Source: https://supreme.justia.com/cases/federal/us/296/268/
Timestamp: 2019-04-25 04:28:41+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 296 › Milwaukee County v. M. E. White Co.
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. 296 U. S. 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. 296 U. S. 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. 296 U. S. 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. 296 U. S. 272.
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. 296 U. S. 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. 296 U. S. 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. 296 U. S. 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.
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.
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.
"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 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.
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, 271 U. S. 230; Becker Steel Co. v. Cummings, ante, p. 296 U. S. 74.
or policy. Union Trust Co. v. Grosman, 245 U. S. 412, 245 U. S. 418; Bond v. Hume, supra; Northern Pacific R. Co. v. Babcock, 154 U. S. 190, 154 U. S. 197-198; Dennick v. Railroad Co., 103 U. S. 11; see Bradford Electric Light Co. v. Clapper, 286 U. S. 145, 286 U. S. 161.
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. 547; Bradford Electric Light Co. v. Clapper, supra, 286 U. S. 157-162.
to penal laws, because the courts of one state should not be called upon to scrutinize the relations of a foreign state with its own citizens, such as are involved in its revenue laws, and thus commit the State of the forum to positions which might be seriously embarrassing to itself or its neighbors. See Moore v. Mitchell, 30 F.2d 600, 602, 604; Beale, Conflict of Laws, § 610.1.
Whether one state must enforce the revenue laws of another remains an open question in this Court. See Moore v. Mitchell, 281 U. S. 18, 281 U. S. 24. But we do not stop to inquire whether the considerations which have been thought to preclude the enforcement of the penal laws of one state in the courts of another are applicable to taxing statutes, or whether the mere possibility of embarrassment in their enforcement should stay the hand of the court of another state in cases where in fact such embarrassment will not occur. For present purposes, we will assume that the courts of one state are not required to entertain a suit to recover taxes levied under the statutes of another, and confine our inquiry to the single question whether they must nevertheless give full faith and credit to judgments for such taxes.
A cause of action on a judgment is different from that upon which the judgment was entered. In a suit upon a money judgment for a civil cause of action, the validity of the claim upon which it was founded is not open to inquiry, whatever its genesis. Regardless of the nature of the right which gave rise to it, the judgment is an obligation to pay money in the nature of a debt upon the specialty. Recovery upon it can be resisted only on the grounds that the court which rendered it was without jurisdiction, Pennoyer v. Neff, 95 U. S. 714; D'Arcy v. Ketchum, 11 How. 165; Tilt v. Kelsey, 207 U. S. 43, or that it has ceased to be obligatory because of payment or other discharge, Anderson v. Clark, 70 Ga. 362; Haggerty v. Amory, 7 Allen 458; First Nat. Bank v.
Hahn, 197 Mo.App. 593, 198 S.W. 489; Revere Copper Co. v. Dimock, 90 N.Y. 33, or that it is a cause of action for which the State of the forum has not provided a court, Anglo-American Provision Co. v. Davis Provision Co., 191 U. S. 373; compare Kenney v. Supreme Lodge, 252 U. S. 411, unless it is compelled to do so by the privileges and immunities clause; compare Douglas v. New York, N.H. & H. R. Co., 279 U. S. 377, McKnett v. St. Louis & S.F. Ry. Co., 292 U. S. 230, and Broderick v. Rosner, supra; or possibly because procured by fraud, compare 72 U. S. Russell, 5 Wall. 290; Maxwell v. Stewart, 21 Wall. 71, 89 U. S. 22 Wall. 77; Hanley v. Donoghue, 116 U. S. 1; Simmons v. Saul, 138 U. S. 439, with 52 U. S. Reid, 11 How. 437; NcNitt v. Turner, 16 Wall. 352, 83 U. S. 366; Cole v. Cunningham, 133 U. S. 107, 133 U. S. 12.
Trial of these issues, even though the judgment be for taxes incurred under the laws of another state, requires no scrutiny of its revenue laws or of relations established by those laws with its citizens, and calls for no pronouncement upon the policy of a sister state. It involves no more embarrassment than the interstate rendition of fugitives from justice, the constitutional command for which is no more specific than that requiring full faith and credit. Foreign judgments are not liens, and are not entitled to execution in the State to which they are brought. See M'Elmoyle v. Cohen, 13 Pet. 312; Cole v. Cunningham, supra, 133 U. S. 112; cf. Gasquet v. Fenner, 247 U. S. 16; Sistare v. Sistare, 218 U. S. 1, 218 U. S. 26. They can no more demand priority over domestic claims for taxes than a judgment upon a simple contract debt, which is equally a binding obligation of the judgment debtor where rendered, and to which full faith and credit must be accorded.
clause was to alter the status of the several states as independent foreign sovereignties, each free to ignore obligations created under the laws or by the judicial proceedings of the others, and to make them integral parts of a single nation throughout which a remedy upon a just obligation might be demanded as of right, irrespective of the State of its origin. That purpose ought not lightly to be set aside out of deference to a local policy which, if it exists, would seem to be too trivial to merit serious consideration when weighed against the policy of the constitutional provision and the interest of the State whose judgment is challenged. In the circumstances here disclosed, no state can be said to have a legitimate policy against payment of its neighbor's taxes, the obligation of which has been judicially established by courts to whose judgments in practically every other instance it must give full faith and credit. Compare Fauntleroy v. Lum, supra.
v. Supreme Lodge, supra; compare Converse v. Hamilton, supra; Broderick v. Rosner, supra; see also American Express Co. v. Mullins, 212 U. S. 311.
