source: Caselaw Access Project

author: Mr. Justice Powell Mr. Justice Blackmun,

license: Public Domain

text:
    NAVARRO SAVINGS ASSN. v. LEE et al.
    No. 79-465.
    Argued March 18, 1980
    Decided May 19, 1980
    Powell, J., delivered the opinibn of the Court, in which Burger, C. J., and Brennan, Stewart, White, Marshall, Rehnquist, and Stevens, JJ., joiñed. Blackmun, J., filed a dissenting opinion, post, p. 466.

      Bernus Wm. Fischman argued the cause for petitioner. With him on the brief was Lawrence 8. Fischman.

      Jámes A. Ellis, Jr., argued the cause and filed a brief for respondents.
   Mr. Justice Powell

delivered the opinion of the Court.

The question is whether the trustees of a business trust may irivoke the diversity jurisdictión of the federal courts on the basis of their own citizenship, rather than that of the trust’s beneficial shareholders.

I

The respondents are eight individual trustees of Fidelity Mortgage Investors, a business trust organized under Massachusetts law. They hold title to real estate investments in trust for the benefit of Fidelity’s shareholders. The declaration of trust gives the respondents exclusive authority over this property “free from any power and control of the Shareholders, to the same extent as if the Trustees were the sole owners of the Trust Estate in their own right. ...” The respondents have power to transact Fidelity’s business, execute documents, and “sue and be sued in the name of the Trust or in their names as Trustees of the Trust.” They may invest the funds of the trust, lend money, and initiate or compromise lawsuits relating to the trust’s affairs.

In 1971, respondents lent $850,000 to a Texas firm in return for a promissory note payable to themselves as trustees. The note was secured in part by a commitment letter in which petitioner Navarro Savings Association agreed to lend the Texas firm $850,000 to cover its obligation to the respondents. In 1973, respondents called upon Navarro to make the “takeout” loan. Navarro refused, and this action followed. The amended complaint, filed in the United States District Court for the Northern District of Texas, sought approximately $175,000 in damages for breach of contract. Federal jurisdiction was premised upon diversity of citizenship. 28 U. S. C. § 1332. The complaint asserted — and the parties agree — that Navarro was a Texas citizen and that each respondent was a citizen of another State. The parties have stipulated, however, that some of Fidelity’s beneficial shareholders were Texas residents.

The District Court dismissed the action for want of subject-matter jurisdiction. 416 F. Supp. 1186 (1976). Concluding that a business trust is a citizen of every State in which its shareholders reside, the court held that the parties lacked the complete diversity required by Strawbridge v. Curtiss, 3 Cranch 267 (1806). The Court of Appeals for the Fifth Circuit reversed. 597 F. 2d 421 (1979). It held that the respondent trustees were real parties in interest because they had full power to manage and control the trust and to sue on its behalf. Since complete diversity existed among the actual parties to the controversy, the Court of Appeals directed the District Court to proceed to trial on the merits. We granted certiorari, 444 U. S. 962 (1979), and we now affirm.

II

Federal courts have jurisdiction over controversies between “Citizens of different States” by virtue of 28 U. S. C. § 1332 (a)(1) and U. S. Const., Art. Ill, §2. Early in its history, this Court established that the “citizens” upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy. McNutt v. Bland, 2 How. 9, 15 (1844); see Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 328-329 (1854); Coal Co. v. Blatchford, 11 Wall. 172, 177 (1871). Thus, a federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy. E. g., McNutt v. Bland, supra, at 14; see 6 C. Wright & A. Miller, Federal Practice and Procedure § 1556, pp. 710-711 (1971).

The early cases held that only persons could be real parties to the controversy. Artificial or “invisible” legal creatures were not citizens of any State. Bank of United States v. Deveaux, 5 Cranch 61, 86-87, 91 (1809). Although corporations suing in diversity long have been “deemed” citizens, see n. 7, supra, unincorporated associations remain mere collections of individuals. When the “persons composing such association” sue in their collective name, they are the parties whose citizenship determines the diversity jurisdiction of a federal court. Great Southern Fire Proof Hotel Co. v. Jones, 177 U. S. 449, 456 (1900) (limited partnership association); see Steelworkers v. Bouligny, Inc., 382 U. S. 145 (1965) (labor union); Chapman v. Barney, 129 U. S. 677 (1889) (joint stock company).

Navarro contends that Fidelity’s trust form masks an unincorporated association of • individuals who make joint real estate investments. Navarro observes that certain features of the trust’s operations also characterize the operations of an association: centralized management, continuity of enterprise, and unlimited duration. Arguing that this trust is in substance an association, Navarro reasons that the real parties to the lawsuit are Fidelity’s beneficial shareholders.

