"Substance" and "Procedure" in Federal Equity.

The Labor Injunction and the Stockholder's Suit Source: Columbia Law Review, Vol. 41, No. 1 (Jan., 1941), pp. 104-121 Published by: Columbia Law Review Association, Inc. Stable URL: http://www.jstor.org/stable/1117208 . Accessed: 02/04/2014 23:56
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protected by the Constitution. Viewed in this light, peaceful picketing is a publicity device, a method of giving expression to opinions on vital economic, social, and political issues. It is an instrument whose aim is to convince the public that some wrong is being done which ought to be rectified by the force of public opinion. As such, peaceful picketing cannot be restricted to any one group, but is to be regarded as a lawful means of persuasion available to any person or group, provided that the matter in controversy is not "of mere local or private concern,"96 and that there are no factors involved which outweigh the public interest in free discussion.97

"Substance" and "Procedure" in Federal Equity-The Injunction and the Stockholder's Suit

Labor

The existence of federal and state courts with partly concurrent jurisdiction has inevitably created problems in choice of law.' Prior to 1938 there had in the federal courts been substantial conformity to state law in matters of procedure,2 and substantial autonomy in matters of substantive law.Y"Erie R. R. v. Totnpkins4 and the new Federal
place, whatever coercive element is inherent therein is likely to disappear. At that point,unless picketers can appeal successfully to the public sympathyor intelligence, their efforts will be wasted. The tendency would then be for that picketing not having a public appeal to disappearalso. ' Thornhill v. Alabama, supra note 14, at 103. 7In effect, this is to say that the fact that peaceful picketing is an exercise of "free speech"is sufficientjustification for whatever harm be done the picketed. So that if the purposesought by the picketing party, when divorcedfrom the incidental harm caused to the one picketed,is not frowned upon by society, the picketing right should be protected. Lest this give the impression that the end justifies whatever means are used, bear in mind that peaceful picketing results in a battle for public opinion, and that the picketer is by no means always the victor. The picketed one should be granted every fair means of peacefully fighting back. If he loses the battle, because public opinion rules against him, he is not necessarily destroyed economically any more than the mass of employers defeated by labor strikes. He has, of course, lost a little of the individualism he formerly possessed, but this is in line with the present-daysocial outlook. ' The problem arises in diversity of citizenship cases, and in the determination of non-federal issues in cases in which jurisdiction is founded on the existence of a federal question. 2REV. STAT ? 914, 28 U. S. C. ? 724 (1934) provided for conformity "as near as may be" to state procedure. This statute did not apply to equity, in which the federal courts developedan independentprocedure. Cf. REV. STAT. ? 917 (1875), 28 U. S. C. ? 720 (1934). Both of these statutes were repealed by the new Rules of Civil Procedure. See 1 MOORE, FEDERAL PRACTICE (Perm. ed. 1938) ? 1.02. 3 Swift v. Tyson, 16 Pet. 1 (U. S. 1891). State statutes, however, were binding on the federal courts in cases at law [REV. STAT. ? 721 (1875), 28 U. S. C. ? 725 (1934)] and to a large extent in equity cases [see Mason v. United States, 260 U. S. 545, 558-9 (1923). But see infra n. 19]. 4304 U. S. 64 (1938). A comprehensivelist of discussions of this decision is containedin Hart, The Bwsiness of the Supreme Court at October Terms 1937 and 1938 (1940) 53 HARV. L. REV. 579, 606.

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Rules5 have inverted this pattern by creating an independent body of uniform federal procedural law, and by requiring adherence to the substantive law of the states. While a new and more rational order may thus have been created, only the outlines have been sketched in many areas. Yet awaiting definitive statement is the status of equity in the new pattern. There arises also the inquiry whether in creating the new order inconsistencies have not resulted,6 for the constitutional basis of the Tompkins opinion jeopardizes not only existing federal legislation but even some of the simultaneously promulgated rules of "procedure." Problems of this nature arise from the restrictions on the power to issue injunctions in labor disputes created by the Norris-La Gardia Act,7 and the limitation imposed by Rule 23b of the Rules of Civil Procedure on the ability of a stockholder to bring a derivative action to redress injuries suffered by his corporation.8 Conformity to State Law in Matters of Equity. The initial inquiry is whether Erie R. R. v. Tompkins applies to equity. If the decision is nothing more than a re-interpretation of the Rules of Decisions Act,9 it would be merely persuasive in equity cases.'0 But the opinion is rested on a constitutional basis'1 which should apply to both law and equity,'2 despite the seemingly restricted language used.13
5FED. RuLEs Civ. PROC., 28 U. S. C. following ? 723c (Supp. 1939), adopted Dec. 20, 1937,308 U. S. 645. The very adoption of independentrules of procedureseems inconsistent with the ideal that different results shall not obtain merely because of the accident of citizenship of the parties. See Note (1938) 38 COLUMBIA LAW REv. 579, 606. It is significant that Mr. Justice Brandeis, the writer of the opinion in the Tompkins case, dissentedto the adoption of the new rules. 308 U. S. at 647. '47 STAT. 70 (1932), 29 U. S. C. ? 101-113 (1934). 828 U. S. C. following ? 723c (Supp. 1938). 9REV. STAT. ?721 (1875), 28 U. S. C. ?725 (1934), supra n. 3. See Stone, J., in Russell v. Todd, 309 U. S. 280, 287 (1940): "The Rule of Decisions Act does not apply to equity. [It] applies only to the rules of decision in 'trials at common law' . . . but applies as well to rules establishedby judicial decision in the states as those established by statute. Erie R. Co. v. Tompkins . See Mason v. United States, 260 U. S. 545, 558-9 (1923). " See 304 U. S. at 822: "If only a question of statutory construction were involved, we should not be preparedto abandona doctrine so widely appliedthroughout the country. But the unconstitutionalityof the course pursued has now been made clear, and compels us to do so." 12The basis for declaring Swift v. Tyson unconstitutionalwould seem to have been that Congress and the federal courts can derive no power to create rules of substantive law from the grant of diversity jurisdiction. Cf. the quotations from Justices Field and Holmes, 304 U. S. at 78-80. Insofar as rules of equity are substantive it is hard to see how federal power over them could be sustained under this reasoning. '3Both Swift v. Tyson and Erie R. R. v. Tompkins involved questions of common law. Mr. Justice Brandeis throughout his opinion talks of "law" and "common law" (e.g. 304 U. S. at 74, id. at 78). The examples he gives of the evils the de-

