Court Opinion

ID: 9419942
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:52:14.464334+00
Date Added: 2024-06-11T16:42:25.877138
License: Public Domain

Mr. Justice Reed,
dissenting.
My understanding of the Court’s decision is that the doctrine of res judicata, that is a former adjudication, defeats Bullington’s claim against Angel. The opinion is limited to that point. In my view the conclusion reached by the Court is erroneous. To narrow the line of my disagreement, I shall state the issues treated in the opinion with which I agree. The causes of action and the parties in the two suits are identical. Federal questions were raised by Bullington’s contention that the North Carolina statute, sufficiently quoted at the beginning of the Court’s opinion, Michie’s Code, 2593 (f), was unconstitutional by federal tests because it barred the North Carolina courts to Bullington’s suit on his notes. It is immaterial, for the purposes of determining the availability of a plea of res judicata, whether the North Carolina judgment was erroneous or not. I agree, further, that, on the ground that a state cannot bar this cause of action from its courts, Buffington could have had review in this Court of the North Carolina judgment and that this Court, if it did not conclude that the North Carolina judgment rested on an adequate state ground, could have finally settled that federal constitutional issue.
The reasoning of the Court leads to the announced result because of these presuppositions with which I differ: (I) “For purposes of res judicata, the significance of what a court says it decides is controlled by the issues that *194were open for decision.” (II) “The'merits’of a claim are disposed of when it is refused enforcement.” (Ill) “Since it was open for Bullington to come here to seek reversal of the decision of the North Carolina Supreme Court shutting him out of the North Carolina courts and he chose not to do so, the decision of the North Carolina Supreme Court concluded an adjudication of a federal question even though it was not couched in those terms.” (IV) “For purposes of diversity jurisdiction a federal court is, 'in effect, only another court of the State.’ ” “He cannot begin all over again in an action involving the same issues before another forum in the same State.”
I. To say that for purposes of res judicata the significance of what a court says it decides is controlled by the issues, announces a rule which, so far as I know, has no prior authority. To adopt such a rule is to declare that a decision in a cause of action is final between the same parties although the court specifically reserves certain questions not necessary for its decision. Res judicata settles all questions which were raised or those that might have been raised but it settles them in accordance with the decision that is made. Of course, when a decision is upon the merits, a matter discussed later, the entire cause of action is adjudicated finally. But this North Carolina adjudication was not upon the merits. It was upon a question of judicial power. The pertinent excerpts from the opinion appear below.1 The fact that other *195issues, going to the merits of the cause of action, might have been decided seems immaterial.
The rule which I consider sound appears in the Restatement of the Law, Judgments § 49, as follows:
“Where a valid and final personal judgment not on the merits is rendered in favor of the defendant, the plaintiff is not thereby precluded from thereafter maintaining an action on the original cause of action and the judgment is conclusive only as to what is actually decided.”
The way to know what was actually decided in this case is to read the applicable portion of the opinion printed in the preceding note. The result of the decision was to leave the cause of action unaffected because when a state denies a remedy, it leaves “unimpaired the plaintiff’s substantive right, so that he is free to enforce it elsewhere.” Bradford Electric Co. v. Clapper, 286 U. S. 145, 160; Dalton v. Webster, 82 N. C. 279.
*196II. It is now to be considered whether or not this judgment of the state court was on the merits. That court said it had no “power to render a judgment for the plaintiff in the cause of action alleged.” This Court now says that such a decision is a disposition on the merits. Evidently what is meant is that when a litigant, who has raised a federal constitutional question, has his case dismissed on the ground that the court “has no power to render a judgment for the plaintiff in the cause of action alleged,” there is a judgment on the merits on the constitutional question as well as upon the right to recover in North Carolina on any other ground. If we have power to declare that it “concluded an adjudication of a federal question even though it was not couched in those terms,” I would reach the opposite conclusion based upon what the North Carolina court did. In my view, the North Carolina court merely decided that it had no power to adjudicate the cause of action. Certainly the state court had the power to interpret its own statute. Knights of Pythias v. Meyer, 265 U. S. 30, 32; Chaplinsky v. New Hampshire, 315 U. S. 568. The withdrawal of jurisdiction surely does not make a judgment one upon the merits. The state court cited Ex parte McCardle, 7 Wall. 506, to emphasize what it meant. If there was a suit on this note in a federal court on an allegation of diversity of citizenship and the federal court dismissed the suit with an opinion saying that the case was dismissed because of lack of jurisdiction, e. g. proof of non-diversity of citizenship, no state court would hold that there had been a decision upon the merits. Where there is no jurisdiction of the subject of the action the judgment is not upon the merits. Stoll v. Gottlieb, 305 U. S. 165, 171-172. Of course, if there is a judgment upon the merits, that judgment would be binding on both federal and state courts. Even if the North Carolina decision is not upon the merits, it is conclusive on North Carolina courts and upon federal courts in North Carolina, *197if those federal courts are courts of the State of North Carolina in the sense that they must follow state decisions upon the power of state courts, under the rule of Guaranty Trust Co. v. York, 326 U. S. 99. I do not think that the Guaranty rule applies. See subdivision IV.
