Local Policy Is No Defense

Local Policy Is No Defense

The preceding section ended on a question: can the forum's own law or policy at least reduce what a sister-state judgment is worth? For judgments the answer is no. A forum may find the underlying claim distasteful, may have a limitations statute that would have barred it, and may even have declared the transaction unlawful, and the judgment still commands credit. In Williams v. North Carolina the Court stated the principle directly: even though the cause of action could not be entertained in the forum, either because the local statute of limitations had run or because the claim contravened local policy, a judgment obtained on it in a sister state is entitled to full faith and credit.¹ Article IV, § 1 is phrased as a command to each state, and nothing in its text makes the credit depend on the forum's agreement with the result.² That is the rule that local policy is no defense to a sister-state judgment.

The limitations example shows how the rule works. A limitations statute regulates how long a claim may be sued on, and once the claim has been reduced to judgment the creditor holds something different: a debt of record, enforceable by an action like any other civil judgment between the parties.³ A suit on the judgment therefore does not revive the original claim. It asks the forum to give effect to what the rendering court has already decided, which is why the forum's limitations period for the underlying claim does not reach it. Baker v. General Motors Corp. repeated the point in the words of an earlier decision, that credit must be given to a judgment "although the forum would not be required to entertain the suit on which the judgment was founded."⁴

Fauntleroy v. Lum, which Williams treated as confirming the rule, shows how far it reaches.⁵ Mississippi had banned cotton futures contracts under which neither side intended to take delivery, and it had made entering into them a crime. Two Mississippi residents made such a contract anyway, and one obtained an arbitral award that a Mississippi court refused to enforce once it learned the contract was criminal. The claimant then served the other party in Missouri and won a Missouri judgment enforcing the award, despite evidence of the Mississippi prohibition. When the claimant brought that judgment back to Mississippi, the Mississippi Supreme Court refused it credit because the transaction was wholly domestic and offended Mississippi policy, and the United States Supreme Court reversed.⁶ The Missouri court may have erred, and it may have erred about Mississippi's own law, yet the judgment was still owed credit. If a forum's interests could ever outweigh the clause's command as to a judgment, a purely local transaction that violates the forum's criminal law is the case where they would, and they do not.

The rule rests on reasons of different kinds. The functional reason is that the forum's objection was available to the defendant where the judgment was made: the defendant could plead the limitations bar or the illegality in the rendering court and, if those arguments failed, could appeal through that state's courts. The system already has a mechanism for correcting a wrong judgment, and relying on that appeal is more efficient and more respectful of the rendering state's sovereignty than letting every sister state second-guess the result.⁷ The incentive reason is subtler. If a forum could refuse credit whenever the claim offended its policy, a judgment debtor would have every reason to move assets, or to move personally, to the state whose policy is most hostile to the claim, and a creditor's judgment would be worth only what the least friendly state chose to give it. Each forum would also be deciding a policy dispute in which it is an interested party. The purpose of the clause adds a further reason: it was meant to end the condition in which each state was "free to ignore obligations created under the laws or by the judicial proceedings of the others," and to make the states integral parts of a single nation.⁸

This exacting credit belongs to judgments. The credit owed to another state's statutes is weaker, because the clause does not compel a state to substitute the statutes of other states for its own on a subject within its competence, while the obligation as to judgments is exacting.⁹ Hughes v. Fetter shows the difference from the claim side, since the Court there weighed Wisconsin's policy against the clause's unifying principle before holding that the policy had to yield.¹⁰ A Wisconsin statute confined the state's own wrongful-death action to deaths caused in Wisconsin, and the state courts relied on it to dismiss a suit under the Illinois wrongful-death act. The Court's opinion also records the parties' concession that, had the same claim already been reduced to judgment, the clause would have compelled Wisconsin's courts to entertain a suit to enforce it.¹¹ For a claim, the forum's policy enters a balance; for a judgment, it carries no weight.

The second half of that pair rests on the weaker credit given to laws. A state may apply its own procedural rules in its own courts, and limitations periods were long treated as falling within that category.¹² A creditor who first reduces the claim to a judgment in a state with jurisdiction therefore converts a claim the forum might refuse to hear into a judgment the forum must honor. The condition that matters is the rendering court's jurisdiction, which the next sections examine.

On an exam stem the temptation is to let a vivid local policy carry the analysis. The forum judge announces that the legislature has declared such claims void, or that the claim would be time-barred at home, and the answer treats that as a defense to the judgment. Students lose this issue when they treat the forum's disagreement with the underlying claim as a defense to the judgment. Whether the forum would have allowed the claim is beside the point, and the questions that can matter concern the rendering court's own power.

Williams acknowledged that Marshall's rule has exceptions. As Justice Brandeis had put it, "the room left for the play of conflicting policies is a narrow one," and the Court's own survey found that the actual exceptions in its decisions, as distinct from its dicta, have been "few and far between" apart from Haddock v. Haddock.¹³ Haddock itself shows what such an exception looked like. A wife sued in New York, the matrimonial domicile where she still lived, for separation and alimony, and the husband pleaded a Connecticut divorce decree obtained after he had established a separate domicile there, with service on her only by publication. The Court had held that New York need not credit the decree, since the husband had wrongfully left the matrimonial home. Williams said the Court did not agree with the theory of Haddock that, as to marital status, a divorce decree granted under such circumstances by one state need not be credited in another.¹⁴ With that theory rejected, whether a divorce decree must be honored turns on the jurisdiction of the court that granted it, which a later section takes up.

One recognized exception resembles a policy objection but depends on the kind of claim the judgment enforces. The courts of one sovereign do not execute the penal laws of another, and the clause confers no new jurisdiction on a state's courts to entertain a suit so penal that no other state's judiciary could hear it.¹⁵ Wisconsin v. Pelican Insurance Co. applied that idea when Wisconsin sought to enforce a judgment of its own courts for a penalty against a resident of another state, and the Court declined to hear it because the courts of no country execute another's penal laws.¹⁶ Reducing a penal claim to judgment does not change its character, because the essential nature of a cause of action is unchanged by recovering judgment on it.¹⁷

The label a legislature or court attaches does not decide whether the exception applies, and that is what keeps it narrow. In Huntington v. Attrill the Maryland court denied credit to a New York judgment because it regarded the underlying liability as penal. The Supreme Court held that the test is whether the liability, in its essential character and effect, punishes an offense against the public or grants a civil right to a private person, that the Supreme Court decides the question for itself when a state court denies credit on this ground, and that the New York liability was civil, so Maryland had denied the judgment the credit it was due.¹⁸ A forum therefore cannot manufacture an exception by calling a claim it dislikes penal.

The modern statement is categorical. Baker read the Court's decisions as supporting no roving public-policy exception to the credit due judgments, and it recalled that the clause "ordered submission . . . even to hostile policies reflected in the judgment of another State, because the practical operation of the federal system, which the Constitution designed, demanded it."¹⁹ A concurring opinion agreed that a judgment may not be denied enforcement because of disagreement with the law of the rendering state, while warning that the majority's own announced exceptions sat uneasily with that principle.²⁰ The recognized grounds for refusing credit therefore lie in defects in the rendering court's authority. Even the older cases that seem to deny credit because the rendering court applied the "wrong" law, such as those involving land outside the rendering state, rest on the absence of jurisdiction.²¹ Those jurisdictional limits are the subject of the next sections.