[260 U.S. 226, 227] Messrs. Wm. H. Arnold and F. S. Quinn, both of Texarkana, Ark., for petitioners.
Mr. James B. McDonough, of Fort Smith, Ark., for respondent.
Mr. Justice SUTHERLAND delivered the opinion of the Court.
The Burke Construction Company, a corporation orgainized under the laws of the state of Missouri, brought an action at law against petitioners in the United States District Court for the Western District of Arkansas on February 16, 1920. The jurisdiction of that court was invoked upon the ground of diversity of citizenship, the petitioners being citizens of the state of Arkansas. The action was for breach of a contract between the parties, whereby the Construction Company had engaged to pave certain streets in the town of Texarkana. A trial was had before the court and a jury which resulted in a disagreement.
Subsequent to the commencement of the action by the Construction Company, viz., on March 19, 1920, petitioners instituted a suit in equity against that company in a state chancery court of the state of Arkansas, upon the same contract, joining as defendants the sureties on the bond which had been given for the faithful performance of the contract. The bill in the latter suit alleged that the Construction Company had abandoned its contract and judgment was sought against the sureties as well as against the company. The bill asked an accounting with reference to the work which had been done and which remained to be done under the contract, and prayed judgment in the sum of $88,000. [260 U.S. 226, 228] In the action brought by the Construction Company the petitioners filed an answer and cross-complaint, setting up, in substance, the same matters which were set forth in their bill in the state court. In the equity suit the Construction Company filed an answer and cross-complaint, setting up the matters charged in its complaint in the action at law. Thus the two cases presented substantially the same issues, the only differences being those resulting from the addition of the sureties as parties defendant in the equity suit. Both actions were in personam, the ultimate relief sought in each case being for a money judgment only.
The equity suit was removed to the United States District Court upon the petition of the Construction Company upon the ground that the company and the petitioners were citizens of different states and that the controversy between them was a separable controversy, and upon the further ground that a federal question was involved. Petitioners moved to remand. The District Court sustained the motion and the equity suit was thereupon remanded to the State Chancery Court, where it is still pending.
After the mistrial of the action at law in the United States District Court, the Construction Company filed a bill of complaint as a dependent bill to its action at law, by which it sought to enjoin the petitioners from further prosecuting the suit in equity in the State Chancery Court. The United States District Court denied the injunction and an appeal was taken to the Circuit Court of Appeals for the Eighth Circuit. That court reversed the decision of the District Court and remanded the case with instructions to issue an injunction against the prosecution of the suit in equity in the State Chancery Court. From that decree the case comes here upon writ of certiorari.
Section 265 of the Judicial Code (Comp. St. 1242) provides:
But this section is to be construed in connection with section 262 ( Comp. St. 1239) which authorizes the United States courts 'to issue all writs not specifically provided for by statute, which may be necessary for the exercise of their respective jurisdictions and agreeable to the usages and principles of law.' See Julian v. Central Trust Co., 193 U.S. 93, 112 , 34 S. Sup. Ct. 399; Lanning v. Osborne (C. C.) 79 Fed. 657, 662. It is settled that where a federal court has first acquired jurisdiction of the subject-matter of a cause, it may enjoin the parties from proceeding in a state court of concurrent jurisdiction where the effect of the action would be to defeat or impair the jurisdiction of the federal court. Where the action is in rem the effect is to draw to the federal court the possession or control, actual or potential, of the res, and the exercise by the state court of jurisdiction over the same res necessarily impairs, and may defeat, the jurisdiction of the federal court already attached. The converse of the rule is equally true, that where the jurisdiction of the state court has first attached, the federal court is precluded from exercising its jurisdiction over the same res to defeat or impair the state court's jurisdiction.
This court in Covell v. Heyman, 111 U.S. 176, 182 , 4 S. Sup. Ct. 355, 358 (28 L. Ed. 390), said:
And the same rule applies where a person is in custody under the authority of the court of another jurisdiction. Ponzi v. Fessenden, 258 U.S. 254 , 42 Sup. Ct. 309, decided March 27, 1922
But a controversy is not a thing, and a controversy over a mere question of personal liability does not involve the possession or control of a thing, and an action brought to enforce such a liability does not tend to impair or defeat the jurisdiction of the court in which a prior action for the same cause is pending. Each court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court. Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res adjudicata by the court in which the action is still pending in the orderly exercise of its jurisdiction, as it would determine any other question of fact or law arising in the progress of the case. The rule, therefore, has become generally established that where the action first brought is in personam and seeks only a personal judgment, another action for the same cause in another jurisdiction is not precluded. Stanton v. Embrey, 93 U.S. 548 ; Gordon v. Gilfoil, 99 U.S. 168 , 178; Hunt v. New York Cotton Exchange, 205 U.S. 322, 339 , 27 S. Sup. Ct. 529; Insurance Co. v. [260 U.S. 226, 231] Brune's Assignee, 96 U.S. 588 , 592; Merritt v. American Steel Barge Co., 79 Fed. 228, 24 C. C. A. 530; Ball v. Tompkins (C. C.) 41 Fed. 486; Holmes County v. Burton Construction Co. (C. C. A.) 272 Fed. 565, 567; Standley v. Roberts, 59 Fed. 836, 844, 845, 8 C. C. A. 305; Green v. Underwood, 86 Fed. 427, 429, 30 C. C. A. 162; Ogden City v. Weaver, 108 Fed. 564, 568, 47 C. C. A. 485; Zimmerman v. So Relle, 80 Fed. 417, 419, 420, 25 C. C. A. 518; Baltimore & Ohio R. Co. v. Wabash Railroad Co., 119 Fed. 678, 680, 57 C. C. A. 322; Guardian Trust Co. v. Kansas City Southern Railway Co., 146 Fed. 337, 340, 76 C. C. A. 615; Guardian Trust Co. v. Kansas City Southern Railway Co., 171 Fed. 43, 96 C. C. A. 285, 28 L. R. A . (N. S.) 620; Woren v. Witherbee, Sherman & Co. (D. C.) 240 Fed. 1013; W. E. Stewart Land Co. v. Arthur (C. C. A.) 267 Fed. 184.
