Petition for Rehearing — Toucey v. New York Life Ins. Co.

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OCTOBER TERM, 1941.

No. 16.

SAMUEL R. TOUCEY, * ETITIONER,

VS.

NEW YORK LIFE INSURANCE COMPANY,

A CORPORATION, RESPONDENT,

RESPONDENT'S PETITION FOR REHEARING.

SAMUEL W. SAwYER.

RICHARD S. RIGHTER,

Horace F. BLAcKWELL, Jr..

. Attorneys for Respondent.

TABLE OF CASFS

Anderson vs. United Realty Co., 222 U. S. 164 5)

Continental Illinois National Bank & Trust Co. vs.

Chicago, R. I. & P. Ry. Co., 294 U. S. 648, 1.¢. 675 11,12

Dial vs. Revnolds, 96 U. S. 249. 1. e. 341 13, 14

Dietzsch vs. Huidekoper, 103 U. S. 494 4.6

Digus vs. Wolcott, 4 Cranch 179 13

Dugas vs. American Surety Co., 300 U. S. 414, 428,

429 6, 7,9, 12, 14

Fssanay Film Co. vs. Kane, 258 U. S. 358, 1. ¢. 361 11

French vs Hay, 22 Wall. 250 4,6,15

Gunter vs. Atlantic Coast Line, 200 U. S. 273, 292 9.10

Hale vs. Bimco Trading. Inc., 306 U. S. 375 9

Julian vs. Central Trust Co., 193 U. S. 93 6,9, 13,15

Kline vs. Burke Construction Co., 260 U. S. 226

a. 4, §, 7, 8, 30, 13,35

Life Ins. Co. vs. Fisher, 5 Tenn. Civ. App. 232 2

Local Loan Co. vs. Hunt, 292 U. S. 234, 239 6.7.9

Looney vs. Eastern Texas R. R. Co., 247 U. S. 214, .

l. ec. 221 10, 12, 15

Madisonville Traccion Co. vs . Saint Bernard Mining

Co., 196 U. S. 239 4,5, "6, 15

National Steamship Co. vs. Tugman, 106 U. S. 118 5

New York C. & St. L. R. Co. vs. Perduie, 97 Ind. App.

517, 187 N. E. 349 2

O'Haire vs. Burns, 45 Colo. 432, 101 Pac. 755 2

Peck vs. Jenness, 7 How. 612 13

Prout vs. Starr, 188 U. S. 537 8

Princess Lida vs. Thompson, 305 U. S. 465 2

Reagan vs. Dick, 233 Pac. 159 (Colo.) 2

Riverdale Mills vs. Manufacturing Co., 198 U. S. 188 9

Root vs. Woolworth, 150 U. S. 401 6, 7, 15

Smyth vs. Ames, 169 U. S. 466 8

Steelman vs. All Continent Corp., 301 U. S. 278, 289 2,12

Supreme Tribe of Ben-Hur vs. Cauble, 255 U. S. 356.

367 ; 11, 12,14

1] INDEX

Toledo Seale Co. vs. Computing Seale Co., 261 U. S.

399, 1. c. 426 2, 12, 13

Watson vs. Jones, 13 Wali. 679 13

Wells Fargo & Co. vs. Taylor, 254 U. S. 175, 1. ¢. 182 10

STATUTES

Judicial Code, Section 265 (28 U. S. C. A., Sec. 379)

+2 a 7, 20.

R. S.. Sec. 720 }

TEXTBOOKS

32 €. J., Sec. 137, p. 115 }-2

Tavlor and Willis, The Power of Federal Courts to

Enjoin Proceedings in State Courts, 42 Yale L. J.

1169, 1174 4

AcTs

Removal Act, 1789, amending pro tanto Act of 1793

, 3, 4, 15

Interpleader Act of 1926 7

Supreme Court of the United States

: OCTOBER TERM, i941.

SAMUEL R. TOUCEY, PETITIONER,

VS.

NEW YORK LIFE INSURANCE COMPANY,

A CORPORATION, RESPONDENT,

RESPONDENT'S PETITION FOR REHEARING.

‘Now comes respondent, New York Life Insurance

Company. and respectfully petitions this court to grant a

rehearing in this cause for the reason that this court,

in revers ig the decree below, has overlooked or disre-

garded important and controlling considerations of law

‘ presented in Respondent's Brief anu Supplemental

Br. ef.

l. In construing Section 26. of the Judicial Code (28

U.S.C. A., Sec. 379; R. S.. Sec! 720) to prohibit an in-

junction in a “relitigation” case, this court has overlooked

or disregarded the prevailing principle uniformly appled

by all other courts to adjust and preserve by injunction

rights acquired under equity decrees.

Thus it is that state courts may enjoin another court

of the same state, or another court of a sister state (32

C. J.. Sec. 137, p. 115: O'Haire v. Burns, 45 Colo. 4282.

101 Pac. 755; Life Ins. Co. v. Fisher, 5 Tenn. Civ. App.

232; New York C. & St. L. R. Co. v. Perdute, 97 Ind

App. 517, 187 N. FE. 349), or a federal court (Reagan v. Dick,

233 Pac. 159 ¢Colo.); compare Princess Lida vy. Thompson.

305 U.S. 465) from relitigating issues already decided

Likewise, a federal court may enjoin another federa!

court from relitigating that which has been adjudged in

equity (Toledo Scale Co, v. Computing Scale Co., 261 U

S. 399: compare Steelman v. All Continent Corp.. 301 U

S. 278). But now this Court has said that, unlike al!

other courts, a federal court may not enjoin a state court

from passing second judgment on what the federal equity

court has previously determined, although as between

every other court such a procedure is deemed inequitabl

and an unjust hardship—more than a mere “incon-

venience’ ’—upon the winning party in the first suit.

The levislative historv of Section 265 and the numer-

ous cases in this court construing and applving it do not

justify a construction ef Section 265 which subordinate:

the jurisdiction of a federal court to that of a state court

But even if this court had never heretefore considered

Section 265, that section sheuld not be construed to ren-

der nugatory and futile the efforts of the litigants and

the trial court, and to deprive the trial court of the powe!

to declare and enforce upon the losing party what it. in

the full exercise of its admitted equity jurisdiction. ha:

solemnly decided. Surely that is not a “part of the del:-

cate adjustments required by our federalism.”

The practical effect of this court’s construction ot

Section 269 is to restrict the statutory right of a parts

to invoke federal jurisdiction by original suit or upon

removal, thereby greatly discouraging litigation in th

federal courts. Now a litigant. otherwise entitled by the

Acts of Conzress to do either of these things, will hesitate

to exercise these rights because this court has said that

after expensive and protracted litigation there, he

find that the decree for which he has so arduously fought

is worth nothing in determining his rights, except as a

basis for a plea of res judicata. The loser may, either

himself or by employing a fraudulent ass.gnment and.

disregarding entirely the federal court litigation and the

auestions settled by it. file the same suit in a state court

and secure a retrial of the same issues without inter-

ference by the federal court. Thus the losing party has

two or more “days in court,” the result to the winner is

as if the federal court preceedings had not taken place,

and the state court may render a judgment against the

winning party, thereby creating the anomalous situation

of a party having one judgment in his favor and one

against him, with his only recourse for relief an applica-

tion to this court’s discretion.

2. This court has given undue importance to the so-

called legislative “withdrawals” from the ‘sweeping pro-

hibition” of Section 265 and has given erreneous effect to

Kline v. Burke Construction Co., 260 U. S. 226

a. Removal of actions. This court has held that the

Removal Act, although passed in 1789, amended pro tanto

the Act of 1793. An earlier statute cannot amend a Jater

one. Nor is it an answer to say that the subsequent re-

enactments of the Removal Act have amended the Act

of 1793. The language of the 1793 Act has never been

changed. It is more logical and reasonable to say that

since the Act of 1793 was not expressly amended by

Congress to exclude from its prohibition injunctions

acainst continued proceedings in state courts in removal

cases, Congress. by reenacting the Removal Act. intended

no withdrawal from the restrictions of the Act of 1793

by the language of the Removal Act.

Even if the Removal Act were enacted after the Act

of 1793, the words ‘and sha!l proceed no further in the

cause” are not a repeal pro tanto of Section 265. No-

Where in the Removal Act is the issuance of an injunc-

ton authorized: the state court is merely ferbidden to

4

proceed. If Congress had intended any such result in

the Removal Act and in the Sb’powner’s Limited Liability

Act. would not Congress, in reenacting Section 265 in the

Revised Statutes of 1874, have expressly excepted these

cases from the limitation of the statute as it did with

respect to bankruptcy matters?

This court now explains French v. Hay, 22 Wall. 250;

Dietzsch v. Huidekoper, 103 U. S. 494, and Madisonviile

Truction Co, v. Saint Bernard Mining Co., 196 U. S. 239,

on the ground that the Removal Act of 1789 amended

pro tanto the Act of 1793. None of these cases intimates

that, and this court has never heretofore said that. Justice

Harlan said in the Madisonville case that it nad been

“settled by former adjudications” that it was com-

petent for the district court “without violating Section 720

of the Revised Statutes” to restrain the party against

whom a cause had been legally removed from taking fur-

ther steps in the state court. Why? To protect the ex-

clusive jurisdiction of the federal courts from interference

by state court proceedings. So this court has repeatedly

said until now. But in 1933 two Harvard law students

(Taylor and Willis, The Power of Federal Courts to

Enjoin Proceedings in-State,Gourts, 42 Yale L. J. 1169,

1174) suggested that Aline v. Burke Constructwn Co..

260 U.S. 226, makes clear what was dark before. This

court now adopts their suggestion as the law. It is un-

sound, as we shall demonstrate, and contrary to what

this Court has uniformly said the removal cases and

Kline v. Burke Construction Co. mean.

Neither the Removal Act nor French v. Hay, Dietzsch

v. Huidekoper, nor Madisonville Traction Co. v. Mining

Co. were mentioned in the Kline opinion. In fact, it was

not a removal case at all. Burke Construction Company

sued Kline in the federal court in Arkansas for breach of

contract. Kline then sued Burke in the Arkansas state

cor on the same contract for an accounting and damages.

To justify the injunction issued by the federal court

—

A

against the state court proceedings, Burke argued, among

other things, that it had a constitutional and statutory

richt to sue Kline in the federal court because of diversity

of citizenship and the requisite jurisdictional amount and

that since the state court suit might be tried and decided

nefore the federal court action and the judgment there

pleaded as res judicata, the federal court proceeding

would be futile, so that the subsequent state court pro-

ceedings thereby deprived Burke of that constitutional

right to proceed in the federal court. Mr. Justice Suther-

land held that the right to institute original proceedings

in the federal court (and by implication, the right to re-

move proceedings from the state to the federal court)

was not conferred by the Constitution but bv the Act of

Congress; that, however, the federal court properly had

jurisdiction of Burke’s suit against Kline to proceed to

judgment and the state court properly had jurisdiction

of Kline’s suit against Burke to proceed to judgment;

and that thus ‘‘there can be no question of judicial su-

premacy, or of superiority of individual right” (1. ¢..235).

