Commercial Publishing Co. v. Beckwith, 188 U.S. 567 (1903)
Commercial Publishing Co. v. Beckwith
No. 132
Argued December 19, 1902
Decided February 23, 1903
188 U.S. 567
ERROR TO THE SUPREME COURT
OF THE STATE OF NEW YORK
Syllabus
1. Where a right to recover as the result of a judicial sale made under decrees both of the courts of the United States and of a state other than that in which the action is brought, is unquestionably set up in the complaint, federal questions exist in the record, and a motion to dismiss must be denied.
2. Questions involved in the construction of a contract for the advancement of money and its repayment and the effect of the lien which the lender has on the accounts pledged as security for such repayment, are not federal in their nature, and this Court must assume that the construction given by the highest court of the state in which the action was brought is correct.
3. Where the highest court of a state has construed decrees made by a United States court and a state court of another state authorizing the sale of certain accounts by a receiver as merely authorizing a sale of the receiver’s right, title and interest in such accounts, and that such right, title and interest was subject to the lien of one who had advanced money on the faith of a contract authorizing him to collect such accounts and repay himself thereout, such construction is not an unreasonable one, and the burden rests upon the plaintiff in error to show that such construction is in violation of the due faith and credit clause of the federal Constitution. And the judgment will be affirmed unless the record shows with certainty that such construction did deny due faith and credit to the decrees in question.
A Tennessee corporation, styled the Commercial Publishing Company, brought this action in a court of the State of New York to recover from Samuel C. Beckwith a sum of money which, it was averred, belonged to the publishing company. It was alleged in the complaint that the right was derived from one Crawford, who, it was averred, became the owner of certain newspaper advertising accounts, on which payments had been made to Beckwith, the aggregate thereof constituting the amount sued for. The manner in which Crawford was asserted to have acquired the ownership of the accounts will appear in the following statement summarized from the pleadings:
On September 30, 1893 an action was begun in the Chancery Court of Shelby County, Tennessee, to foreclose a deed of trust which had been made by the Memphis Appeal Company, publishers of a newspaper known as the Memphis Appeal-Avalanche. Samuel C. Beckwith was made a party defendant to the cause. Contemporaneously with the filing of the bill, a receiver of the assets of the newspaper company was appointed, and he continued the publication of the paper. Although the complaint in the action at bar did not set out the nature of the controversy in the Tennessee suit between the trustees, who were plaintiffs in the action, and Beckwith, it was alleged that, a short time after the bill was filed, Beckwith procured the removal to a circuit court of the United States of a separate controversy existing between himself and the trustees, in which court, it was averred, such controversy thereafter continued. Subsequently, it was alleged, other actions were filed in the Tennessee court against the Memphis Appeal Company, which actions were ultimately consolidated with the trustee cause. It was charged that, in the month of April, 1894, like decrees were simultaneously entered in the consolidated actions in the state court and in the one which had been removed to the United States court, and that, under such decrees, a sale was had on June 16, 1894, of the property vested in the receiver, including the accounts due said receiver, representing moneys earned by the receiver in the operation of the newspaper, of which the accounts upon which Beckwith had collected the money sued for formed a part. At this sale, it was alleged, Crawford became the purchaser of all the property embraced in the order of sale, and he thereafter assigned his purchase to the plaintiff.
In an amended answer, Beckwith admitted having collected and retained the moneys sued for, and specially denied the other allegations of the complaint. He also set up as a defense that he had collected the moneys in question rightfully, under the authority of an agreement with the Memphis Appeal Company made prior to the execution of the deed of trust heretofore referred to. He further alleged that the receiver never acquired title to the moneys, and had never offered for sale or sold any right or title thereto. Subsequently, by supplemental answer, it was alleged that, after the execution of the decrees of sale, and on appeal from a final decree which had been entered in the consolidated cause, the Supreme Court of the State of Tennessee adjudicated that the trust deed and all proceedings based thereon were null and void, and that, by reason thereof, the sale in question was a nullity.
The action at bar was tried by a jury upon an agreed statement of facts. By direction of the court, there was a verdict in favor of the plaintiff for the full amount claimed. This judgment was affirmed by the appellate division of the Supreme Court of the State of New York. An appeal was then taken to the court of appeals of the state, which reversed the judgment, and ordered the complaint to be dismissed with costs. 167 N.Y. 329. The judgment of the court of appeals having been made that of the trial court, a writ of error from this Court was prosecuted.