MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
Petitioners sought a judgment granting equitable relief in the District Court below, whose jurisdiction rested solely on diversity of citizenship. The question is whether the Circuit Court of Appeals, on appeal from the judgment of the District Court, rightly declined to exercise its jurisdiction on the ground that decision of the case on the merits turned on questions of Florida constitutional and statutory law which the decisions of the Florida courts had left in a state of uncertainty.
Petitioners brought this suit in the District Court for Southern Florida, alleging by their bill of complaint that they are owners and holders of General Refunding Bonds issued in 1933 by respondent, the City of Winter Haven, Florida; that by their terms the bonds are callable by the city on any interest date on tender of their principal
In the event that the court should determine that the obligation of the deferred-interest coupons is unenforceable, then it was prayed that the court declare that petitioners are entitled to enforce the obligation for payment, principal and interest, of the amount of the original bonded indebtedness of the city which was refunded by the General Refunding Bonds now held by petitioners, and that the court enjoin the city and its officials, respondents here, from failing or refusing to pay the interest due on such refunded bonds, as provided by the resolution of the city commissioners authorizing the issue and sale of the General Refunding Bonds in 1933.
The District Court granted respondents' motion to dismiss the complaint on the grounds that it failed to state a cause of action and that the questions of law involved had been determined adversely to petitioners by the Supreme Court of Florida. The Court of Appeals, without passing on the merits, reversed and directed that the cause be dismissed without prejudice to petitioners' right to proceed in the state courts to secure a determination of the questions of state law involved. 134 F.2d 202.
The Court of Appeals agreed with petitioners that the bill of complaint presented a justiciable controversy requiring determination, that they were entitled to a judgment declaring the law of Florida with respect to the validity of the deferred-interest coupons, and that if petitioners' contentions were sustained they were entitled
Although the opinion below refers to the suit as one for a declaratory judgment, the declaration of rights prayed, as is usually the case in suits for an injunction, is an indispensable prerequisite to the award of one or the other of the forms of equitable relief which petitioners seek in the alternative. Hence, so far as we are concerned with the necessity and propriety of a determination by a federal court of questions of state law, the case does not differ from an ordinary equity suit in which, both before and since Erie R. Co. v. Tompkins, 304 U.S. 64, federal courts have been called upon to decide state questions in order to render a judgment.
The facts as presented by the amended bill of complaint and the motion to dismiss raise two issues of state law, one and possibly both of which must be decided if petitioners are to have the benefit which they seek of the jurisdiction conferred on district courts in diversity cases. The first question arises from the fact that the Refunding Bonds of
Several decisions of the Supreme Court of Florida have declared that where bonds to be refunded contain no provision for deferred-interest coupons, refunding bonds containing such coupons would impose "new and additional or more burdensome terms" (Outman v. Cone, 141 Fla. 196, 199, 192 So. 611, 613) which may not be included in refunding bonds unless they are approved by referendum in accordance with Article IX, § 6. Outman v.
As appears from the amended bill of complaint, after the present suit was begun the Supreme Court of Florida decided the case of Andrews v. Winter Haven, supra. This case involved the same issue of Refunding Bonds as is here in question. The Florida court held that the deferred-interest coupons are invalid; that the purported obligation of the invalid coupons is severable from the obligations to pay the principal of the bonds and current interest on the other coupons, which obligations are valid and enforceable; and that the bonds are subject to call upon tender of the stipulated principal and interest without including any amount purporting to be payable on the deferred-interest coupons.
It is the contention of petitioners that the Andrews case is not controlling because it, as well as Outman v. Cone, supra, and Taylor v. Williams, supra, which it cited and followed, is inconsistent with earlier decisions of the Supreme Court of Florida antedating the Refunding Bonds of 1933, particularly Sullivan v. Tampa, supra; State v. Miami, 103 Fla. 54, 137 So. 261; State v. Special Tax School District, 107 Fla. 93, 144 So. 356; Bay County v. State, 116 Fla. 656, 157 So. 1; State v. Citrus County, 116 Fla. 676, 157 So. 4; State v. Sarasota County, 118 Fla. 629, 159 So. 797. Petitioners also insist that, in deciding the Andrews case, the attention of the Supreme Court of Florida was not directed to the doctrine which it had earlier announced in Columbia County Commissioners v. King, supra, and in State ex rel. Nuveen v. Greer, supra, that by the law of Florida a contract is governed by the laws declared at the time the contract was made, and that consequently the court did not apply the doctrine. And finally it is said that the weight of the Outman and Andrews cases as precedents is impaired by the fact that although they appear on the record to be
While the rulings of the Supreme Court of Florida in the Andrews case must be taken as controlling here unless it can be said with some assurance that the Florida Supreme Court will not follow them in the future, see Wichita Royalty Co. v. City National Bank, 306 U.S. 103, 107; Fidelity Trust Co. v. Field, 311 U.S. 169, 177-178; West v. American Telephone & Telegraph Co., 311 U.S. 223, 236, we assume, as the Court of Appeals has indicated, that the Supreme Court of the State may modify or even set them aside in future decisions. But we are of opinion that the difficulties of ascertaining what the state courts may hereafter determine the state law to be do not in themselves afford a sufficient ground for a federal court to decline to exercise its jurisdiction to decide a case which is properly brought to it for decision.
