Supreme Court of the United States · 1876 · Federal Courts
Federal CourtsConcurrent jurisdictionBankruptcystate court jurisdictionfederal questionconcurrent jurisdictionbankruptcy assigneeBankrupt Act of 1867
Facts
The case involved a suit brought by an assignee in bankruptcy. The principal objection was that the assignee's right to sue existed only by virtue of the federal bankrupt law, so the action could be maintained only in federal court. The assignee's title and causes of action came from section 14 of the Bankrupt Act, which vested in the assignee the bankrupt's rights of action for property and contract-related claims. The state courts otherwise had ordinary cognizance over the kinds of common-law and equitable actions the assignee sought to bring.
Issue
Whether an assignee in bankruptcy, whose authority and title derive from federal bankruptcy law, may bring suit in a state court. More broadly, whether state courts may exercise jurisdiction over rights arising under federal law when Congress has not made federal jurisdiction exclusive.
Rule
Rights arising under the Constitution, laws, and treaties of the United States may be enforced in state courts of competent jurisdiction unless Congress has made federal jurisdiction exclusive by express provision or necessary implication, or unless concurrent state jurisdiction would be incompatible with the nature of the case. Accordingly, an assignee in bankruptcy under the Bankrupt Act of 1867 may sue in state court wherever that court has jurisdiction appropriate to the nature of the action.
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10 practice questions + 4 AI-graded essays on this case
One of 10 multiple-choice questions for this case. Pick an answer to see why.
In Columbus, Ohio, Nora Ellison was appointed receiver under a federal statute that transfers to her all of a failed trader's contract claims. She filed an ordinary breach-of-contract action in an Ohio court of general jurisdiction against Lakeview Grain Supply for unpaid invoices. Lakeview argues the case belongs only in federal court because Nora's authority exists solely by federal law.
How should the Ohio court rule on the jurisdictional objection?
Explanation. The majority rule is that rights arising under federal law may be enforced in state courts that are otherwise competent to hear that class of case, unless Congress has made federal jurisdiction exclusive expressly or by implication, or unless concurrent state jurisdiction is incompatible with the nature of the case. An ordinary contract action is the sort of action state courts commonly hear, and the federal source of Nora's title alone does not oust state jurisdiction.