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This view is borne out by a large number of cases holding that federal courts are bound to follow state decisions not only on legal questions arising in equity actions,'4 but also on questions purely equitable.'5 One exception has, however, been indicated: a right to equitable relief in the federal court will only be precluded by an adequate remedy
cision in the Tompkins case was intendedto correct all involve common law situations. Id. at 75-6. The use of "common law" might be thought to be in contradistinctionto statute law, did he not refer to the power of Congress to "declare rules of common law applicable in a state". Id. at 78. Hence a verbal argument could be made that the Justice was carefully excluding equity from the scope of his opinion. But nothing indicates that the Justice was making any attempt to use the terms in any precise, accurate, restrictive sense. Thus in Hinderlider v. La Plata Co., 304 U. S. 92, 110 (1938), in an opinion handed down on the same day as the Tompkins decision, Mr. Justice Brandeis refers to the question of apportionment between two states of the waters of an interstate stream as one of "federal common law", even though the action was for an injunctionto protect "equitablerights." Id. at 104. 14 Wichita Royalty Co. v. City Nat. Bank of Wichita Falls, 306 U. S. 103 (1939) (Action to wind up bank; bank's liability for diverting trust funds to trustee's private account); Carter Oil Co. v. McQuigg, 112 F. (2d) 275 (C. C. A. 7th, 1940) (action to enjoin interferencewith rights of lessee; nature of estate reserved by lessor's grantor) ; ContinentalIll. Nat. Bank & Trust Co. v. City of Middlesboro, 109 F.(2d) 960 (C. C. A. 6th, 1940) (action to enjoin city from requiring removal of telephone poles; issue: validity of franchise to defendant, and of purportedreservationin defendant'sdedicationof propertyto city) * Women's Catholic Order of F. v. Special School Dist., 105 F.(2d) 716 (C. C. A. 8th, 1939) (specific performance; validity of pledge of revenues by school district) * cf. In re Shyvers, 33 F. Supp. 643 (S. D. Cal. 1940) (bankruptcy; whether claimant had a lien). However, in Travelers' Mut. Casualty Ins. Co. v. Skeer, 24 F. Supp. 805, 806 (N. D. Mo. 1938), it was said that the Tompkins case did not apply to actions in equity because "all the proceedingsin a court of equity are governed by the Constitution and laws of the United States." The court seems to have placed its principle reliance, however, on the theory that the issue in question, damages on an injunction bond, was procedural.Id. at 806. Compare Mercantile CommerceB. & T. Co. v. S. E. Arkansas L. Dist., 106 F.(2d) 966 (C. C. A. 8th, 1938) (allowance of attorney's fees held procedural). Contra: American Optometric Ass'n v. Ritholz, 101 F.(2d) 883 at 887 (C. C. A. 7th, 1939), cert. denied, 307 U. S. 647 (1939) (same; action at law, held substantive). 15Cities Service Oil Co. v. Dunlop, 60 Sup. Ct. 201 (1940) (bill to remove cloud on title; plaintiff pleads bona fide purchase in reliance on mistake in deed; burden of proof of bona fides held not a question "of practice in courts of equity", but one relating to "a substantialright") ; Ruhlin v. N. Y. Life Ins. Co., 304 U. S. 202 (1938) (action to rescind disability and double indemnity clauses of insurance policy; construction of incontestability clause); Brun v. Hansen, 103 F. (2d) 685 at 697-8, 700 (C. C. A. 9th, 1939), cert. denied, 308 U. S. 571 (1939) (whether conveyance to be set aside, whether constructivetrust was proper remedy for breach of administrator'sfiduciaryduty.); Fidelity and GuaranteeFire Corp. v. Bilquist, 108 F. (2d) 713 (C. C. A. 9th, 1940) (action to reform insurance policy; right to reformation); Boone v. Equitable Holding Co., 32 F. Supp. 896 (S. D. W. Va. 1940) (action to set aside note on ground endorser incompetent; degree of proof of incompetency); see Prudential Ins. Co. of America v. Land Estates, Inc. 110 F.(2d) 617 (C. C. A. 2d, 1940) (allowability of claim in receivership; state law said to have governed prior to Erie R. R. v. Tompkins); Bryant v. Linn County, Ore., 27 F. Supp. 562, 564 (D. Ore. 1938) (whether trust ex maleficio arose; trust held unenforceable because claim not reasonably made as provided in National Banking Act) ; Socony-Vacuum Oil Co. v. Rosen, 108 F.(2d) 632, 635 (C. C. A. 6th, 1940) (what constitutes unfair competition; state and federal law the same).

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at law in the federal court.16 How far this exception will be extended cannot as yet be foretold; the opinions of Mr. Justice Stone may be taken to suggest that whenever the issue is whether "in any given instance a suit . . . is an appropriate one for the exercise of the extraordinary powers of a court of equity,"''7 that is, where it relates to "equitable remedies,''l8 the federal courts need not follow state law. If this is the position that the Court will adopt, then the Tompkins case has not achieved full conformity in matters equitable. Previously, federal courts refused to follow state statutes conferring "equitable remedies" while following those conferring "equitable rights" ;19the Tomrpkins case may merely have extended that dichotomy, with its attendant confusion and inconsistencies of result,20 to judicial decisions. The cases holding federal equity courts independent of state statutes in matters of "equitable remedies" seem to have been based primarily on the need for preserving the constitutional right to a jury trial,21 which was violated if a remedy obtainable only on the equity side of the court was given for a right whose violation was normally tried to a jury on the law side.22 With the adoption of the "single form of ac1"Atlas Ins. Co. v. Southern Inc., 306 U. S. 563 (1939); see Russell v. Todd, 309 U. S. 280, 286 (1940); cf. Sweeney v. Pennsylvania Dept. of Pub. Assistance Bd., 33 F. Supp. 587 (M. D. Pa. 1940). The Atlas case may simply exemplify the principle of City Bank Farmers' Trust Co. v. Schnader, 29 U. S. 24 (1934), infra note 26. But cf. Di Giovanni v. Camden Fire Ins. Assn., 296 U. S. 64 (1935). These cases may, however, stand for the broaderpropositionthat even where the state legal remedy is equally available in the federal court, the question of its adequacyis one for independentfederal determination. Or they may stand for the even broader proposition that in every instance the propriety of granting equitable remedies is one for independentfederal determination. Under either of the latter interpretationsthey are subject to the criticisms made in the ensuing text. 1Atlas Ins. Co. v. Southern, Inc., 306 U. S. 563, 568 (1939). 18Russell v. Todd, 309 U. S. 280, 294 (1940). Mr. Justice Stone expressly left the question open. Compare Bruun v. Hanson, 103 F.(2d) 685 (C. C. A. 9th, 1939) supra note 12, with Isaac v. Milton Mfg. Co., 33 F. Supp. 732 (M. D. Pa. 1940) (whether receiver appointable; treated as question of provisional remedy; no state cases cited). 1 See Notes (1932) 32 COLUMBIA LAW REV. 688, (1936) 49 HARV. L. REV. 950, 954 et seq., (1923) 33 YALE L. J. 193. 20See Note (1932) 32 COLUMBIA LAW REV. 688, 698. See, e.g., Scott v. Nealy, 140 U. S. 106, 109-10 (1891). The precise meaning of the phrase "equitableremedies"is difficult to ascertain. In the ensuing discuswill be used to refer to questions where the issue is: given a cause sion "remedial" of action cognizable at law, will equitablerelief be granted? "Substantive"rules of equity ("equitablerights") will mean those which determine, not whether the case is properly cognizable in equity rather than in law, but whether plaintiff, being properly in the equity court, has stated a meritorious cause of action. Compare Whitehead v. Shattuck, 138 U. S. 146 (1891), with Holland v. Challen, 110 U. S. 15 (1884). See Pusey & Jones Co. v. Hanssen, 261 U. S. 491, 499 (1923). 22 Cf. Cates v. Allen, 149 U. S. 450, 459 (1893): ". . . the fact that the chancery court has the power to summona jury on occasion cannot be regardedas the equivalent of the right of trial by jury secured by the Seventh Amendment."

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tion"23 the two sides of the court are abolished. Jury trials are to be granted whenever the parties would formerly have been entitled to them,24 but it would seem that the fact that equitable relief was asked need not preclude the parties from obtaining a jury trial as of right.25 Hence federal independence in granting or refusing equitable remedies is no longer required by the constitution. Save in certain exceptional cases26there seems no stronger reason to preserve federal independence in matters of equitable remedies than in any other type of question. The Constitutionality of the Norris-La Guardia Act. The opinion in the Tompkins case did more than require federal courts to follow state decisions; Congress has, according to Mr. Justice Brandeis, no "power to declare substantive rules of common law ap3 Rule 2, 28 U. S. C. following ? 723c (Supp. 1939). ' Rule 38, ibid. On the question when a jury trial may be obtainedas of right, see 2 MOORE, FEDERAL PRACrICE (Perm. ed. 1938) ? 38; Pike and Fischer, Pleadings and Jury Rights in the New Federal Procedure (1940) 88 U. OFPA. L. REv. 645; McCaskill, Jury Demands in the New Federal Procedure (1940) 88 U. OF PA. L. REv. 315. 'Cf. Trittipo v. Morgan, 99 Ind. 269 (1884), granting a jury trial of a statutory bill to quiet title, brought by a plaintiff out of possession against a defendant in possession. A similar statute, on similar facts, has been held unenforceablein a federal equity court since there was an adequate legal remedy in ejectment. Whitehead v. Shattuck, 138 U. S. 146 (1891). Rules 8(a) (3) and 18(b) authorizing requests for a number of different kinds of relief in one action, and joinder of legal and equitable causes of action, remove all impedimentsto the bringing of "blended" actions, requesting equitable relief and requiring adjudicationof legal rights. Thus a contract creditor's bill to vacate a fraudulent conveyance, formerly held unenforceable in the federal courts [Scott v. Neely, 140 U. S. 106 (1891); Cates v. Allen, 149 U. S. 450 (1893) ; cf. Pusey & Jones v. Hanssen, 261 U. S. 493 (1923)] is now specifically mentioned by Rule 18(b) as an example of the type of joinder it permits. See 2 MooRE, FEDERAL PROCEDURE (1938) ? 18.03 Normally the question whether a jury trial is to be granted will still depend on the kind of relief asked [cf. Pike and Fischer, op. cit. supra note 24, at 656],
since the test is whether the action would formerly have been brought at law or in equity [see Grauman v. City Co. of N. Y., 31 F. Supp. 172, 174 (S. D. N. Y. 1939); Bellavance v. Plastic-Craft Novelty Co., 30 F. Supp. 37, 38 (D. Mass. 1939)]. But the fact that the nature of the remedy asked is usually indicative of the existence of a right to jury trial, does not negate the proposition that there is no longer any necessary relation between them such as to give rise to constitutional restrictions on the powers of federal courts to follow state law as to the propriety of

