Marshall v. Holmes, , is an 1891 decision of the United States Supreme Court on equitable relief, res judicata and fraud on the court in diversity jurisdiction. Justice John Marshall Harlan wrote for a unanimous Court that held it unconscionable to allow a state court's decision to stand that had been based on documents later exposed as forgeries. It permitted a federal case seeking to set that verdict aside to go forward.
The petitioner had previously had several judgements rendered against her in Louisiana state court. After discovering that a letter attributed to her, used as evidence against her at trial, had been forged, she filed a petition for a bill of review in the Southern District of New York seeking to enjoin the respondent from endorsing the verdict. The state court would not allow the case to be removed, and so Marshall appealed directly to the Supreme Court.
Harlan's opinion considered both the question of whether federal courts had the authority to so disturb a state court's decision, and whether a court other than that which rendered the original judgement could grant equitable relief in a decided action where allegedly fraudulent evidence had been considered. He held that since Marshall had sought an independent action, Louisiana law and federal precedent allowed the case to be considered. Harlan also dismissed the respondents' argument that federal courts could not hear the case since none of the judgements against Marshall exceeded the $500 minimum then legally required by noting that they well exceeded that amount in the aggregate.
Other courts noted shortly afterwards that the invocation of unconscionability seemed to be in conflict with the Court's unanimous holding 13 years earlier in United States v. Throckmorton that equitable relief could not be granted in cases of intrinsic fraud such as that Marshall alleged. The Court was asked several years later in Graver v. Faurot to reconcile the two cases, but declined. As of the early 21st century this issue remains unresolved; some state courts and the Third Circuit Court of Appeals have held that Marshall overruled Throckmorton while others have reaffirmed the latter case.
Underlying dispute
In 1884 David Mayer, an agricultural supplier, brought suit against Sarah Marshall, owner of the Cabin Teele cotton plantation in Madison Parish, Louisiana, and 24 of her tenants, alleging nonpayment for products advanced to them. Mayer sought recompense from Marshall in the form of raw cotton equivalent in market value to the money he was owed. The two parties agreed to try all the cases as one.
At trial, Mayer introduced into evidence a letter from Marshall, who was not present, to her late agent, Elijah Boyd, instructing him to release the cotton to Mayer as payment. On that basis he secured judgement against her in all the cases, all for amounts less than $500 each. Marshall learned of the forged letter later but the state Supreme Court declined the case in 1887 as the amount in controversy in each judgement was too small for it to assert jurisdiction.
Marshall returned to her home in New York and filed an action at equity in the Southern District of New York seeking to enjoin Holmes, the Madison Parish sheriff, and Mayer from enforcing or collecting the judgement since it had been obtained fraudulently. Back in Louisiana she applied in state court for removal to federal court. The district court declined, on the grounds that Marshall's petition had been too vague or insufficient to state a case for removal, and she petitioned the U.S. Supreme Court for certiorari.
Supreme Court
The Court granted the petition, and heard oral argument in the case in April 1891. It returned a decision that November holding unanimously for Marshall.
Justice John Marshall Harlan wrote the opinion. Unlike the Louisiana Supreme Court, he found that the Court could hear the case on the basis of the aggregate total of the judgements since they were far above the $500 minimum at the time:
Next Harlan turned to the fraud claim. Since the forged letter had made the difference at trial, "The case ... is one where, without negligence, laches or other fault upon the part of petitioner, Mayer has fraudulently obtained judgments which he seeks, against conscience, to enforce by execution." While it was generally a rule that courts of equity would not reconsider judgements made at law procured by forged or perjured evidence when that evidence had already been considered at trial, Harlan quoted from the Court's 1813 Marine Insurance Co. v. Hodgson decision, which held that "any fact which clearly proves it to be against conscience to execute a judgment, and of which the injured party could not have availed himself in a Court of law; or of which he might have availed himself at law, but was prevented by fraud or accident unmixed with any fault or negligence in himself or his agents, will justify an application to a Court of Chancery."
Lastly Harlan addressed the respondents' argument that there was no federal jurisdiction. Two earlier cases of the Supreme Court where litigants had sought to reopen decided cases because of fraud or other irregularity, Barrow v. Hunton, another case from Louisiana, and Gaines v. Fuentes, controlled. In the former the Court had directed removal to state court; in the latter it did not, finding the case to be an independent action from the original one. "In the one class, there would be a mere revision of errors and irregularities, or of the legality and correctness of the judgments and decrees of the state courts; and in the other class, the investigation of a new case, arising upon new factsMarshall, 597–598.
A more recent case, Arrowsmith v. Gleason, decided the issue for Harlan since it had involved, like the instant case, diversity jurisdiction, where citizens of different states are involved, and where the Constitution generally guarantees access to federal courts. "These authorities would seem to place beyond question the jurisdiction of the Circuit Court to take cognizance of the present suit, which is none the less an original, independent suit, because it relates to judgments obtained in the court of another jurisdiction."Marshall, at 599.
