# Opinion — Great Southern Fire Proof Hotel Co. v. Jones

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opinion
- **Published:** January 1, 1904
- **Citation:** 193 U.S. 532

## Text

Supreme Court of the United States,

No. 165.—Ocroser Term, 1903.

The Great Southern Fire Proof Hotel Com

e pany, )} = . .
Petitioner, On writ of certiorari to

the Circuit Court of

v8. :
Benjamin F. Jones, George M. Laughlin, Ben- sero for the Sixth
acs iIrcuit.

jamin F. Jones, Jr., et al.

[April 4th 1904.]

Mr. Justice HARLAN delivered the opinion of the Court.

The Great Southern Fire Proof Hotel Company, a corporation of Ohio,
made a contract with one McClain for the construction of a hotel build-
ing and opera house at Columbus, Ohio.

McClain contracted with Jones & Laughlins, Limited, a partnership asso-
ciation organized under the laws of Pennsylvania, for a certain amount
of steel to be used in the buildings which he undertook to erect.

Under that contract Jones & Laughlins, Limited, furnished steel of the
value of $43,296.74.

Proceeding under certain statutes of Ohio relating to liens for mechanics
and others, Jones & Laughlins, Limited, brought suit in the Cireuit Court
of the United States for the Southern District of Ohio against the Hotel
Company, to enforce a lien asserted by them on the hotel building and
opera house for the balance due on their contract with McClain. Various
persons were made defendants because they asserted claims upon or interest
in the property. It was a case in which the jurisdiction of that court
depended upon diversity in the citizenship of the parties. Upon final
hearing the Circuit Court dismissed the bill on the ground that the statute
of Ohio of April 13th 1894, (91 Ohio Laws, 135,) under which Jones &
Laughlins, Limited, proceeded, was repugnant to the Constitution of Ohio.
79 Fed. Rep. 477. Upon appeal to the Circuit Court of Appeals, that
court, being of cpinion that the statute was constitutional, reversed the
decree of the Cireuit Court. 58 U.S. App. 397; 86 Fed. Rep. 370. The
case was then brought here upon writ of certiorari, and this court, without
considering the merits, reversed the judgments of both courts upon the
ground that the record did not affirmatively show a case of which the
Cirenit Court could properly take cognizance, so far as the citizenship
of the parties was concerned. In the opinion then rendered we said that
under the circumstances the plaintiffs should be permitted to amend their
pleadings as to the citizenship of the parties; and, if a case could be pre-

—

2 Great Southern Fire Proof Hotel Co. vs. Jones.

sented within the jurisdiction of the Circuit Court, the parties should be
allowed to proceed to a final hearing on the merits. Great Southern Fire
Proof Hotel Co. v. Jones, 177 U. S. 449.

Upon the return of the cause the plaintiffs filed an amended bill of com-
plaint, which cured the defect in its original bill as to the citizenship of
the parties. The case went to a final hearing upon the merits, and a de-
cree was rendered in favor of the plaintiffs. That decree was affirmed in
the Circuit Court of Appeals. Great Southern Fire Proof Hotel Co. vy.
Jones, 116 Fed. Rep. 793. The case is again here upon a writ of certiorari
granted upon motion of the Hotel Company.

The statutory provisions, questions as to the constitutionality of which
have been raised in this case, are certain sections of the Revised Statutes
of Ohio, as follows:

“Src. 3184. A person who performs labor, or furnishes machinery or
material for constructing, altering or repairing a boat, vessel or other water
craft, or for erecting, altering, repairing or removing a house, mill, manu-
factory, or any furnace or furnace material therein, or other building,
appurtenance, fixture, bridge or other structure, or for the digging, drill-
ing, plumbing, boring, operating, completing or repairing of any gas well,
oil well or any other well, or performs labor of any kind whatsoever, in
altering, repairing or constructing any oil derrick, oil tank, oil or gas pipe
line, or furnishes tile for the drainage of any lot or land by virtue of a con-
tract with, or at the instance of the owner thereof or his agent, trustee,
contractor or subcontractor, shall have a lien to secure the payment of the
same upon such boat, vessel or other water craft, or upon such house, mill,
manufactory or other building or appurtenance, fixture, bridge or other