III. If the two preceding numbered divisions of this opinion are sound, there was no occasion for Bullington to seek a review of the first judgment in this Court. He was in the position of the owner of a cause of action, dismissed because prematurely brought or brought in the wrong county. The judgment that the Supreme Court of North Carolina ordered was “dismissed,” not on the merits, not with prejudice, and not judgment for the defendant, but a simple dismissal. North Carolina might have declared, by statute, that no cause of action would be recognized in North Carolina for the recovery of a deficiency on a mortgage indebtedness. Instead of this, we are told, authoritatively, by the Supreme Court of North Carolina that North Carolina has withdrawn the jurisdiction of its courts from such a cause of action. This produces quite a different situation.
IV. The pith of the problem, as I see it, is laid bare by the foregoing differentiations. It consists of the question whether the North Carolina decision establishes a controlling rule of law upon the constitutionality of the state statute as tested by the federal Constitution or adjudicates that the statute merely withdraws jurisdiction from state courts over a type of action. This Court concludes that the state decision determined the constitutionality of the statute and that its holding was binding on all federal courts in North Carolina, as well as state courts. This idea is comprehended in the Court's opinion by the statements that the federal courts are courts of the state in diversity cases and that a litigant cannot stop with an intermediate court decision against him and begin a new litigation on the same cause of action.
*198The Court reaches the conclusion that res judicata should apply by an application of Erie Railroad v. Tompkins, 304 U. S. 64, and Guaranty Trust Co. v. York, 326 U. S. 99. The teaching of those cases is accepted by me. They lead to the conclusion that in diversity cases, legal or equitable, and this proceeding is a diversity case, the federal courts in a state apply the law of that state in matters of substantive law. In matters of procedure and jurisdiction, I take it, no one would contend that the doctrine of Erie Railroad is applicable. One may regret that the line of the Great Divide between substance and procedure cannot be clearly marked so that all may agree as to its location in any one case. But that line exists. We have said that federal courts must follow the law of the state as to burden of proof. Cities Service Co. v. Dunlap, 308 U. S. 208; Palmer v. Hoffman, 318 U. S. 109, 117; as to conflict of laws, Griffin v. McCoach, 313 U. S. 498; Klaxon Co. v. Stentor Co., 313 U. S. 487, and as to state statutes of limitation in equity cases, Guaranty Trust Co. v. York, supra. The reason for these conclusions is to gain the desirable end of a symmetry of law within each state. The momentum of the opinions, just cited, and of the desire for uniformity should not cause us to disregard the rule that state law, statutory or judicial, directed at remedies or powers of courts, cannot affect the federal system. Each of the cases just cited follows the declarations of state law by state courts. In this case, this Court departs from the state court’s interpretation of the meaning of a state statute in order to bring about the federal policy of uniformity. By this, the Court departs from the sound rule that a state court’s interpretation of state statutes is binding on federal courts. In reaching the conclusion which it does, this Court decides that if a state court does not have power to adjudicate a cause, neither does a federal court in that state. It also departs from controlling precedents that state enactments on jurisdic*199tion, remedies and procedures do not affect the jurisdiction, remedies or procedures of federal courts. It is true that these antedate the Erie case but that case did not change the state and federal j urisdiction.