granting equitable remedies. 'Cf. Matthews v. Rodgers, 284 U. S. 521 (1932), in which the federal court
refused to enjoin enforcement of a state tax, although the injunctive remedy was seemingly available in the state court. In such a case, reasons of comity dictate federal abstention. See 284 U. S. at 525. And since the question concerns the remedy for the violation of rights guaranteed by the Federal Constitution, the

existence of an independentfederal rule is justified. A converse situation is suggested by City Bank Farmers' Trust Co. v.
Schnader, 291 U. S. 24 (1934). There the state remedy was by an administrative proceeding, not available in the federal court. Federal equitable relief was granted. A similar result would be justified today, it is submitted. The problem is unusual, since state legal remedies must normally be granted by federal courts under the

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The dictum might appear in terms to exclude plicable in a state...."27 equity from the restriction imposed.28 But if the Tompkins opinion is to be applied to judicial decisions in equity, logic would seem to require that the identity of treatment with law be made complete, and the opinion be applicable to federal statutes relating to equity as well as to law. Assuming that Erie R. R. v. Tompkins restricts Congressional power over substantive matters in equity, a serious question is raised as to the constitutionality of the Norris-La Guardia Act,29 which restricts the
Tbmpkins case. But if for any reason it is impossible to give the state remedy, it seems fair to permit federal equitable remedies to be given, perhaps allowing a jury trial. Non-conformity in this instance is necessitated by the inability to give legal relief; the granting of equitable relief serves rather to minimize the effects of non-conformity. 27304 U. S. at 78. The statement appears to be obiter dictum. Its correctness has been judicially questionedboth in the concurring opinion of Mr. Justice Reed in the Tompkins case, 304 U. S. at 89, and by Judge Magruder in Sampson v. Channell, 110 F.(2d) 754, 756-7 n. 4 (C. C. A. 1st, 1940). Mr. Justice Brandeis seems to have assumed that he was merely restating the previously accepted law. See 304 U. S. at 72. But, while no attempt had ever been made to assert a Congressional authority to enact substantive rules applicable in diversity cases, its existence had also never been deniedby the courts and had been persuasively asserted by at least one text writer, GOODNOW, SOCIAL REFORM AND THE CONSTITUTION (1911) C. IV; see also WILLOUGHBY, CONSTITUTIONAL LAW (2d ed. 1929) 1297-8. The principal argument lies in the analogy from admiralty, where a grant of judicial power has been held to confer legislative power. In re Garnett, 141 U. S. 1 (1891) ; Detroit Trust Co. v. The Thomas Barlum, 293 U. S. 21 (1934). But that grant was of exclusive power, [The Moses Taylor, 4 Wall. 411 (U. S. 1866)], and state legislation has been held unenforceablein admiralty. [Southern Pacific Co. v. Jensen, 244 U. S. 205 (1917). But cf. The Hamilton, 207 U. S. 398 (1907)]. Hence federal legislative authority was often the only one possible. Cf. The Lottawanna, 21 Wall. 558, 576-7 (U. S. 1874). More important as a predictionbasis, are political considerations. To sustain federal legislative authority over substantivematters in diversity cases is no longer vitally necessary in order to permit needed social legislation, in view of the expansion of the commercepower. (Thus the Norris-La GuardiaAct can be partly sustained on other grounds, see infra p. 115.) Nor is it a convenient and practical method of securing uniformity of commercial law. See the Tompkiniscase, 304 U. S. at 74. [Comparethe possibilities of a federal act applicableto interstate transactions and an identically worded Uniform Act, and of such enabling provisions as the Miller-Tydings Amendment, 50 STAT. 693 (1937), 15 U. S. C. ? 1 (Supp. 1939)]. On the other hand the scope of such a power would be far greater than that wielded by the court under Suift v. Tyson, since local rules of property would not be exempt, and state statutes would be overriden. Hence it is to be anticipated that unless a strong social need arises, which is incapable of satisfaction by other methods, the Court would be reluctant to overturn Mr. Justice Brandeis' dictum. 947 STAT. 70 (1932), 29 U. S. C. ?? 101-113 (1934). Many provisions of the Act are not herein discussed Pt length. ?? 109, 110, 111, 112, and parts of ? 107 deal with questions such as notice and hearing, findings of fact, jury trial, appeals, and raise no problemunder Erie R. R. v. Tompkins. etc. These are clearly procedural ? 106 provides that no officer or memberof an organization may be held liable for acts committed in the course of a labor dispute save on clear proof that he participated in, authorized or ratified such acts. The provision has been termed a rule of evidence. See Sen. Rep. No. 163, 72d Cong., 1st Sess. (1932) 19-21; Cinderella Theater Co. v. Sign Writers' Local Union, 6 F. Supp. 164, 171 (E. D.
' See supra note 13.

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power of federal courts to issue injunctions in labor disputes. The important provisions for present purposes are those depriving the federal courts of "jurisdiction" (1) to enjoin certain specified types of conduct,30 and (2) to enjoin any conduct unless certain facts are established.31 These provisions seem analytically to deal with equitable remedies; they do not deny the possible existence of a cause of action in tort, but merely deny such a cause of action any equitable enforcement. Accordingly the provisions have, prior to Erie R. R. v. Tompkins, been held constitutional,32and retroactively applicable to a cause of action pending at the time of their passage.33 These cases would be conMich. 1934). Contra: Sen. Rep. No. 163, 72d Cong., 1st Sess. (1932) Part 2, 9-10. As such it would seem "rationally capable of classification" as procedural. See Sampson v. Channell, 110 F.(2d) 754, 756-7 n. 4 (C. C. A. 1st, 1940). Hence its constitutionalitycould be sustained. But it would not seem constitutionally applicable to cases arising in a state in which such an officer was made responsible regardless of participation,authorization,or ratification. 3?29 U. S. C. ? 104. The principal acts thus protected are (a) striking, (b) joining a labor union, (c) paying to or withholding from strikers any strike or unemployment benefits, (e) peaceful picketing, (f) assembling peaceably, (h) agreeing to do, or (i) urging others to do, any of these acts. The provision in ? 104(e) may be thought to be of only academic interest, in view of the Court's declarationin Thornhill v. Alabama, 110 U. S. 88 (1940) that the right of peaceful picketing is guaranteed by the Constitution. See su?prap. 93. But quaere whether the protection afforded by a Constitutionalinterpretation which the Court is free to change is as great as that afforded by an explicitly worded statute. Quaere also the extent to which the Thornhill case will increase the occasions for the problemsof the present Note to arise by making possible removal on the ground of a federal question. = 29 U. S. C. ? 107 (1934) deprives the court of "jurisdiction" to issue a temporary or permanentinjunction except after findings "(a) that unlawful acts have been committedand will be continued unless restrained; (b) that substantial and irreparableinjury to complainant'sproperty will follow; (c) that as to each item of relief granted greater injury will be inflicted upon complainantby the denial of relief than will be inflicted upon defendantsby the granting of relief; (d) that complainant has no adequate remedy at law; and (e) that the public officers charged with the duty to protect complainant'sproperty are unable or unwilling to furnish adequate protection." This section, which also provides for notice, hearing, etc., was termed "procedural"in the committee reports. SEN. REP. No. 163, 72d Cong., 1st Sess. (1932) 21-3; id. Part 2, 10-12. But obviously to require certain findings to be made is to make the existence of facts upon which to base those findings a part of complainant'scause of action. See also ? 108 providing that no one may obtain an injunctionwho has failed to observe his legal obligations in connection with the labor dispute, or to use every possible means to settle it. ' Levering & Garrigues Co. v. Morrin, 71 F. (2d) 284 (C. C. A. 2d, 1934) (?104); Lauf v. E. G. Shinner & Co., 303 U. S. 323 (1938) (? 107); United Electric Coal Co. v. Rice, 80 F.(2d) 1 (C. C. A. 7th, 1935) (? 108). All of these cases base their holdings on the power of Congress to define and limit the jurisdiction of the inferior federal courts, even though ? 108 is not worded in jurisdictional terms. However, in the Levering case an alternative ground given for the holding of constitutionalitywas that ? 104 was "a limitation affecting remedy rather than property rights," the court thereby distinguishing the present provision from that invalidatedon due process grounds in Truax v. Corrigan, 257 U. S. 312 (1921) by means of the fact that the latter statute was therein construed to deny all remedies and thereby legalize picketing. 71 F.(2d) at 287. Levering & Garrigues Co. v. Morrin, 71 F. (2d) 284 (C. C. A. 2d, 1934) (? 104).

