Milwaukee County v. White Co

Citation80 L.Ed. 220,56 S.Ct. 229,296 U.S. 268
Decision Date09 December 1935
Docket NumberNo. 32,32
PartiesMILWAUKEE COUNTY v. M. E. WHITE CO. *
CourtUnited States Supreme Court

Messrs. Herbert H. Naujoks, of Madison, Wis., and Clark J. A. Hazelwood, of Milwaukee, Wis., for Milwaukee County.

Mr. Irving Herriott, of Chicago, Ill., for M. E. White Co.

Mr. Justice STONE delivered the opinion of the Court.

This case comes here under section 239 of the Judicial Code, 28 U.S.C. § 346, 28 U.S.C.A. § 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 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, Wis., a court of general jurisdiction. The judgment is siad 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 State of 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 State of 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 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 section 24(1) of the Judicial Code, 28 U.S.C. § 41(1), 28 U.S.C.A. § 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 juris- diction of the District Courts is restricted by section 24(2), 28 U.S.C.A. § 41(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 re-examine 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. 8 S.Ct. 1370, 32 L.Ed. 239, compare Fauntleroy v. Lum, 210 U.S. 230, 28 S.Ct. 641, 52 L.Ed. 1039, 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, 31 S.Ct. 155, 55 L.Ed. 204; Price v. United States, 269 U.S. 492, 46 S.Ct. 180, 70 L.Ed. 373; Dollar Savings Bank v. United States, 19 Wall. 227, 22 L.Ed. 80; and see Stockwell v. United States, 13 Wall. 531, 542, 20 L.Ed. 491; Meredith v. United States, 13 Pet. 486, 493, 10 L.Ed. 258. 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, Bunbury's Exch. Rep. 225; Attorney General v. Hatton, Bunbury's Exch. Rep 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, 21 S.Ct. 251, 45 L.Ed. 410; General Investment Co. v. New York Central R. Co., 271 U.S. 228, 230, 46 S.Ct. 496, 70 L.Ed. 920; Becker Steel Co. v. Cummings, Attorney General, 296 U.S. 74, 56 S.Ct. 15, 80 L.Ed. 54, decided November 11, 1935.

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, 53 S.Ct. 599, 77 L.Ed. 1158, 88 A.L.R. 170; Bond v. Hume, 243 U.S. 15, 37 S.Ct. 366, 61 L.Ed. 565; cf. Tennessee Coal, Iron & R. Co. v. George, 233 U.S. 354, 355, 34 S.Ct. 587, 58 L.Ed. 997; Clark Plastering Co. v. Seaboard Surety Co., 259 N.Y. 424, 182 N.E. 71, 85 A.L.R. 845; Herrick v. Minneapolis & St. Louis Ry. Co., 31 Minn. 11, 16 N.W. 413, 47 Am.Rep. 771; Healy v. Root, 11 Pick. (Mass.) 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, 70 L.R.A. 183. 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 or policy. Union Trust Co. v. Grosman, 245 U.S. 412, 418, 38 S.Ct. 147, 62 L.Ed. 368; Bond v. Hume, supra; Northern Pacific R. Co. v. Babcock, 154 U.S. 190, 197, 198, 14 S.Ct. 978, 38 L.Ed. 958; Dennick v. Central R. Co., 103 U.S. 11, 26 L.Ed. 439; see Bradford Electric Light Co. v. Clapper, 286 U.S. 145, 161, 52 S.Ct. 571, 76 L.Ed. 1026, 82 A.L.R. 696.

2. The faith and credit required to be given to judgments does not depend on the Constitution alone. Article 4, § 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, 28 USCA § 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 system of government, and recognizes that consistently with the full-faith and credit clause there may be limits to the extent to which the policy of one state, in many respects sovereign, may be subordinated to the policy of another. That there are exceptions has often been pointed out, Broderick v. Rosner, 294 U.S. 629, 642, 55 S.Ct. 589, 79 L.Ed. 1100; Alaska Packers Ass'n v. Industrial Accident Commission, 294 U.S. 532, 546, 55 S.Ct. 518, 79 L.Ed. 1044; Bradford Electric Light Co. v. Clapper, supra, 286 U.S. 145, 160, 52 S.Ct. 571, 76 L.Ed. 1026, 82 A.L.R. 696; Huntington v. Attrill, 146 U.S. 657, 663, 13 S.Ct. 224, 36 L.Ed. 1123; Wisconsin v. Pelican Insurance Co., 127 U.S. 265, 293, 8 S.Ct. 1370, 32 L.Ed. 239; and in some instances decided. See Haddock v. Haddock, 201 U.S. 562, 26 S.Ct. 525, 50 L.Ed. 867, 5 Ann.Cas. 1; Maynard v. Hill, 125 U.S. 190, 8 S.Ct. 723, 31 L.Ed. 654; Hood v. McGehee, 237 U.S. 611, 35 S.Ct. 718, 59 L.Ed. 1144; Olmsted v. Olmsted, 216 U.S. 386, 30 S.Ct. 292, 54 L.Ed. 530, 25 L.R.A.(N.S.) 1292; Fall v. Eastin, 215 U.S. 1, 30 S.Ct. 3, 54 L.Ed. 65, 23 L.R.A.(N.S.) 924, 17 Ann.Cas. 853. Without attempting to say what their limits may be, we assume for present purposes that the command of the Constitution and of the statute is not all-embracing, and direct our inquiry to the question whether a state to which a judgment for taxes is taken may have a policy against its enforcement meriting recognition as a permissible limitation upon the full-faith and credit clause. Of that question this court is the final arbiter. See Alaska Packers Association v. Industrial Accident Commission, supra, 294 U.S. 532, 547, 55 S.Ct. 518, 79 L.Ed. 1044; Bradford Electric Light Co. v. Clapper, su...

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