Thus no removal was involved at all and no injunction

was sought against further prosecution in the state court

of a case validly removed. The case against the prosecu-

tion of which the injunction was sought was entirely

separate, distinct and independent from the federal court

case, instituted there originally by Burke. Even if it be

assumed that the basis of the Kline case was that the

federa? court had no jurisdiction to protect by injunction

in that case, that basis does not and cannot exist in the

removal cases. By the act of removal, the state court loses

jurisdiction and the federal court acquires jurisdiction

(National Steamship Co. v. Tugman, 106 U. S. 118: Madi-

sonrille Traction Co. v. Mining Co.. 196 U. S. 239: An-

derson v. United Realty Co., 222 U. S. 164). If thereafter

plaintiff attempts to proceed further in the state court

Suit, the federal court may enjoin him to protect the

jurisdiction it has acquired against the unlawfui ex-

ercise of the purported jurisdiction the state court has

lost. This is what French v. Hay and the other cases

hold and nothing in the Kline case even purports to

change or otherwise affect the authority of these cases.

Mr. Justice Sutherland, who wrote the opinion for

this court in the Kline case, apparently did not regard

it as elarifvmg, explaining, overruling or in any way af-

fecting the principle announced in French v. Hay, Dietzsch

v. Huidekoper, and Madisonville Traction Co. v. Mining

Co. In Local Loan Co. v. Hunt, 292 U. S. 234, he cited

Dietzsch v. Huidekoper, along with Julian v. Central

Trust Co. and Root v. Woolworth,.as authority for the

issuance of an injunction hy a federal equity court after

a discharge .n bankruptc:’ to prevent litigation in the

state court of a claim already discharged in bankruptcy

“notwithstanding the provisions of Section 265 * * *”

(1. ¢. 239). If Mr. Justice Sutherland had thought that

by the Kline case he was denving the validit’ of the

reason given by the court in the French, Dietc.sch, and

Madisonville Traction cases, he certainly would not have

cited the Dietzsch case as authority for the very proposi-

tion for which this court now savs it did not stand.

In 1936 (Dugas v. American Surety Co., 300 U. S.

414), this court, through Mr. Justice Van Devanter, cited

French v. Hay and Mad?sonville Traction Co. v. Mining

Co., as authority for the granting of an injunction by a

federal court to prevent state court litigation of a claim

settied by a federal interpleader decree. The court said,

1. c. 425:

The power of the Court to enjoin Dugas from

further prosecuting his suit in the state court * * *

has full support * * * in settled adjudications respect-

ing the power of a federal court to protect its Juris-

diction and decrees.

Not until now has this court stated that the remova!

cases were bottomed upon the language of the Remova:

Act. We respectfully submit that thev are not. Noth-

9}

a,

7

inv in Kline v. Burke Construction Co. suggests that they

are. They simply represent a well recognized ‘exception’

to Section 265 by judicic! construction of that statute.

b. Interpleader. The Interpleader Act of 1926 is but

a legislative recognition of the judicial construction of the

Act of 1793, namely, that where a res is involved such

as a fund, the federal court has the power to enjoin state

court interference with it.

3. In holding that there is no established doctrine

excepting “relitigation” cases from Section 265, this court

has disregarded its plain rulings in prior decisions.

Root v. Woolworth, 150 U. S. 401, is said to be ‘er-

roneously regarded” as illustrating a “relitigation”’ excep-

ticn because no state court suit had been brought. True,

no state court suit had been begun, but Woolworth’s sup-

plemental bill alleged, among other things, thet ‘‘your

orator is informed and believes the said defendant

threatens to, and unless restrained by the order and in-

junction of Your Honors will, institute divers actions in

respect of the title of said premises and thereby vex,

annoy and harass your orator’ and the decree enjoined

Root, amony other things, “from bringing any action or

actions touching the title to cr possession of the said

premises.’ Thus state court proceedings were included

within the scope of the injunction and it is a fair in-

terpretation of the case, in view of the regard in whic:

it has subsequently been held by this court, to say that

this court thought then that Section 265 did not forbid

the injunction even if state court proceedings had been

ecmmenced. In 1933, Mr. Justice Sutherland cited the

Root case as authority for this very proposition, in Local

Loan Co. v. Hunt, 292 U.-S. 234, 229. Again in 1936

Mr. Justice Van Devanter cited it for the same proposi-

nen, in Dugas v. American Surety Co., 300 U. S. 414,

428, 429.

rs)

Prout v. Starr, 188 U. S. 537, is more than the “‘first

come, first served” case, now discredited by Kline v. Burke

Construction Co., 260 U.S. 226. It is a true “relitigation”

case. Starr filed a stockholder’s suit against the Rock

Island and the Nebraska State Board of Transportation

to enjoin the Board's enforcement of a Nebreska ‘ate

statute alleged to be unconstitutional. A restraining order

was issued pursuant to the bil’. At about tie same time

and in the same court, certain stockholders of the Bur-

lington, the Chicago & North Western and the Union

Pacific filed three similar suits for the same relief. In

Starr's case the ;,arties agreed that that case should abide

the result of .»- Burlington, the Chicago & N. W. and

the Union Pacific cases and that the decree in Starr's

case should be conformable to those entered in the other

thiee cases. Decrees were entered against the defendants

in these cases which were affirmed by this court in 1898

(Smyth v. Ames, 169 U. S. 466). Thereafter Prout suc-

ceeded Smyth as Attorney General of Nebraska on Jan-

uary 1, 1901, and instituted an action in the Nebraska

state court against the Rock Island to recover penalties for

an alleged violation of the Nebraska statute whose en-

forcement had been forbidden by this ccurt in 1898. Starr

then applied by supplemental bill in the original Rock

island case for an injunction against the prosecution of

Prout’s suit in the state court. An injunction was issued

and affirmed by tunis court, Mr. Justice Shiras saying,

1. ec. O44:

The object of the supplemental bili was to re-

strain the present appellant, as successor to Smyth.

from attemptins to transfer the very matters that

stood for judgment in the Federal ceurt to the state

court by filing a bill in the latter. Such a course

might bring about a conflict between those courts,

and create the confusion so often deprecated by tnis

court. ~ * *

The jurisdiction of the Circuit Court could not

be defeated or impaired by the institution, by one 6!

the parties, of subsequent proceedings, whether oi:

9

or criminal, involving the same legal questions, in

the state court. * * *

Julian v. Central Trust Co., 193 U. S. 93; Riverdale

Mills v. Manufacturing Co., 198 U. S. 188, and Local Loan

Co v. Hunt, 292 U. S. 234, are now peremptorily dis-

missed as “res” cases and therefore inappticable. Mr.

Justice Day did not think so in Supreme Tribe of Ben-

Hur v. Cauble, 255 U. S. 356; he cited the Julian case

as a “relitigation” case. See, also, Gunter v. Atlantic

Coast Line, 200 U. S. 273, 292. Neither did Mr. Justice

Van Daventer in Dugas v. Amerivan Surety C., 300 U. S.

414, 429. At the time the supplemental bills for injunc-

tion were filed in these three cases, ne res was in the

possession or custody of the court and that is not the

ground on which the relief granted was based. Justifica-

tion for the injunction was the necessity and justice of

preserving to the winning party the fruits of its decree.

Mr. Jitsiice Reea has so ably analyzed these cases and so

accurately interpreted their significance that we need not

repeat it here.

We are not told why this court “need not consider”

Gunter v. Atlantic Coastline, 200 U. S. 273. The case

directly invoived the attempted relitigation in the South

Carolina state court of the issue of the railroad’s ex-

emption from state taxation established 25 vears before

in the federal district court for South Carolina. This

court held that an injunction issued pursuant to a sup-

plemental bill was proper.

Hale v. Bimco Trading, Inc., 506 U. S. 375, is not like

the Gunter case. The mandamus action in the Florida

State court was instituted first’ Thereafter Bimco, not

a party to the mandamus suit, sued in the federal court

in Florida to prevent the action sought to be compelled

oy the mandamus case. *An interlocutory injunction was

issued by the federal court and the Florida Supreme Court

ordered that the mandamus case be staved until this court

10

cod en the constitutionality of the statute in Bimco’s

oe This court held that the prohibition of Section 265

did not apply to forbid the injunctien enjoining the en-

forcement of the statute. Thus this case bears no re-

semblance to the Guriter case in any material particular.

It did not represent any attempt to relitigate in the state

court issues previously decided by a federal decree. On

the contrary, it is the kind of case typified by Kline v.

Burke Construction Co., supra.

Looney v. Eastern Texas R. R. Co., 247 U. S. 214. 1s

said not to be a “relitigation” case and “obviously not

to rule this case. Admittedly, its facts are tot exactly

like those here in that the injunction there wes not in

aid of a final decree. But the injunction was to enforce

a previous temporary injunction issued to prevent state

court interference with the pending federal suit, and the

justification for the injunction was the protection and

preservation of the prior federal jurisdiction ‘until the

object of the suit is accamplished and compiete justice

done between the parties” (lc. 221). That was regarded

as “familiar and long established practice’ (1. ¢. 221).

Thus the case is im principle exactly like this one.

The Looney case has been cited with approval sIx

times by this Court in subsequent cases as authority for

she proposition that Section 265 does not prohibit the

issuance of an injuncticn against state court proceedi™ss

when necessary to protect federal jurisdiction and federal

decrees from frustration, defeat or impairment through

proceedings in state courts. -

The first of these cases is Weils Fargo & Co. v. Taylor,

254 U. S. 173. See Respondent's original brief, page 3%.

The Court said, 1. c. 183:

* * * the provision [Section 265) coes not pre-

vent the federal courts * * * from maintaining ana

protecting their own iurisdiction, properly acquir’?

1]

and still subsisting, by enjoining attempts to frustrate,

defeat or impair it threugh proceedings in the state

courts, French v. Hay, 22 Wall. 250; Jultan v. Central

Trust Co., 193 U. S. 93, 112; Chesapeske and Ohio

Ry. Co. v. McCabe, 213 U.S. 207, 219: Looney v. East-

ern Texas R. R. Co., 247 U. S. 214, 221. * * * (Insert

ours).

The second case is Supreme Tribe of Ben-Hur v, Cau-

ble, 255 U. S. 256, 367.

Essanay Film Co. v. Kane, 258 U. S. 358, follows.

Kane secured an interlocutory default judgment against

Essanay in the New Jersey state court without service

of process on it and wes preceeding to take final judgment

when Essanay filed its bill in the federal court in New

Jersey for an injunction to restrain further prosecution

of the state court action. The injunction was denied and

this court affirmed. Mr. Justice Pitney, however, said,

.'c. aee

In exceptional instances the letter has been de-

parted from while the spirit of the prohibition has

been observed; fcr example, in cases holding that,

in order to maintain the jurisdiction of a federal court

properly invoked, and render its judgments and de-

crees effectual, proceedings in a state court which

would defeat or impair such jurisdiction may be en-

joined. French v. Hay, 22) Wait. 250; Dietzsch Vv.

Huidekoper, 103 U. S. 494, 497; Julian v. Central Trust

Co.. 198 U. S. 93, 112; Madisonville Traction Co. Vv.

