Opinion ID: 1830354
Heading Depth: 1
Heading Rank: 4

Heading: Our Response And Its Context

Text: In the present context we accept it as our responsibility to provide the Court of Appeals with such information about our statutory penalty rule as will best assist that Court in resolving the issue before it. The success and usefulness of our efforts depend upon our understanding just what information the Court of Appeals needs. With deference that Court has not worded the primary question  Question No. 1  as artfully as it might. In Question No. 1, we are asked whether Section 11-3-23 is ... general in nature... .  as though we or any other group of judicial linguists could provide a meaningful answer to such a vague question, and as though something turns on the answer. The question then asks whether the statute is ... general in nature so as to establish a `substantive' rule of damages... . Implicit, of course, is the wholly dubious notion that a statute general in nature (whatever that means) is automatically substantive. [5] The final step in the question's syllogism is ... which a federal court, sitting in diversity, must apply. In short, the Court of Appeals in Question No. 1, reasons that if the statute is general, it is substantive, and if it is substantive the federal court must apply it. Experience suggests that generality and substance, like beauty, are in the eye of the beholder. [6] We, therefore, take the Court of Appeals at its word when it makes clear that we are not to consider ourselves limited by the phrasing of the certified questions. Walters v. Inexco Oil Company, 670 F.2d at 478 fn. 7.
It has been commonly supposed that under the familiar Erie doctrine the federal courts, when exercising diversity of citizenship jurisdiction, apply state substantive law and federal procedural law. This, of course, is not so much what was said in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) as it is the subsequent mythology. We understand the Erie doctrine to hold that the courts of the United States are required by the Federal Rules of Decisions Act, 28 U.S.C. § 1652, to enforce what has been loosely (and, in our view, often misleadingly) referred to as state substantive law. This law is not enforced because of any power the state may have to enact a statute enforcement of which is obligatory upon the federal courts. Erie ultimately construes a federal statute. Erie Railroad Co. v. Tompkins, supra , Reed, J., concurring, 304 U.S. at 90-92, 58 S.Ct. at 827-828, 82 L.Ed. at 1201-1202. It holds in effect that the Congress has declared in the Rules of Decisions Act that state law applies in certain cases tried in federal courts. [7] But the Erie doctrine does not include and encompass all state laws arguably substantive. Even though there may be an outcome determinative conflict between state and federal law, there has been a clear recognition that there are many instances in which a federal rule must prevail even in diversity cases. This is so even though there be present unmistakably important state interests underlying the rejected state rule. In Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), the Supreme Court enforced the federal rule regarding service of process on an executor, even though enforcement of the conflicting Massachusetts rule would have produced a different result in the lawsuit. In Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969), the Court of Appeals held that a federal test applies when a jury verdict is challenged on a motion for judgment notwithstanding the verdict. Szantay v. Beech Aircraft Corp., 349 F.2d 60 (4th Cir.1965) held that South Carolina's door closing statute would not be enforced against non-Carolina litigants in a diversity case, even though the South Carolina state courts clearly would have enforced it. In Stovall v. Price Waterhouse Co., 652 F.2d 537, 540-541 (5th Cir.1981) the Court of Appeals applied a federal rule of collateral estoppel to a diversity case arising out of Mississippi, even though the state rule was substantially different. Just how the courts of the United States decide whether a particular state rule should be enforced seems to become more obscure with each case. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), suggested a mechanical outcome determinative test. Mechanics produced arbitrary results, so Byrd v. Blue Ridge Electric Cooperative, 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), adopted a balancing of interests test  the state's interests in the enforcement of its laws weighed against any federal interest implicated by the particular question presented, all considered against the backdrop of everyone's interest in the equitable administration of the laws and avoidance of unseemly forum shopping. In Hanna v. Plumer, supra , the pendulum swung back to the middle, toward a somewhat more mechanical test, at least in cases where the federal rule at issue was within the Supreme Court's rule making power. 28 U.S.C. § 2072. Precisely what the Erie rule means today we do not pretend to know. [8] The blunt substantive  procedural distinction has proved unsatisfactory in all except the simplest of cases. [9] What is clear, however, is that the question whether the Mississippi penalty statute should be applied in this case is a pure Erie question. It is the Erie doctrine which provides the clues as to what the questions are, to what information the Court of Appeals needs. Having in mind notions of some sort of golden rule for the federal system of which we are a part, we will answer as best we can.