In Baltimore & Ohio Railroad Co. v. Wabash Railroad Co., supra, the Circuit Court of Appeals for the Seventh Circuit said:
In Stewart Land Co. v. Arthur, supra, where the plaintiff sued the defendant upon two checks and a promissory note in the United States District Court, and subsequently brought an action against him upon the same instruments in a state court and an injunction was sought against the latter action, the Circuit Court of Appeals for the Eighth Circuit disposed of the matter as follows:
Prior to the decision in the instant case, as an examination of the foregoing authorities, and others which might be added, will show, the rule was firmly established that the pendency in a federal court of an action in personam was neither ground for abating a subsequent action in a state court nor for the issuance of an injunction against its prosecution. In the case now under consideration, however, the court below held otherwise, upon the ground [260 U.S. 226, 233] that:
It is said further that if the second suit may be prosecuted so as to secure an adjudication in a state court before the action of the federal court can be adjudicated, then the federal court's adjudication would be made futile because before it is rendered the controversy will have become res adjudicata by the adjudication of the state court. Such a result, it is urged, cannot be allowed because the Construction Company brought its action in the federal court in pursuance 'of a grant of this right in the Constitution and the acts of Congress' and it may not be deprived of that constitutional right by a subsequent suit in a state court.
The force of the cases above cited is sought to be broken by the suggestion that in none of them was this question of constitutional right presented or considered.
The right of a litigant to maintain an action in a federal court on the ground that there is a controversy between citizens of different states is not one derived from the Constitution of the United States, unless in a very indirect sense. Certainly it is not a right granted by the Constitution. The applicable provisions, so far as necessary to be quoted here, are contained in article III. Section 1 of that article provides:
By section 2 of the same article it is provided that the judicial power shall extend to certain designated cases and controversies and, among them, 'to controversies ... between citizens of different states . ...' The effect of these provisions is not to vest jurisdiction in the inferior courts over the designated [260 U.S. 226, 234] cases and controversies but to delimit those in respect of which Congress may confer jurisdiction upon such courts as it creates. Only the jurisdiction of the Supreme Court is derived directly from the Constitution. Every other court created by the general government derives its jurisdiction wholly from the authority of Congress. That body may give, withhold or restrict such jurisdiction at its discretion, provided it be not extended beyond the boundaries fixed by the Constitution. Turner v. Bank of North America, 4 Dall. 8, 10; United States v. Hudson & Goodwin, 7 Cranch, 32; Sheldon v. Sill, 8 How. 441, 448; Stevenson v. Fain, 195 U.S. 165 .1 The Constitution simply gives to the inferior courts the capacity to take jurisdiction in the enumerated cases, but it requires an act of Congress to confer it. The Mayor v. Cooper, 6 Wall. 247, 252. And the jurisdiction having been conferred may, at the will of Congress, be taken away in whole or in part; and if withdrawn without a saving clause all pending cases though cognizable when commenced must fall. Assessors v. Osbornes, 9 Wall. 567, 575. A right which thus comes into existence only by virtue of an act of Congress, and which may be withdrawn by an act of Congress after its exercise has begun, cannot well be described as a constitutional right. The Construction Company, however, had the undoubted right under the statute to invoke the jurisdiction of the federal court and that court was bound to take the case and proceed to judgment. It could not abdicate its authority or duty in favor of the state jurisdiction. Chicot County v. Sherwood, 148 U.S. 529, 533 , 13 S. Sup. Ct. 695; McClellan v. Carland, 217 U.S. 268, 282 , 30 S. Sup. Ct. 501. But, while this is true, it is likewise true that the state court had jurisdiction of the suit instituted by petitioners. Indeed, since the case presented by that suit was such as to preclude its removal to the federal jurisdiction, the state jurisdiction in that particular suit was exclusive. It was, therefore, equally [260 U.S. 226, 235] the duty of the state court to take the case and proceed to judgment. There can be no question of judicial supremacy, or of superiority of individual right. The well-established rule, to which we have referred, that where the action is one in rem that court-whether state or federal- which first acquires jurisdiction draws to itself the exclusive authority to control and dispose of the res, involves the conclusion that the rights of the litigants to invoke the jurisdiction of the respective courts are of equal rank. See Heidritter v. Elizabeth Oil Cloth Co., 122 U.S. 294, 305 , 5 S. Sup. Ct. 135. The rank and authority of the courts are equal, but both courts cannot possess or control the same thing at the same time, and any attempt to do so would result in unseemly conflict. The rule, therefore, that the court 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 decree of the Circuit Court of Appeals is therefore reversed and the case remanded to the District Court for further proceedings in conformity with this opinion.
[ Footnote 1 ] 25 Sup. Ct. 6.