Ill

We need not reject the argument that Fidelity shares some attributes of an association. In certain respects, a business trust also resembles a corporation. But this case involves neither an association nor a corporation. Fidelity is an express trust, and the question is whether its trustees are real parties to this controversy for purposes of a federal court’s diversity jurisdiction.

As early as 1808, this Court stated that trustees of an express trust are entitled to bring diversity actions in their own names and upon the basis of their own citizenship. Chappedelaine v. Dechenaux, 4 Cranch 306, 308. Federal Rule of Civil Procedure 17 (a) now provides that such trustees are real parties in interest for procedural purposes. Yet similar principles governed diversity jurisdiction long before the advent of uniform rules of procedure. In 1870, the Court declared that jurisdiction properly founded upon the diverse citizenship of individual trustees “is not defeated by the fact that the parties whom they represent may be disqualified.” Coal Co. v. Blatchford, 11 Wall., at 175 (mortgage contract). “[T]he residence of those who may have the equitable interest” is simply irrelevant. Bonnafee v. Williams, 3 How. 574, 577 (1845) (note held in trust for third party). The same rule applies when “the beneficiaries are many.” Dodge v. Tulleys, 144 U. S. 451, 456 (1892) (dictum) (railroad trust deed).

In Bullard v. Cisco, 290 U. S. 179, 189 (1933), the trust beneficiaries were “numerous and widely scattered” investors who had conveyed certain bonds to a committee formed by a protective, agreement. The agreement did not use trust terminology. Nevertheless, the Court held that the “rights, powers and duties expressly assigned” to committee members “necessarily” made them trustees. Ibid. The agreement gaye the committeemen “full title to the deposited bonds,” and it defined “the control and power of disposal which the trustees were to have over them.” Ibid. Refusing to analogize the committee to a collection agency, the Court concluded that “[t]he beneficiaries were not necessary parties and their citizenship was immaterial.” Id., at 190.

Bullard reaffirms that a trustee is a real party to the controversy for purposes of diversity jurisdiction when he possesses certain customary powers to hold, manage, and dispose of assets for the benefit of others. The trustees in this case have such powers. At all relevant times, Fidelity operated under a declaration of trust that authorized the trustees to take legal title to trust assets, to invest those assets for the benefit of the shareholders, and to sue and be sued in their capacity as trustees. Respondents filed this lawsuit in that capacity. They seek damages for breach of an obligation running to the holder of a promissory note held in their own names. Fidelity’s 9,500 beneficial shareholders had no voice in the initial investment decision. They can neither control the disposition of this action nor intervene in the affairs of the trust except in the most extraordinary situations.

We conclude that these respondents are active trustees whose control over the assets held in their names is Teal and substantial. That the trust may depart from conventional forms in other respects has no bearing upon this determination. Nor does Fidelity’s resemblance to a business enterprise alter the distinctive rights and duties of the trustees. There is no allegation of sham or collusion. See 28 U. S. C. § 1359; Bullard v. Cisco, supra, at 187-188, and n. 5. The respondents are not “naked trustees” who act as “mere conduits” for a remedy flowing to others. McNutt v. Bland, 2 How., at 13-14; see Browne v. Strode, 5 Cranch 303 (1809). They have legal title; they manage the assets; they control the litigation. In short, they are real parties to the controversy. For more than 150 years, the law has permitted trustees who meet .this standard to sue in their own right, without regard to the citizenship of the trust beneficiaries. We find no reason to forsake that principle today.

The judgment of the Court of Appeals is

Affirmed.

Mr. Justice Blackmun,

dissenting.

A reader of the Court’s conclusory opinion might wonder why this heavily burdened tribunal chose to review this case. Most assuredly, we did not do so merely to reaffirm, ante, at 462, Mr. Chief Justice Marshall’s ruling from the bench in Chappedelaine v. Dechenaux, 4 Cranch 306, 308 (1808), to the effect that aliens serving respectively as residuary legatee and representative of an estate, “although they sue as trustees,” were entitled to bring a federal diversity action against a Georgia citizen. Rather, I had thought that we granted cer-tiorari to resolve a significant conflict among the Courts of Appeals concerning the question whether the citizenship of a business trust, for purposes of establishing diversity jurisdiction, is determined by looking to the citizenship of its trustees or that of its beneficial shareholders. I believe that the analysis applied by the Court of Appeals in resolving that question was correct, but in applying that same analysis I would reach a different result. I feel that neither the approach now used by this Court, nor the result it reaches, comports with the Massachusetts law of business trusts, or with the Court’s precedents concerning diversity jurisdiction.

