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CRS Annotated Constitution

Article IV -- Table of ContentsPrev | Next
RECOGNITION OF RIGHTS BASED UPON CONSTITUTIONS, STATUTES, COMMON LAW

Development of the Modern Rule

With regard to the extrastate protection of rights which have not matured into final judgments, the full faith and credit clause has never abolished the general principle of the dominance of local policy over the rules of comity.103 This was stated by Justice Nelson in the Dred Scott case, as follows: “No State . . . can enact laws to operate beyond its own dominions . . . Nations, from convenience and comity . . . recognizes [sic] and administer the laws of other countries. But, of the nature, extent, and utility, of them, respecting property, or the state and condition of persons within her territories, each nation judges for itself.” He added that it was the same with the States of the Union in relation to another. It followed that even though Dred Scott had become a free man in con[p.855]sequence of his having resided in the “free” State of Illinois, he had nevertheless upon his return to Missouri, which had the same power as Illinois to determine its local policy respecting rights acquired extraterritorially, reverted to servitude under the laws and judicial decisions of that State.104

In a case decided in 1887, however, the Court remarked: “Without doubt the constitutional requirement, Art. IV, Sec. 1, that ‘full faith and credit shall be given in each State to the public acts, records, and judicial proceedings of every other State,’ implies that the public acts of every State shall be given the same effect by the courts of another State that they have by law and usage at home.”105 And this proposition was later held to extend to state constitutional provisions.106 More recently this doctrine has been stated in a very mitigated form, the Court saying that where statute or policy of the forum State is set up as a defense to a suit brought under the statute of another State or territory, or where a foreign statute is set up as a defense to a suit or proceedings under a local statute, the conflict is to be resolved, not by giving automatic effect to the full faith and credit clause and thus compelling courts of each State to subordinate its own statutes to those of others but by appraising the governmental interest of each jurisdiction and deciding accordingly.107 That is, the full faith and credit clause, in its design to transform the States from independent sovereigns into a single unified Nation, directs that a State, when acting as the forum for litigation having multistate aspects or implications, respect the legitimate interests of other States and avoid infringement upon their sovereignty, but because the forum State is also a sovereign in its own right, in appropriate cases it may attach paramount importance to its own legitimate interests.108 The[p.856]clause (and the comparable due process clause standards) obligate the forum State to take jurisdiction and to apply foreign law, subject to the forum’s own interest in furthering its public policy. In order “for a State’s substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.”109 Obviously this doctrine endows the Court with something akin to an arbitral function in the decision of cases to which it is applied.

Transitory Actions: Death Statutes.—The initial effort in this direction was made in connection with transitory actions based on statute. Earlier, such actions had rested upon the common law, which was fairly uniform throughout the States, so that there was usually little discrepancy between the law under which the plaintiff from another jurisdiction brought his action ( lex loci ) and the law under which the defendant responded ( lex fori ). In the late seventies, however, the States, abandoning the common law rule on the subject, began passing laws which authorized the representatives of a decedent whose death had resulted from injury to bring an action for damages.110 The question at once presented itself whether, if such an action was brought in a State other than that in which the injury occurred, it was governed by the statute under which it arose or by the law of the forum State, which might be less favorable to the defendant. Nor was it long before the same question presented itself with respect to transitory action ex contractu, where the contract involved had been made under laws peculiar to the State where made, and with those laws in view.

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Actions Upon Contract.—In Chicago & Alton R.R. v. Wiggins Ferry Co.,111 the Court indicated that it was the law under which the contract was made, not the law of the forum State, which should govern. Its utterance on the point was, however, not merely obiter, it was based on an error, namely, the false supposition that the Constitution gives “acts” the same extraterritorial operation as the Act of 1790 does “judicial records and proceedings.” Notwithstanding which, this dictum is today the basis of “the settled rule” that the defendant in a transitory action is entitled to all the benefits resulting from whatever material restrictions the statute under which plaintiff’s rights of action originated sets thereto, except that courts of sister States cannot be thus prevented from taking jurisdiction in such cases.112

However, the modern doctrine permits a forum State with sufficient contacts with the parties or the matter in dispute to follow its own law. In Allstate Insurance Co. v. Hague,113 the decedent was a Wisconsin resident, who had died in an automobile accident within Wisconsin near the Minnesota border, in the course of his daily employment commute to Wisconsin. He had three automobile insurance policies on three automobiles, each limited to $15,000. Following his death, his widow and personal representative moved to Minnesota, and she sued in that State. She sought to apply Minnesota law, under which she could “stack” or aggregate all three policies, permissible under Minnesota law but not allowed under Wisconsin law, where the insurance contracts had been made. The Court, in a divided opinion, permitted resort to Minnesota law, because of the number of contacts the State had with the matter. On the other hand, an earlier decision is in considerable conflict with Hague. There, a life insurance policy was executed in New York, on a New York insured, with a New York beneficiary. The insured died in New York, and his beneficiary moved to Georgia and sued to recover on the policy. The insurance company defended on the ground that the insured, in the application for the policy, had made materially false statements that rendered it void under New York law. The defense was good under New York law, impermissible under Georgia law, and Georgia’s decision to apply its own law was overturned, the Court stressing the surprise to the parties of the resort to the law of another State and the absence of any occurrence in Georgia to which its law could apply.114

