finding jurisdiction when a shareholder-plaintiff sought an injunction to prevent a trust company from buying farm loan bonds issued pursuant to a federal statute since his bill for relief was predicated on the assertion that the federal statute was unconstitutional
How later courts described this case
- finding jurisdiction when a shareholder-plaintiff sought an injunction to prevent a trust company from buying farm loan bonds issued pursuant to a federal statute since his bill for relief was predicated on the assertion that the federal statute was unconstitutional
- holding that a shareholder suit seeking to enjoin a private company from investing in certain federal bonds on the grounds that the statute authorizing the issuance of those bonds was unconstitutional presented substantial federal issue
- holding that federal jurisdiction was proper because of the significant federal interest in determining the constitutionality of a federal stat ute
- holding that federal jurisdiction existed over the plaintiff’s state law cause of action because the plaintiff’s claim required a determination of whether a federal statute was unconstitutional
Written by the judges who cited it.
Later courts went against this
Questioned by Governor Lincoln C. Almond v. Capital Properties, Inc., and Metropark, Ltd., 212 F.3d 20 (2000)
255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577 (1921), is the most famous example), occasionally cast doubt upon it, rarely applied it in practice, and left the very scope of the concept unclear.
The opinion
Mr. JustíceHolmes,
dissenting.
Noddubt it is desirable that the question raised in this case should be set at rest, but that , can be done by the Courts, of the United States only within the limits of the jurisdiction conferred upon them by the Constitution and the laws of the United States. As this suit was brought by a citizen of Missouri against a Missouri corporation the *214 single ground upon which the jurisdiction of the District Court can be maintained is that the suit “arises under the Constitution or laws of the United States” within the meaning of § 24 of the Judicial Code. I am of opinion that this case does not arise in that way and therefore that the bill should have been dismissed.
It is evident that the cause of action arises not under any law of the United States but wholly under Missouri law. The defendant .is a Missouri corporation and the right claimed is that of a stockholder to prevent the directors from doing an act, that is, making an investment, alleged to be contrary to their duty. But the scope of their duty depends upon the charter of their corporation and other laws of Missouri.- If those laws had authorized, the investment in terms the plaintiff would have had no case, and this seems to me to make manifest what lam unable to deem even debatable, that, as I have said, the cause of action arises wholly under Missouri law. If the Missouri law authorizes or forbids the investment according to. the determination of this Court upon a point under the Constitution or acts of Congress, still that, point is material only because the Missouri law saw fit to make it so. The whole foundation of the duty is Missouri law, which at its sole will incorporated the other law as it might incorporate a document. The other law or document depends for its relevance and effect not on its own force but upon the law that took it up, so I repeat once more the cause of action arises wholly from the law of the State.
But it seems to me that a suit cannot be said to arise under any other law than that which creates the cause of action. It may be enough that the law relied upon creates a part of the cause of action although not the whole, as held in Osborn v. Bank of the United States, 9 Wheat. 738, 819-823 , which perhaps is all that is meant by the less guarded expressions in Cohens v. Virginia, 6 Wheat. 264, 379 . I am content to assume this to be so, although the Osborn Case *215 has been criticized ánd regretted. But the law must create at least a part of the cause of action by its own force, for it is the suit, not a question in the suit, that must arise under the law of the United States. The mere adoption by a state law of a United States law as a criterion or test, when the law of the United States has no foree proprio vigore, does not cause a case under .the state law to be also a case under the law of the United States, and so it has been decided by this Court again and again. Miller v. Swann, 150 U. S. 132, 136, 137 ; Louisville & Nashville R. R. Co v. Western Union Telegraph Co., 237 U. S. 300, 303 . See also Shoshone Mining Co. v. Rutter, 177 U. S. 505, 508, 509 .
I find nothing contrary to my views in Brushaber v. Union Pacific R. R. Co., 240 U. S. 1, 10 . It seems to me plain that the objection that I am considering was not before' the mind of the Court or the subject of any of its observations, if open. I am confirmed in my view of that case by the fact that in the next volume of reports is a decision, reached not without discussion and with but a single dissent, that “a suit arises under the law that creates the ;cause of action. ’ ’ That was the ratio decidendi of American Well Works Co. v. Layne & Bowler Co., 241 U. S. 257, 260 . I know of no decisions to the contrary and see no reason for overruling it now.
Mr. Justice McReynolds concurs in this dissent. In view of our opinion that this Court has no jurisdiction we express no judgment on the merits.