St. Bernard Mining Co., 196 U. S. 239, 245, Looney

v. Eastern Texas R. R. Co., 247 U. S. 214, 221. The

effect of this, as will be observed, is but to enforce

the same freedom from interference on the ene hand,

that it is the prime object of Sec. 265 to require on

the other.

Continental Illinois National Bank & Trust Co. V.

Chicago, R. I. & P. Ry. Co., 294 U. S. 648, follows. This

court affirmed the issuance of an injunction by a federal

bankruptcy court against the sale of collateral by the

)")

Reconstruction Finance Corporation which would hinder,

obstruct and delay the preparation and cc wummation of

a reorganization plan so as probably to prevent it. This

court said, 1. ¢. 679:

The power to Issue an injunction. when necessary

to prevent the defeat or impairment of its Jurisdiction

is. therefore, inherent in a court of bankruptcy as

it is in a duly established court of equity * * * An

injunction may be issued in such circumstances where

the purpose of protecting and preserving the juris-

diction of the court “urtil the object of the suit

accomplished and complete justice done between the

parties.” Looney v. Eastern Texas R. R. Co., 247 U.S.

214, 221.

Dugas v. American Surety Co., 300 U. S. 414, is the

next case. See Respondent's original brief, page 29. The

injunction was justified upon the broad powers ef an

equity court as well as by the express terms of the Inter-

pleader Act. The Looney case was cited as ar authority

fcr the proposition that a federal equity court had ‘nherent

power to enjoin state court proceedings “to protect its

jurisdiction and decrees” (1. ¢. 429).

Steelman v. All Continent Corporation, 301 U. S. 278,

follows. See Respondent's supplemental brief, page 2°

The injunction was issued to restrain the prosecution of

4 suit in another federal, not a state, court, but the Loone)

case was regarded as a precedent for the existence of the

power to issue an injunction by a federal court “when

necessary to prevent the defeat or impairment of its Jurms-

diction” tl. c. 289).

Supreme Tribe of Ben-Hur v. Cauble, 255 U. S. 356.

remains—for some discussion. It cannot, of course, poss

bly be distinguished from this case; hence it must now

be overruled, It has been cited with approval once

by thir court in Toledo Scale Co. V. Computing Scale Ce.,

261 U. S. 399, in which, in a “relitigation™ case, the in-

13

nst proceedings in another federal, not

yuNnctionN WAS again:

state. court. Mr. Chief Justice Tatt there sau. i. <

It {the Circuit Court of Appeals} could, there-

fore, itself have enjoined the Toledo Company from

interfering with the execution of its own decree, * * *;

or it could direct the district court to do so, as It

did. Supreme Tribe of Ben-Hur v. Cauble, 200 . 2.

356; * * * «Insert ours).

Merely because Mr. Justice Day in the Cauble case

decided the validity of the injunction there in one sentence

upon the authority of the Looney case “and cases cited”

‘which include Julian v. Central Trust Co., 193 U. S. 93,

thereby indicating that Mr. Justice Day thought that,

contrary to what this court has now said, the Julian case

was a “relitigation” case and not a “res case) is no evi-

dence that his decision is any more “sporadic” or ‘“‘ill-

considered” than that of Mr. Justice Swayne in Dual v.

Reynolds, 96 U. S. 340. Even if Dial v. Reynolds were a

“relitigation” case, Mr. Justice Swayne merely said, in

denying the propriety of the injunction: ‘‘Such an in-

junction, except under the Bankrupt Act, no court of the

United States can grant” (1. c. 341). As authority for this

conclusion, he cited Diggs v. Wolcott, 4 Cranch 179, Peck

v. Jenness, 7 How. 612, and Watson v. Jones, 13 Wall.

679. none of which was a “‘relitigation” case.

Diags v. Wolcott has been analyzed by this court in

footnote 5 of its opinion. It is simply the typical “first

come, first serve” case, perfectiy consistent with Kline

\. Burke Construction Co., 260 U. S. 226, and not involv-

ing any federal decree or any subsequent attempt to reliti-

gate issues decided by a cecree.

Peck v. Jenness is exactly the same kind of a case,

a federal bankruptcy court having no power to enjoin a

prior attachment suit pending in the state court.

Watson v. Jones is a similar case. In a controversy

between church members over church property in Louis-

ville. the Kentucky court had decreed that Watson and

others were entitled to its possession. Thereafter Jones

filed a bill in the federal court to restrain Watson from

taking possession. This court denied the power of the

federal court to issue this kind ef an injunction.

Thus Mr. Justice Day's cases much more convincing |\

support his conclusion in the Cauble case than Mr. Justice

Swayne’s cases support his conclusion in the Dial case.

If Dial v. Reynolds is a “relitigation” case, this Court is

now reinstating its authority by overruling the Cauble

case which apparently had overruled the Dtat case.

Moreover, Dial v. Reynolds is clearly not a “‘supple-

mental bill” case. Reynolds’ first suit, won by Cooper,

was an ejectment action in the federal court. Dial's

suit to enforce the rights there adjudged was an independ-

ent equity bill for foreclosure and for an injunction. it

was not and could not be ‘supplemental’ or “ancillary”

because the original case was a law action, not an equity

action. This distinction is important, since the “relitiga-

tion” doctrine originates in tne ‘supplemental bill’ cases.

This Court has overlooked or disregarded Dugas V.

American Surety Co., 300 U. S. 414. That case cemon-

strates conclusively that this Court at that time (1936)

thought that all of the cases we have relied upon here

were authority for the reliet granted in this case. The

facts of the Dugas case are stated in our original brief

at page 29. It is unquestionably a “relitigation” case. It

cannot be put aside or explained as an “‘intefpleader”™ case

because the express authority of the Interpleader Act was

only an alternative ground of the decision. The power of

the court tc enjoin Dugas from proceeding in the state

court was put just as squarely upon “‘‘settled adjudications

respecting the power of a federal court to protect its ju-

risdiction and decrees” (1. ce. 429). The Court said, 1. ©.

428:

(5) The jurisdiction to entertain a supplemental

bill is free from doubt. Such a bill may be brought

-

15

in a federal court in aid of and to effectuate its prior

decree to the end either that the decree may be car-

riea fully into execution or that it may be given fuller

effect, but subject to the qualification that the relief

be not of a different kind or on a different principle.

Storv’s Equity Pleading, 9th Ed.. Sec. 338; Root v.

Woolworth, 150 U.S. 401, 410-412; Local Loan Co, v.

Hunt. 292 U.S. 234, 239. Such a bill is aneiary and

dependent, and therefore the jurisdiction follows

that of the origina! suit, regardless of the citizenship

of the parties te the bill or the amount in contro-

versy. Root v. Woolworth, supra. p. 413; Locat Loan

Co. v. Hunt, supra.

(6) The power of the Court to enjoin Dugas

from further prosecuting his suit in the state court

on the appeal bond has full support in Sections 2 and

3 of the Interpleader Act of 1926 before quoted, as also

in settled adjudications respecting the power of a

federal court to protect its jurisdiction and decrees.

French v. Hay. 22 Wall. 250; Root v. Woolworth, su-

pra. p. 411; Julian v. Central Trust Co., 193 U. S. 93,

112: Madisonville Traction Co. v. Saint Bernard Min-

ing Co., 196 U. S. 239, 245; Looney v. Eastern Texas

R. Co., 247 U. S. 214, 221; Wells Fargo Co. v. Taylor,

254 U. S. 175, 183.

Thus the removal cases (French v. Hay and Madison-

ville Traction Co. v. Mining Co.) were then regarded as

authority for the issuance of the injunction, and not be-

cause they held or were regarded as holding that the Re-

moval Act of 1789 amended pro tanto the Act of 1798.

Mr. Justice Sutherland concurred in this decision, even

though he had written the opinion in Kline v. Burke Con-

struction Co., now said by this Court to have changed the

basis of the removal cases. Thus, also, Root v. Woolworth

and Looney v. Eastern Texas R. Co. were then regarded

as authorities, although this Court now dismisses them

(the Reot case in a footnote) as not “‘relitigation” cases.

And. thus, Julian v. Central Trust Co. was then regarded

as an authority. although this Court now says it Is a “res”

case,

16

For vears the District Courts and the Circuit Courts

of Appeals have uniformly regarded all of these cases as

establishing bevond any doubt a just and equitable ex-

ception to the literal language of Section 265 to permit

the federal courts to protect and maintain the integrity of

their decrees and to preserve to litigants the fruits there-

of. See the cases cited in respondent's original brief,

page 31 and in Note 18 of Mr. Justice Reed’s opinion.

This Court now says that all of these courts have been

misguided by “loose talk” of this Court and by “erroneous

implications” from its decisions. Presumably, this Court

has unt'] now fallen into the same error, since until 1936

at least this Court had uniformly held that these cases had

established a settled exception to Section 265 in ‘‘relitiga-

tion” cases.

It is. of course, this Court’s prerogative to deciare an

established principle wrong and overrule a great body of

decisions announcing and applymg it. We have tried to

point out in our original and supplemental briefs why it

should not be done here. But this Court has now said

that no such principle as we contend for exists. In so de-

claring, this Court has overlooked or disregarded a long

and uniform line of controlling cases in this Court, which

cannot fairly be distinguished from this case.

It is respectfully submitted that for the foregoing

reasons, this Court should grant a rehearing in this case.

SAMUEL W. SAWYER,

RICHARD S. RIGHTEP,

Horace F. BLACKWELL, JR..

Attorneys for Respondent.

We hereby certify that the foregoing petition for re-

hearing is presented to this Court in good faith and not

for the purpose of vexation or delay.

SAMUEL W. SAWYER,

RIcHARD S. RIGHTER,

Horace F. BLACKWELL, JR..

Attorneys for Respondent.

SUPREME COURT OF THE UNITED STATES.

Nos. 16 and 19.—Ocroper Term, 1941.

Samuel R. Toucey, Petitioner, )

16 vs.

New York Life Insurance Company.| On Writs of Certiorari to

the United States Cir.

Phoenix Finance Corporation, - enit Court of Appeals

Petitioner, for the Eighth Circuit.

19 vs.

Jowa-Wisconsin Bridge Company.

[November 17, 1941.]

Mr. Justice FRANKFURTER delivered the opinion of the Court.

These cases were argued in succession and are dealt with in a

“ngle opinion because the controlling question in both is the same:

Does a federal court have power to Stay a proceeding in a State

‘ourt simply because the claim in controversy has previously been

adjudicated in the federal court ?

Yo. 16. Tn 1935. Toucey brought suit against the New York Life

Insurance Company in a Missouri State court. He alleged that in

1924 the company issued him a life insurance poliey providing for

=nthly disability benefits and for the waiver of premiums during

‘sability; that he became disabled in April, 1933, and that the

iefendant fraudulently concealed the disability provisions from

um; that the defendant unlawfully cancelled the poliey for non-

‘“ayment of premiums: that in September, 1935, he discovered the

“mpany for reinstatement of the policy and for the payment of

‘ability benefits, and that the company refused.