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sistent with a construction of the provisions as relating to federal power,34 but other decisions seem clearly to treat them as relating to equitable remedies,35 terming a dismissal for non-compliance therewith to be for want of equity, not want of power as a federal court,36 and accepting removal from a state court of a cause of action barred by them.37 If federal legislative and judicial power over the propriety of granting equitable remedies is not foreclosed by the Tompkins case, no objection to the constitutionality of these provisions arises. If, as seems more probable, the principle of the Tompkins case applies generally to equity, with a few small exceptions, analysis of these provisions as remedial is not expressive of legal consequences. It remains yet to ask how these provisions may and should be classified. It would be hard to justify a classification as procedural. The Act seems to bear no intimate relation to the coherent system of procedure in federal courts, nor will it cause too serious difficulties to trial judges to have to apply different rules when sitting in different states. On the other hand, while "rights" in the technical sense herein used are not affected, the practical ability of a plaintiff to get relief is seriously affected by the Act. Possibly the most attractive argument for terming the Act procedural is that a court should attempt to carry out to the fullest the expressed policy of Congress, and not to nullify it in whole or in part. That argument would be valid were the analytical classification of the Act reasonably open to question.38 Since the Act does not seem
3 See infra n. 41 for an explanation of the use of this phrase. ' See cases cited infra n. 35; also Levering & Garrigues Co. v. Morrin, 71 F.(2d) 284, 287 (C. C. A. 2d, 1934) (? 104); Lauf v. E. G. Shinner Co., 303 U. S. 323, 327 (1937) (? 107); Rohde v. Dighton, 27 F. Supp. 149, 150 (W. D. Mo. 1939) (? 107). 'See S. S. Kresge Co. v. Amsler, 99 F.(2d) 503, 507 (C. C. A. 8th, 1938) (? 104); Grace Co. v. Williams, 96 F.(2d) 478, 480 (C. C. A. 8th, 1938) (? 107); Fehr Baking Co. v. Bakers' Union, 20 F. Supp. 691, 694 (W. D. La. 1937) (? 104 semble; held no labor dispute). 3' Miller Parlor Furniture Co. v. Furniture Workers' Industrial Union, 8 F. Supp. 209 (D. N. J. 1934), (1934) 34 COLUMBIA LAW REV. 1552. Contra, Wucker Furniture Co. v. Furniture Salesmen's Union, 126 N. J. Eq. 145 (1939) (?? 104e, 107c, 107e). The decision of a state court on the right of removal is not conclusive; if the defendantfiles the record in the federal court the latter may enjoin further proceedings in the state court [Madisonville Traction Co. v. St. Bernard Mining Co., 196 U. S. 239 (1905)], and even if the state court has been permitted to proceed to final judgment, its judgment may be reversed by the Supreme Court [Baltimore and Ohio R. R. Co. v. Koontz, 104 U. S. 5 (1881)]. ' See Sampson v. Channell, 110 F. (2d) 754, 756-7 n. 4 (C. C. A. 1st, 1940), gress' power over procedure "would certainly include a power to include within the domain of 'procedure' subject-matter falling within the borderland between substance and procedure, and rationally capable of classification within either category." It may seem surprising that Congressional opinion should be given weight on a matter of "pure law." But since there are many situations which
cert. denied, 60 Sup. Ct. 1099 (1940), wherein Judge Magruder observed that Con-

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susceptible of classification as procedural, the argument is addressed rather to the wisdom of placing the Tompkinis decision on a constitutional basis restrictive of federal legislative power. However, it may be possible to uphold the constitutionality of these provisions. Congress has undoubted power over the jurisdiction of the federal courts.39 That power would seem to be exercisable so as to withdraw certain types of suits from the range of federal judicial cognizance,40 leaving them to be tried exclusively in state courts. If the Norris-La Guardia Act could be construed as jurisdictional41the whole problem with which Erie R. R. v. Tomnpkins deals would be avoided. For the Tompkins case deals with a problem of choice of law, and that problem cannot arise if the court refuses to take jurisdiction. The question is, therefore, whether a jurisdictional construction is permissible. The Act does not appear to deal with the question whether cases within its terms should be tried in state rather than in federal courts; it seems rather to deprive the federal courts of the power to grant injunctive relief in cases properly before them. But this want of power to give an equitable remedy may perhaps justify a federal court in refusing to take jurisdiction. Cases dealing with state statutes in equity are informative on this point. While normally state statutes were applied by the federal equity court, an exception was made where the statute was thought to extend "equitable jurisdiction" to issues previously tried as of right to a jury.42 Where a substantially adequate remedy was available at law the case was dismissed without prejudice to an action at law,43 or transdo not fit any category by "intrinsic compulsion," classification must often depend on considerations of policy, one of which is the general undesirability of declaring legislation to be unconstitutional. '3 See Kline v. Burke Construction Co., 260 U. S. 226, 233 (1923). 40Cf. McChesney v. Illinois Cent. R. R., 197 Fed. 85 (W. D. Ky. 1912), sustaining the constitutionality of the provisions denying the right to remove causes brought under the Federal Employers' Liability Act, 36 STAT. 291 (1910), 28 U.S.C. ?71 (1934), 45 U. S.C. ?56 (1934). ' In the ensuing discussion "jurisdictional" will be used to connote any situation which will induce the federal courts to remand a removed action, or dismiss an original one in such fashion that the dismissal will be res judicata only of the proposition that the case cannot be tried in the federal court. The term expresses the presently relevant legal consequences of want of "jurisdiction" in the stricter sense of more orthodox usage, denoting a non-compliance with the REV. STAT. ? 24 (1875), 28 U. S. C. ? 41 (1934) (relating to diversity of citizenship and the like), which will herein be referred to by the term "federal power". Thus the legal consequences described by this use of the term "jurisdictional" are consequences which result from facts describable as "want of federal power", but which may also result from other facts. 4' See supra n. 19. 4'At the time when Cates v. Allen, infra n. 37, was decided, original actions improperly brought in equity were dismissed without prejudice to an action of law, e.g. Scott v. Nealy, 140 U. S. 106 (1891) * see Twist v. Prairie Oil Co., 274 U. S. 684, 689 (1927). Rules 22 and 23 of the Equity Rules of 1912 provided for the free transfer of such causes of action to the law side of the federal court.

