Court Opinion

ID: 9419355
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:49:01.017514+00
Date Added: 2024-06-11T16:42:06.039840
License: Public Domain

Mr. Justice Frankfurter,
dissenting:
To deny a suitor access to a federal district court under the circumstances of this case is to disregard a duty enjoined by Congress and made manifest by the whole history of the jurisdiction of the United States courts based upon diversity of citizenship between parties. For I am assuming that law declared by this Court, in contradistinction to law declared by Congress, is something other than the manipulation of words to formulate a predetermined result. Judicial law to me implies at least some continuity of intellectual criteria and procedures in dealing with recurring problems.
I believe it to be wholly accurate to say that throughout our history it has never been questioned that a right created by state law and enforceable in the state courts can also be enforced in the federal courts where the parties to the controversy are citizens of different states. The reasons which led Congress to grant such jurisdiction to the federal courts are familiar. It was believed that, consciously or otherwise, the courts of a state may favor their own citizens. Bias against outsiders may become embedded in a judgment of a state court and yet not be sufficiently apparent to be made the basis of a federal claim. To avoid possible discriminations of this sort, so the theory goes, a citizen of a state other than that in which he is suing or being sued ought to be able to go into a wholly impartial tribunal, namely, the federal court sitting in that state. Thus, the basic premise of federal jurisdiction based upon diversity of the parties’ citizenship is that the federal courts should afford remedies which are coextensive *337with rights created by state law and enforceable in state courts.
That is the theory of diversity jurisdiction. Whether it is a sound theory, whether diversity jurisdiction is necessary or desirable in order to avoid possible unfairness by state courts, state judges and juries, against outsiders, whether the federal courts ought to be relieved of the burden of diversity litigation, — these are matters which are not my concern as a judge. They are the concern of those whose business it is to legislate, not mine. I speak as one who has long favored the entire abolition of diversity jurisdiction. See 13 Cornell L. Q. 499, 520 et seq. But I must decide this case as a judge and not as a legislative reformer.
Aside from the Johnson Act of May 14, 1934, 48 Stat. 775,1 the many powerful and persistent legislative efforts to abolish or restrict diversity jurisdiction have ever since the Civil War been rejected by Congress. Again and again legislation designed to make inroads upon diversity jurisdiction has been proposed to Congress, and on each occasion Congress has deliberately refused to act. See, for example, the recent efforts to restrict diversity jurisdiction which were provoked by the Black & White Taxicab decision, 276 U. S. 518; Sen. Rep. No. 626, 70th Cong., 1st Sess.; Sen. Rep. No. 691, 71st Cong., 2d Sess.; Sen. Rep. No. 530 and Sen. Rep. No. 701, 72d Cong., 1st Sess. We *338are dealing, then, not with a jurisdiction evolved and shaped by the courts but rather with one explicitly conferred and undeviatingly maintained by Congress.
The only limitations upon the exercise of diversity jurisdiction — apart from that which Congress made in the Johnson Act — are, broadly speaking, those illustrated by Railroad Comm’n v. Rowan & Nichols Oil Co., 310 U. S. 573, as amended in 311 U. S. 614-15; Railroad Comm’n v. Pullman Co., 312 U. S. 496; and Chicago v. Fieldcrest Dairies, 316 U. S. 168. In Rowan & Nichols the claim based upon state law was derived from a statute requiring proration on a “reasonable basis,” and it was not clear from the decisions of the state courts whether such courts might exercise an independent judgment as to what was “reasonable.” 311 U. S. at 615. And in Pullman it was also “far from clear” whether state law, as authoritatively defined by the local courts, might not displace the federal questions raised by the bill. 312 U. S. at 499. Where the controlling state law is so undefined that a federal court attempting to apply such law would be groping utterly in the dark — where “no matter how seasoned the judgment of the district court may be, it cannot escape being a forecast rather than a determination,” Railroad Comm’n v. Pullman Co., 312 TJ. S. at 499 — a court of equity may “avoid the waste of a tentative decision,” id., at 500. The Pullman and Fieldcrest Dairies cases are merely illustrative of one phase of the basic constitutional doctrine that substantial constitutional issues should be adjudicated only when no alternatives are open. A definitive ruling by the state courts upon the questions of construction of the state statutes might have terminated the controversies in those cases and thus eliminated serious constitutional questions. Under such circumstances it was an affirmation and not a denial of federal jurisdiction in each of those cases for the district court to hold the bill *339pending a seasonable determination of the local issues in a proceeding to be brought in the state courts.