I

The Court recognizes that Fidelity Mortgage Investors, a Massachusetts business trust, “shares some attributes of an association,” and that it “also resembles a corporation.” Ante, at 462. The Court concludes, however, based on its reading of portions of Fidelity’s Declaration of Trust, that it is an “express trust.” Taken either as a proposition of the general common-law of trusts, or as an interpretation of the Massachusetts law of business trusts, that conclusion is not nearly so automatic and evident as the Court’s scant reasoning implies.

In Hecht v. Malley, 265 U. S. 144 (1924), this Court described the Massachusetts business trust in terms that have come to be accepted as the classic definition, see 16A R. Eick-hoff, Fletcher Cyclopedia of the Law of Private Corporations §8228 (1979):

“The ‘Massachusetts Trust’ is a form of business organization, common in that State, consisting essentially of an arrangement whereby property is conveyed to trustees, in accordance with the terms of an instrument of trust, to be held and managed for the benefit of such persons as may from time to time be the holders of transferable certificates issued by the trustees showing the shares into which the beneficial interest in the property is divided. These certificates, which resemble certificates for shares of stock in a corporation and are issued and transferred in like manner, entitle the holders to share ratably in the income of the property, and, upon termination of the trust, in the proceeds.
“Under the Massachusetts decisions these trust instruments are held to create either pure trusts or partnerships, according to the way in which the trustees are to conduct the affairs committed to their charge. If they are the principals and are free from the control of the certificate holders in the management of the property, a trust is created; but if the certificate holders are associated together in the control of the property as principals and the trustees are merely their managing agents, a partnership relation between the certificate holders is created. Williams v. Milton, 215 Mass. 1, 6; Frost v. Thompson, 219 Mass. 360, 365; Dana v. Treasurer, 227 Mass. 562, 565; Priestley v. Treasurer, 230 Mass. 452, 455.
“These trusts — whether pure trusts or partnerships— are unincorporated. They are not organized under any statute; and they derive no power, benefit or privilege from any statute. The Massachusetts statutes, however, recognize their existence and impose upon them, as 'associations/ certain obligations and liabilities.’' (Footnotes omitted.) 265 U. S., at 146-147.

Based on its reading of Fidelity’s Fifth Amended and Restated Declaration of Trust, App. A40, and seemingly unconcerned with considerations of state law, the Court determines that respondents “are active trustees whose control over the assets held in their names is real and substantial.” Ante, at 465. That the trustees’ control over the assets of Fidelity is substantial may be accepted without quarrel. The Court fails to recognize, however, that the Declaration of Trust lodges in the beneficial shareholders substantial control over the actions of these trustees. Article 2.1 of the Declaration provides that the trustees are to be elected at annual shareholder meetings by a majority of the shares voted. App. A47. Article 2.2 provides that trustees may be removed from office, with or without cause, by vote of the majority of the outstanding shares. Ibid. Article 6.7 vests in the shareholders two significant powers: the ability to call a special meeting upon the request of not less than 20% of the outstanding shares, and the requirement that any sale, lease, exchange, or other disposition of more than 50% of the trust assets is to be made only upon the affirmative approval of the holders of a majority of the shares. Id., at A67. Most significantly, Art. 8.2 reserves to the holders of a majority of the shares the right to terminate the trust at any shareholder meeting, and Art. 8.3 gives them the power to amend the Declaration of Trust itself. Id., at A79-A80.

The leading Massachusetts decision concerning the legal nature of a business trust is Williams v. Inhabitants of Milton, 215 Mass. 1, 102 N. E. 355 (1913). There the court inquired whether personal property held by the trustees of the Boston Personal Property Trust was to be taxed as partnership property or investment trust property. In concluding that the indenture of trust created a true trust, the court observed that the shareholders of the trust were not associated in any way, did not hold meetings, and could not force the trustees to amend or terminate the trust. Id., at 10, 102 N. E., at 358. The court emphasized, however, that the parties’ intent to create a trust, rather than a partnership, as evidenced in the declaration of trust, was not controlling. “It is what the parties did in making the trust indenture that is decisive.” Id., at 12, 102 N. E., at 359.

In Frost v. Thompson, 219 Mass. 360, 365, 106 N. E. 1009, 1010 (1914), the court distilled from Williams the following test:

“A declaration of trust or other instrument providing for the holding of property by trustees for the benefit of the owners of assignable certificates representing the beneficial interest in the property may create a trust or it may create a partnership. Whether it is the one or the other depends upon the way in which the trustees are to conduct the affairs committed to their charge. If they act as principals and are free from the control of the certificate holders, a trust is created; but if they are subject to the control of the certificate holders, it is a partnership.”