We have no legislative history available as a guide to the interpretation of Mississippi's mandatory penalty statute, today codified in Miss. Code Ann. § 11-3-23 (Supp. 1982). We are, nevertheless, quite familiar with the statute, having construed and applied it many times over the years. The statute applies to a variety of kinds of final judgments or decrees. Clearly a judgment for a sum of money such as we have here is within the statute. It applies to all final judgments of the types specified by the statute which are affirmed unconditionally by this Court. And, by virtue of Miss. Code Ann. § 11-51-79 (Supp. 1982), the statutory penalty shall be assessed in appeals taken to our circuit courts by our county courts. Excel Saw and Tool Co. v. Micor Corp., 265 So.2d 926 (Miss. 1972); Johnson Limited, Inc. v. Signa, 410 So.2d 1320 (Miss. 1982). The penalty statute has been on our statute books at least since 1857. Miss.Rev. Code, ch. 63, art. 12 (1857). When it enacted the statute originally, we are confident the Mississippi Legislature had in mind only appeals to the Supreme Court of Mississippi. And, when the amount of the penalty was increased from 5% to 15% [Miss. Laws (1980) ch. 533, § 1] we are likewise confident that the legislature contemplated only state appeals. For this state has no constitutional power to prescribe that a penalty be assessed, or the manner of computation of such a penalty, for cases pending in courts other than the courts of the State of Mississippi. The penalty statute expresses the state's interest in discouraging frivolous appeals. It likewise expresses a bona fide interest in providing a measure of compensation for the successful appellee, compensation for his having endured the slings and arrows of successful appellate litigation. Section 11-3-23 has application only where the appellant, as the unsuccessful litigant in the trial court, may by law take an appeal as of right. Appeals of interlocutory judgments or decrees are not subject to the penalty. Canal Bank and Trust Co. v. Brewer, 147 Miss. 885, 992-923, 114 So. 127, 128 (1927). This state makes no effort to limit the right of appeal, e.g., to cases where appellant proceeds in good faith, where there is probable cause to believe that the lower court has erred, and the like. The application of such threshold tests invariably leads to arbitrary and not infrequently unjust determinations of who may appeal and who may not. The fate of many appeals is necessarily determined summarily and without full briefing or argument. As unworkable as these quasi-subjective tests are, an unfettered automatic right of appeal brings its own evils. Unsuccessful defendants will take meritless appeals because they are made, to subject their adversaries to more costs and expense, to squeeze a favorable settlement out of an impecunious plaintiff, and for less laudable reasons. In this setting Mississippi has opted for the mandatory penalty rule. Every losing litigant is given an automatic right of appeal. When deciding whether to exercise that right, the penalty statute is there for him to consider. If he is successful on his appeal, of course, he incurs no penalty. If he loses, however, he must pay the price, a price he well knows and may easily calculate before giving his notice of appeal. [10] We note that the Walters assert as a basis for their claim of the penalty that they had been denied the use of the funds since the date of the U.S. District Court's judgment. This premise is faulty. The purposes of our penalty statute and the policies it has been designed to promote do not include consideration of mere delay experienced by the plaintiff in getting his money. That is taken care of by our rules providing that all judgments shall bear interest at the legal rate from date of rendition. [11] Miss. Code Ann. § 75-17-7 (Supp. 1982). Still we can hardly be oblivious to the fact that in the past decade, an aggregate of prevailing market interest rates and the annual inflation rate has greatly exceeded the eight percent per annum legal rate of interest. The penalty statute has further importance in the present state of this Court's caseload. It protects this Court from being required to spend its time and energy and resources on appeals thoughtlessly taken. Similarly, it tells the litigants that the trial itself is a momentous event, the centerpiece of the litigation, not just a first step weighing station en route to endless rehearings and reconsiderations. It is designed to deter litigants in our trial courts from trying their cases with one eye on the Supreme Court. It is designed to assure that the cases brought to this Court are only those in which bona fide, substantial claims of legal error are found. In conclusion, we state unequivocally that if this case had been in our state judicial system, the penalty statute would have applied and the penalty would have been assessed against Inexco. To be specific, (a) if the judgments rendered May 2, 1979, [see Walters v. Inexco Oil Co., 511 F. Supp. 21 (S.D.Miss. 1979)] had been rendered by any circuit court in this state [the facts suggesting that venue may well have been proper in the Circuit Court of Clarke County, Mississippi]; and (b) if the appeal in fact taken in this case to the United States Court of Appeals for the Fifth Circuit had been taken to this Court; and (c) if, as did the Court of Appeals [ Walters v. Inexco Oil Co., 632 F.2d 891 (5th Cir.1980)], we had unconditionally affirmed, then, upon proper and timely motion, we would under the authority of Section 11-3-23 have assessed the penalty on each judgment and against Inexco. We would have done this because the literal language of the penalty statute so required. En route we would have recognized that such action vindicated the purposes and policies undergirding and embodied in the statute.