Stoll v. Gottlieb, 305 U.S. 165 (1938)
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U.S. Supreme Court STOLL v. GOTTLIEB, 305 U.S. 165 (1938)
[Page 305 U.S. 165, 167]
Mr. Justice REED delivered the opinion of the Court.
This certiorari was allowed to review a judgment of the Supreme Court of Illinois. That court had denied effect to a plea of res judicata arising from orders of a district court in bankruptcy. Provisions declaring the supremacy of the Constitution and the extent of the judicial power and authorizing necessary and proper legislation to make the grants effective confer jurisdiction upon this Court to determine the effect to be given decrees of a court of the United States in state courts. [Footnote 1] As the contention is that the ruling below disregarded decrees of a court of the United States it raised a federal question reviewable under Section 237(b) of the Judicial Code, 28 U.S.C.A. 344(b).2
[Page 305 U.S. 165, 168]
The admission of facts and uncontroverted allegations of the pleadings show that Ten Fifteen North Clark Building Corporation filed a petition for reorganization on June 20, 1934, under Section 77B of the Bankruptcy Act, 11 U.S.C.A. 207, in the United States District Court for the Northern District of Illinois; that the petition was approved as properly filed shortly thereafter, and that notice of the proceedings was given to the creditors, one of whom was respondent William Gottlieb. A proposed plan of reorganization was filed by the debtor which provided for the substitution of one share of common stock in the Olympic Hotel Building Corporation for each $100 principal amount of the outstanding first mortgage, 6 1/2% gold bonds of the debtor corporation, the discharge of the bonds and the cancellation of a guaranty endorsed on them. The guaranty was one of J. O. Stoll, petitioner here, and S. A. Crowe, Jr., to pay the bond. Its material provisions are stated below. [Footnote 3] The extinction of the personal guaranty was in consideration 'for the transfer of all the assets of said Debtor (i.e., the Building Corpora-
[Page 305 U.S. 165, 170]
The Municipal Court granted the relief sought by the bondholder, the appellate court reversed and its judgment was in turn reversed by the Supreme Court of Illinois which affirmed the judgment of the Municipal Court. [Footnote 4] Two justices dissented.
The Congress enacted, as one of the earlier statutes, provisions for giving effect to the judicial proceedings of the courts. This has long had its present form. [Footnote 5] This statute is broader than the authority granted by Article 4, section 1, of the Constitution, U.S.C.A.Const. art. 4, 1, to prescribe the manner of proof and the effect of the judicial proceedings of states. Under it the judgments and decrees of the Federal courts in a state are declared to have the same dignity in the courts of that state as those of its own courts in a like case and under similar circumstances. [Footnote 6] But where the judgment or decree of the Federal court determines a right under a Federal statute, that decision is 'final until reversed in an appellate court, or modified or set aside in the court of its rendition.' [Footnote 7] As this plea was based upon an adjudication under the reorganization pro-
[Page 305 U.S. 165, 171]
visions of the Bankruptcy Act, effect as res judicata is to be given the Federal order, if it is concluded it was an effective judgment in the court of its rendition. The problem before the Supreme Court of Illinois was not one of full faith and credit but of res judicata. In this particular case, a federal question was involved. This was the power of the Federal courts to protect those who come before them relying upon constitutional rights or rights given, as in this case, through a statute enacted pursuant to constitutional grants of power.