If, in a case of this sort, the state right sought to be enforced in the federal courts depended upon a “forecast rather than a determination” of state law, if the federal court was practically impotent to enforce state law because of its inability to fathom the complexities, legal or factual, of local law, the rule of Rowan & Nichols would be applicable. In such a situation the line of demarcation between what belongs to the state administrative body and what to its courts should not be drawn by the federal courts. If it could be shown that the circumstances of this case warranted the application of such a doctrine of abstention, I would gladly join in the decision of the Court. But such a showing has not been attempted, nor, I believe, could it be made.
Let us examine briefly the nature of'the rights sought here to be enforced in the federal courts. In 1919 the Texas Railroad Commission issued its Rule 37 imposing general spacing limitations upon the drilling of oil wells, “provided that the Commission in order to prevent waste or to prevent the confiscation of property” would grant exceptions from the general restrictions. The order of the Railroad Commission in this case granted a permit to drill a well in exception to Rule 37. Section 8 of Article 6049c of Vernon’s Texas Civil Statutes, 1925, provides that any “interested person affected by . . . any rule, regulation or order made or promulgated by the Commission thereunder, and who may be dissatisfied therewith, shall have the right to file a suit in a court of competent jurisdiction in Travis County, Texas, and not elsewhere, against the Commission, or the members thereof, as defendants, to test the validity of said laws, rules, regulations or orders.”
Looking only at the statute, one could find at least two possible sources of ambiguity and confusion. By what *340standards should the courts be governed in reviewing the “validity” of Commission orders? Does the statutory limitation of courts “of competent jurisdiction in Travis County, Texas,” preclude review in the federal district court sitting in Travis County? Fortunately, we need no longer look'only to the words of the statute. These questions are not new. They are not presented in this case for the first time. We are not writing on a clean slate.
It is true that Texas law governing review of Commission orders under Rule 37 has not always been clear and certain, and that there may be parts of the statute and some of the Railroad Commission’s Rules, with which we are not now concerned, which, like other legal materials, are not as clear as they might be. But, in a series of recent decisions, the Supreme Court of Texas has not only given precision to the concepts of “waste” and “confiscation of property” employed in Rule 37, it has also defined with clarity the scope of judicial review of Commission action. In Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 70-71, 131 S. W. 2d 73, the Court held that “the term ‘confiscation’ evidently has reference to depriving the owner or lessee of a fair chance to recover the oil and gas in or under his land, or their equivalents in kind. It is evident that the word refers principally to drainage. Under one of the exceptions in Rule 37, well permits may be granted to prevent ‘confiscation.’ It is the law that every owner or lessee of land is entitled to a fair chance to recover the oil and gas in or under his land, or their equivalents in kind. Any denial of such fair chance would be ‘confiscation’ within the'meaning o.f Rule 37.” And in Railroad Commission v. Shell Oil Co., 139 Tex. 66, 80, 161 S. W. 2d 1022, decided by the Supreme Court of Texas on March 11,1942, the scope of judicial review contemplated by Texas law was authoritatively defined: “In Texas, in all trials contesting the validity of an order, *341rule, or regulation of an administrative agency, the trial is not for the purpose of determining whether the agency actually heard sufficient evidence to support its orders, but whether at the time such order was entered by the agency there then existed sufficient facts to justify the same. Whether the agency heard sufficient evidence is not material.” See also Cook Drilling Co. v. Gulf Oil Corp., 139 Tex. 80, 161 S. W. 2d 1035, decided the same day.