‘ structure, or upon such gas well, oi] well or any other well, or upon such
oii derrick, oil tank, oi! or gas pipe line, and upon the material and ma-
chinery so furnished, and upon the interest, leasehold or otherwise, of the
owner in the lot or land on which the same may stand, or to which it may be
removed.

“Sec. 3185. Such person, in order to obtain such lien, shall, within four
months from the time of performing such labor, or furnishing such ma-
chinery or material, file with the recorder of the county where the labor
was performed, or the machinery or material furnished, an affidavit con-
taining an itemized statement of the amount and value of such labor, ma-
chinery, or material, or any part thereof, with all credits and offsets thereon,
a copy of the contract, if it is in writing, a statement of the amount and
times of payment to be made thereunder, and a description of the land on
which the gas well, oil well, or other wells are situated, or the land on
which the house, mill, manufactory, or other buildings, or appurtenance,
fixture, bridge, or other structure may stand, or to which it may be re-
moved; and the same shall be recorded in a separate book to be kept

sntannertonneenesl

ae

Great Southern Fire Proof Hotel Co. vs. Jones. 3

therefor, and shall operate as a lien from the date of the first item of the
labor performed or the machinery or material furnished upon or toward
the property designated in the preceding section, and the interest of the
owner in the lot or land on which the same may stand, or to which it may
be removed, for six years from and after the date of the filing of such
attested statement. If an action be brought to enforce such lien within
that time, the same shall continue in force until the final adjudication
thereof; and there shall be no homestead or other exemption against any
lien under the provisions of this chapter.

“Spc. 3185a. In all cases where the labor, material or machinery referred
to in sections 3184 and 31865 shall be furnished by any person other than
the original contractor with such owner, or his agent or trustee, the lien
shall not exceed the actual value of the labor, material or machinery 80
furnished, and the aggregate amount of liens for which the property may
be held shall not, in the absence of fraud or collusion between the owner
and original contractor, exceed the amount of the price agreed upon be-
tween the owner and original contractor for the performing of such labor
and the furnishing of such material and machinery : Provided, if it shall
be made to appear that the owner and contractor, for the purpose of de-
frauding subcontractors, material-men or laborers, fixed an uureasonably
low price in the original contract for any work or material for which a
lien is given under section thirty-one hundred and eighty-four, the court
shall ascertain the difference between such fraudulent contract price and a
fair and reasonable price therefor, and such subcontractors, material-men
and laborers shall have a lien to the amount of such fair and reasonable
price so ascertained.” 91 Ohio Laws, 135, 137.

The contention of the Hotel Company is that the statute under which
Jones & Laughlins, Limited, proceeded was repugnant to the Constitution
of Ohio; and that the Supreme Court of Ohio having held in two cases,
Palmer & Crawford v. Tingle, and Young v. Lion Hardware Company,
55 Ohio St. 423—determined before the bringing of this suit, but after the
rights of the parties had been fixed by their contracts—that the statute
was inconsistent with the State Constitution, the duty of the Federai court
was to follow those decisions, even if, in the exercise of an independent judg-
ment on the subject, it was of opinion that the statute was constitutional. Is
that view in harmony with the decisions of this court?

The leading case on this subject is Burgess v. Seligman, 107 U.S. 20,
33. In that case, which was in the Circuit Court of the United States,
the rights of the parties depended upon a statute of Missouri, which had
not been construed by the highest court of the State at the time those rights
accrued under it; and the question arose whether the Circuit Court was
entitled to determine for itself what was the true meaning of the statute.
In view of some differences in forms of expression in previous cases, the

4 Great Southern Fire Proof Hotel Co. vs. Jones.

court deemed it wise to re-examine the subject upon both principle and
authority, and to announce the rule by which a Cireuit Court of the United
States should be guided in case of a conflict of opinion between it and the
highest court of the State as to the meaning and legal effect of a local stat-
ute upon which the rights of parties depended.

