the state in its judgment in
regard to the demurrer, and regard it as a determination
binding upon this court, even though it might be erroneous.
The decision of the ...
