Tennessee v. Union & Planters' Bank
152 U.S. 454, 14 S. Ct. 654, 1894 U.S. LEXIS 2135 (1894)
Rule of Law:
Federal question jurisdiction, whether original or by removal, exists only when the plaintiff's properly pleaded complaint establishes that the suit arises under the Constitution or laws of the United States, and not when a federal question is merely anticipated as a defense or raised by the defendant.
Facts:
- In the first and second cases, the plaintiffs brought suit claiming rights solely under Tennessee law.
- In the first and second cases, the plaintiffs' complaints suggested that the defendants would argue that the state law relied upon by the plaintiffs was unconstitutional under the U.S. Constitution.
- In the third case, the State of Tennessee sought to enforce a tax lien against the capital stock of a defendant bank.
- The defendant bank in the third case claimed its stock was exempt from such taxation by its charter.
- The defendant bank in the third case contended that the state statute, if applied to it, would violate the Contracts Clause of the U.S. Constitution.
Procedural Posture:
- Plaintiffs in the first and second cases filed bills in the Circuit Court of the United States.
- In the third case, the State of Tennessee initiated a suit in a state court against the defendant bank.
- The defendant bank in the third case petitioned for removal of the suit from the state court to the Circuit Court of the United States.
- The Supreme Court reviewed the decrees issued by the Circuit Court of the United States in all three cases.
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Issue:
Does a suit arise under the Constitution or laws of the United States, for purposes of federal question removal jurisdiction under the Acts of 1887 and 1888, when the plaintiff's complaint relies solely on state law, but the defendant anticipates or raises a defense based on federal law?
Opinions:
Majority - Mr. Justice Gray
No, a suit does not arise under the Constitution or laws of the United States for federal question jurisdiction if the federal issue appears only as a defense or is merely anticipated in the plaintiff's complaint. The Court held that the acts of 1887 and 1888, which governed federal jurisdiction, were intended to contract, not expand, the jurisdiction of the Circuit Courts. Citing Osborn v. Bank of United States, the Court affirmed that the plaintiff's right to sue depends on the state of things when the action is brought, and cannot depend on an anticipated defense. For original jurisdiction, it has long been settled that the federal question must appear in the plaintiff's statement of their own claim, as established in Metcalf v. Watertown. The Court further clarified that the 1887 and 1888 Acts limited removal jurisdiction for defendants to only those suits that could have been originally brought by the plaintiff in federal court. Therefore, a defendant's assertion of a federal defense, or a plaintiff's anticipation of such a defense, is insufficient to establish federal question jurisdiction for removal. Since the plaintiffs in all three cases claimed rights only under Tennessee law, and any reference to federal law was either an anticipated defense or a defense raised by the defendant, federal jurisdiction was lacking.
Dissenting - Mr. Justice Harlan
Yes, in the third case, where the defendant's entire defense rested upon a federal constitutional claim, the suit should have been removable to federal court. Justice Harlan disagreed with the majority's interpretation of the 1887 and 1888 Acts as being too narrow. He argued that it has long been settled that a suit 'arises under the Constitution or laws of the United States' if it necessarily involves a federal right or immunity asserted by either party. He contended that Congress, by the 1887 Act, intended to restrict who could remove (only defendants, not either party as under the 1875 Act) and to increase the jurisdictional amount, but not to fundamentally alter what kind of federal questions allowed removal when asserted by a defendant. Harlan questioned the logic of allowing a plaintiff to invoke federal jurisdiction based on a federal claim while denying a defendant the right to remove a case where their entire defense is grounded in federal law. He believed the phrase 'of which the Circuit Courts of the United States are given original jurisdiction by the preceding section' was primarily meant to ensure the jurisdictional amount was met for removed cases, not to limit the nature of the federal question for a defendant's removal rights.
Analysis:
This case is a landmark decision establishing the 'well-pleaded complaint rule' as the touchstone for federal question jurisdiction in both original and removal contexts. It significantly limits access to federal courts based on a federal defense, emphasizing that the federal question must be a necessary element of the plaintiff's cause of action. The ruling reinforces federalism by ensuring that state courts have primary jurisdiction over disputes founded on state law, even when federal issues may arise defensively. Future cases would heavily rely on this interpretation to determine the boundaries of federal court jurisdiction, preventing defendants from using federal defenses as a gateway to federal court unless the plaintiff's initial claim itself presents a federal question.
