Court Opinion

ID: 9419578
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:50:17.334022+00
Date Added: 2024-06-11T17:22:19.104692
License: Public Domain

Me. Chief Justice Stone.
I concur in the result.
The relative priority of Prudence’s participation in the bankrupt’s estate in a 77B reorganization is a federal right governed by federal not state law. Prudence Corp. v. Geist, 316 U. S. 89, 95. As the reorganization plan did not purport to alter that right, but merely provided that it should be determined by a court of “competent jurisdiction,” I cannot conclude that the adoption of the plan contemplated or effected the alteration of the federal right *657by requiring it to be redefined in terms of the law of New York, or of any .other jurisdiction, where the parties might happen to seek its adjudication.
The fact that a federal right is to be ascertained in a state rather than in a federal court does not make it any less the duty of the court to apply federal law. Chesapeake & Ohio R. Co. v. Martin, 283 U. S. 209, 212-213; Awotin v. Atlas Exchange Bank, 295 U. S. 209; Brady v. Southern R. Co., 320 U. S. 476, 479, and cases cited; Illinois Steel Co. v. Baltimore & Ohio R. Co., 320 U. S. 508, 511, and cases cited; Steele v. Louisville & Nashville R. Co., 323 U. S. 192, 204. And a mere grant by the federal court of permission to the parties to litigate a federal question in a state court, is not a direction that the question be determined by state law, more than is a general statutory authorization for a suit in the state court on a federal right.
The state court has held that petitioner, the holder of mortgage participation certificates, is not entitled to' share in the mortgage until the holders of other certificates, which petitioner has guaranteed, are paid in full. Its judgment should be affirmed, not because the plan called for determination of petitioner’s rights in the bankrupt’s estate by state rather than federal law, but because in the circumstances of this case the applicable federal law is the same as that which the state court has applied. Petitioner did not, as in the Geist case, acquire its interest in the mortgage as an original investment before it sold and guaranteed certificated shares in the mortgage, nor did it acquire its own certificates independently of the performance of its obligation as a guarantor of the certificates. Petitioner is here in the position of a subrogee of a claim whose payment it has guaranteed. For it acquired its claim to participate in the mortgage through performance of its guaranty, by purchase, after default, of the certificates of participation which it had guaranteed.
*658As we recognized in the Geist case, and were at pains to point out, 316 U. S., at p. 96, such a cage is within the rule of United States v. National Surety Co., 254 U. S. 73, 76; Jenkins v. National Surety Co., 277 U. S. 258; American Surety Co. v. Westinghouse Electric Co., 296 U. S. 133, “that a solvent guarantor or surety of an insolvent’s obligation will not be permitted, either by taking indemnity from his principal or by virtue of his right of subrogation, to compete with other creditors payment of whose claims he has undertaken to assure, until they are paid in full.”
Mr. Justice Rutledge concurs in this opinion.