In that case Mr. Justice Bradley, delivering the unanimous judgmeni of
this court, said: “The Federal courts have an independent jurisdiction
in the administration of State laws, co-ordinate with, and not subordinate
to, that of the State courts, and are bound to exercise their own judgment
as to the meaning and effect of those laws. The existence of two co-ordi-
nate jurisdictions in the same territory is peculiar, and the results would
be anomalous and inconvenient but for the exercise of mutual respect and
deference. Since the ordinary administration of the law is carried on by
the State courts, it necessarily happens that by the course of their decisions
certain rules are established which become rules of property and action in
the State, and have all the effect of law, and which it would be wrong to
disturb. This is especially true with regard to the law of real estate and
the construction of State constitutions and statutes. Such established rules
are always regarded by the Federal courts, no less than by the State courts
themselves, as authoritative declarations of what the law is. But where
the law has not been thus settled, it is the right and duty of the Federal
courts to exercise their own judgment ; as they also always do in reference
to the doctrines of commercial law and general jurisprudence. So when
contracts and transactions have been entered into, and rights have accrued
thereon under a particular state of the decisions, or when there has been
no decision of the State tribunals, the Federal courts properly claim’ the
right to adopt their own interpretation of the law applicable to the case,
although a different interpretation may be adopted by the State courts after
such rights have accrued. But even in such cases, for the sake of harmony
and to avoid confusion, the Federal courts will lean towards an agreement
of views with the State courts if the question seems to them balanced with
doubt. Acting on these principles, founded as they are on comity and
good sense, the courts of the United States, without sacrificing their own
dignity as independent tribunals, endeavor to avoid, and in most cases do
avoid, any unseemly conflict with well-considered decisions of the State
courts. As, however, the very object of giving to the national courts juris-
diction to administer the laws of the States in controversies between citizens
of different States was to institute independent tribunals which it might
be supposed would be unaffected by local prejudices and sectional views,
it would be a dereliction of their duty not to exercise an independent judg-
ment in cases not foreclosed by previous adjudication.”

So in Carroll County v. Smith, 111 U.S. 556, in which the principal
question was as to the validity, under the Constitution of Mississippi, of cer-

Great Southern Fire Proof Hotel Co. vs. Jones. 5

tain proceedings taken under a railroad charter, the Supreme Court of
that State having passed on the question, it was contended that its judg-
ment was binding on the courts of the United States. But this court,
speaking by Mr. Justice Matthews, said: “It was not a rule previously
established, so as to have become recognized as settled law, and which, of
course, all parties to transactions afterwards entered into would be pre-
sumed to know and to conform to. When, therefore, it is presented for
application by the courts of the United States, in a litigation growing out
of the same facts, of which they have jurisdiction by reason of the citizen-
ship of the parties, the plaintiff has a right, under the Constitution of the
United States, to the independent judgment of those courts, to determine
for themselves what is the law of the State, by which his rights are fixed
and governed. It was to that very end that the Constitution granted to
citizens of one State, suing in another, the choice of resorting to a Federal
tribunal. Burgess v. Seligman, 107 U. S. 20, 33.” And in Anderson v.
Santa Anna, 116 U. S. 356, 365, it was distinctly adjudged that where rights
have accrued under a State constitution or statute, “before the State court
has announced its construction, the Federal courts, although leaning to ay
agreement with the State court, must determine the question upon their
own independent judgment.” In Pleasant Township v. dtna Life Insu-
rance Co., 138 U. 8. 67, 72, where the rights of one of the parties depended
upon the validity of a statute of Ohio, and which statute the Supreme Court
of Ohio had held after the rights of the parties had accrued, under their
contract, to be in violation of the Constitutioe of that State, this court,
although reaching the same 2onclusion as that announced by the State
court, took care to say that the decision of the State court did not conclude
this court, and that concurrence with the views expressed by the State court
was the result of the exercise of its independent judgment—citing Burgess
v. Seligman as having settled the law upon this subject.

