MR. JUSTICE CARDOZO delivered the opinion of the Court.
Whether a federal court has jurisdiction of this suit as one arising under the Constitution and laws of the United States is the single question here.
Petitioner, plaintiff in the court below, sued the respondent in a state court in Mississippi to recover a money judgment. The following facts appear on the face of the complaint: In June, 1931, the assets of the First National Bank of Meridian, a national banking association, were conveyed to the respondent, the First National Bank in Meridian, under a contract whereby the debts and liabilities of the grantor, insolvent at the time and in the hands of a receiver, were assumed by the grantee, which covenanted to pay them. Among the debts and liabilities so assumed were moneys owing to the petitioner, the state Collector of Taxes, or now claimed to be owing to him, for state, county, city, and school district taxes. In form the assessment was imposed upon the shares or capital stock of the bank, its surplus and undivided profits, exclusive of the value of the real estate. In law, so the pleader states, all taxes thus assessed were debts owing by the shareholders, which the bank was under a duty to pay as their agent out of moneys belonging to them, then in its possession.
A petition was filed by the respondent for the removal of the cause to the federal court upon the ground that the suit was one arising "under the Constitution or laws of the United States." Judicial Code § 28, 28 U.S.C. § 71; cf. Judicial Code § 24 (1) (a), 28 U.S.C. § 41. The state court made an order accordingly, and the federal District Court denied a motion to remand. Later, after a trial upon the merits, the complaint was dismissed. The Circuit Court of Appeals for the Fifth Circuit affirmed the judgment of dismissal, overruling the objection that the cause was one triable in the courts of Mississippi. 81 F.2d 502. The decision was put upon the ground that the power to lay a tax upon the shares of national banks has its origin and measure in the provisions of a federal statute (R.S. § 5219, 12 U.S.C. § 548), and that by necessary implication a plaintiff counts upon the statute in suing for the tax. Because of the importance of the ruling, this Court granted certiorari, "limited to the question of the jurisdiction of the District Court."
How and when a case arises "under the Constitution or laws of the United States" has been much considered in the books. Some tests are well established. To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. Starin v. New York, 115 U.S. 248, 257; First National Bank v. Williams, 252 U.S. 504, 512. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. Ibid; King County v. Seattle School District, 263 U.S. 361,
Looking backward we can see that the early cases were less exacting than the recent ones in respect of some of these conditions. If a federal right was pleaded, the question was not always asked whether it was likely to be disputed. This is seen particularly in suits by or against a corporation deriving its charter from an act of Congress. Osborn v. Bank of the United States, 9 Wheat. 738, 817-828; Pacific Railroad Removal Cases, 115 U.S. 1, 11. Modern statutes have greatly diminished the importance of those decisions by narrowing their scope. Gay v. Ruff, 292 U.S. 25, 35; Puerto Rico v. Russell & Co., 288 U.S. 476, 483. Federal incorporation is now abolished as a ground of federal jurisdiction except where the United States holds more than one-half the stock. Act of February 13, 1925, c. 229, § 12, 43 Stat. 936, 941. Partly under the influence of statutes disclosing a new legislative policy, partly under the influence of more liberal decisions, the probable course
Viewing the case at hand against this background of established principle, we do not find in it the elements of federal jurisdiction.
1. The suit is built upon a contract which in point of obligation has its genesis in the law of Mississippi. A covenant for a valuable consideration to pay another's debts is valid and enforcible without reference to a federal law. For all that the complaint informs us, the failure to make payment was owing to lack of funds or to a belief that a stranger to the contract had no standing as a suitor or to other objections non-federal in their nature. There is no necessary connection between the enforcement of such a contract according to its terms and the existence of a controversy arising under federal law.
Not every question of federal law emerging in a suit is proof that a federal law is the basis of the suit. The tax here in controversy if valid as a tax at all, was imposed under the authority of a statute of Mississippi. The federal law did not attempt to impose it or to confer upon the tax collector authority to sue for it. True, the tax, though assessed through the action of the state, must be consistent with the federal statute consenting, subject to restrictions, that such assessments may be made. R.S. § 5219, 12 U.S.C. § 548. It must also be consistent with the Constitution of the United States. McCulloch v. Maryland, 4 Wheat. 316; Owensboro National Bank v. Owensboro, 173 U.S. 664; Baltimore National Bank v. Tax Commission, 297 U.S. 209. If there were no federal law permitting the taxation of shares in national banks, a suit to recover such a tax would not be one arising under the Constitution of the United States, though the bank would have the aid of the Constitution when it came to its defense. Tennessee v. Union & Planters Bank, supra; Sawyer v. Kochersperger, 170 U.S. 303; Arkansas v. Kansas & Texas Coal Co., 183 U.S. 185; Louisville & Nashville R. Co. v. Mottley, supra. That there is a federal law permitting such taxation does not change the basis of the suit, which is still the statute of the state, though the federal law is evidence to prove the statute valid.
Another line of reasoning will lead us to the same conclusion. The Mississippi law provides, in harmony with the act of Congress (R.S. § 5219), that a tax upon the shares of national banks shall be assessed upon the shareholders, though the bank may be liable to pay it as their agent, charging their account with moneys thus expended.
This Court has had occasion to point out how futile is the attempt to define a "cause of action" without reference to the context. United States v. Memphis Cotton Oil Co., 288 U.S. 62, 67, 68. To define broadly and in the abstract "a case arising under the Constitution or laws of the United States" has hazards of a kindred order. What is needed is something of that common-sense accommodation of judgment to kaleidoscopic situations which characterizes the law in its treatment of problems of causation. One could carry the search for causes backward, almost without end. Bird v. St. Paul F. & M. Insurance
The judgment should be reversed and the cause remitted to the District Court with instructions to remand it to the court in Mississippi from which it was removed.
MR. JUSTICE STONE took no part in the consideration or decision of this case.