Case ID: f_105/html/0536-01.html
Source: Caselaw Access Project
Author: {"author": "WHEEIER, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ANGLO-AMERICAN PROVISION CO. v. DAVIS PROVISION CO. et al.
    (Circuit Court, S. D. New York.
    November 17, 1900.)
    Jurisdiction of Federal Courts — Federal Question — Rights under Constitution and Laws of United States.
    Where the effect of a state statute limiting the right of foreign corporations to sue in.its courts is to deprive a corporation of another state of the equitable right to set off against a judgment rendered against it in such courts a judgment in its favor against the plaintiff therein, rendered in another state, such corporation is deprived of its constitutional right to have full faith and credit given to such judgment, and also of the right to the full and equal benefit of all laws and proceedings given it by Rev. St. § 1977; and under section 1979 and- section 629, subd. 16, a circuit court of the United States has jurisdiction to afford it appropriate relief.
    
    Jn Equity. On demurrer to bill.
    Henry Wilsou Bridges, for plaiutiff.
    Frank E. Smith, for defendauts.
    
      
       Jurisdiction in cases involving federal questions, see notes to Bailey v. Mosher, 11 C. C. A. 308; Montana Ore-Purchasing Co. v. Boston & M. Consol. Copper & Silver Min. Co., 35 C. C. A. 7.
    
   WHEEIER, District Judge.

These corporatious are both of the state of Illinois. The bill alleges, in short substance, that the plaintiff, in 1899, recovered judgment against the defendant the Davis Provision Company, in Illinois, for $5,049.98, no part of which has been paid, and that the defendant is insolvent; that defendant has recovered judgment arising out of the same transactions against the plaintiff and its surety on an appeal bond in New York for $9,678.64; and that the plaintiff has brought suit in the state court of New York to have its judgment set off against the defendant’s judgment, which has been denied because of section 1780 of the Code of Civil Procedure, which provides that:

“An action against a foreign corporation may be maintained by another foreign corporation, or by a non-resident, in one of the following eases only: (1) Where the action is brought to recover damages for the breach of a contract made within the state, or relating to property situated within the state, at the time of the making thereof. (2) Where it is brought to recover real property situated within the state, or á chattel, which is replevied within the state. (3) Where the cause of action arose within the state, except where the object of the action is to affect the title to real property situated without the state.”

The constitution of the United States provides (article 4):

“Section 1. Full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state. And the congress may by general laws prescribe the maimer in which such acts, records and proceedings shall be proved, and the effect thereof.”

And the laws of the United States provide by the Revised Statutes:

“Sec. 1977. All persons within the jurisdiction of the United States shall have the same right in every state and territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefits of all laws and proceedings for the security of persons and property as is enjoyed by white citizens.”
“Sec. 1979. Every person vvlio, under color of any statute, ordinance, regulation, custom, or usage, of any state or territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceedings for redress.”

And by section 629 that the circuit courts shall have jurisdiction:

“Sixteenth. Of all suits authorized by la.w to be brought by any person to redress the deprivation, under color of any law, statute, ordinance, regulation, custom, or usage of any stale, or any right, privilege, or immunity secured by the constitution of the United States, or of any right secured by any law_providing for equal rights of citizens of the United States, or of ail persons witiiin the jurisdiction of the United States.”

This suit is brought for the deprivation of the right to have those judgments, which are, according to the allegations of the bill, in effect mutual, set off against each other in Yew York. The bill is demurred to for want of jurisdiction and of equity, and the cause has now been heard upon the demurrer.

That these judgments are, upon these allegations, proper subjects of equitable offset upon general principles of law, is not, and could not well be, much disputed; but the principal argument against the bill is based upon the idea that it is brought to review the decision of the state court. This is not, however, the theory of the bill at all, as it is now here understood. The decision of (lie state courts may have been entirely correct under that law of the state limiting the right of a foreign corporation to sue in those courts; but, whether correct or mistaken, the plaintiff has been deprived of its right of offset under color of that statute of the state; and this suit is not at all framed to review in any way the judgment by which this was done, but for independent relief under tírese laws of the United States, provided for because of that statutory deprivation. The state may have the right to exclude foreign corporations from its courts, or to limit suits by them there (Pembina Consol. Silver Min. & Mill. Co. v. Pennsylvania, 125 U. S. 181, 8 Sup. Ct. 737, 31 L. Ed. 650), but then that exclusion or limitation, if of a right secured by the constitution and laws, may afford ground for the relief deprived of in the courts of the United States. Pull faith and credit to the Illinois judgment is not only not given to the plaintiff in Yew York, but the plaintiff is deprived of the right, by being deprived of the right to sue, to have any faith or credit whatever given there to that judgment. The right of equitable offset arises under the general principles of law, but the right to have it done in this manner arose under the constitution and laws of the United States. Bank v. Stevens, 169 U. S. 432, 18 Sup. Ct. 403, 42 L. Ed. 807; Northwestern Fertilizing Co. v. Hyde Park, 3 Biss. 480, Fed. Cas. No. 10,336. Demurrer overruled; defendants to answer over by December 10th.