In Folsom v. NinetySiz, 159 U. S. 611, 627, which involved a question
of the validity of a State enactment, this court referred to Burgess v.
Seligman, and, speaking by Mr. Justice Gray, said: “There not being
shown to have been a single decision of the State court against the con-
stitutionality of the act of 1885 before the plaintiff purchased his bonds,
nor any settled course of decision upon the subject, even since his pur-
chase, the question of the validity of these bonds must be determined by
this court according to its own view of the law of South Carolina.”
In Barnum v. Okolona, 148 U. S. 393, which involved the validity of
certain bonds, and which bonds the highest court of the State had adjudged
to be void under a local statute, the court said: “As against a party who
became the owner of such bonds before the decision of the Supreme Court
of the State was rendered, which was the case here, we do not consider
ourselyes bound by such decision unless we regard it as intrinsically sound.”

—

6 Great Southern Fire Proof Hotel Co. vs. Jones.

As late as Stanley County v. Coler, 190 U. S. 437, 445, relating to the valid-
ity of certain municipal bonds, this court reaffirmed the same principles.
To the same effect are other cases which will be found cited in the opinion
of the Circuit Court of Appeals in this case when it was first before that
court. Jones v. Great Southern Fire Proof Hotel, 86 Fed. Rep. 370. The
only exception to the general rule announced in the above cases arises when
the question is whether a particular statute was passed by the Legislature
in the manner prescribed by the State Constitution, so as to become a law
ofthe State. Town of South Ottawa v. Perkins, 94 U. 8. 260 ; Post v. Super-
visors, (Amoskeag Bank v. Ottawa,) 105 U. 8. 667; Wilkes County v. Coler,
180 U.S. 506, 520.

The plaintiffs insist that the Supreme Court of Ohio, in Railway Co. v.
Cronin, 38 Ohio St. 122, and Railway Co. v. McCoy, 42 Ohio St. 251—
which were determined prior to the contract between McClain and the
plaintiffs—announced principles which, being applied here, would sustain
the validity of the act of 1894. If this were true, then, in conformity with
the settled course of decisions in this court, we should hold that the rights
of the plaintiffs under their contract could not be affected by a change of
decision in the State court. But, as the Cireuit Court of Appeals held,
the two cases just referred to should not control the decision here. Those
cases, it is true, related to statutes giving liens to those who performed labor
and furnished materials in the construction of railroads. But it does not
appear that any question was raised or determined in them as to the con-
stitutionality of the particular statutes there involved.

On behalf of the Hotel Company, it is contended that the cases of Hampon
v. State, 8 Ohio St. 315, Copeland v. Manton, 22 Ohio St. 398, Dunn v. Ran-
kin, 27 Ohio St. 132, and Bullock v. Horn, 44 Ohio St. 420, all prior to the
act of 1894, announced general principles which, being accepted, would
necessarily lead to the conclusion reached by the Supreme Court of Ohio in
the two subsequent cases, above cited, in which section 3184 of that act was
held to be in violation of the State Constitution. It is, therefore, contended
that our interpretation of the Constitution of Ohio should be controlled by
the rule stated in O’Brien vy. Wheelock, 95 Fed. Rep. 883, 905, which in-
volved the validity of certain municipal bonds as well as the validity of a
statute of Illinois passed in 1871, the Illinois Constitution then in force being
the one adopted in 1870. In that case the court observed that the IIlinois
act of 1871 not having been construed by the Supreme Court of Illinois before
the bonds there in question were issued, it was its duty, under the rule an-
nounced in Burgess v. Seligman, to exercise an independent judgment as to
the validity of that act under the State Constitution. But in so doing the
court said two principles should not be overlooked, namely: “(1) That,
although the act of 1871 may not have been expressly the subject of judicial
construction before the rights of the plaintiffs accrued, this court should

