Eastern Building Assn. v. Welling

Background

An association formed under New York law sued over a mortgage dispute that was decided in South Carolina courts. The record shows the association argued that New York incorporation law and New York court decisions should control the mortgage. The federal questions the record later described were whether the South Carolina decision refused full faith and credit to New York laws, impaired the obligation of a contract, or deprived the association of property without due process.

Reasoning

The Supreme Court focused on a procedural point: the federal constitutional claims were not raised in the trial court or in the exceptions to the trial court’s ruling. The trial court interpreted the contract on its plain terms without relying on New York law, and the state supreme court affirmed. Only in an application for rehearing did the association assert conflicts with the U.S. Constitution. The Court explained that federal rights must be specially set up or claimed in the state proceedings, and under settled authority those claims came too late, so the Supreme Court lacked jurisdiction to decide them.

Real world impact

Because the dismissal was procedural, the Supreme Court did not rule on the constitutional merits. The South Carolina decision therefore remains in effect for now, and the association’s federal claims were not reached. If a federal claim is properly presented and preserved in the state courts, it could be reviewed in a later case, but this appeal was dismissed for lack of jurisdiction.