if those federal courts are courts of the State of North Carolina in the sense that they must follow state decisions upon the power of state courts, under the rule of Guaranty Trust Co. v. York, 326 U. S. 99. I do not think that the Guaranty rule applies. See subdivision IV.

III. If the two preceding numbered divisions of this opinion are sound, there was no occasion for Bullington to seek a review of the first judgment in this Court. He was in the position of the owner of a cause of action, dismissed because prematurely brought or brought in the wrong county. The judgment that the Supreme Court of North Carolina ordered was "dismissed," not on the merits, not with prejudice, and not judgment for the defendant, but a simple dismissal. North Carolina might have declared, by statute, that no cause of action would be recognized in North Carolina for the recovery of a deficiency on a mortgage indebtedness. Instead of this, we are told, authoritatively, by the Supreme Court of North Carolina that North Carolina has withdrawn the jurisdiction of its courts from such a cause of action. This produces quite a different situation.

IV. The pith of the problem, as I see it, is laid bare by the foregoing differentiations. It consists of the question whether the North Carolina decision establishes a controlling rule of law upon the constitutionality of the state statute as tested by the federal Constitution or adjudicates that the statute merely withdraws jurisdiction from state courts over a type of action. This Court concludes that the state decision determined the constitutionality of the statute and that its holding was binding on all federal courts in North Carolina, as well as state courts. This idea is comprehended in the Court's opinion by the statements that the federal courts are courts of the state in diversity cases and that a litigant cannot stop with an intermediate court decision against him and begin a new litigation on the same cause of action.

The Court reaches the conclusion that res judicata should apply by an application of Erie Railroad v. Tompkins, 304 U. S. 64, and Guaranty Trust Co. v. York, 326 U. S. 99. The teaching of those cases is accepted by me. They lead to the conclusion that in diversity cases, legal or equitable, and this proceeding is a diversity case, the federal courts in a state apply the law of that state in matters of substantive law. In matters of procedure and jurisdiction, I take it, no one would contend that the doctrine of Erie Railroad is applicable. One may regret that the line of the Great Divide between substance and procedure cannot be clearly marked so that all may agree as to its location in any one case. But that line exists. We have said that federal courts must follow the law of the state as to burden of proof. Cities Service Co. v. Dunlap, 308 U. S. 208; Palmer v. Hoffman, 318 U. S. 109, 117; as to conflict of laws, Griffin v. McCoach, 313 U. S. 498; Klaxon Co. v. Stentor Co., 313 U. S. 487, and as to state statutes of limitation in equity cases, Guaranty Trust Co. v. York, supra. The reason for these conclusions is to gain the desirable end of a symmetry of law within each state. The momentum of the opinions, just cited, and of the desire for uniformity should not cause us to disregard the rule that state law, statutory or judicial, directed at remedies or powers of courts, cannot affect the federal system. Each of the cases just cited follows the declarations of state law by state courts. In this case, this Court departs from the state court's interpretation of the meaning of a state statute in order to bring about the federal policy of uniformity. By this, the Court departs from the sound rule that a state court's interpretation of state statutes is binding on federal courts. In reaching the conclusion which it does, this Court decides that if a state court does not have power to adjudicate a cause, neither does a federal court in that state. It also departs from controlling precedents that state enactments on jurisdic

tion, remedies and procedures do not affect the jurisdiction, remedies or procedures of federal courts. It is true that these antedate the Erie case but that case did not change the state and federal jurisdiction.