In Pusey & Jones Co. v. Hanssen, 261 U. S. 491, this Court held that an authority given by Delaware to its Chancellor to appoint a receiver for an insolvent corporation on the application of any creditor did not give additional power to the federal court to appoint a receiver in a diversity case on the application of a simple creditor although the federal courts had long exercised the right to appoint receivers on the application of a secured creditor. This Court said:
“That a remedial right to proceed in a federal court sitting in equity cannot be enlarged by a state statute is likewise clear, Scott v. Neely, 140 U. S. 106; Cates v. Allen, 149 U. S. 451. Nor can it be so narrowed, Mississippi Mills v. Cohn, 150 U. S. 202; Guffey v. Smith, 237 U. S. 101, 114. The federal court may therefore be obliged to deny an equitable remedy which the plaintiff might have secured in a state court. Hanssen’s contention is that the statute does not enlarge the equitable jurisdiction or remedies; and that it confers upon creditors of a Delaware corporation, if the company is insolvent, a substantive equitable right to have a receiver appointed. If this were true, the right conferred could be enforced in the federal courts, Scott v. Neely, 140 U. S. 106, 109; since the proceeding is in pleading and practice conformable to those commonly entertained by a court of equity. But it is not true that this statute confers upon the creditor a substantive right.”
See Henrietta Mills v. Rutherford County, 281 U. S. 121, 127-128; Kelleam v. Maryland Casualty Co., 312 U. S. 377, 382.
*200In Lupton’s Sons Co. v. Automobile Club, 225 U. S. 489, this Court held that a contract which could not be sued upon in the courts of New York because a New York statute provided that no foreign corporation could “maintain any action in this state” without a certificate that it had complied with certain state requirements to do business in the state, could nevertheless be sued upon in the federal court. It was said, p. 500:
“The State could not prescribe the qualifications of suitors in the courts of the United States, and could not deprive of their privileges those who were entitled under the Constitution and laws of the United States to resort to the Federal courts for the enforcement of a valid contract. . . . The State in the statute before us made no such attempt. The only penalty it imposed, to quote again from the Makar Case, was a disability to sue ‘in the courts of New York.’ ”
These cases make clear that in diversity litigation the federal courts are not simply courts of the state. They are so far as the enforcement of the substantive laws of the state are concerned, but not when procedure or power to act is involved. The Lupton case shows too, that, when a state denies power to its courts to adjudicate a cause, that denial does not affect the power of the federal courts to decide the case. As I am of the opinion that the state court merely denied its power to adjudge between these parties and did not decide the merits of Bullington’s cause of action, the state court judgment cannot be res judicata in the federal court.
If it is true that in passing upon the meaning of a state statute, a federal court is not required to follow the state court’s characterization of its statute, as remedial or substantive, this Court’s present determination that the statute is substantive for our purposes cannot change the effect in this litigation of the state’s decision to the contrary. *201When the state court held that for its purposes the statute was remedial, it was remedial in that court. If remedial, the state judgment was not upon the merits and could not be res judicata in any court as to the right to recover on the cause of action.
If the plea of res judicata is not good and this Court should decide that the state statute is substantive law, i. e., a declaration of the policy of North Carolina against claims on deficiencies after sales of incumbered property, it would be necessary to determine the constitutionality of the North Carolina statute that declares uncollectible in North Carolina a claim on a contract that was good in Virginia. In view of this Court’s present decision, I express no opinion upon this issue.
Mr. Justice Jackson and Mr. Justice Rutledge join in this opinion.

 220 N. C. at 20-21, 16 S. E. 2d at 412: “The statute operates upon the adjective law of the State, which pertains to the practice and procedure, or legal machinery by which the substantive law is made effective, and not upon the substantive law itself. It is a limitation of the jurisdiction of the courts of this State.
“The Legislature, within constitutional limitations, can fix and circumscribe the jurisdiction of the courts of this State. The Legislature has exercised its prerogative to so limit the jurisdiction of the *195courts of this State that holders of notes given for purchase price of real estate are not entitled to a deficiency judgment thereon in such courts. We cannot hold that this action upon part of the legislative branch of our government impinged the full faith and credit clause of the Constitution of the United States or the general doctrine that the validity of a contract is determined by the law of the place where made, the lex loci contractus as distinguished from the lex fori. Both the constitutional provision urged and the general doctrine invoked by the appellee are substantive law and the statute involved, as aforesaid, relates solely to the adjective law. No denial of the full force and credit of the Virginia contract is made, and no interpretation or construction of the contract involved is attempted. The court, being deprived of its jurisdiction, has no power to render a judgment for the plaintiff in the cause of action alleged. ‘Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause. And this is not less clear upon authority than upon principle.’ ”