Great Southern Fire Proof Hotel Co. vs. Jones. 7

give effect to any rules of construction that may have been previously estab-
lished by the highest court of the State when interpreting similar provisions
in the Constitution of 1848; (2) that the Federal courts, for the sake of
harmony and to avoid confusion, should ‘lean towards an agreement of
views with the State courts, if the question seems to them balanced with
doubt,’ and endeavor to avoid ‘any unseemly conflict with the well-con-
sidered decisions of the State courts’ upon questions of local law.” We
have already shown that it was the duty of the Federal court to lean to
an agreement with the State court, and we recognize it to be equally its
duty, when the rights of parties depend upon the construction of a State
constitution, to give effect to any settled rules for construing that instrument
which had been announced by the highest court of the State before such
rights accrued. ‘The difficulty in applying this principle here is that, prior
to the two cases in 55 Ohio St., the Supreme Court of Ohio had not, we
think, established any rules of constitutional construction that would neces-
sarily require us to hold the act of 1894 to be unconstitutional.

In our opinion, neither the decisions of Palmer v. Crawford, and Young
v. Lion Hardware Co., 55 Ohio St. 423, nor any other case in the Supreme
Court of Ohio precluded the Circuit Court from exercising its independent
judgment as to the constitutionality of the statute of Ohio here in question.
If, prior to the making of the contracts between the plaintiffs and McClain,
the State court had adjudged that the statute in question was in violation of
the State Constitution, it would have been the duty of the Circuit Court, and
equally the duty of this court, whatever the opinion of either court as to the
proper construction of that instrument, to accept such prior decision as
determining the rights of the parties accruing thereafter. But the decision
of the State court, as to the constitutionality of the statute in question, hav-
ing been rendered after the rights of parties to this suit had been fixed
by their contracts, the Circuit Court would have been derelict in duty if it
had not exercised its independent judgment touching the validity of the
statute here in question. In making this declaration we must not be under-
stood as at all qualifying the principle that, in all cases, it is the duty of
the Federal court to lean to an agreement with the State court, where the
issue relates to matters depending upon the construction of the Constitution
or laws of the State.

It remains to dispose of the question of the constitutionality of the Ohio
statute upon which this suit is based. In its consideration of the subject
the Supreme Court of Ohio, in the Palmer-Young cases, referred to the
Preamble to the constitution of that State, declaring that “ We, the people
of the State of Ohio, grateful to Almighty God for our freedom, to secure
its blessings and promote our common welfare, do establish this constitu-
tion ;” to the first section of the Ohio Bill of Rights providing that “all men
are, by nature, free and independent, and have certain inalienable rights,

a

8 Great Southern Fire Proof Hotel Co. vs. Jones.

among which are those of enjoying and defending life and liberty, acquir-
ing, possessing and protecting property, and seeking and obtaining happi-
ness and safety; ’ and to the second section of the State constitution de-
claring that “all political power is inherent in the people. Government
is instituted for their equal protection and benefit.” It then said: “The
usual and most frequent means of acquiring property is by contract, and
one of the most valuable and sacred rights is the right to make and enforce
contracts. The obligation of a contract, when made and entered into, can-
not be impaired by act of the General Assembly.” In view of these consti-
tutional provisions, aided by the general rules of law, the State court held
the statute to be unconstitutional and void, so far as it gave (syllabus) “a
lien on the property of the owner to subcontractors, laborers and those who
furnish machinery, material or tile to the contractor;” that “ all to whom
the contractor becomes indebted in the performance of his contract, are
bound by the terms of the contract between him and the owner.” 55 Ohio
St. 423.