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f erred to the law side of the court.44 But where the legal remedy in the federal court was clearly inadequate, to transfer a removed case to the law side would result in depriving a litigant of effective redress. Faced with this situation, the Court in Cates v. Allen remanded the case to the state court, on the ground that it lacked jurisdiction.45 Subsequent cases appear to have adopted a different concept of "jurisdiction." Thus the objection that a cause of action was not properly cognizable in equity was held waivable,46 while absence of diversity of citizenship, for example, is not.47 And it was held that the impropriety of granting equitable relief did not raise a "jurisdictional" issue within the meaning of a statute48 providing for direct appeals to the Supreme Court on questions of "jurisdiction."49 As a re4'At the time of the decision in Cates v. Allen a case improperlyremoved into federal equity could be transferred to the law side. Elliott v. Schuler, 50 Fed. 454 (W. D. N. C. 1892); see Coosaw Min. Co. v. S. Carolina, 144 U. S. 550, 564 (1891) ; cf. Ketchum v. Black River Lumber Co., 4 Fed. 139 (W. D. Wis. 1880). Where the case involved both legal and equitable causes of action it could be split up and proceededin in both sides of the court. Hunt v. Hollingsworth, 100 U. S. 100 (1870) ; Fisk v. Union Pac. Ry. Co., 8 Blatchf. 299, Fed. Cas. No. 4,829 (C. C. S. D. N. Y. 1871); La Mothe Mfg. Co. v. Nat'l Tub Works, 15 Blatchf. 432, Fed. Cas. No. 8033 (C. C. S. D. N. Y. 1879); Perkins v. Hendrix, 23 Fed. 418 (C. C. D. Mass. 1885); Lacroix v. Lyons, 27 Fed. 403 (C. C. E. D. La. 1886) ; cf. Levy v. Am. Cent. Ins. Co. [C. C. W. D. Tenn., unreported, discussed in Whittenton Mfg. Co. v. Memphis & Ohio River Packet Co., 19 Fed. 273, 276 (C. C. W. D. Tenn. 1883)]. '4149 U. S. 451 (1893). Cf. Rosenbaumv. Bauer, 120 U. S. 450 (1887), remanding a removed action because of the federal court's inability to issue a writ of mandamus. There may be some intimation in Twist v. Prairie Oil Co., 274 U. S. 684, 690 (1927), that a court will remand a removed suit where it would have retained one originally brought. Cf. Peters v. Equitable Life Ins. Co., 149 Fed. 290, 294 (C. C. D. Mass. 1906). There are some pragmatic reasons for making such a distinction, since a dismissal exposes plaintiff to the necessity of securing new service of process, and to the possibility that a statute of limitations has run, whereas remanddoes not. Comparethe majority doctrinethat where [its jurisdiction is doubtful the federal court will remand rather than retain the case. Pabst v. Roxana Petroleum Co., 30 F. (2d) 953 (S. D. Tex. 1929). Contra: Pierce v. Desmond, 11 F.(2d) 327 (D. Minn. 1926).] But, save for the possible exercise of discretion in borderline cases, no reason is seen for a difference in treatment. The statute refers in the same terms to original and removed cases, 18 STAT. 472 (1875), 28 U. S.C. ?80 (1934). The emphasis in the discussion on removed cases does not, therefore, indicate that removal jurisdiction is regarded as something unique. But for the present purpose the removal cases are more valuable because the issue of jurisdiction as between federal and state courts is clearly presented by the motion to remand, whereas a motion to dismiss in an original case may be based on any of a number of grounds. ' In re MetropolitanRailway Receivership,208 U. S. 90 (1098); see Pusey & Jones Co. v. Hanssen, 261 U. S. 491, 500 (1923); Twist v. Prairie Oil Co., 274 U. S. 684, 691 (1927). '4Mansfield, Coldwater, and Lake Mich. R. R. v. Swan, 111 U. S. 379 (1894) (lack of diversity of citizenship). 4 26 STAT. 827 (1891), repealed, 43 STAT. '938 (1925). 4 Smith v. McKay, 161 U. S. 355 (1896) (action to enjoin use of property till license fees therefor were paid, and for accounting) ; see Smith v. Apple, 264 U. S. 274, 278 (1924).

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sult one judge has thought that Cates v. Allen has been overruled.50 But these cases were dealing with wholly different issues; their only relation to the problem of Cates v. Allen is that the result in each case was expressed by the use of the same term. But that does not indicate that the content of that term should be the same in each situation.5' In view of the growing movement to minimize and finally abolish the rigid division between the law and equity side of the court,52 it was obviously desirable to permit waiver of objections to the propriety of trial in equity.53 The desirability of restricting the number of cases directly appealable to a busy Supreme Court was equally clear.54 Hence a narrow concept of "jurisdiction" was desirable. On the other hand, to the extent that conformity with state statutory law was sought, an expansion of the concept of jurisdiction so as to permit remand in Cates v. Allen afforded a means of minimizing the violence done to that purpose by prevailing doctrines of federal equity jurisdiction. It would seem, therefore, that on the question of jurisdiction Cates v. Allen is still good law.55 Its value for the present discussion lies in
See Essenkay Corp. v. Mangel Stores Corp., 10 F. Supp. 50, 52 (S. D. N. Y. 1932). " That a question may be classified in one way for one purpose and in another way for another purpose, see Cook, "Substance"and "Procedure"in Conflict of Laws (1933) 42 YALE L. J. 333 passim. Compare Sampson v. Channell, 110 F.(2d) 754 (C. C. A. 1st, 1940), cert. denied, 60 Sup. Ct. 1099 (1940), holding that burden of proof of contributorynegligence is substantive for purposes of determining whether the federal court should follow state law, but applying the state rule that for purposes of conflicts of laws it is procedural. But cf. Venner v. Great Northern Ry., 209 U. S. 24, 34 (1908), infra n. 55, in which a case holding that Equity Rule 94 (now 23b) did not raise a jurisdictional question so as to permit direct appeal was cited as authoritative that a cause of action which failed to comply with Rule 94 was removable. '2Equity Rules 22 and 23 of the Rules of 1912, and 38 STAT. 956 (1915), 28 U. S. C. ?? 397-8 (1934) provided for the free transfer of causes from law to equity or vice versa, for the trial by jury in the equity court of legal issues arising in equity actions, and for the interposition of equitable defenses in legal actions. Rule 2 of the new Rules of Civil Procedure completes the process by providing for "one form of action," and Rules 38 and 39 provide for demandof jury trial in any action, and treat the failure to demand as a waiver. ' The fact that the right to jury trial is waivable [REV.STAT. ? 649 (1875), 28 U. S. C. ? 773 (1934)] impelled strongly to this result. On remand of a case improperly tried in equity it would be tried in the same court, hence the only hardshipcreatedby its impropertrial in equitywas the loss of the right to jury trial. Cf. 1 MOORE, FEDERAL PRACTICE (Perm. ed. 1938) 127.
'Cf.
FRANKFURTER AND LANDIS, BUSINESS OF THE SUPREME COURT

254-73. 5 See Twist v. Prairie Oil Co., 274 U. S. 684, 690 (1927). But see Essenkay Corp. v. Mangel Stores Corp., 10 F. Supp. 50, 51-52 (S. D. N. Y. 1932); cf. Venner v. Great Northern Ry., 209 U. S. 24 (1908). The Venner case presents the strongest inconsistency with Cates v. Allen, since it in terms adopts the theory that, given diversity of citizenship and the requisite amount in controversy, want of equity in the bill will not prevent removal. See 209 U. S. at 34-5. But the provision there in question seems to have been regarded by the court as a substantive rule. See infra note 57. On the question of equity jurisdiction the point decided has been rendered moot by Rule 18b, see supra n. 25.