The suit was removed to the federal District Court for the West-

“. Distriet of Missouri. the plaintiff being a citizen of Missouri

sno fraud on the defendant's part and that the plaintiff was not

“abled within the meaning of the policy. No appeal was taken.

-

Toucey Vs. New York Life Ins. Co.

In 1037, an action at iaw was brought against the msuranee com

pany in the Missouri state court by one Shay, a resident of the Dus.

triet of Columbia. He alleged that he was Toueceys assignee

and that Toucey’s disability entitied him to Judgment. It does not

ar ear that the insurance company filed an answer or any other

pleading. Instead, a “Supplemental bill’ was filed in the Western

District of Missouri, setting forth the history of the litigation be:

tween the parties, alleging that the assignment to Shay was made

in order to avoid federal jurisdiction, and praying that Toucey be

enjoined from bringing any suit for the purpose of readjudicating

the issues settled by the federal deeree and from further prosecuting

the Shay suit.

A preliminary injunction was granted and affirmed by the

Cireuit Court of Appeals for the Kighth Cireuit. 102 F. (2d) 16.

The court held that Toucey's claim in the pricr suit rested upon

proof of his disability, and that this issue, necessarily involved

in the Shay proceeding, had been conclusively determined in

the insurance company's favor. Section 265 of the Judicial Code,

36 Stat. 1162,.28 U. S. C. § 379, was construed not to deprive &

federal court of the power to enjoin state court proceedings where

an injunction is ‘‘necessary to preserve to litigants the fruits of,

or to effectuate the lawful decrees of the federal courts’. Cer

tiorari was denied, 307 U. S. 638, anu the injunction was made

permanent. Toucey appealed and the Cirenit Court of Appeals

again affirmed, 112 F. (2d) 927. In view of the importance of the

questions presented, we granted certiorari. 311 U. S. 643. The

decision below was affirmed by an equally divided Court, 313 U.S.

538. and the case is now before us on rehearing, 313 U. 8. 596.

No. 19. The Iowa-Wisconsin Bridge Company, a Delaware cot

poration, in 1982 executed a deed of trust conveying all of its prop-

erty, principally a bridge across the Mississippi River between lowe

and Wisconsin, to secure a $200,000 pond issue. In 1933, the trus-

tees, an Iowa corporation and a Wisconsin citizen, filed a bill of

foreclosure in the federal District Court for the Northern District of

Iowa. One of the Bridge Company's stockholders intervened 4s 4

party defendant, alleging that the bonds and mortgage were frau-

dulent and without consi@cration. Upon his motion, the Phoenix

Finance Corporation, a D:laware corporation which held almost

ct of the bonds, was joined as a plaintiff. The Bridge Com-

pany’s answer challenged the validity of the indenture and alleged

Toucey vs. New York Life Ins. Co. 3

that the bends were issued without consideratior. Phoenix denied

all allegations of fraud.

The case was tried before a master, whose modified conclusions

were adopted by the court. Finding that the mortgage and bonds

were fraudulently issued and that almost all the bonds were without

consideration, the court denied foreclosure. The Cireuit Court of

Appeals for the Eighth Circuit affirmed, 98 F. (2d) 416, and cer-

torari was denied, 305 U.S. 650.

Phoenix thereafter instituted five separate suits against the

bridge Company in the Delaware state courts, seeking recovery un

various notes and contracts claimed to have constituted the con-

sideration for the bones. The Bridge Company thereupon filed a

“supplemental bill’’ in the Northern Distriet of Iowa, asserting

that the issues involved in the state court suits had been made res

judicata by the federal decree, and praying, inter alia, that Phoenix

te enjoined from further prosecuting the state suits. (In one

of the suits, the state court rejected the res judicata plea, Phoe-

mr Finance Corp. v. Iowa-Wisconsin Bridge Co., 14 Atl. (2¢)

386, and an appeal is now pending in the Supreme Court of

Delaware.) The district court found that Phoenix was bound

sy the former decree, and that the prohibition of § 265 was no bar

‘o an injunction. The Cireuit Court of Appeals affirmed, 115

F. (2d) 1, and because of the relation of the questions presented to

those in No. 16, we brought the case here. 312 U. S. 679.

The courts below have thus decided that the previous federal

judgments are res judicata in the state proceedings, and that

therefore, notwithstanding the prohibitory provisions of § 265, the

‘ederal courts may use their injunctive powers to save the de-

fendants in the state proceedings the inconvenience of pleading

and proving res judicata.

First. Section 265—‘‘a limitation of the power of the federal

‘ourts dating almost from the beginning of our history and express-

tg an important congressional policy—to prevent needless fric-

‘ion between state and federal courts’’, Oklahoma Packing Co.

° Gas Co., 3089 U. S. 4, 8-9—is derived from §5 of the Act

Oe

' Pleading a federal decree as res judicata in a state suit raises a federal

juestion teviewable in this Court under § 237(b) of the Judicial Code, 43

at. 937, 28 U. 8. C. §344(b). Dupasseur v. Rochereau, 21 Wal!. 130;

“eposit Bank v. Frankfort, 191 U. S. 499: Virginia-Carolina Chemical Co. v.

Airven, 215 U. 8. 252; Stoll v. Gottlieb, 305 U. 8. 165, 167.

4 Toucey vs. New York Life Ins. Co.

of March 2, 1793, 1 Stat. onn. * . 2. OF shall a writ of in-

junction be granted [by any court ef the United States} to stay

proceedings in any court of a state ’ In its present form,

36 Stat. 1162, 28 U. S C. § 379, the provision reads as follows

“The writ of injunction shall not be granted by any court of the

United States to stay proceedings in any court of a State, except

in cases where such injunction may be authorized by any law relat-

ing to proceedings in bankruptey’’.?

The history of this provision in the Judiciary Act of 1793 is not

fully known. We know that on December 31, 1790, Attorney Gen-

eral Edmund Randolph reported to the House of Representatives

on desirable changes in the Judiciary Act of 1789. Am. State

Papers, Mise., vol. 1, No. 17, pp. 21-36. The tmost serious question

raised by Randolph concerned the arduousness of the circuit duties

imposed on the Supreme Court justices. But the Report also

suggested a number of amendments dealing with procedural

matters. A section of the proposed bill submitted by him provided

that ‘‘no injunction in equity shall be granted by a district court

-to a judgment at law of a State court.’’ Id., p. 26. Randolph ex-

plained that this clause ‘will debar the district court from inter-

fering with the judgments at law in the State courts; for if the

plaintiff and defendant rely upon the State courts, as far as the

judgment, they ought to coutinne there as they have begun. It is

enough to split the same suit into one at law, and another i2

equity, without adding a further separation, by throwing the

common law side of the question into the State courts, and the

equity side into the federal courts’’. Id., p. 34. The Report we

considered by the House sitting as & Committee of the Whole. and

then was referred to successive special committees for further con

sideration. No action was taken until after Chief Justice Jay

and his associates wrote the President that their cireuit-riding

duties were too burdensome. American State Papers, Mise. vol. ]

No. 32. p. 51. In response to this complaint, which was tran

mitted to Congress, the Act of March 2, 1793, was passed, ¢oD:

taining in § 5, inter alia, the prohibition against staying sate

court proceedings.

an

2 Formulated as a contraction of the f.deral courts’ equity jurisdictios,

the Act of 1793 ‘‘limits their general equity powers in respect to the granting

of a particular form of equitable relief; thet is, it prevents them from grant:

ing relief by way of injunction in the cases included within its inhibitions.”

Smith v. Apple, 264 U. S. 274, 279. See Treinies v. Sunshine Mining Co

308 U. S. 66, 74.

Toucey vs. New York Life Ins. Co. 5

Charles Warren in his article Federal and State Court Interfer-

suce, 43° Harv L. Bev. 345, 347, suggests thet this provision

was the direct consequeme of Randolph’s report. This seems

doubtful, in view of the very narrow purpose of Randolph's pro-

posal, namely, that federal courts of equity should not inter-

fere with the enforcement of judgments at law rendered in the

state courts. See Taylor and Willis, The Power of Federal Courts

ty Enjoin Proceedings in State Courts, 42 Yale L. J. 1169, 1171,

n, 14.

There is no record of any debates over the statute. See 3 Annals

of Congress (1791-93). It has been suggested that the provi-

sion reflected the then strong feeling against the unwarranted

intrusion of federal courts upon state sovereignty. Chisholm v.

Georgia, 2 Dall. 419, was decided on February 18, 1793, less than

two weeks before the provision was enacted into law. The signifi-

eance of this proximity is doubtful. Compare Warren, #ederal and

State Court Interference, 43 Harv. L. Rev. 345, 347-48 with

Gunter v. Atlantic Coast Line, 200 U. 8, 273, 291-92. Much more

probeble is the suggestion that the provision reflected the prevail-

ing prejudices against equity jurisdiction. The Journal of William

Maclay (1927 ed.), chronicling the proceedings of the Senate while

he was one of its members (1789-1791), contains abundant evi-

dence of a widespread hostility to chancery practice. See especially,

pp. 92-94, 101-06 (debate on the bill that became Judiciary Act

of 1789). Moreover, Senatsr Ellsworth (soon to become Chief

Justice of the United States), the principal draftsman of both the

WS9 and 1793 Judiciary Acts, often indicated a dislike for equity

jurisdiction. See Brown, Life of Oiiver Ellsworth (1905 ed.) 194;

Journal of William Maciay (1927 ed.) 103-04; Warren, New Light

om the History of the Federal Judiciary Act of 1789, 37 Harv. Lo.

Rey. 49, 96-100.3 ;

Regardless of the various influences which shaped the enactment

of $5 of the Act of March 2, 1793, the purpose and direction under-

\y.ng the provision is manifest from its terms: proceedings in the

state courts should be free from interference by federal injunction.

The provision expresses on its face the duty of ‘“‘hands off’’ by

* The last clause of § 5 of the Aet of 1793, outlawing the familiar er parte

Ajunction, affords another illustration of hostility to ehancery practice: ‘‘nor

shall such writ [of injunction] be granted in any case without reasonable

previous notice to the adverse party, or his attorney, of the time and place

“ Moving for the same.’’ 1 Stat. 335.

in

6 Toucey vs. New York Life Ins. Co.

the federal courts in the use of the injunction to .ay litigation in ¢

state court.‘

Second. The language of the Act of 1793 was unqualified:

” nor shall a writ of injunction be granted to stay

1 Stat. 335. In

the course of one hundred and fifty years, Congress has made

’?

proceedings mm any court of a state

few withdrawals from this sweeping prohibition :

(1) Bankruptcy proceedings. This is the only legislative ex-

ception. which has been incorporated directly into Seetion 265:

ras except in cases where such injunction may be au

thorized by any law relating to proceedings in bankruptey .

86 Stat. 1162. This provision, based upon § 21 of the Bankruptcy

Act of 1867, 14 Stat. 526, was inserted in the Act of 1792 by the

Revisers. RK. 8S. § 720; see Proposed Draft of Revision of U. 3.

Statutes (1872), vol. 1, pp. 418.