In other words, as the Circuit Court of Appeals has said in this case, “We now know the legal requisites of orders and regulations of the Railroad Commission under the conservation laws of Texas. . . . Whether the Commission heard evidence or not is immaterial; it is not required to take testimony or make findings of fact before promulgating its orders. Such procedure is foreign to the law of Texas, although customary under federal statutes. If the facts in existence when the order was made, as later shown by evidence before the court, were such that reasonable minds could not have reached the conclusion arrived at by the Commission, or if the agency exceeded its power, then the order should be set aside by any court of competent jurisdiction.” 130 F. 2d 10, 14-15.
Clearly, therefore, the scope of judical review in a Rule 37 case, as declared by the Supreme Court of Texas, is precisely as well defined, for example, as the scope of judicial review by the federal courts of orders of the Interstate Commerce Commission or the National Labor Relations Board. That the scope of review may be different does not make the standards of review any less definite or less susceptible of application by a court. I think there can be no doubt that under the Constitution and laws of Texas, as construed by the decisions of the state courts, such courts exercise a judicial power in these cases precisely similar to that wielded by the federal courts under Article III. Can it be said, therefore, that in considering the *342validity of an exception allowed by the Texas Railroad Commission under Rule 37, the federal judges sitting in that state are engaged in duties which are foreign to their experience and abilities? Judges who sit in judgment upon the legality of orders made by the Interstate Commerce Commission are certainly not incompetent to apply the narrowly defined standards of law established by Texas for review of the orders of its Railroad Commission.
We come, then, to the question whether Texas has manifested any desire to confine such review to the state courts sitting in Travis County. A little history will go a long way in answering this question. On April 3, 1891, the Texas legislature enacted a statute creating the Texas Railroad Commission. Section 6 provided that suits to set aside Commission orders could be brought “in a court of competent jurisdiction in Travis County, Texas.” And, naturally enough, the question soon arose whether this provision prevented review in the federal court sitting in Travis County. Almost fifty years ago there came before this Court a memorable litigation in which the meaning and purpose of the provision were thoroughly canvassed. In Reagan v. Farmers’ Loan & Trust Co., 154 U. S. 362, 391-92, decided May 26, 1894, this Court unanimously held that “it may be laid down as a general proposition that, whenever a citizen of a State can go into the courts of a State to defend his property against the illegal acts of its officers, a citizen of another State may invoke the jurisdiction of the Federal courts to maintain a like defence. A State cannot tie up a citizen of another State, having property rights within its territory invaded by unauthorized acts of its own officers, to suits for redress in its own courts. ... We need not, however, rest on the general powers of a Federal court in this respect, for in the act before us express authority is given for a suit against the commission . . . The language of this provision [§ 6 of the *3431891 statute] is significant. It does not name the court in which the suit may be brought. It is not a court of Travis County, but in Travis County. The language differing from that which ordinarily would be used to describe a court of the State was selected apparently in order to avoid the objection of an attempt to prevent the jurisdiction of the Federal courts.”
For almost fifty years the holding in the Reagan case has not been questioned. On the contrary, it has always been taken for granted that the District Court for the Western District of Texas is “a court of competent jurisdiction in Travis County” and a suitable forum in which to challenge the validity of orders of the Texas Railroad Commission. One need only look at the tables of cases in both the lower federal courts and in this Court to obtain a sense of the solidity of this exercise of jurisdiction. Section 8 of Article 6049c, the Texas legislation immediately before us, was originally enacted in 1932. The Texas legislature might expressly have sought to restrict judicial proceedings with respect to Commission orders to the state courts of Travis County. This it has done in other situations. See e. g., Art. 911e, § 10 of Vernon’s Revised Civil Statutes, 1925 (appeal by applicant for transportation agent’s license from denial of application by Railroad Commission); Art. 3286 (suits by heirs or claimants to escheated lands); Art. 5032 (appeals from revocation or suspension of authority with respect to reciprocal insurance); Art. 8307, § 7 (suits to recover penalties from employers failing to report injuries under workmen’s compensation law). In these statutory provisions jurisdiction is specifically limited to the “District Court in Travis County, Texas,” the state court. But in Article 6049c the Texas legislature used the phrase “in a court of competent jurisdiction in Travis County,” precisely the same as that which had been construed by this Court in the Reagan case. How, then, *344can it be fairly said that the Texas legislature meant to exclude the federal courts from exercising jurisdiction in these cases?