(1928)

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its holding that, even though the statutory requirements for the existence of federal judicial power are satisfied,56a federal court which is unable to give equitable relief may decline jurisdiction and leave the plaintiff free to obtain his more adequate relief in the state court.57 Cates v. Allen thus provides a persuasive analogy for construing as jurisdictional a federal statute restrictive of remedial powers.58 Since the jurisdictional construction of the provisions of the Norris-La Guardia Act that have been under discussion is possible, the familiar rule that a statute will if possible be construed so as to avoid unconstitutionality59would seem to require it. Stockholders Suits: Rule 23b. A somewhat different problem is raised by Rule 23b of the Rules of Civil Procedure,60 relating to stockholders' derivative actions. The relevant provisions require that plaintiff allege that he was a stockholder at the time of the injury complained of,61 and that demand was made on
' I.e. the requirementsimposed by 28 U. S. C. ? 41, see supra n. 41. 7 It is to be noted that the doctrine of Cates v. Allen does not apply in every case in which the plaintiff can obtain relief in the state court, but only where the difference between the two courts relates to a question of remedial power. Thus differences of substantive law do not prevent removal Free v. Western Union Telegraph Co., 122 Fed. 309 (C. C. S. D. Iowa, 1903) (right to damages for mental anguish); cf. Young v. Southern Pac. Ry. Co., 25 F. (2d) 630 (C. C. A. 2d, 1928) (action barred by laches in federal court; not in state court). Nor did differences in procedure prevent removal if the case was capable of assimilation into one of the available forms of "suit at law or in equity." E.g., North Carolina Pub. Serv. Co. v. So. Power Co., 282 Fed. 837 (C. C. A. 4th, 1922); State of Washington ex ret. City of Tacoma v. Tacoma Ry. & Power Co., 244 Fed. 989 (C. C. W. D. Wash. 1910) (mandamus); Postal Tel. Cable Co. v. Southern Ry. Co., 122 Fed. 156 (C. C. W. D. N. Car. 1903) (condemnation); Chicago, M. & St. P. Ry. Co. v. Drainage Dist. No. 3, 253 Fed. 491 (S. D. Iowa 1917) ; People v. Burke, 141 Misc. 663, 254 N. Y. Supp. 522 (Sup. Ct. Erie Co. 1931) (assessment) ; Harr v. Pioneer Mech. Corp., 1 F. Supp. 294 (S. D. N. Y. 1932) (declaratory judgment); McLaughlin v. Western Union Tel. Co., 7 F.(2d) 177 (E. D. La. 1925) (workmen's compensation). In general see Watkins, The Inadequacy of the Federal Courts as a Bar to the Removal of Suits from the State to the Federal Court (1922) 95 CENT. L. J. 312. 5 Cf. REV. STAT. ? 720, (1875), 28 U. S. C. ? 379 (1934), providing that "writs of injunction shall not be granted" to stay proceedings in state courts, which has been held to prevent removal to the federal court [Lawrence v. Morgan's R. R., 121 U. S. 634 (1887) ; see Bondurantv. Watson, 103 U. S. 281, 288. But cf. Diggs and Keith v. Wolcott, 4 Cranch 179 (U. S. 1807)], but not to present a "jurisdictional" issue within the meaning of the direct appeals statute [Smith v. Apple, 264 U. S. 274 (1924)]. 'Cf. Crowell v. Benson, 285 U. S. 22, at 62 (1931); see Ashwander v. Tennessee Valley Authority, 297 U. S. 288, 348 (1936). ' FED. RULES CIV. PROC., 28 U. S. C. following ? 723 (Supp. 1939). The rule is substantially the same as Rule 27 of the Equity Rules of 1912, and Rule 94 of the Equity Rules of 1882. The latter in turn simply adopts in the form of a rule of court the requirements laid down in Hawes v. Oakland, 104 U. S. 450, 461 (1881). 6 In ten or eleven states, including New York, New Jersey, Pennsylvania, Illinois, and perhaps Delaware, the rule is contrary. See Note (1938) 38

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the corporate directors and plaintiff's fellow-stockholders to secure the desired action, or that such demand would have been futile.62 Analyzed solely in terms of substance and procedure the rule seems clearly substantive.63 The fact that the Supreme Court adopted it, as a rule not affecting substantive rights, a few months before the decision in the Tomspkinscase should have little weight,64 for it can hardly be regarded as a considered judgment on the point.65 Analytically the rule, as interpreted, creates conditions precedent to the existence of any cause of action on behalf of the plaintiff, and hence relates to substantive rights. Nor would procedural inconvenience be caused, or the integrated system of federal procedure disrupted, by the application of state rules. Hence the rule, as interpreted, should be deemed substantive, and therefore unconstitutional. Can the rule be sustained as jurisdictional? The political facts which led to the adoption of the rule were clearly the frequent abuse of stockholders' suits as a means of obtaining collusive access to the federal courts, and thereby unduly burdening those courts.66 Insofar as the
LAW REV. 1472, 1480; FLETCHER, CORPORATIONS (Perm. ed. 1932) ? 5980 n. 12. Nine states apply the federal rule, id. ? 5981 n. 27. ' This provision appears to embody the law of all the states that have passed on the question, except that the requirementthat demand be made on the stockholders may be more stringent under the federal rule. See 13 FLETCHER, CORPORATIONS (Perm. ed. 1932) ?? 5963, 5964, 5970. ' Accord: Tunks, Categorization and Federalism: "Substance" and "Procedure" After Erie Railroad v. Tompkins, (1939) 33 ILL. L. REV. 271, 287; Notes (1938) 38 COLUMBIA LAW REV. 1472, 1483-4, (1939) 37 MIcH. L. REV. 773, 776. See Summers v. Hearst, 23 F. Supp. 986, 992 (S. D. N. Y., 1938). Two cases have applied the Rule without questioning its present validity. Isaac v. Milton Mfg. Co., 33 F. Supp. 732 (M. D. Pa. 1940) (demand) Lynch v. Yonkers, Nat. B. T. Co., 3 Fed. Rules Serv. 23b, 1, Case 1, (S. D. N. Y. 1940) (ownership) ; Gallup v. Caldwell, 32 F. Supp. 711 (D. Del. 1940) (ownership). ' Cf. (1940) 26 VA. L. REV.823. But see Summersv. Hearst, 25 F. Supp. 986, 992 (S. D. N. Y. 1938). ' Particularly in view of the fact that Rule 23b was simply a re-promulgation of an old rule, while many other rules were of great novelty and importance,does it seem unlikely that great attention was paid to it. The lack of attention given Rule 23b in populardiscussions of the new rules is indicative. See FEDERAL RULES
COLUMBIA OF CIVIL PROCEDURE,PROCEEDINGSOF INSTITUTES, WASHINGTON AND NEW YORK

(1939) passim. Since Erie R. R. v. Tompkins had not yet been decided when the rules were promulgatedit is unlikely that the problems it raised were clearly in the minds of the court, or at all in the minds of the members as the Advisory Committee which drafted the rules. It is significant that shortly after the Tompkins decision Chairman Mitchell of the Advisory Committee reminded lawyers of the fact that some of the rules raised constitutional questions, and referred especially to Rule 23b.
FEDERAL RULES OF CIVIL PROCEDURE, PROCEEDINGS OF INSTITUTES, WASHINGTON AND NEW YORK (1939) 227-8; id. Cleveland (1938) 184. The restriction in the enabling act, 48 STAT. 1064, 28 U. S. C. ? 273b (1934)

that the rules shall not affect substantive rights was of course in the minds of Court and committee. But it may be questionedwhether that restriction would have any applicabilityto a rule which merely continued in existence a long established policy of the federal courts. See PROCEEDINGS,CLEVELAND, supra, 265 (Dean, now
Judge, Clark).

NSee Hawes v. Oakland, 104 U. S. 450, 452-3 (1881).

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prevention of collusion is the rule's purpose it would seem jurisdictional. But the rule has also been justified as a means of preventing undue interference with the directors' discretion,67and as preventive of "strike" suits.68 The cases fail to indicate which of these purposes is of primary importance,69but perhaps show a tendency towards treating the rule as a general principle of equity rather than a mere means of protecting the jurisdiction of the federal court.70 One test of the jurisdictional nature of the rule is its applicability to cases where there is no likelihood of collusion because the existence of a federal question entitles the parties to a federal trial regardless of their citizenship. The requirement of demand has been held applicable to such cases,7' but not that relating to stock ownership.72 It might be thought that the latter could therefore be regarded as jurisdictional,73
See id. at 454-7. See Boldenweck v. Bullis, 40 Colo. 253, 259, 90 Pac. 634, 636 (1907); Pitcher v. Lone Pine-Surprise Min. Co., 39 Wash. 608, 612, 81 Pac. 1047, 1049 (1905). 69 See Delaware & Hudson Co. v. Albany & Susquehanna R. R., 213 U. S. 435 (1909) (demand): The rule "is intended to secure the Federal courts from imposition upon their jurisdictionand to recognize the right of the corporatedirectory to corporate control." Compare Quincy v. Steel, 120 U. S. 241, 244 (1887) (demand, ownership; rule designed to prevent collusion) ; Huntington v. Palmer, 104 U. S. 482, 484 (1881) (dismissed because plaintiff "failed to repel the presumption" of collusion by showing proper demand on corporation); Doctor v. Harrington, 196 U. S. 579, 585, 587 (1904) (demand being proved, the corporationneed not be realigned as a party plaintiff, so as to destroy diversity) ; with Dimpfell v. Ohio & M. R. R., 110 U. S. 209 (1884) (demand, ownership: demurrer sustained "for want of equity in the bill") ; id. at 210 (ownership, court suggests suit wholly vexatious); Illinois Central Ry. v. Adams, 180 U. S. 28, 34 (1901) (provision involved not stated) ; Venner v. Great Northern Ry., 209 U. S. 24, 33-5 (1908)
6B