(2) Removal of actions. The Removal Acts, ever since the

Act of Septeinber 24, 1789, 1 Stat. 73, 79. have provided that when-

ever any party entitled to remove a suit shall file with the state

court = proper petition for removal and a bond with good and

sufficient surety, it shall then be the duty of the state court to ac

cept such petition and bond ‘tand proceed no further in the case

Section 265 has always been deemed inapplicable to remova:

preeeedings. Dietzsch v. Huidekoper, 103 U. S. 494; Madison

ville Traction Co. v. Mining Co., 196 VU. S. 239. The trie Ta

tionale of these decisions is that the Removal Acts bewe, pro fant:

egw eted tiie Act of 1793. Subsequent decisions have derited the

‘loose ground advanced in French v. Hay, 22 Wall. 259, 953; See

Kline v. Burke Construction Co., 260 U.S. 226; Taylor and Willis

The Power of Federal Courts to Enjoin Proceedings in State Courts

42 Yale L. J. 1169, 1174-75; compare Bryant v. Atlantic Coast Line

R. Co., 92 F. (2d) 569, 571.

(3) Limitation of shipowners’ liability. The Act of 1851 limiting

the liability of shipowners provides that after a shipowner ‘7.5s

fers his interest in the vessel to a trustee for the benefit of the claim:

ants, ‘‘all claims and proceedings against the owner or owners sha!!

oa

4 Section 262 of the Judicial Code, 36 Stat. 1162, 28 U.S, CG. § 377, is derived

from Section 14 of the Judiciary Act of 1789, 1 Stat. 81, which provided that

the ‘‘courts of the United States shall have power to issue wiits of scr

facias, habeas corpus, and a!l other writs not specially provided for by statute

which may be necessary for the exercise of their respective jurisdictions. ard

agreeable to the principles and usages of law.’’ The gencral powers thus given

to the federal courts were obviously Vinited by the subsequent enact nt cf

the specific prohibitory provisions of the Act of 1793.

Toucey vs. New York Life Ins. Co. 7

aease.”’ 9 Stat. 635, 686. Being a ‘‘subsequent statute’’ to the

Act of 1793, this provision oper.tes as an implied legislative

amendment to it. Providence & N.Y. SS. Co. s. Hill Mfg. Co., 109

U.S. 578, 599; see Admiralty Rule 51, 254 U. 8., appendix, p. 26.

(4) Interpleader. ‘the Interpleader Act of 1925, 44 Stat. 416,

amended the 1917 Interpleader Act, 89 Stat. 929, to previde as fol-

lows: ‘‘Notwithstanding auy provision of the Judicial Code to the

contrary, said [district] court shall have power to issue its pro-

cess for all claimants and to issue an order of injunction against

each of them, enjoining then. from instituting or prosecuting any

suit or proceeding in any State court or in any other Federal

court. . . .’? See Dugas v. American Surety Co., 300 U.S.

414, 428: Treinies v. Sunshine Mining Co., 308 U.S. 66, 74.

(5) Prazier-Lemke Act. The filing of a petition for relief under

this Aet subjects the favmer and his property, wherever located,

to the ‘‘exelusive jurisdiction ’ of the federal court. And except

with the consent of the court, specified proceedings against the

farmer or his property ‘‘shall mot be instituted, or if instituted at

any time prior to the filing of a petition under t.is section, shall

not be maintained, inany court . . . .’’ 47 Stat. 1473. See Kalb

Vv. Feuerstein, 308 U.S. 433.

Third. This brings ns to applications of § 265 apart from these

statutory qualifications. The early decisions of this Court applied

the Act of 1793 as a matter of course. However, a line of cases

beginning with Hagan v. Lucas, 10 Pet. 400, holds that the ecurt,

Whethege federal or state, which first takes possession of a res

withdraws the property from the reach of the other. Taylor v.

5 The first case arising under the provision was Diggs & Keith v. Wolcott,

4 Craneh 179 (49Q?), where the appellants brought an action at law on vari-

out promissory notes in a state ¢,urt. While this action was stil] perding, the

defendant filed a bill in the st .e chancery court for cancellation of the notes.

The fatter suit was removed to the federal circuit court which cancelled the

notes and enjeined the further prosecution of the state action ai law. The re-

port of the proceeding in this Court states merely that ‘‘the court being of

opinior that a cireuit court of the United States @p nct jurisdiction to enjoin

proceedings in a state court, reversed the decree.’’ In his Commentaries on

Amerncan Law (1826) vol. 1, p. 386, Chancellor Kent, stating that the decision

in the ease ‘‘is not to be contested'’, refers to it as illustrative of a situation

‘‘in which any contro! by the federal over the state courts, other than by means

of the established appellate jurisdiction, has cqually been prevented.’’ Peck

t. Jenness, 7 How. 612, 625, holding that a federal! court sitting in bankruptey

could not discharge the lien of a prior attachment made under state law, was

the first case which expressly relied upon the Act of 1793. In Orton v. Smith,

18 How. 265, 266, the Court held it error to enjoin a state action to establish

title to certain land. ‘‘The courts of the United States have no such power

Over suitors in a state court.’’

“

8 Toucey vs. New York Life Ins. Co.

Carryl, 20 How. 583, 597; Freeman v. Howe, 24 How. 450. See

Kline v. Burke Construction Co., 260 U. 8. 226, 235: ‘‘The rank

and authority of the [federal avd state] courts are equal but both

courts cannot possess or contro, ihe same thing at the same time,

and any attempt to do so would result in unseemly conflict.

The rule, therefore, that the ecurt first acquiring jurisdiction shall

proceed without interference from a court of the other jurisdiction

is a rule of right and of law based upon necessity, and where the

necessity, actual or potential, does not exist, the rule does not

apply. Since that necessity does exist in actions in rem and

does not exist in actions in personam, involving a question of

personal liability only, the rule applies in the former but does not

apply in the latter.’’

The Act of 1793 expresses the desire of Congress to avoid fric-

tion between the federal government and the states resulting from

the intrusion of federal auchority into the orderly functioning of

a state's judicial process. The reciprocal doctrine of the res cases

is but an application of the reason underlying the Act. Contest

between the representatives of two distinet Judicial systems over

the same physical property would give rise to actual physical fric-

tion. The rule has become weil settled, therefore, that Section

265 does not preclude the use of the injunction by a federal court

to restrain state proceedings seeking to interfere with property

in the custody of the court. Farmers Loan & Trust Co. v. Lake

Street R. Co., 177 U. S. 53, 61; Kline v. Burke Construction (9.,

260 U. S. 226, 229, 235; Lion Bonding Co. v. Karatz, 262 wT. S44,

88-89: see Warren, Federal and State Court Interference, 43 Harv.

T,. Rev. 345, 359-66. And where a state court first acquires con-

trol of the res, the federal courts are disabled from exercising any

power over it, by injunction or otherwise. Palmer v. Teras, 212

U. 8. 118.

Another group of cases is said to constitute an exception to

§ 265, namely, where federal courts have enjoined litigants from

enforeing judgments fraudulently obtained in the state courts.

Marshall v. Holmes, 141 U. S. 589; Simon v. Southern Railway,

236 U. S. 115; Essanay Film Co. v. Kane, 258 U. S. 8o°F

Atchison Ry. Co. v. Wells, 265 U. S. 101: Wells Fargo & ©.

6 The extent to which a federal court's exclusive control over the res ™!

require use of the injunction to effeetuate its decrees in rem is illustrated by

Riverdale Mills v. Manufacturing Co., 198 U. S. 188, Julian v. Central

Trust Co., 193 U. 8. 93, and Local Lean Co. v. Hunt, 292 U. 8. 234, 241. cf.

Ex parte Baldwin, 291 U. S. 610, 615. .

Toucey vs. New York Life Ins. Co. 9

v. Taylor, 254 U.S. 175. In the Simon case, Mr. Justice Lamar

undertook to rationalize this class of cases by regarding a state

court ‘‘proceeding’* as completed once judgment is secured, with

ihe result that an injunction against levying execution does

net stay a judicial ‘‘ proceeding’. 236 U.S. at 124. But this con-

struction of § 265 was rejected in Fill v. Martin, 296 U.S.

543, 403: ** That term | proceedings| is comprehensive. It includes

all steps taken or which may be taken in the state court or by its

offivers from the institution to the close ot the final process It

applies to appellate as well as to original proceedings; and is inde-

pendent of the doctrine of res gudicata. It apphes alike to aetion

by the court and by its ministerial officers; applies not only to an

execution issuedson a judgment, but to any proveeding supplemental

or aneillary taken with a view to making the suit or judgment ef-

fective.” However, the opinion cites the Wells Fargo and Essanay

Film cases in a footnote dealing with ‘the recognized exceptions

to y 299.7" 296 UL S. 408, n. 19.) The foundation of these cases

is thus very doubtful. However, we need not undertake to re-

*Xamine them here since, in any event, they do not govern the cases

at bar.’

Fourth. We come, then, to the so-called ‘‘relitigation’’ cases,

the first of which is Dial v. Reynolds, 96 U. S. 340. The facts of

the case are simple: Cooper was indebted to Staatsman. To secure

‘hese debts he executed a mortgage deed of trust under which Dial

Was trustee. Asserting title in himself to the property covered by

the mortgage, Reynolds brought ejectment against Cooper 1a the

‘ederal court. On writ of error this Court set aside a judgment

in Reynoids’ favor and held title to be in Cooper. Cooper y.

Reynolds, 10 Wall. 308, 321. Reynolds thereafter disinissed his

ejectment action in the federal. court and brought a new action

against Cooper in a Tennessee state court based upon the claim thus

Previously litigated. Dial and Staataman, joining Cooper as a party

defendant, filed snit in the federal court to foreclose the mortgage

and to enjoin Reynolds from further prosecuting his action in the

‘ate court. The lower court sustained Reynolds’ demurrer, and

this Court affirmed. It held that the ‘““vravamen’’ of the bills

“as an injunction to prevent Reynolds from proceeding in the state

court. "Such an injunetion, exeept under the Bankrupt Act,

mi Por Similar reasons we need not here consider cases tike Ex parte Young,

“°9 U.S. 123, and Gunter r. Atlantie Coast Line, 260 U.S, 273, with which

fompore Hale v. Bimeo Trading Co., 306 U.S, 375, 378.