The Circuit Court of Appeals expressed its earnest desire, in the interest
of harmony of decision, to come to an agreement with the State court, but
its sense of duty compelled it to sustain the constitutional validity of the stat-
ute upon which the plaintiffs based their claim. Upon a careful considera-
tion of the objections urged to the statute, and after an extended review of
the authorities, the Circuit Court of Appeals held that the statute did not
deprive the owner of his property without due process of law, nor unrea-
sonably interfere with his liberty of contract ; that the restraints put upon
the owner by the provisions in favor of sub-contractors and those who
furnished materials to be used by the contractor in execution of his con-
tract with the owner, was neither arbitrary nor oppressive ; that such pro-
visions were no more onerous than required by the necessity of protecting
those who actually do the work or furnish the material by which the owner
is benefited ; and that as the legislation in question was sanctioned by the
dictates of natural justice, and, as must be conclusively presumed, was
known to the owner when he contracted for the building of his house, its
requirements could only be avoided by pointing out some specific part of
the organic law which has been violated by its enactment.

We are constrained to withhold our assent to the views expressed by the
Supreme Court of Ohio, and to express our concurrence with the Circuit
Court of Appeals. The great weight of authority in this country as to the
meaning and scope of constitutional provisions substantially like those to be
found in the Constitution of Ohio is, in our opinion, against the conclusion
reached by the learned State court. Exercising an independent judgment
on the subject, we are obliged to so declare. The reasons in support of the
constitutionality of the statute are cogently stated in the able and elaborate
opinion of Judge Lurton, speaking for the Circuit Court of Appeals in this

‘edited

.

Great Southern Fire Proof Hotel Co. vs. Jones. 9

case, Jones v. Great Southern Fire Proof Hotel Co., 86 Fed. Rep. $71.
As the reports of the decisions of the Circuit Court of A ppeals are accessi-
ble to all, we will not encumber this opinion with a restatement of the
grounds, 80 fully set forth by that court, on which the validity of the statute
must be sustained. We content ourselves with referring to its opinion, and
with citing, in the margin* some authorities which, in our judgment, support
the views expressed by the Circuit Court of Appeals. It results that the

decree must be affirmed.
It is 80 ordered.

Mr. Justice Warre did not hear the argument and took no part in the
decision of this case.

ee ee

* Van Stone v. Stillwell & Bierce Manf’g Co., 142 U.S. 128; MeMurray v. Brown,
91 U.S. 257; Blauvelt vo. Woodworth, 31 N. Y. 285; Glacius v. Black, 67 N. } a
563; Donahy »v. Clapp, 12 Cush. 440; Bowen v. Phinney, 162 Mass. 593; White v.
Miller, 18 Pa. 52; Spofford v. True, 33 Me. 283; Payne v. Tillinghort, 52 Conn.
632; Freusch v. Shyrock, 51 Md. 162; Colton v. Frese, 45 Ind. 96; Smith v. New-
baur, 144 Ind. 95; Title Guarantee & Trust Co. v. Wren, 56 Pac. Rep. (Oregon )
271 ; Mallory v. La Crosse &c., 80 Wis. 170 ; Laird v. Noonan, 32 Minn. 358; Albright
». Smith, 2 8S. Dak. 577; Barnard v. McKenzie, 4 Colo. 251 ; Smalley v. Gearing, 121
Mich 196; Hightower v. Bailey, 56 S. W. (Ky.) 147; Sumner Building & Supply
Co., 51 La. Ann. 196; Roanoke &e. Co. v. Karn, 80 Va. 589; Henry & Coatsworth
Co. v. Evans, 97 Mo. 47; Cole Manf’g Co. v. Falls, 90 Tenn. 466 ; Gurney v. Wal-
sham, 16 R. 1.699. See, also, 2 Jones’ Liens, 286 ; Phil, Mech. Liens, 324, 4 30, 3d ed.

‘True copy.
Test :

Clerk Supreme Court, U.S.

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