"The essential nature and real foundation of a cause of action are not changed by recovering judgment upon it, and the technical rules which regard the original claim as merged in the judgment, and the judgment as implying a promise by the defendant to pay it, do not preclude a court to which a judgment is presented for affirmative action (while it cannot go behind the judgment for the purpose of examining into the validity of the claim) from ascertaining whether the claim is really one of such a nature that the court is authorized to enforce it."
In that case, it was held that this Court was without original jurisdiction of a suit brought by Wisconsin to recover upon a judgment obtained in its own courts for a penalty imposed by its statutes for the failure of an insurance company to file an annual report. So far as the opinion can be taken to suggest that full faith and credit is not required with respect to a judgment unless the original cause of action would have been entitled to like credit, it is inconsistent with decisions of this Court already noted, and was discredited in Fauntleroy v. Lum, supra, 210 U. S. 236-237, and Kenney v. Supreme Lodge, supra, 252 U. S. 414.
We intimate no opinion whether a suit upon a judgment for an obligation created by a penal law, in the international sense, see Huntington v. Attrill, supra, 146 U. S. 677, is within the jurisdiction of the federal District Courts, or whether full faith and credit must be given to such a judgment even though a suit for the penalty before reduced to judgment could not be maintained outside of the State where imposed. See Wisconsin v. Pelican Insurance Co., supra.
2 percent for delinquency in payment, but the record does not disclose that the nominal penalty arose under a penal law, or is of such a nature as to preclude suit to recover it outside the State of Wisconsin. See Huntington v. Attrill, 146 U. S. 657, 146 U. S. 667 et seq. The certificate and question are framed on the assumption that it is not. The judgment is stated to be for taxes.
The question is answered "yes."
MR. JUSTICE McREYNOLDS and MR. JUSTICE BUTLER think that the question should be answered "no."
Horsy v. Daniel, 2 Lev. 161; 1 Marsh. 284; Prince v. Nicholson, 5 Taunt. 665; Hall v. Obder, 11 East, 118; Lyman v. Brown, 2 Curtis 559, 561; Taylor v. Bryden, 8 Johns. 173; Russell v. Smyth, 9 M. & W. 810; Andrews v. Montgomery, 19 Johns. 162; Boston India Rubber Factory v. Hoit, 14 Vt. 92; Carter v. Crews, 2 Port. 81; Belford v. Woodward, 158 Ill. 122, 41 N.E. 1097; Cole v. Driskell, 1 Blackf. 16; see 1 Chitty on Pleading, 115; 2 Freeman on Judgments, § 1515.
Henry v. Sargeant, 13 N.H. 321; Gulledge Bros. Lumber Co. v. Wenatchee Land Co., 122 Minn. 266, 142 N.W. 305; Colorado v. Harbeck, 232 N.Y. 71, 133 N.E. 357; James & Co. v. Second Russian Insurance Co., 239 N.Y. 248, 257, 146 N.E. 369; In re Martin's Will, 255 N.Y. 359, 362, 174 N.E. 753; Beadall v. Moore, 199 App.Div. 531, 533, 191 N.Y.S. 826; cf. Municipal Council of Sydney v. Bull  1 K.B. 7; Queen of Holland v. Drukker  Ch. 877; Attorney General of Canada v. Schulze & Co., 9 Sc.L.T.Rep. 4.
Moore v. Mitchell, 30 F.2d 600, 601, aff'd on another ground, 281 U. S. 281 U.S. 18; In re Anita Bliss' Estate, 121 Misc. 773, 202 N.Y.S. 185; In re Martin's Estate, 136 Misc. 51, 240 N.Y.S. 393; Maryland v. Turner, 75 Misc. 9, 132 N.Y.S. 173. Contra, Holshouser Co. v. Gold Hill Copper Co., 138 N.C. 248, 50 S.E. 650.
"§ 610. No action can be maintained on a right created by the law of a foreign state as a method of furthering its own governmental interests."
"§ 443. A valid foreign judgment for the payment of money which has been obtained in favor of a state, a state agency, or a private person, on a cause of action created by the law of the foreign state as a method of furthering its own governmental interests will not be enforced."
Comment (b) states that the enforcement of such a judgment is not required by the full faith and credit clause. But illustration 4 states that a state judgment against a foreign corporation for a stipulated fee for the privilege of doing business within the State is entitled to full faith and credit.
These conclusions should be compared with New York v. Coe Manufacturing Co., supra. See Beale, Conflict of Laws, §§ 443.1, 610.2.

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