(ownership).
70 Cf. Illinois Central Ry. v. Adams, 180 U. S. 28 (1901) (provision involved not specified) holding that non-compliancewith the rule does not raise a jurisdictional issue under the direct appeals statute; the existence of a federal question was an alternative ground for the holding. Subsequent cases seem to have taken the appeal, Doctor v. Harrington, 196 U. S. 579 (1905) (demand) ; Delaware & Hudson Co. v. Albany & Susquehanna R. R., 213 U. S. 435 (1909) (demand). But the Adams case was cited as controlling on the issue of jurisdiction in Venner v. Great Northern Ry., 209 U. S. 24, 34 (1908) (ownership). It was also cited with approval in Employers' Corp. v. Bryant, 299 U. S. 374, 381 n. 10 (1937), and Milwaukee Co. v. White Co., 296 U. S. 268, 272 (1935). See also Whittemore v. Amoskeag Bank, 134 U. S. 527, 529, 530 (1890) (provision involved not stated; federal question) ; Taylor v. Holmes, 127 U. S. 489, 494 (1888) (demand, semble ownership), referring to dismissals for non-compliance with the rule as being for want of equity. 11Wathenv. Jackson Oil Co., 235 U. S. 635 (1915) ; Corbus v. Alaska Treadwell Gold Min. Co., 187 U. S. 455 (1907); see Hill v. Wallace, 259 U. S. 44, 62, 74 (1922); Ashwanderv. Tennessee Valley Authority, 297 U. S. 288, 318 (1936). 72Jablow v. Agnew, 30 F. Supp. 718 (S. D. N. Y. 1940); Hand v. Kansas City Southern Ry., 55 F.(2d) 712 (S. D. N. Y. 1931); Lindsley v. Natural Carbonic Gas Co., 162 Fed. 954 (C. C. S. D. N. Y. 1908); Ball v. Redland Ry. Co., 93 Fed. 513 (C. C. D. Vt. 1899). 73A number of cases refuse to apply the rule to removed cases. Groel v. United Electric Co., 132 Fed. 252 (C. C. D. N. J. 1904) ; Earle v. Seattle L. S. & E. Ry. Co., 56 Fed. 909 (C. C. D. Wash. 1893) ; see Booth v. Greer Inv. Co., 52 F.(2d) 857, 860 (N. D. Okla. 1931) Evans v. Union Pac. Ry. Co., 58 Fed. 497, 500

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but the Venner case, holding that non-compliance with the ownership provision is no ground for remanding a case removed from a court which has no such provision, seems to prevent such a construction.74 The Venner case seems inconsistent with Cates v. Allen. But it was well settled that differences in substantive law would not prevent removal,75and the Court in the Venner case seems to have treated the rule as substantive. Moreover the Venner decision had an additional basis: a rule of court may not alter the constitutional and statutory jurisdiction of the courts.76In the cases so holding the rules invalidated were thought to conflict with statutory provisions.77 The provision in the enabling act that the new rules shall supersede any prior statutes in conflict therewith78 might seem to obviate this objection. But it is highly doubtful whether an authorization to promulgate rules of "procedure" could justify a rule which deprived the district courts of power to hear a particular type of case. And Rule 82 specifically provides that the Rules shall not be construed so as to "affect the jurisdiction of the district courts". It may be possible to argue that "jurisdiction" as used in Rule 82 is to be narrowly interpreted, as was "jurisdiction" in the direct appeals statute.79 But at the least serious doubt as to the validity of Rule
(C. C. D. Colo. 1893). The federal courts of New York consistently apply the ownership provision to removed case, although New York has no such rule. Watts v. Alexander Morrison & Co., 45 F.(2d) 969 (C. C. A. 2d, 1930); Robbins v. Sperry Corp., 1 Fed. Rules Dec. 220 (S. D. N. Y. 1940); Jacobsen v. General Motors Corp., 22 F. Supp. 255 (S. D. N. Y. 1938); Hitchings v. Cobalt Central Min. Co., 189 Fed. 241 (S. D. N. Y. 1910); Venner v. Great Northern Ry. Co., 153 Fed. 408 (S. D. N. Y. 1907), aff'd, 209 U. S. 24 (1908). But see Leo v. Union Pac. Ry. Co., 17 Fed. 273, 274 (C. C. S. D. N. Y. 1883). It has been though that the application of the rule to removed cases indicated that its purpose was not to prevent collusion, since no question of collusion is raised in a removed case. See Notes (1938) 38 COLUMBIA LAW REv. 1472, 1482, (1939) 37 MICH. L. REv. 773, 775. But collusion while less easy, is yet a possible evil in removed cases. The procedure would be simply for the corporation to get one of its stockholders to sue in the state court, and then it and the real party defendant would remove the cause. The defect of this procedure would be that the corporation could not successfully remove unless the real defendantjoined in the removal petition [cf. McNaul v. West Indian Securities Corp., 178 Fed. 308 (C. C. S. D. N. Y. 1910)], since it would be difficult if not impossible to establish a separable controversy between the stockholder and his corporation [cf. Campbellv. Milliken, 119 Fed. 981 (C. C. D. Colo. 1902)]. But consent of the real defendantto trial in the federal court would in many cases not be difficult to get, cf. Hawes v. Oakland, 104 U. S. 450, 452 (1881). 74Vennerv. Great Northern Ry., 209 U. S. 24 (1908). Accord: Robbins v. Sperry Corp., 1 Fed. Rules Dec. 220 (S. D. N. Y. 1940). 7 See supra note 57. It would be difficult to regard rule 23b as remedial; the stockholder's suit is normally the only method available to a stockholder of enforcing the right of the corporation. 71 209 U. S. at 35. 7Washington-Southern Co. v. Baltimore Co., 263 U. S. 629 (1924); Standish v. Gold Creek Mining Co., 92 F.(2d) 662 (C. C. A. 9th, 1937). 78 48 STAT. 1064, 28 U. S. C. ? 723b (1934). 79See supra p. 113. Insofar as a question of power is concerned, the argument may have validity. That the court cannot by rule alter the power of federal

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23b would remain even if it were reconstrued to prevent the district courts from hearing causes in which the rule was not complied with.80 It may be thought that the Tompkins case eliminates the need for protection from collusion;81 but the convenience of the new federal procedure,82and all those factors which induce litigants to prefer one judge to another, might yet furnish an incentive to the attempted acquisition of federal jurisdiction. Perhaps that purpose can be served adequately by another provision in Rule 23b, requiring a sworn allegation that the suit is not a collusive attempt to acquire federal jurisdiction.83 If not, another alternative may be available. A federal court has the power to compel realignment of the parties to an action according to the real nature of their interest therein,84 in order to determine whether the case truly involves a controversy between citizens of different states. It would seem permissible for the Court to promulgate a rule requiring alignment of the corporation as a party plaintiff where the stockholder had acquired his stock after the commission of the injury for which he seeks redress, or had failed to make proper demand on the directors and
courts to hear cases would seem obvious. But a court has, to some extent, the ability to refuse to exercise a jurisdiction which it possesses. Hence it would seem permissible for the Supreme Court to instruct the district courts to exercise their power to refuse jurisdiction in these cases. This ability to decline jurisdictionhas been recognizedby the Supreme Court in cases involving foreign corporations [Rogers v. Guaranty Trust Co., 288 U. S. 123 (1933)] and in cases involving possible interference with the exercise of state administrative policy [Pennsylvania v. Williams, 294 U. S. 176 (1935)]. But cf. Doyle v. Northern Pac. Ry. Co., 55 F.(2d) 708 (D. Minn. 1932) ; see (1933) 33 COLUMBIA LAWREv. 922; (1933) 46 HARV. L. REV. 520. Cates v. Allen may be thought to be another instance in which judicial discretion of this nature was exercised. Compare Peters v. Equit. Life Ins. Co., 149 Fed. 290 (C. C. D. Mass. 1906). However, it is to be noted that in Cates v. Allen, and in the proposal that has been made with reference to the Norris-La Guardia Act, there was involved a restriction on the power of the federal court to give relief which was imposed by an authority (Constitution, federal statute) capable of imposing a "jurisdictional" limitation in the strict sense; the only question before the Court was whether that restriction was to be construed to have jurisdictional consequences. On the interpretation of Rule 82 the analogy from the direct appeals statute is weak. That statute, and the rule with regard to waiver, had nothing to do with the question whether the case should be heard in the federal court. The same could hardly be said of Rule 82. "'Such a constructionwould necessitate an overruling of the Venner case, and of expressions in numerous other opinions. But it would seem preferable to overrule some of the cases construing a rule, rather than declare the rule itself invalid. 8 See Tunks, op. cit. supra note 63, at 287; Note (1938) 38 COLUMBIA LAW
REV. 1472, 1484.