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Stockholder Corporation Relationship.—Nor is it alone to defendants in transitory actions that the full faith and credit clause is today a shield and a buckler. Some legal relationships are so complex, the Court holds, that the law under which they were formed ought always to govern them as long as they persist.115 One such relationship is that of a stockholder and his corporation. Hence, if a question arises as to the liability of the stockholders of a corporation, the courts of the forum State are required by the full faith and credit clause to determine the question in accordance with the constitution, laws and judicial decisions of the corporation’s home States.116 Illustrative applications of the latter rule are to be found in the following cases. A New Jersey statute forbidding an action at law to enforce a stockholder’s liability arising under the laws of another State and providing that such liability may be enforced only in equity, and that in such a case the corporation, its legal representatives, all its creditors, and stockholders, should be necessary parties, was held not to preclude an action at law in New Jersey by the New York superintendent of banks against 557 New Jersey stockholders in an insolvent New York bank to recover assessments made under the laws of New York.117 Also, in a suit to enforce double liability, brought in Rhode Island against a stockholder in a Kansas trust company, the courts of Rhode Island were held to be obligated to extend recognition to the statutes and court decisions of Kansas whereunder it is established that a Kansas judgment recovered by a creditor against the trust company is not only conclusive as to the liability of the corporation but also an adjudication binding each stockholder therein. The only defenses available to the stockholder are those which he could make in a suit in Kansas.118


Footnotes

103 Bank of Augusta v. Earle, 13 Pet. (38 U.S.) 519, 589–596 (1839). See Kryger v. Wilson, 242 U.S. 171 (1916); Bond v. Hume, 243 U.S. 15 (1917).
104 Scott v. Sandford, 19 How. (60 U.S.) 393, 460 (1857); Bonaparte v. Tax Court, 104 U.S. 592 (1882), where it was held that a law exempting from taxation certain bonds of the enacting State did not operate extraterritorially by virtue of the full faith and credit clause.
105 Chicago & Alton R.R. v. Wiggins Ferry Co., 119 U.S. 615, 622 (1887).
106 Smithsonian Institution v. St. John, 214 U.S. 19 (1909). When, in a state court, the validity of an act of the legislature of another State is not in question, and the controversy turns merely upon its interpretation or construction, no question arises under the full faith and credit clause. See also Western Life Indemnity Co. v. Rupp, 235 U.S. 261 (1914), citing Glenn v. Garth, 147 U.S. 360 (1893), Lloyd v. Matthews, 155 U.S. 222, 227 (1894); Banholzer v. New York Life Insurance Co., 178 U.S. 402 (1900); Allen v. Alleghany Co., 196 U.S. 458, 465 (1905); Texas & N.O.RR Co. v. Miller, 221 U.S. 408 (1911). See also National Mutual B. & L. Assn. v. Brahan, 193 U.S. 635 (1904); Johnson v. New York Life Ins. Co., 187 U.S. 491, 495 (1903); Pennsylvania Fire Ins. Co. v. Gold Issue Mining Co. 243 U.S. 93 (1917).
107 Alaska Packers Assn. v. Comm. 294 U.S. 532 (1935); Bradford Elec. Co. v. Clapper, 286 U.S. 145 (1932).
108 E.g., Allstate Insurance Co. v. Hague, 449 U.S. 302 (1981); Nevada v. Hall, 440 U.S. 410 (1979); Carroll v. Lanza, 349 U.S. 408 (1955); Pacific Employers Ins. Co. v. Industrial Accident Comm., 306 U.S. 493 (1939); Alaska Packers Assn. v. Industrial Accident Comm., 294 U.S. 532 (1935).
109 Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 818 (1985) (quoting Allstate Insurance Co. v. Hague, 449 U.S. 302, 312–313 (1981) (plurality opinion)).
110 Dennick v. Railroad Co., 103 U.S. 11 (1881), was the first so–called “Death Act” case to reach the Supreme Court. See also Stewart v. Baltimore & Ohio R. Co., 168 U.S. 445 (1897). Even today the obligation of a State to furnish a forum for the determination of death claims arising in another State under the laws thereof appears to rest on a rather precarious basis. In Hughes v. Fetter, 341 U.S. 609 (1951), the Court, by a narrow majority, held invalid under the full faith and credit clause a statute of Wisconsin which, as locally interpreted, forbade its courts to entertain suits of this nature; in First Nat. Bank v. United Airlines, 342 U.S. 396 (1952), a like result was reached under an Illinois statute. More recently, the Court has acknowledged that the full faith and credit clause does not compel the forum state, in an action for wrongful death occurring in another jurisdiction, to apply a longer period of limitations set out in the Wrongful Death Statute of the State in which the fatal injury was sustained. Wells v. Simonds Abrasive Co., 345 U.S. 514 (1953). Justices Jackson, Black, and Minton, in dissenting, advanced the contrary principle that the clause requires that the law where the tort action arose should follow said action in whatever forum it is pursued.
111 119 U.S. 615 (1887).
112 Northern Pacific Railroad v. Babcock, 154 U.S. 190 (1894); Atchison, T. & S.F. Ry. v. Sowers, 213 U.S. 55,67 (1909).
113 449 U.S. 302 (1981). See also Clay v. Sun Insurance Office, Ltd., 377 U.S. 179 (1964).
114 John Hancock Mutual Life Ins. Co. v. Yates, 299 U.S. 178 (1936).
115 Modern Woodmen v. Mixer, 267 U.S. 544 (1925).
116 Converse v. Hamilton, 224 U.S. 243 (1912); Selig v. Hamilton, 234 U.S. 652 (1914); Marin v. Augedahl, 247 U.S. 142 (1918).
117 Broderick v. Rosner, 294 U.S. 629 (1935). See also Thormann v. Frame, 176 U.S. 350, 356 (1900); Reynolds v. Stockton, 140 U.S. 254, 264 (1891).
118 Hancock National Bank v. Farnum, 176 U.S. 640 (1900).
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