The diversity jurisdiction was not conferred for the benefit of the federal courts or to serve their convenience. Its purpose was generally to afford to suitors an opportunity in such cases, at their option, to assert their rights in the federal rather than in the state courts. In the absence of some recognized public policy or defined principle guiding the exercise of the jurisdiction conferred, which would in exceptional cases warrant its non-exercise, it has from the first been deemed to be the duty of the federal courts, if their jurisdiction is properly invoked, to decide questions of state law whenever necessary to the rendition of a judgment. Commonwealth Trust Co. v. Bradford, 297 U.S. 613, 618; Risty v. Chicago, R.I. & P. Ry. Co., 270 U.S. 378, 387; Kline v. Burke Construction Co., 260 U.S. 226, 234-235; McClellan v. Carland, 217 U.S. 268, 281-282. When such exceptional circumstances are not present, denial of that opportunity by the federal courts merely because the answers to the questions of state law are difficult or uncertain or have not yet been given by
The exceptions relate to the discretionary powers of courts of equity. An appeal to the equity jurisdiction conferred on federal district courts is an appeal to the sound discretion which guides the determinations of courts of equity. Beal v. Missouri Pacific R. Co., 312 U.S. 45, 50. Exercise of that discretion by those, as well as by other courts having equity powers, may require them to withhold their relief in furtherance of a recognized, defined public policy. Di Giovanni v. Camden Insurance Assn., 296 U.S. 64, 73, and cases cited. It is for this reason that a federal court having jurisdiction of the cause may decline to interfere with state criminal prosecutions except when moved by most urgent considerations, Spielman Motor Co. v. Dodge, 295 U.S. 89, 95; Beal v. Missouri Pacific R. Co., supra, 49-51; Douglas v. Jeannette, 319 U.S. 157; or with the collection of state taxes or with the fiscal affairs of the state, Matthews v. Rodgers, 284 U.S. 521; Stratton v. St. Louis Southwestern Ry. Co., 284 U.S. 530; Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293; or with the state administrative function of prescribing the local rates of public utilities, Central Kentucky Gas Co. v. Railroad Commission, 290 U.S. 264, 271 et seq. and cases cited; or to interfere, by appointing a receiver, with the liquidation of an insolvent state bank by a state administrative officer, where there is no contention that the interests of creditors and stockholders will not be adequately protected, Pennsylvania v. Williams, 294 U.S. 176; Gordon v. Ominsky, 294 U.S. 186; Gordon v. Washington, 295 U.S. 30; cf. Kelleam v. Maryland Casualty Co., 312 U.S. 377, 381. Similarly it may refuse to appraise or shape domestic policy of the state governing its administrative agencies. Railroad Commission v. Rowan & Nichols Oil Co., 311 U.S. 570; Burford v. Sun Oil Co., 319 U.S. 315. And it may of course decline to exercise
But none of these considerations, nor any similar one, is present here. Congress having adopted the policy of opening the federal courts to suitors in all diversity cases involving the jurisdictional amount, we can discern in its action no recognition of a policy which would exclude cases from the jurisdiction merely because they involve state law or because the law is uncertain or difficult to determine. The decision of this case is concerned solely with the extent of the liability of the city on its Refunding
Erie R. Co. v. Tompkins, supra, did not free the federal courts from the duty of deciding questions of state law in diversity cases. Instead it placed on them a greater responsibility for determining and applying state laws in all cases within their jurisdiction in which federal law does not govern. Accepting this responsibility, as was its duty, this Court has not hesitated to decide questions of state law when necessary for the disposition of a case brought to it for decision, although the highest court of the state had not answered them, the answers were difficult, and the character of the answers which the highest state courts might ultimately give remained uncertain. Wichita Royalty Co. v. City National Bank, supra; West v. American Telephone & Telegraph Co., supra, 236-237; Fidelity Trust Co. v. Field, supra, 177-180; Six Companies v. Joint Highway District, 311 U.S. 180, 188; Stoner v. New York Life Ins. Co., 311 U.S. 464; Palmer v. Hoffman, 318 U.S. 109, 116-118. Even though our decisions
The judgment will be reversed and the cause remanded to the Circuit Court of Appeals for further proceedings in conformity to this opinion.
MR. JUSTICE BLACK and MR. JUSTICE JACKSON are of the opinion that the judgment should be affirmed for the reasons stated in the opinion of the Circuit Court of Appeals, 134 F.2d 202.