*, os

10 Toucey vs. New York Life Ins. Co.

ne court of the United States can grent. With this exception, iv is

expressiy forbidden by law.’ 96 U.S. at 341°

Looney V. Eastern Teras BR. R. Co., 247 U. S. 214, was not a

‘-relitigation’’ case. The Texas federal distriet court, in a’ suit

brought by various carriers, granted a preliminary injunction re-

straining the state Attorney General trom proceeding to assess tines

and penalties upon them for complying with an order of the Inter-

siate Commerce Commission. The Attorney General nevertheless

instituted proceedings in a state court to enjoin the earriers from

complying with the Commission’s order, end a supplemental !i

was filed in the federal court to stay the proceedings. The distric’

court issued the injanetion, and this Court dismissed an af»

peal under ¥ 266, holding that the injunetion below was not hase!

upon the une sustitutionality of the Texas state statutes, but was

eranted merely to protect its jurisdiction until the suit brough’

by the carriers was finally settled. The case obviously does not rue

ours. Nupreme Tribe of Ben-ur vy. Cauble, 255 U. S. 356, held

thet a federal district court, having rendered a decree in a class st

brought in Lehalf of all the members of a certain class cf benetic-

aries in a fraternal association, may enjoin me mbers of the class.

found to be bound by the deeree, frem prosecuting suits in the state

courts which would relitigate questions settled by such deeree The

opinion of Mr. Justice Day contains no reference te either the AW

of Mareh 2. 1793. ar to Dial v. Reynolds. The opinion is devoted al-

most entirely to a discussion of whether the former deeree is >

cudicata in the state sults, Having determined this question in

affirmative, the Court disposed of the remaining— § 265-——question

iy one sentence, citing only one case in support of its cone} ise)

Looney v. Eastern Texas R. R. Co., supra, which, as we have seen.

Was not a relitigation case.” 255 U.S. at 367.

a ne ———-

S The Court also held that in a foreciosure proceeding the complul

cannet jom a third person who clanmns adversely to the mortgagor and om

gagee, and that consequently there was a misjoinder of parties. 96 UL S

S41. These grounds for decision were, of course, alternative, and either:

is sufficient to dispose of the case. However, they were entirely separate © i

distinet. and there is no basis for any inference that the Court might have

held an injuretion if Reynolds had been properly joined. Nor need we

sider common-law refinements in actiong for ejeetment, for the Court

explicitiy on its duty te obey the Act of 1793.

2 Root vr, Woolworth, 150 UT. S, 401, is erroneously regarded as illustrating

a ‘‘relitigation’’ exception to § 265. The ease holds merely that cours ?

equity have jurisdiction to ‘effectuate their own decrees by injunetior

writs of assistance in order to avoid the relitigation of questions once sett)

between the same parties’’, 150 U.S. at 411-12, The Court did net uy’

i

Toucey vs. New York Life Ins. Co. 11

Fifth. We find, therefore, that apart from Congressional au-

thorization, only one *‘exception’’ has been imbedded in § 265 by

judicial construction, to wit, the res cases. The fact that one

exception has found its way into § 265 is no justification tor making

another. Furthermore, the res exception, having its roots in the

same poliey from which sprang $265, has had an uninterrupted

and firmly established acceptance in the decisions. The rule of the

mes cases Was unequivocally on the books when Congress reenacted

the original $5 of the Act of 1793, first by the Revised Statutes of

Isv4 and later by the Judicial Code in 1911,

In striking contrast are the ‘‘relitigation eases."’ Loose lanzuaze

and a sporadic. ill-considered decision cannot be held to have im-

bedded in our law a doctrine which so patently violates the expressed

prohibition ef Congress.’ We are not dealing here with a settled

course of decisions, erroneous in origin but around whieh sub

stantial interests have clustered. Only a few recent and episodic

Riterances furnish a tenuous basis for the exception whieh we

are now asked explicitly to sanction. Whatever justification

there may be for turning past error into law when reasonable ex-

peetations wonld thereby be defeated, no such justification ean be

urged on behalf ef a procedural doctrine in the distribution of

bilicial power between federal and state courts. It denies reality

to snegest that litigants have shaped their eondnet in relianee upon

« federal injunetion against a state suit to relitigate a elaim already settled

‘YY a previous federal deeree—-no such state suit had been brought. Conse

qient!y, there was no oceasion to consider the applicaility of £265. The

“first come, first served’ rationale of eases like Prout r. Starr, 188 TS. 537

was disearded in Kline +. Burke Construction Co., 260 U.S, 926. 235. «f?

TT. or .

nes tr. Carpenter, 91 U. S, 254, 257.

There ig no warrant for the assumption that, in the proposals for the

Jadicial Code of 1911, Congress had before it the ‘‘relitigation’’ exeeption

ts settled doctrine, and that by $265 gave it legisintive confirmation. The

sepert of the Special Joint Committee on Revision and Codifieation of the

Laws of the United States annotated the Act of 1793 with citations to twenty

‘x desisions of this Court. Sen. Rept. No, 388, 6lat Cong, 24 Sess,, p. 474,

Yet no reference was made to four of the five decisions of this Court prior

JIndieial Code whieh are supposed to justify the ‘‘relitigation’’ doe-

‘rine Reot +. Woelworth, 150 TT. S. 401° Prout. Starr, 188 YT" S, 537:

wrdale Mills r. Manufacturing Co., 198 U.S 188: Gunter vr. Atlantie Canst

ne, 200 TS. 273. (As we have already seen, ‘‘removal’’ ensee Like French

r. Hay, 22 Wall. 250, and Dietzach vr. Huidekoper, 103 U.S. 494. rest upon an

*, +}

ntrely different footing.) None of the reparta submitted to Congress eon

n inv disenssion of 4&5 of the Act ef 1793 and the deeisions const ing

See H. Rept. No. 818, Glst Cong... 2d Sess., referring jo HW. Doe, No. 78%,

"ist Cong., 2d Sess.; Sen. Rept. No. 288, Gist Cong., 24 Sess.: Final Report

Commission to Revise and Codify the Laws of the United Stetes (1996)

op 29. 244. Nor do the debates disclose anv consideration of the question,

“ee 45 Cong. Ree., pts. TIT and 1V, end 46 Cong. Ree., pts. IV, passim.

12 Toucey vs. New York Life Ins. Co.

some loose talk in past decisions in the application of § 265 or,

more coneretely, upon erroneous implications drawn from Looney

y. Eastern Texas K. R. Co., supra, and Supreme Tribe of Ben- ur

vy. Caubie, supra. Compare Helvering v. Hallock, 309 US. 106,

119-20.

It is indulging in the merest fiction to suggest that the doctrine

which for the first time we are asked to pronounce with our eyes

open and in the light of full consideration. was so obviously and

firmly part of the texture of our law that Congress in effect en-

acted it threugh its silence. There is no oe casion here to regard

the silence cf Congress as more commanding than its own plainly

and unmistakably spoken words. This Is not a situation where

Congress has failed to act after having been requested to act or

where the cireumstances are such that Congress would ordinariy

be expected to aet. The provisions of $265 have never been

the subject of comprehensive legislative reexamination. Even the

exceptions referable to legislation have been incidental features ©

other statutory sehemes, such as the Removal and Interpleader

Acts, The explicit and comprehensive policy of the Act of 175

has been left intact. To find significance in Congressional non

action under these eireumstances is to find significance where

there is none.

Section 265 is not an isolated instance of withholding from the

federal courts equity powers possessed by Anglo-American court

As part of the delicate adjustments required by our federalism,

Congress has rigorously controlled the ‘inferior courts”’ in their

relation to the courts of the states. The unitary system of the

courts of England is saved these problems.

The guiding consideration in the enforcement of the Congres

sional poliey was expressed by Mr. Justice Campbell, for the

Court. in Taylor v. Carryl, 20 How. 583, 597:

“The legislation of Congress, in organizing the judicial power

of the United States, exhibifs much cireumspection in aveidinz

ocessions for plac ing the tribunals of the States and of the U nion

in any collision.’

We must be scrupulous in our regard for the limits with’

which Congress has confined the authority of the courts of its own

creation.

Reversed

Mr. Justice Dovcuas took no part in the corsideration or deci-

sion of No. 19.

SUPREME COURT OF THE UNITED STATES.

Nos. 16 and 19.--Octorer Term, 1941.

Samuel R. Toucey, Petitioner,

lb vs.

New York Life Insurance Company. On Writs of Certiorari to

; / the United States Cir-

Phoenix Finance Corporation, {cuit Court of Appeais

Petitioner, for the Eighth Cireuit.

19 Us. |

lowa-Wisconsin Bridge Company. |

| November 17, 1941.]

Mr. Justice Reep, dissenting.

The controlling issue in both the Touwcey and the Phoenir Fi-

nonce cases is the power of a federal court te pretect those whe

have obtained its decrees against an effort to force relitigation of

the same causes of action in the state courts. Questions of res

ywlicafa seen inapposite for the cenelusion, We are not e¢on-

cerned in either case with the effeet of the decrees if and when

they might be pleaded in the state actions, Since federal juris-

diction in each ease depended upon diversity, their effeet as a

pleaded bar to recovery in the state suits would depend upon the

fath and credit by law or usage given like judgments of courts

of the state containing the federal district.’ But when the pre-

liminary question is the meaning and application of the federal

decree as a basis for a conclusion as to whether or not the decree

shall he enforced by further steps, it is entirely a federal ques-

tion. Tt is immaterial from that point of view whether the fed-

eral jurisdiction was bottomed originally on diversity, or the Con

Sitution or laws of the United States. The power to give effect

to the judgments of federal courts rests with Congress.? Tt has

ee

%, R. 8. $905; 28 UT. S. C. $687; Hancock National Bank vr. Farnum, 176

v. S, 640,

_2Embry +, Palmer, 107 U. 8. 3, 9; Atchison, T. & S. F. Ry. v. Sowers,

213 U. 8. 55, 64.

2 Toucey vs. New York Life Ins. Co.

exercised that power for general purposes by Judicial Cote

§ 262.*

As originaliy enacied § 265 was a single line in a two page act

concerning practice in the federal courts, Act of March 2. 17:5,

e. 22, $5, 1 Stat. 334. The aet’s disconnected provisions were

amendiments to the statute establishing Judicial Courts of

United States. The short section in which § 2600 appeared on

ene hand enlarged equity powers of judges of this Court by author

izing them to issue writs of me «reat and injunetion, and en the

other restricted the use of restraining orders without notice. L.

to the four corners of the aet, for lack of legislative Materials.

deduetions as to the purpose and infention of the enacting Co

is, if

vress, and faced with the absolute prohibition of its words,

well be concluded that the intention was to bar an inj

running against the court itself as distinguished from the partes

The fact that courts of equity had long exerebsed the power

teriain bills to carry their deerees into exeeution Dvn

against the parties adds strength to such a supposition

needed powers We Ud mot be agnuy Witharawn,

1 ! }

x ° .

We are pot refevated ta sueh speculations, however j

t

vision in one form or anether has been embodied im ours’

law since 1793. It was continued by the adoption of the he

V1 ed Statntes of | Bote and the Judicial Code ot 17) Ty

the cases interpreting it have been woven into the fabric o!

law through the decades. What changes world have been m

its form to meet the needs of our expanding Jurispradence

it net for the flexibility supplied by Indicial interpretation, vw

only conjecture, Certainly when the eode of TOT restated"

terms, the Congress took into consideration what had by that

eome to be its accepted interpretation. Granted that $265 0s .1°

a sentence or section of a legistative scheme whose meanins

he sought in the purpose of the entire enactment or series of ef

‘The Supreme Court and the distriet courts shall have power fo iss

ef scire facias, The Supreme Court, the eirent courts ef appeants,

district courts shall have power to issue all writs not sper ifically prov

hy statute, which may be necessary for (he exercise of their respect ‘

dictions, and agreeable to the naages and principles of law.’* CR. *

Mar. 3, 191], ce. 231, § 262, 36 Stat. 1362.