The inquiry is to be directed at the conclusiveness of the order releasing the guarantor from his obligation, assuming the Bankruptcy Court did not have jurisdiction of the subject matter of the order, the release in reorganization of a guarantor from his guaranty of the debtor's obligations. [Footnote 8]
A court does not have the power, by judicial fiat, to extend its jurisdiction over matters beyond the scope of the authority granted to it by its creators. There must be admitted, however, a power to interpret the language of the jurisdictional instrument and its application to an issue before the court. 9 Where adversary parties appear, a court must have the power to determine whether or not it has jurisdiction of the person of a litigant,10 or whether its geographical jurisdiction covers the place of the occurrence under consideration. [Footnote 11] Every court in rendering a judgment tacitly, if not expressly, determines its juris-
[Page 305 U.S. 165, 173]
That a former judgment in a state court is conclusive between the parties and their privies in a Federal court when entered upon an actually contested issue as to the jurisdiction of the court over the subject matter of the litigation, has been determined by this Court in Forsyth v. Hammond. [Footnote 15] The respondent, Caroline M. Forsyth, sought by injunction in the Federal court to forbid the City of Hammond from collecting taxes on certain lands, annexed to the city by an earlier state court decree. The city contended that the earlier decree was decisive, the respondent that it was void because the enlargement of a city was a matter of legislative, not judicial, cognizance. Without determining the issue whether annexation itself is a function solely of the legislature, this Court upheld the contention of the city on the ground that the respondent had taken an appeal to the Supreme Court of Indiana from the earlier decree of the trial court against her in the annexation proceedings, and had in that appeal attacked the validity of the decree on the ground of lack of jurisdiction. 'Having litigated a question in one competent tribunal and been defeated, can she litigate the same question in another tribunal acting independently and having no appellate jurisdiction? The question is not whether the judgment of the supreme court would be conclusive as to the question involved in another action between other parties, but whether it is not binding between the same parties in that or any other forum.' [Footnote 16]
[Page 305 U.S. 165, 176]
upheld the motion. It was pointed out that a determination of a jurisdictional fact, such as whether an alleged bankrupt is a farmer, binds,21 but that where there was no statute of bankruptcy applicable 'necessarily there is no power in the District Court to include,' the excepted corporation. It was thought that to recognize the binding effect of the judgment would be to extend the jurisdiction. This decision is inapplicable here because there was not an actually contested issue and order as to jurisdiction. The case is also distinguishable because the motion to vacate was made in the same bankruptcy proceeding as the order. We do not comment upon the significance of this variable.
To appraise the cases dealing with status and transfer of title to real estate seems outside the scope of the present inquiry. The rule applied here may or may not be applicable in instances where the courts with jurisdiction of the later controversy are passing upon matters of status and real estate titles. 22
It is frequently said that there are certain strictly jurisdictional facts, the existence of which is essential to the validity of proceedings and the absence of which renders the act of the court a nullity. Examples with citations are listed in Noble v. Union River Logging Railroad. [Footnote 23] For instance, service of process in a common law action within a state, publication of notice in strict form in proceedings in rem against absent defendants, the appointment of an administrator for a living person, a court martial of a civilian. Upon the other hand there are quasi- jurisdictional facts, diversity of citizenship, majority of litigants, and jurisdiction of parties, a mere finding of which,
[Page 305 U.S. 165, 177]
regardless of actual existence, is sufficient. As to the first group it is said an adjudication may be collaterally attacked, as to the second it may not. We do not review these cases as we base our conclusion here on the fact that in an actual controversy the question of the jurisdiction over the subject matter was raised and determined adversely to the respondent. That determination is res adjudicata of that issue in this action, whether or not power to deal with the particular subject matter was strictly or quasi-jurisdictional.
Judgment reversed.
Mr. Justice McREYNOLDS, concurs in the result. Footnotes
Footnote 1 Crescent City Live Stock Co. v. Butcher's Union, Live Stock Co., 120 U.S. 141, 146, 7 S.Ct. 472, 474; Embry v. Palmer, 107 U.S. 3, 9, 2 S.Ct. 25, 30; Metcalf v. Watertown, 153 U.S. 671, 676, 14 S.Ct. 947, 949; Atchison, Topeka & S.F.R. Co. v. Sowers, 213 U.S. 55, 65, 29 S.Ct. 397, 400.
Footnote 2 Dupasseur v. Rochereau, 21 Wall. 130, 134; Crescent City Live Stock Co. v. Butcher's Union, Live Stock Co., 120 U.S. 141, 142, 7 S.Ct. 472; Des Moines Nav. Co. v. Iowa Homestead Co., 123 U.S. 552, 559, 8 S.Ct. 217, 220; Pittsburgh, C.C. & St. L.R. Co. v. Long Island Loan & Trust Co., 172 U.S. 493, 507, 19 S.Ct. 238, 243; Motlow v. Missouri, 295 U.S. 97, 98, 55 S.Ct. 661, 662.