The respondents argued that two other recent cases the Court had heard, Nougué v. Clapp and Graham v. Boston, Hartford and Erie Railroad, where the Court had held the cases belonged in state court where fraud had been alleged to have corrupted the original proceedings, weighed in favor of their position. Harlan distinguished those cases as having involved fraud that the petitioners knew of, or reasonably should have, during the original litigation. "... [I]t might be," he wrote, "that relief could be granted by reason of the fact, distinctly alleged, that some of the necessary proof establishing the forgery of the letter was discovered after the judgments at law were rendered, and after the legal delays within which new trials could have been obtained, and could not have been discovered by her sooner."Marshall, 601.
Subsequent jurisprudence
Among the precedents Harlan's opinion cited was United States v. Throckmorton, an 1878 case in which a similarly unanimous court, including him, had declined to allow the government to reopen a 20-year-old California land claim allegedly secured through falsified documents and perjured affidavits. Justice Samuel Freeman Miller's opinion had drawn on the decisions of English courts dating to 1702 to delineate a distinction between intrinsic fraud, consisting of evidence heard during the original proceeding and considered non-reviewable, and extrinsic fraud, occurrences outside the proceeding that prevented the losing party from fully and fairly presenting their case, which could lead to equitable relief. The fraud in Marshall seemed to be intrinsic, yet the Court had granted her the possibility of relief anyway, a seeming conflict with the earlier decision. The Court declined to do when given the opportunity, but that has not precluded lower courts from considering the issue.
Supreme Court
Graver v. Faurot
As Marshall was working its way through the appellate courts, an Illinois man named Graver was solicited by an Ohio banker acquaintance, Faurot, to invest in a company he recommended. Graver decided to buy $15,000 of its stock at what he had been led to believe was a discounted price. In actuality the stock was almost worthless, and Faurot had not disclosed to Graver that he had an interest, nor that he and the company owner, Bailey, had made a written agreement to divide Faurot's investment between themselves., hereafter Graver I
After the stock collapsed, Graver, suspecting the scheme but having no proof, sued Faurot and Bailey for fraud. Graver's attorney asked the two under oath in depositions if they had so conspired, and they both denied it. Without any other evidence, Graver had no case, and with his agreement the judge dismissed it., hereafter Graver II
Three years later, Faurot's bank failed. Records filed during the bankruptcy, including documentation on file with the federal government earlier, revealed Faurot's interest and his agreement with Bailey. Graver filed a bill of review in federal court for the Northern District of Illinois seeking to have the earlier dismissal set aside. Judge James Graham Jenkins agreed that Graver had been defrauded, but after reading Throckmorton and Marshall could not decide whether Graver could retry the case with the newly discovered evidence:Graver I, at 242–244.
Jenkins chose to resolve that question by procedurally ruling for the defendants and suggesting the problem might be resolved on appeal.Graver I, 245–246.
The Seventh Circuit Court of Appeals decided to certify the question to the Supreme Court before attempting to decide the case. In 1896 the Court unanimously declined. As part of the record, the Seventh Circuit had submitted the entire case, which, Chief Justice Melville Fuller wrote, put the Supreme Court in a difficult position. Statute forbid the appellate circuits from submitting an entire case to the Court without a specific question or questions to resolve.Graver III, at 437–438.
"[I]f we should find that the bill was insufficient when tested by principles accepted in both the cases referred to, we should be indisposed to return an answer not required for the disposition of the case," Fuller observed. "This practically requires us to pass upon the whole case as it stands, and to decide whether the demurrer was properly sustained or not." Thus, he said, the Court would not consider the question unless the whole case was appealed to it.
On remand, the Seventh Circuit issued its decision, holding provisionally for Graver, later that year. Judge William Allen Woods wrote for a unanimous three-judge panel that carefully considered the distinction drawn in the two cases. "[M]anifestly it is not true of a complainant in equity that when he brings his bill he must come prepared with proof to maintain it, and to meet any defense which may be interposed", he wrote. "It is his privilege to search the conscience of his adversary by requiring, him to answer under oath, and if possessed of no other evidence, or means of obtaining it, he must accept or at least yield to the answer as true."Graver II, 261–262.
Because of the false testimony the case could not go to trial, bringing it under Throckmortons exception for extrinsic fraud. "The present case does not come within the strict letter, and certainly not within the spirit or reason, of the rule", Woods wrote. Ultimately, Woods concluded, it was not necessary to reconcile the two cases; in fact both of them justified holding for Graver. "There can be and ought to be no repose of society where for such wrongs the courts are incapable of giving redress."Graver II, 263.
Simon v. Southern Railway Co.