4Cf Steelman r. All Continent Co., ao TY. Ss. 974, Pa): Warren.

and State Court Interference, 1930) 43 Harv. L. Rew. 345, 572

" Story, Equity Pleadings (10th Ed.) § 429: Mitford, Pleadings im O

(1780) p. 38: Cooper, Equity Pleading, (1809) pp. 98, 99; Booth vr. leavers

1 Keen 570 (1837); Kershaw v. Thompson, 4 Johns, Ch. 609 (N, Y. 1

-

Toucey Vs. New York Life Ins. Co. 3

ments.’ we are nevertheless led by the judicial history intervening

ts passage to look beyond the literal language and give

weight to those decisions which had added to sts content before

‘he reenactment in the Judicial Code. In the Senate Report of the

Special Joint Committee on Revision and Codification no change

~-

n language was suggested. Yet the Committee as indicative of

Sthen state of the law cited numerous cases which are relitigation

aces and are analyzed or referred to later 1a this opimton.? We are

more persuaded to believe that the Code of 1911 intended to

yeornt this early legislation with its judicial gloss because of the al

offered. This alternative is that a federal judgment entere 7

aps after vears of expense in niwey and energy and after the

tion of thousands of pages of evidence Comes to nothing

inal. It is te be only the basis fer a plea of res judicata

sto be examined by another court, unfamiaar with the

already made, to determine whether the issues were or

ot settled by the former adjudication.” We. tee, desire

the difficntties innate in the federal svstem af voverbment

eo sttoothed away witheut a clash of sovereiynties but we find

veause for alarm: in efieming a eourt whieh forbids parties bound

decree to ficht the battle over on another day and field.” We

net in reaching for theoretical symmetry hamper the efi.

and needlessiv break the continuity of our quidicial method

wy A deeree forbidding a defeated) party from setting up

cht anywhere, based upon claims adjudged is the usual form

fate for determining eoutroversies |!

nynetiens are appropria

1 orts properly are hesitant te depart from literalismi in

reting a statute!) Strong equities do increce departure Trom

nanan course where the purpose at thie Coneress appears

I: is hard te coneeive of a statute, new or old, which

6 Waited States ve. Amer. Trucking Ass ‘ns, 319 ” S 534. 543.

"Frenels ob. Wav. 22 Wall. 250: Dietzsch rv. Huidekoper, 165 U.S. 494;

Central Trust Co.. 192 U. 8. 112; Sharon v. Terry, 36 Fed. 357

rher Seeond Nat. Bank. 67 Fed. 8332; Central Trnst Co. + Western

NO RB Co.. 89 Fed. 24: James vr. Central Trust (o., @8 Fed. 480) Chicuge

R T& PL Ry. vr. St. Joseph Union Depet Co., 92 ‘ed. 22: State Trust Co. 1

Kansas Citv, P. & G. R. Co., 119 Bed, 10.

Ihetaseh rv. Huidekoper, 103 U.S. 494, 498.

*(¥ Princess Lida v. Thompson, 305 U.S 456, 468,

“Eg. In re Chiles, 22 Wall. 157, 166; Sharon v Terry, 36 Fed. 357, 345,

11(*, Southern Railway Co, r. Painter, No. 24 this term, decided today.

12 Tited States rv, Amer. Trucking Ase’ns, 310 T S. 534: United States ~.

(aaranty Trust Co., 280 U. S. 478: Miller vr. Nut Margarine Co., 284 1. S.

5; Allen r Regents, 304 U. S. 439.

Basis iin lie ss

+ Toucey vs. New York Life Ins. Co.

has a meaning totally disassociated from supporting legislatic:

or the body of adjudications within its ambit. This statute is)

a posture much more favorable for the interpretation that it autho:

izes injunctions against rélitigation in state courts than were tf.

statutes construed in any of the cases cited in the preceding nor

for the interpretation given chem. In facet we conclude that

restatement in the Code of 1911 with the decisions pow to |

examined in existence necessitates the interpretation here ady

vated. Additional decisions since 147] and the failure of Congres

to repudiate this interpretation add something of substance to ths

arenent,

There exists no divergence of view in regard to the power

federal courts to enjoin proceedings in state courts where the stay

aetion may embarrass or interfere with the federal eourt’s pris

control over a res which is in its possession.'* That is an exception

te 3260. Equally firmly embedded is the power, long exercise:

as compatible with $265, of carrying into execution by injun

Tion against state actions the equitable decrees which have Serti

rights or claims between the parties to the federal litigation, Ths

igh? be said to be anxiliary to the protective jurisdiction over

property in the possession of a court. Inasmuch, however, as the

cases hereafter cited ceancern rights arising from claims already

adjudicated, and since, in the eases Where a res was at one tim

invelved, the property was no longer in the possession of the court

isting the injunetion, the theory of preventing an unseemly clas

over physical possession has no basis. The principle for which the

following authorities stand is that a court has the right to execute

its decrees to avoid relitigation and forced reliance on res Judventn

The proceedings, as will be made to appear later, which were « If

plemented by the orders prohibiting state suits here under review,

fall well within the limits of this hitherto wel] recognized con

ception

As early as 1893 this Court declared in Root v. Woolworth, 1

CU. 8, 401. 411. that the ‘jurisdiction of courts of equity to inter

fere and effectuate their own decrees by injunctions or writs of

HASIstanee aT order to avoid the relitigation of questions once set

ted between the same parties. is well settled."’ Root, the parts

enjoined by the original decree. asserted rights whieh would re-

quire relitivati Moot settled issies. Aecordingly he was enjoined

1S Kline +. Burke Construction Co.. 260 U.S. 226, 229.

Toucey vs. New York Life Ins. Co. 5

on supplemental bill, inter alia, ‘from bringing any action or

actions touching the title to or possession of the said premises

; _ ?* Until dissolved, that injunction forbade proceedings

in state and federal courts alike. Although § 265 was not discussed,

she case is cited as a convenient summary of the then law, and be-

cause it promptly became a precedent for enforcement of decrees

even when the problem of § 265 was raised. The authority of this

vase has not been doubted uot now.

Prout v. Starr, 188 U.S. 537, 544, forbade a state suit in viola-

tion of a federal court stipulation for a decree, treated the stipu-

‘ation as @ decree, and enjoined an action in personam in the state

court for the collection of penalties under an unconstitutional stat-

ute. The state action was in violation of the original federal

iwree. This Court said: ‘‘The jurisdiction of the Circuit Court

| could not be defeated or impaired by the institution, by one of the

parties, of subsequent proceedings, whether civil or Fre,

volving the same legal questions, in the state court.’

In 193 U.S. appeared the ease of Julian v. Central Trust Com-

any. A railroad property in North Carolina had been sold under

freclosure proceedings in the federal circuit court. The decree

was that the property be sold free of all claims of parties and the

judicial sale was confirmed to the Southern Railway Company.

Some years later a cause of action arose which was prosecuted to

judgment in a state court against the original morigagor without

notice to or claim against the purchaser, the Southern. In the

‘ave of a threat to sell the property formerly conveyed by the

federal decree, the circuit court enjoined the state proceedings.

This Court said, pp. 112, 114: ‘‘In such case we are of opinion

‘hat a supplemental bill may be filed in the original suit with a

view to protecting the prior jurisdiction of the Federal court and

‘) render effectual its decree. . . . In such cases where the

Federal court aets in aid of its own jurisdiction and to render its

leeree effectual, it may, notwithstanding sec. 720, Rev. Stat.,

265 J. C1 restrain all proceedings in a state court which would

have the effect of defeating or impairing its jurisdiction.

It is conceded that the Federal right could be set up in the state

~onrt from which the execution issued, and, if denied, the ultimate

rights of the parties can be determined upon writ of error to this

ort. In the view we have taken of this case the Federal court

6 Toucey vs. New York Life Ins. Co.

had not lost its jurisdiction to protect the purchaser at its sale

upon direet proceedings such as are now before us.’’*4

Riverdale Mills v. Manufacturing Co., 198 U. 8S. 189, followed

the established doctrine. The Riverdale Mills acquired property

by judicial sale in the federal court. A state proceeding later was

begun by parties to the federal foreclosure alleging the invalidity

of the sale and secking possession of the property. Riverdale

then filed an ancillary bill in the original foreclosure suit for an

injunction against prosecution of the state suit. Against ‘he

claimed protection of R. 8. § 720 (§ 265 J. C.), p. 193, it was:held

here that a federal court may ‘‘protect the title which it has de-

creed as against everyone a party to the original suit and prevent

that party from relitigating the questions ef right which have

already been determined.”’ P. 195.

It is quite clear that the Court in both the Julian and the

Riverdale cases was intent not on protecting a res, sinee that had

long passed from its hands, but on avoiding relitigation by exe-

euting its decrees. This appears particularly from their rei:

ance upon French v. Hay, 22 Wall. 290, Dietzsch v. Huadekoper,

103 U.S. 494, and Sharon v. Terry, 36 Fed. 337. In the French

case no res was involved. It was a federal injunction against the

enforcement of a judgment of a state court obtained in a state

action after removal of a related but separate state suit. The reason-

ing proceeded upon the protection of federal judgments, not on the

language of the removal statute. The same is true of Dirtrsch.

There a state snit on a replevin bond was enjoined by the federal

court because it grew out of a failure to return property awarded

in replevin in a state court after the removal of the orizna.

replevin suit to the federal eourt which issued the injuns oT

Tt was there said, p. 497: ‘°A court of the United States is not pr

vented from enforcing its own judgments by the statute which for

bids it to grant a writ of injunetion to stay proceedings in a 57a

court.”’

14 The doctrine of the Julian case finds illustrations in the lower federal

courts. While it is true that those courts were enforcing foreclosure. that

purpose had been accomplished and the enjoined state suits sought relitegace”

of closed issues. James v. Central Trast Co., 98 Fed. 489 (1899), modifs-me

Central Trust Co. rv. Western N. C. R. Co., 89 Fed. 24 (1898); State Trust

Co. v. Kansas City, P. & G. R. Co., 110 Fed. 10 (1901); Central Trust

Co. v. Western North Carolina R. Co., 112 Fed. 471 (1901); Alton Water ©

vr. Brown, 166 Fed. 840 (1908).

Toucey vs. New York Life Ins. Co. 7

The Court today lays aside Gunter v. Atlantic Coast Line, 200

VS. 273 (1906), as inapplicable. The case in our view may be

properly cited as a relitigation decision. It forcefully declares, albeit

by alternative ruling, for the position here taken. <A federal court

had enjoined a state tax on the ground) of unconstitutionality. The

state was a party. Years later the state brought an action in the

state court for the tax which the deeree prohibited. An ancillary

bill sought and obtained an injunction from the federal court.

This Court said, p. 292, ‘‘Indeed, the proposition that the Eleventh

Amendment, or section 720 of the Revised Statutes, control a court

of the United States in administering relief, although the court was

acting in a matter ancillary to a decree rendered in a cause over

which it had jurisdiction, is not open for discussion. Dietzsch v.