And so, the case really reduces itself to this: in the actual application of the standards governing judicial review of Commission orders allowing exceptions under Rule 37— standards which today have been authoritatively and precisely defined — a different result may be obtained if suit is brought in the federal rather than the state courts. And why? Because federal judges are less competent and less fair than state judges in applying the rules that are binding upon both? If this were true here, it would be equally true as applied to almost all types of litigation brought into federal courts to enforce state-created rights. The explanation may perhaps lie in the realm of what has sometimes been called “psychological jurisprudence.” In the assessment of evidence and the other elements which enter into a judicial judgment, a federal judge may make judgments different from those which a state judge may make. Federal judges are perhaps to be regarded as men apart— judges who cannot be trusted to judge fairly and impartially. But if this be our premise, why should it not follow that the federal courts are, because of their putative bias, to be denied the right to hear insurance cases, or cases involving controversies between debtors and creditors, landlords and tenants, employers and employees, and all the other complicated controversies arising out of the local law of the forty-eight states?
It is the essence of diversity jurisdiction that federal judges and juries should pass on asserted claims because the result might be different if they were decided by a state court. There may be excellent reasons why Congress should abolish diversity jurisdiction. But, with all deference, it is not a defensible ground for having this Court by indirection abrogate diversity jurisdiction when, as a matter of fact, Congress has persistently refused to restrict *345such jurisdiction except in the limited area occupied by the Johnson Act. The Congressional premise of diversity jurisdiction is that the possibility of unfairness against outside litigants is to be avoided by providing the neutral forum of a federal court. The Court today is in effect withdrawing this grant of jurisdiction in order to avoid possible unfairness against state interests in the federal courts. That which Congress created to assure impartiality of adjudication is now destroyed to prevent what is deemed to be hostility and bias in adjudication.
Of course, the usual considerations governing the exercise of equity jurisdiction are equally applicable to suits in the federal courts where jurisdiction depends upon the diversity of the parties’ citizenship. The chancellor certainly must balance the equities before granting relief; he should stay his hand where another court seized of the controversy can do justice to the claims of the parties; he may refuse equitable relief where the asserted right is doubtful because of the substantive law which he must find as declared by the state. But it is too late in the day to suggest that the chancellor may act on whimsical or purely personal considerations or on private notions of policy regarding the particular suit. It is not for us to say that litigation affecting state laws and state policies ought to be tried only in the state courts. Congress has chosen to confer diversity jurisdiction upon the federal courts. It is not for us to reject that which Congress has made the law of the land simply because of our independent conviction that such legislation is unwise.
This is not just an isolated case. To order the dismissal of this litigation, on this record and in the present state of Texas law, is not merely to decide that the federal court in Travis County, Texas, should no longer entertain suits brought under the Texas conservation laws. We are holding, in effect, that the enforcement of state rights created by state legislation and affecting state policies is limited *346to the state courts. It means, candidly, that we should reexamine all of the cases — and there have been many— since the Reagan decision almost half a century ago. Do we not owe it to the lower federal courts, for example, to tell them where a case like Texas Pipe Line Co. v. Ware, 15 F. 2d 171, now stands? In that case the federal court entertained a suit to enforce rights arising under a state workmen’s compensation law. Would it be error for a federal judge to do so today? See, also, Lane v. Wilson, 307 U. S. 268.
