Klinev.Burke Constr. Co.

Whether a federal district court may enjoin the prosecution of a parallel suit in state court when the federal action was commenced first?¹⁴

Section 265 of the Judicial Code provides that 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 relating to proceedings in bankruptcy.¹⁵ This section is to be construed in connection with § 262. That provision authorizes the United States courts to issue all writs not specifically provided for by statute. Such writs may be necessary for the exercise of their respective jurisdictions and agreeable to the usages and principles of law. 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.¹⁶ This rule applies only to actions in rem involving a res.¹⁷ The converse holds where state jurisdiction first attaches.¹⁸ A controversy over a mere question of personal liability does not involve the possession or control of a thing. 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.

No. The Burke Construction Company filed its action at law in the United States District Court for the Western District of Arkansas on February 16, 1920, invoking diversity jurisdiction against Arkansas citizens for breach of the paving contract, resulting in a mistrial.¹⁹ On March 19, 1920, the petitioners filed their equity suit in Arkansas state chancery court against the Construction Company and the sureties, seeking an accounting and $88,000 judgment, with each side filing answers and cross-complaints setting forth substantially the same matters in both proceedings.²⁰ Both actions were in personam, seeking only money judgments, and the equity suit was remanded to state court after removal was denied.²¹ The Circuit Court of Appeals directed an injunction against the state suit, but because no res was involved and the actions sought only personal liability, the federal court lacked authority to enjoin the parallel state proceeding under the established rule from Covell v. Heyman.²²

A federal district court may not enjoin the prosecution of a parallel in personam suit in state court even when the federal action was commenced first.²³

Whether the constitutional grant of diversity jurisdiction prevents a state court from adjudicating the same controversy after the federal action has begun?²⁴

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.²⁵ Certainly it is not a right granted by the Constitution.²⁶ Article III, Section 1 vests the judicial power of the United States in one Supreme Court and such inferior courts as Congress may ordain and establish.²⁷ Section 2 extends that power to controversies between citizens of different States.²⁸ The effect is not to vest jurisdiction in the inferior courts but to delimit those in respect of which Congress may confer jurisdiction.²⁹ Every other court created by the general government derives its jurisdiction wholly from the authority of Congress.³⁰ Congress may give, withhold or restrict such jurisdiction at its discretion, provided it be not extended beyond the boundaries fixed by the Constitution.³¹ The state court had jurisdiction of the suit instituted by petitioners. 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.

No. The Construction Company invoked diversity jurisdiction under the statute in its federal action at law filed February 16, 1920, against the Arkansas petitioners for breach of the Texarkana paving contract.³² The petitioners' subsequent equity suit in state chancery court on March 19, 2020, adding the sureties and seeking an $88,000 judgment, was not removable, rendering state jurisdiction exclusive in that suit. Although the federal court was bound to take the case and proceed to judgment without abdicating its authority, the constitutional provisions in Article III do not create an exclusive right that bars the state court from adjudicating the same in personam controversy.³³ Both courts possess equal rank and authority over personal liability actions.³⁴

The constitutional grant of diversity jurisdiction does not prevent a state court from adjudicating the same controversy after the federal action has begun.³⁵

Whether the pendency of an in personam action in federal court precludes a subsequent in personam action in state court seeking the same relief?³⁶

The rule 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.³⁷ Each court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court.³⁸ 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.³⁹ The rule is limited to actions which deal either actually or potentially with specific property or objects.⁴⁰ Where a suit is strictly in personam, in which nothing more than a personal judgment is sought, there is no objection to a subsequent action in another jurisdiction, either before or after judgment, although the same issues are to be tried and determined.⁴¹

No. Although the federal action at law filed by the Burke Construction Company on February 16, 1920, and the petitioners' equity suit filed March 19, 1920, in state chancery court both sought only money judgments on the same paving contract, answers and cross-complaints set forth substantially identical issues apart from the sureties added solely in the equity suit.⁴² After the federal mistrial and remand of the removed equity suit, the Construction Company sought an injunction via dependent bill.⁴³ The pendency of the prior federal in personam action did not preclude the state proceeding or authorize interference, consistent with the rule from Stanton v. Embrey, Gordon v. Gilfoil, and the line of cases including Baltimore & Ohio R.R. Co. v. Wabash R.R. Co.⁴⁴

The pendency of an in personam action in federal court does not preclude a subsequent in personam action in state court seeking the same relief.⁴⁵