Huidekoper, 103 U. 8. 494; Prout v. Starr, 188 U. 8. 537; Julian

v Central Trust Co., 193 V. 8. 93, 112.°’ It cannot fairly be said,

we think. that this was not a holding that a federal court has the

duty to protect its parties against relitigation. This seems quite

certain when we examine the cases cited which are discussed hereto-

fore in this opinion.

The Terry case cited under the Riverdale Mills case, supra, is a

good illustration of the permeation of our law by the principle of

protection of federal decrees by injunctions against prosecuting st:

suits which relitigate settled issues. In Sharon vy. Terry, a for.

decree had determined the frandulert character of a marriage «

tract, and had enjoined all efforts to establish rights under any

its provisions. Notwithstanding this decree a party thereafter

songht and obtained a judgment of the highest court of the state

determining the marriage contract valid. There was no plea of

res judicata in the state proceedings. After the entry of the state

judgment, the persona! representative of the winning party in the

federal suit revived that proceeding and obtained a renewal of the

injunction over the specifie objection that R. S. § 720 (§ 266 J. C.)

barred the crder, 36 Fed. 337, 365.

The opinion was by Justice Field of this Court on cireuit and

stated: ‘‘ The decree of the federal court, when revived, may be used

to stay any attempted enforcement of the judgment of the state

court.’’ P. 364. It is true that the opinion shows that the circuit

court was of the view that prior jurisdiction of an in personam cause

gave the federal court authority to issue an injunction against state

proceedings. P. 366. But the decision was directly on the point

8 Toucey vs. New York Life Ins. Co.

of enforcement of a decree. When the case came to this Court it

was affirmed without consideration of § 265 on the ground that the

propriety of the revivor was the only matter for decision, 141 U. 8.

49.

In the later case of Missouri Pac. Ry. Co. y. Jones, 170 Fed. i24

(1909), a federal court had decided that a state statute fixing rail-

road rates was unconstitutiona! and had entered decrees for the

railroads accordingly. Thereafter a county attorney commenced

a suit in the state court against the companies to restrain collection

of any but the statutory rate. On supplemental bill by the rail-

roads the federal court enjoined him from prosecuting that suit,

and relitigating the rate controversy. Similarly, in St. Louis Min.

& Mill. Co. v. Montana Mining Co., 148 Fed. 450 (1906), the rn-

successful party in the federal suit was enjoined from proceeding

further in the state court to relitigate matters already decided.”

The fact that the federal proceeding was ancillary to an action to

try title seems to have had no part in the decision.'®

These cases were all handed down before the adoption of the

Judicial Code in 1911. They are catalogued to show that the power

of the federal courts to make their decrees effective was accepted

as consonant with the general prohibition of § 265. Pomeroy

taught that this was the law in 1905.17 The rule was applied after

1911 when oceasion arose. By Supreme Tribe of Ben-Hur v. Cauh'¢,

255 U. S. 356, 367, it was decided in 1921 almost without dis-

cussion that a federal court which had entered a decree as to riglits

in a fraternal benefit association in a class suit might enjoin by

neillary bil! other members of the class from relitigating the

issues in a state suit, Looney v. Eastern Tezas R. Co., 247 U.S

214, cited as a controlling precedent, was suggested there by

appellant, the Supreme Tribe of Ben-Hur, upon the very point

here under discussion. Jd., 65 Law. Ed. 675. This Court now

lays the Looney case aside as not being a ‘*relitigation’’ case

— ae

—_—-

15%. Garner +. Second Nat. Bank, 67 Fed, 833 (1895).

16 There are inscances of the recognition of the power to prevent relitiga

tion despite R. 8. § 720 though the power was not actually exercised, (1°.

K. I. & P. Ry. v. St. Joseph Union Depot Co., 92 Fed, 22, 25 (1898); Guardian

Trust Co. v. Kansas (ity Southern Ry. Co., 146 Fed. 337, 340 (1906), Craft

¢. Lathrop, Fed. Cas. No. 3318 (1851), presents the converse situation ot t}

exercise of this power without consideration of the contemporary equi\s nt

of § 265.

1714 Pomeroy’s Equitable Remedies (1905) $640, p. 1079. After dis

cussing § 262---'‘ Accordingly, a federal court may grant an injunetion agans!

2 procceding in a state court when necessary to render effective its o"

decree.’’

=

Toucey vs. New York Life Ins. Co. 9

While the injunction in the Looney case was not in aid of a decree,

it was in aid of jurisdiction taken to determine a Texas rate con-

troversy. A temporary injunction had been entered to maintain

the status quo until a review by the Interstate Commerce Commis-

sion. A temporary injunction may well be likened to a decree and

entitled to the same protection against relitigation. Such was evi-

dently this Court's view. It said, page 221: ‘*So important is it

that unseemly conflict of authority between state and federal courts

should be avoided by maintaining the jurisdiction of each free from

the encroachments of the other, that §265 of the Judicial Code,

Rev, Stats., § 720, Act of March 2, 1793, e. 22, 1 Stat. 334, has re-

peatedly been held not applicable to such an injunction.’’

The last case in this Court, Local Loan Co. v. Hunt, 292 U. S.

234, upheld by a unanimous court an injunction upon an ancillary

bill in a bankruptey proceeding forbidding the prosecution in a

state court of a claim discharged in bankruptey. This Court placed

its decision squarely on the jurisdiction of the bankruptcy court

to execute its decrees ‘‘notwithstanding the provisions of § 265 of

the Judicial Code.’’ Quite properly no mention is made of the ex-

ception in § 265 ‘‘except in eases where such injunction may be

authorized by any law relating to proceedings in bankruptey.’”’

The only authorization for injunctions is in Bankruptcy Act §11,

11U 8. C. §29, which provides for a stay of pending suits during

adjudication in bankruptey. This is substantially the language of

(21 of the Bankruptey Act of 1867, 14 Stat. 526, which caused the

insertion of the exception in the Revised Statutes as is shown by

the cross-reference under R. 8S. $720. The specific exception of

§265 was inapplicable to the Leeal Loan Company situation, Fur-

thermore, this case involved a res only in the sense that ev“ bank-

tuptey proceeding involves a res, i, e., the estate.

(ther federal courts since the adoption of the Judicial Co“ » have

continued to enjoin relitigation of settled issues.”

We think it may be eccurately stated that for more t) .1 half a

century there has been a widely accepted rule supportin * .he power

18 St. Louis-‘San Franciseo Ry. v. McElva'. 253 Fed. 123 (1118) (validity

of mortgage foreclosure); Wilson v. Alexander, 276 Fed. 875 (1921) (de-

feasibility of title to land); Hickey t. Johnson, 9 F. (2d) 498 (1925) (valid-

ity of deeds to Indian land); American Surety Co. of New York v. Baldwin,

2 F, Supp. 679 (1933) (liability of surety on appeal bond); Sterling .

Gredig, 5 F. Supp. 329 (1932) (validity of provisions in a will); Hesselberg

t. Aetna Life Ins. Co., 102 F. (2d) 23 (1939) (validity of insurance policy).

10 Toucey vs. New York Life Ins. Co.

of federal courts to prevent relitigation. There are adequate prece-

dents directly in point and others which recognize that the rule

exists and is sound. Some at one time involved a res. A number

applied the same rule when a res was never in the hands of the

court. Not a case nor a text book is cited to support the Court's

present position. No articles in periodicals suggest the propriety

or desirability of so positive a change, except a single query as {0

the logic of the relitigation development.'® Though the Judicial

Code received careful analysis before adoption,*® no language’ was

inserted to disavow the settled construction of the reenacted, sec-

tion. Dial v. Reynolds, 96 U. 8. 340, said by the Court to be a “‘re

litigation’’ case, did not involve a decree. In a federal suit to quiet

titie an injunction was sought to forbid a state action in eject-

ment. It is in line with Aline v, Burke Construction Co., 260 U.S

226, but not even persuasive on the question of relitigation or

execution of decrees.

We turn now briefly to the original and auxiHary decrees in the

two cases under consideration. In the Toucey case his suit in

equity against the insurance company for restoration of an insur-

ance policy and payments for benefits under it on the ground of

the fraud of the company was decided against Toucey. An as-

signee of Toucey’s in privity with him sought to relitigate the same

issues in a state court. The federal court which entered the orig-

inal decree enjoined on supplemental bill ‘‘retrial, reconsideration

or readjudication’’ of the settled issues and the prosecution of the

state action.”*

In the Jowa-Wisconsin Bridge Co. case a decree invalidating 4

certain mortgage and bonds issued in consideration of claimed in-

debiedness after protracted litigation was entered December 1, 1936,

in a mortgage foreclosure suit brought in federa! court by the bond-

holders. This decree became final.2* Thereafter parties to the pro-

ceedings sought to litigate, in the state courts of Delaware, the

validity of certain items of the indebtedness which are alleged te

form the basis for the bond issue and to have been invalidated dy

19 See Taylor and Willis, The Power of Federal Courts to Enjoin Proceed:

ings ia State Courts, (1932) 42 Yale L. J. 1169, 1176. C¥. Warren, Federal

and State Court Interferenee, (1930) 43 Harv. L. Rev. 345, 378.

20 Senate Report No. 388, 61st Cong., 2d Sess.. (1910), p. 2.

21 Cf. Touecey v. New York Life Ins. Co., 102 F. (24) 16, 20; Equitable

Life Assur. Soc. v. Wert, 102 F. (2d) 10.

2298 F. (2d) 416, cert. denied, 305 U. S. 650.

ee Te eee 3:

eT a ee ee ee

. Ot oi le! aed WW xe"4 2) &

Toucey vs. New York Life Ins. Co. li

the former federal decree. A supplemental and ancillary bill was

fled by the Bridge Company in the original federal court suit

seeking an injunction against the relitigation of the already adju-

dicated causes of action. The District Court granted the injunc-

tion «n a finding that the causes declared upon in Delaware had

been settled by the federal litigation.*%

These summary statements show plainly, it seems to us, that the

injunctions now set aside by this Court were issued within the recog-

nized rule that federal courts may pratect their decree by prohibit-

ing relitigation without violation of § 265 as heretofore understood

and interpreted. Both decrees should be affirmed.**

The Cnrer Justice and Mr. Justice RoBerts concur in this

lissent.

%3 See, for an aang _gpony | of the complexities of the issues already

wttled: Bechtel Trust Co. v. lowa-Wisconsin Bridge Co., 19 F. Supp. 127;

First Trust & Savings Bank v. Iowa-Wisconsin Bridge Co., 98 F. (2d) 416;

Phoenix Finance Corp. v. lowa-Wisconsin Bridge Co., 115 F. (2d) 1.

24it might be neted that § [65 is recognized as merely a limitation on gen-

tral equity powers, Smith v. Apple, 264 U. 8. 274, while the Norris-LaGuardia

Act, 47 Stat. 70, is a denial of jurisdiction ¢o enjoin. ‘‘no court of the United

States . . . shall have j~ isdiction to issue any . . . imjuncticn in a case

volving or growing out vi a labor dispute, except . . . .’’