In Pusey & Jones Co. v. Hanssen, 261 U. S. 491, this Court held that an authority given by Delaware to its Chancellor to appoint a receiver for an insolvent corporation on the application of any creditor did not give additional power to the federal court to appoint a receiver in a diversity case on the application of a simple creditor although the federal courts had long exercised the right to appoint receivers on the application of a secured creditor. This Court said:

"That a remedial right to proceed in a federal court sitting in equity cannot be enlarged by a state statute is likewise clear, Scott v. Neely, 140 U. S. 106; Cates v. Allen, 149 U. S. 451. Nor can it be so narrowed, Mississippi Mills v. Cohn, 150 U. S. 202; Guffey v. Smith, 237 U. S. 101, 114. The federal court may therefore be obliged to deny an equitable remedy which the plaintiff might have secured in a state court. Hanssen's contention is that the statute does not enlarge the equitable jurisdiction or remedies; and that it confers upon creditors of a Delaware corporation, if the company is insolvent, a substantive equitable right to have a receiver appointed. If this were true, the right conferred could be enforced in the federal courts, Scott v. Neely, 140 U. S. 106, 109; since the proceeding is in pleading and practice conformable to those commonly entertained by a court of equity. But it is not true that this statute confers upon the creditor a substantive right."

See Henrietta Mills v. Rutherford County, 281 U. S. 121, 127-128; Kelleam v. Maryland Casualty Co., 312 U. S. 377, 382.

741700 O-47-17

In Lupton's Sons Co. v. Automobile Club, 225 U. S. 489, this Court held that a contract which could not be sued upon in the courts of New York because a New York statute provided that no foreign corporation could "maintain any action in this state" without a certificate that it had complied with certain state requirements to do business in the state, could nevertheless be sued upon in the federal court. It was said, p. 500:

"The State could not prescribe the qualifications of suitors in the courts of the United States, and could not deprive of their privileges those who were entitled under the Constitution and laws of the United States to resort to the Federal courts for the enforcement of a valid contract. . . . The State in the statute before us made no such attempt. The only penalty it imposed, to quote again from the Mahar Case, was a disability to sue 'in the courts of New York.'"

These cases make clear that in diversity litigation the federal courts are not simply courts of the state. They are so far as the enforcement of the substantive laws of the state are concerned, but not when procedure or power to act is involved. The Lupton case shows too, that, when a state denies power to its courts to adjudicate a cause, that denial does not affect the power of the federal courts to decide the case. As I am of the opinion that the state court merely denied its power to adjudge between these parties and did not decide the merits of Bullington's cause of action, the state court judgment cannot be res judicata in the federal court.

If it is true that in passing upon the meaning of a state statute, a federal court is not required to follow the state court's characterization of its statute, as remedial or substantive, this Court's present determination that the statute is substantive for our purposes cannot change the effect in this litigation of the state's decision to the contrary.

183

RUTLEDGE, J., dissenting.

When the state court held that for its purposes the statute was remedial, it was remedial in that court. If remedial, the state judgment was not upon the merits and could not be res judicata in any court as to the right to recover on the cause of action.

If the plea of res judicata is not good and this Court should decide that the state statute is substantive law, i. e., a declaration of the policy of North Carolina against claims on deficiencies after sales of incumbered property, it would be necessary to determine the constitutionality of the North Carolina statute that declares uncollectible in North Carolina a claim on a contract that was good in Virginia. In view of this Court's present decision, I express no opinion upon this issue.

MR. JUSTICE JACKSON and MR. JUSTICE RUTLEDGE join in this opinion.

MR. JUSTICE RUTLEDGE, dissenting.

This is a hard case making, I think, proverbially bad law. On the surface what seems to be decided is simply a question of res judicata. Actually the decision rests on an "and/or" hodgepodge of res judicata and Erie doctrines.1 In my judgment the admixture not only is unnecessary but distorts and misapplies both doctrines. If res judicata properly applies and is adequate to dispose of the cause, there is no occasion for the sidewise introduction of Erie ideas. Likewise, if Erie appropriately governs the case, the Court's elaborate and altogether novel discussion of res judicata is superfluous.

The Court has not decided this case on any basis of full faith and credit. Accordingly res judicata as it is applied

1 Erie R. R. Co. v. Tompkins, 304 U. S. 64.

2 The Court does not hold that the full faith and credit clause, Const., Art. IV, § 1, binds the federal courts to give the North Carolina judgment the effect of precluding a further suit in the federal