" E.g., the broad scope of pretrial discovery would almost certainly be desired by plaintiff and might be desired by both litigants. In general see Pike and Willis, Federal Deposition-DiscoveryProcedure (1938) 38 COLUMBIA LAW REV. 1179, 1436. ' This provision has been held jurisdictional for purposes of the direct appeals statute, City of Chicago v. Mills, 204 U. S. 321 (1907). But cf. American Creosote Works v. Powell, 298 Fed. 417 (C. C. A. 5th, 1924). 8'Dawson v. Columbia Trust Co., 197 U. S. 178 (1905); Removal Cases, 100 U. S. 457 (1879).

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stockholders. By such realignment collusive attempts to secure diversity of citizenship would be rendered unavailing. Yet the regulation of the proper alignment of the parties to a controversy could, it would seem, be regarded as procedural, and therefore within the rule-making power of the Court.85 Conclusion The foregoing discussion will indicate that the problems raised by Erie Ry. v. Tompkins need not always be resolved in terms of substance and procedure. The desirability of the jurisdictional solution herein suggested has yet to be considered. It might be thought that it is really a means of restoring to Congress and the federal courts the power over matters of substance that the Tompkins decision professed to take from them.86 But the power herein suggested is merely a power to refuse the aid of the federal courts in enforcing rights given by state law; the dismissal or remand by the federal court, being on jurisdictional grounds, will not prevent suit by the same parties on the same cause of action in the state court.87 Hence the federal courts will not be creating legally binding rules, and the evil of different results depending on the accident of citizenship is not resurrected.
'In determiningwhether diversity of citizenship exists the court may realign the parties according to their real interest in the controversy. Removal Cases, 100 U. S. 457 (1879). The Venner case held that noncompliancewith Rule 23b (then Rule 94) would not justify such realignment. But the only authority cited was Doctor v. Harrington, 196 U. S. 579 (1904), a case refusing to realign the parties on the ground that the rule had been complied with. It would therefore seem open to the Court to overrule the Venner case on this point. A rule such as that suggested would not seem open to attack as "affectingthe jurisdiction"of the federal courts within the meaning of Rule 82. Rule 82 does not mean that whether a case will be heard in the federal court is unaffectedby the new rules; e.g. Rule 18 permitting joinder of claims formerly not joinable makes it possible to aggregate those claims in order to abtain the requisite amount in controversy. Cashmere Valley Bank v. Pacific Fruit and Prod. Co. Inc., 33 F. Supp. 946 (1940). Compare Rule 18b, leading to a result contrary to that of Cates v. A11en,supra n. 25 and p. 113. Similarly Rule 14a has resulted in an extension of the permissible scope of third party interpleader. See Note (1940) 53 HARV. L. REv. 449, 455. Since no conflict with a jurisdictional statute is apparent [cf. PROCEEDINGS, CLEVELAND, supra n. 65, p. 356] it would seem open to the Court to define the circumstancesunder which realignment is necessary in order to carry out the purpose of the constitutional and statutory requirement of diversity of citizenship. , See Powell, Some Aspects of American Constituftional Law (1940) 53 HARV. L. REv. 529, 541. 'Apparently a dismissal under the present rule is res judicata. Compare Robbins v. Sperry Corp., 1 Fed. Rules Dec. 220 (S. D. N. Y. 1940), refusing to permit remand and refusing to allow plaintiff to discontinue, and dismissing for non-compliancewith Rule 23b. This question was argued as a result of an attempt by the unsuccessful plaintiff in Frankenstein v. Anaconda Copper Min. Co., 6 F. Supp. 569 (S. D. N. Y. 1934) to resue in the state court, but no reported decision was handeddown.

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In one respect the use of the jurisdictional construction serves to decrease federal power. For by declining jurisdiction of a case, the federal court renders it impossible for federal procedure to be applied in that case. This is of great importance under the Norris-La Guardia Act, for if the federal court were to decline jurisdiction because the case fell within the provisions previously discussed, the defendant would be denied the very important procedural safeguards contained in other provisions of the Act.88 It must further be remembered that the Tompkins case has not deprived federal courts of all power over substantive law; where state decisions on the point being decided are contradictory or nonexistent the federal court may well exercise a directing influence on the development of the state law.89 To decline jurisdiction destroys this possibility. Whether these considerations outweigh the desirable ends to be served by the use of a jurisdictional construction are questions of policy to be determined in the light of the particular circumstances of each situation in which the question arises. But at least the construction does obviate the anomaly of requiring the federal courts to enforce rules of law which Congress deems contrary to public policy. And by permitting an expression of Congressional policy, it permits that policy to have possible persuasive influence on the legislative policies of the several states.90
S See Notes (1938) 47 YALE L. J. 1336, 1349; id., 1351. In view of the Thorithill decision, supra n. 30, it may be that the struggle to establish the right of peaceful picketing will in future center in the realm of procedural guarantees to make effective the now-establishedsubstantive principles. In this event the result of declaring the provisions herein discussed to be "jurisdictional"would be undesirable to labor, in whose interests the Act was passed; quaere whether a court would be justified in declaring these provisions unconstitutionalon the ground that such a holding was more consistent with the legislative purpose than would be the alternative "jurisdictional"construction. ' See for instance the great numberof statutes, exactly or substantiallyfollowing the wording of the Norris-La Guardia Act, which were enacted immediately STAT. ANN. (Michie, 1935) c. 97, ? 76; Idaho Laws of after its passage. COLO. 1933, c. 215; IND. STAT. ANN. (Baldwin, 1934) ? 501 et seq.; MINN. STAT. ANN. (Mason, Supp. 1940) ? 4260; Utah Rev. STAT. ANN. (Supp. 1939) ? 49-2A; cf. WYo. REV. STAT. ANN. (Courtright, Supp. 1940) ? 63-201 et seq. (all passed in 1933) ; LA. GEN. STAT. ANN. ?? 4379-5 et seq. (Dart., 1939) (passed in 1934); MD. ANN. CODE (Flack, Supp. 1939) art. 100, ?? 64-76; N. Y. C. P. A. ? 876-a; N. Dak. Laws of 1935, c. 247; cf. MASS. ANN. Laws (Supp. 1940) ? 4620 (all passed in 1935); PA. STAT. ANN. (Purdon Supp. 1939) tit. 43, ? 206a; (passed in 1937), CONN. GEN. STAT. (Supp. 1939) c. 309a (passed in 1939). Three states had such statutes prior to Mar. 26, 1932, the date of enactment of the Norris-La Guardia Act. ARIZ. REV. CODE ANN. Struckmeyer, 1928 ch. 92 ?4266 et seq. (passed in 1928) ; Wis. STAT. ? 103.51et seq., (passed in 1931, reenactedin 1935) cf. ORE. CODE ANN. ?? 49-901 et seq., (passed in 1930).
8829 U. S. C. ?? 107, 109, 110, 111, 112.

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