Tennessee v. Union & Planters' Bank - 152 U.S. 454, 14 S. Ct. 654 (1894)

Rule:

A suit in federal court must be one in which some title, right, privilege, or immunity on which the recovery depends will be defeated by one construction of the Constitution, or a law or treaty of the United States, or sustained by a contrary construction. A cause cannot be removed from a state court simply because, in the progress of the litigation, it may become necessary to give a construction to the Constitution or laws of the United States. The question whether a party claims a right under the Constitution or laws of the United States is to be ascertained by the legal construction of its own allegations, and not by the effect attributed to those allegations by the adverse party.

Facts:

On the basis of the general tax act of the State of 1887, the State filed a bill in equity against the banks to collect taxes in federal court. The banks argued that the trial court did not have jurisdiction over the matter. The trial court found that it did have jurisdiction, and ruled that the banks were exempt from paying the taxes. The State challenged the trial court’s decision. 

Issue:

Did the federal court have jurisdiction over the State’s actions?

Answer:

No.

Conclusion:

On review, the United States Supreme Court found that none of the actions arose under the Constitution or the laws of the United States. Instead, the Court found that the rights claimed by the State in each of the cases arose under the laws of Tennessee. Therefore, the Court found that there was no federal issue and the trial court had no jurisdiction. The trial court's decision was reversed, and the cases were remanded for dismissal.