Perhaps no judicial action calls for a more cautious exercise of discretion than the appointment of a receiver by a court of equity, especially where the enterprise to be administered relates to important public interests. Such a situation was presented to this Court in Pennsylvania v. Williams, 294 U. S. 176, in which — solely on the score of diversity of citizenship — a federal court was asked to assume the management of a Pennsylvania building and loan association. The problem before this Court was not whether the controversy should be adjudicated by a federal rather than a state court, but whether, as a matter of sound judicial administration, a court of equity should take hold of the affairs of the association by putting a judicial officer in charge when in fact the state had established an administrative system whereby “the duty of supervising its own building and loan associations and of liquidating them by an adequate procedure when insolvent,” 294 U. S. at 184, was entrusted to a permanent, experienced state agency. The question was not at all whether a federal court should abdicate its authority in favor of a state court where the rules of law which would govern a suit in a state court would be precisely the same as those which a federal court would be bound to apply. The Williams case, in other words, is but an application of the traditional doctrine that a court of equity should stay its hand from the improvident appointment of a receiver.
*347To talk about courts as “working partners” with administrative agencies whenever there is judicial review of administrative action is merely another way of saying that legislative policies are enforced partly through administrative agencies and partly through courts. See United States v. Morgan, 307 U. S. 183, 191. But the use of such colloquial expressions can hardly obliterate the distinction between judicial power and legislative power, whether the latter be exercised directly by the legislature or indirectly through its administrative agencies. The courts of Texas sit in judgment upon the Railroad Commission of Texas only in so far as they have been charged by Texas law with the duty of ascertaining the validity of Commission action. They no more “participate in the fashioning of the state’s domestic policy” than the federal courts participate in the fashioning of the transportation policy of the federal government in reviewing orders of the Interstate Commerce Commission under the Urgent Deficiencies Act, 38 Stat. 219, 28 U. S. C. § 47.
Therefore, unless all functions of courts heretofore deemed to be judicial in nature even though they involve appropriately defined review of actions taken by administrative agencies are now to be deemed administrative in nature, the circumstance that a right asserted before a court arises from a controversy that originated before an administrative agency cannot alter either the nature of the power being exercised by the court or its capacity to entertain jurisdiction. One might choose, for example, to describe this Court as the “working partner” of the Securities and Exchange Commission, the Comptroller of the Currency, the Commissioner of Internal Revenue, and the score of other administrative bodies the validity of whose actions frequently comes here for review. But such a characterization of our role in reviewing administrative orders does not make this exercise of our power any the *348less judicial or any the more administrative. Nor should it be adequate to wipe out a distinction that is so embedded in our constitutional history and practice.
The opinion of the Court cuts deep into our judicial fabric. The duty of the judiciary is to exercise the jurisdiction which Congress has conferred. What the Court is doing today I might wholeheartedly approve if it were done by Congress. But I cannot justify translation of the circumstance of my membership on this Court into an opportunity of writing my private view of legislative policy into law and thereby effacing a far greater area of diversity jurisdiction than Senator Norris, as chairman of the Senate Judiciary Committee, was ever able to persuade Congress itself to do.
Mr. Justice Roberts and Mr. Justice Reed join in this dissent.
The Chief Justice expresses no views as to the desirability, as a matter of legislative policy, of retaining the diversity jurisdiction. In all other respects he concurs in the opinion of Mr. Justice Frankfurter.

 The Johnson Act provides that no district court can enjoin the enforcement of any order issued by a state administrative body where the jurisdiction of the court “is based solely upon the ground of diversity of citizenship, or the repugnance of such order to the Constitution of the United States,” and “where such order (1) affects rates chargeable by a public utility, (2) does not interfere with interstate commerce, and (3) has been made after reasonable notice and hearing, and where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such State.”
Since the order under review in this case did not in any way affect rates chargeable by any public utility, the Johnson Act is inapplicable.