Footnote 3 'Guaranty.'For Value Received, the undersigned, Do Hereby Guarantee the payment of the within bond and the interest thereon, at the maturity thereof either by the terms of said bond or of any agreement extending the time of payment thereof, or by anticipation of maturity at the election of the legal holder or owner thereof, in accordance with any provision of said bond or of the trust deed given to secure the same, or of any extension agreement; and do hereby absolutely guarantee the payment of the respective interest coupons, given to evidence the interest on said bond, and all extension coupons, at their respective dates of maturity, and all interest on said coupons, and do hereby absolutely guarantee the full and complete performance by the maker of the trust deed given to secure the said bonds and coupons, and its successors and assigns, of all of the terms, provisions, covenants and agreements of the said trust deed and of any such extension agreement.'
Footnote 4 368 Ill. 88, 12 N.E. 881.
Footnote 5 Rev.Stat. 905, 28 U.S.C.A. 687: 'The acts of the legislature of any State or Territory, or of any country subject to the jurisdiction of the United States, shall be authenticated by having the seals of such State, Territory, or country affixed thereto. The records and judicial proceedings of the courts of any State or Territory, or of any such country, shall be proved or admitted in any other court within the United States, by the attestation of the clerk, and the seal of the court annexed, if there be a seal, together with a certificate of the judge, chief justice, or presiding magistrate, that the said attestation is in due form. And the said records and judicial proceedings, so authenticated, shall have such faith and credit given to them in every court within the United States as they have by law or usage in the courts of the State from which they are taken.'
Footnote 6 Dupasseur v. Rochereau, 21 Wall. 130; Embry v. Palmer, 107 U.S. 3, 9, 2 S.Ct. 25, 30; cf. Metcalf v. Watertown, , 14 S.Ct. 947.
Footnote 7 Deposit Bank v. Frankfort, 191 U.S. 499, 520, 24 S.Ct. 154, 161.
Footnote 8 We express no opinion as to whether the Bankruptcy Court did or did not have jurisdiction of the subject matter. Cf. In re Diversey Building Corp., 7 Cir., 86 F.2d 456; In re Nine North Church Street, Inc., 2 Cir., 82 F.2d 186; Union Trust Co. v. Willsea, 275 N.Y. 164, 167, 9 N.E.2d 820, 112 A.L.R. 1175.
Footnote 9 As illustrations of the exercise of this power, see Texas & Pac. R. Co. v. Gulf, etc., R. Co., 270 U.S. 266, 274, 46 S.Ct. 263, 265; Matter of Gregory, 219 U.S. 210, 217, 31 S.Ct. 143, 145.
Footnote 10 Baldwin v. Traveling Men's Ass'n, , 51 S.Ct. 517.
Footnote 11 Jones v. United States, 137 U.S. 202, 11 S.Ct. 80.
Footnote 12 Chicago Life Ins. Co. v. Cherry,
Footnote 13 Chicago Life Ins. Co. v. Cherry, 244 U.S. 25, 30, 37 S.Ct. 492, 493; Baldwin v. Traveling Men's Ass'n, 283 U.S. 522, 525, 51 S.Ct. 517; Davis v. Davis, , 59 S.Ct. 3, decided November 7, 1938.
Footnote 14 The Bankruptcy Court is one of general jurisdiction. Fairbanks Steam Shovel Co. v. Wills, 240 U.S. 642, 649, 36 S.Ct. 466, 469.
Footnote 15 166 U.S. 506, 515, 17 S.Ct. 665, 669.
Footnote 16 166 U.S. 506, 517, 17 S.Ct. 665, 669, 670.
Footnote 17 , 8 S.Ct. 217.
Footnote 18 Dowell v. Applegate, 152 U.S. 327, 340, 14 S.Ct. 611, 616.
Footnote 19 Vallely v. Northern Fire Ins. Co., 254 U.S. 348, 354, 41 S.Ct. 116, 117.
Footnote 20 , 41 S.Ct. 116, 118.
Footnote 21 Denver First Nat. Bank v. Klug, 186 U.S. 202, 22 S.Ct. 899.
Footnote 22 Cf. Andrews v. Andrews, 188 U.S. 14, 23 S.Ct. 237; Id., 176 Mass. 92, 57 N.E. 333; Fall v. Eastin, 215 U.S. 1, 30 S.Ct. 3, 23 L.R.A.,N.S., 924, 17 Ann.Cas. 853; Carpenter v. Strange, 141 U.S. 87, 105, 11 S.Ct. 960, 966.
Footnote 23 , 13 S.Ct. 271.
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