Guided by these principles, the Frost court concluded that the “Buena Yista Fruit Company” was a partnership rather than a trust. This conclusion followed from the fact that shareholders representing two-thirds of the outstanding shares had the power to remove any or all of the trustees at any time without cause, to appoint others to fill resulting vacancies, and to terminate the trust. Moreover, shareholders representing a majority of the shares had the power to amend the declaration of trust and bylaws. “These provisions demonstrate that this association is a partnership and not a trust.” Id., at 366, 106 N. E., at 1010. Thus, the court concluded that the trustees could not be sued in an action on a note issued by the Buena Vista Fruit Company.

In a variety of contexts, the Supreme Judicial Court of Massachusetts has continued to observe the line, drawn in Williams and in Frost, that is based on the relative powers of shareholders and trustees in a business trust. It appears to me that the powers lodged in the beneficial shareholders of Fidelity — the powers to elect and remove trustees, to vote on major trust investments, to amend the terms of the trust, and to terminate it — clearly dictate that it falls on the partnership side of the line. And those same powers convert the relationship between Fidelity's trustees and shareholders from one of trusteeship to one of agency. Thus, in Williams, the court stated: “The person in whose name the partnership property stands in such a case is perhaps in a sense a trustee. But speaking with accuracy he is an agent who for the principal's convenience holds the legal title to the principal's property.” 215 Mass., at 6, 102 N. E., at 356. See also Howe v. Chmielinski, 237 Mass. 532, 534, 130 N. E. 56, 56 (1921).

I do not suggest that this state-law analysis is fully dis-positive of the federal jurisdictional question presented here, see n. 7, infra, but it certainly is relevant. Moreover, I believe that it casts very substantial doubt on the Court’s major premise, namely, that Fidelity is an “express trust.”

II

Petitioner argues that this case is controlled by the confluence of principles emanating from two of this Court’s past decisions, each of which the Court, in its present opinion, essentially relegates to a footnote. The first case, Morrissey v. Commissioner, 296 U. S. 344 (1935), like Hecht v. Malley, 265 U. S. 144 (1924), dealt with the tax treatment of a business trust. In holding that such an entity was not an “ordinary trust,” the Court observed:

“In what are called 'business trusts’ the object is not to hold and conserve particular property, with incidental powers, as in the traditional type of trusts, but to provide a medium for the conduct of a business and sharing its gains. Thus a trust may be created as a convenient method by which persons become associated for dealings in real estate, the development of tracts of land, the construction of improvements, and the purchase, management and sale of properties; or for dealings in securities or other personal property; or for the production, or manufacture, and sale of commodities; or for commerce, or other sorts of business; where those who become beneficially interested, either by joining in the plan at the outset, or by later participation according to the terms of the arrangement, seek to share the advantages of a union of their interests in the common enterprise.” 296 U. S., at 357.

These distinctions, along with the similarities between a business trust and a corporation, led the Court to conclude that a business trust was an “association,” taxable, along with corporations, joint stock companies, and insurance companies, under § 2 (a) (2) of the respective Revenue Acts of 1924 and 1926, ch. 234, 43 Stat. 253, and ch. 27, 44 Stat. 9.

Concluding that Morrissey establishes that Fidelity is an unincorporated association, petitioner argues that it follows that this controversy is then controlled by the second case, Steelworkers v. Bouligny, Inc., 382 U. S. 145 (1965). In Bouligny, a unanimous- Court held that an unincorporated labor union’s citizenship for diversity purposes could not be determined without regard to the citizenship of its members. Although the holding of Bouligny was limited to the diversity treatment of labor unions, the principles it enunciates are unmistakably broad. The Court rejected the invitation of other courts and commentators to eradicate the distinction between the “citizenship” of corporations, on the one hand, and that of labor unions and other unincorporated ■ associations, on the other hand. See id., at 149-150. The Court stated that it was “of the view that these arguments, however appealing, are addressed to an inappropriate forum, and that pleas for extension of the diversity jurisdiction to hitherto uncovered broad categories of litigants ought to be made to the Congress and not to the courts.” Id., at 150-151.

The Court of Appeals in this case recognized the pertinence of Bouligny to the problem presented here, but found that ease distinguishable. It noted that Bouligny is directly applicable only to the situation in which an unincorporated association seeks to.establish diversity jurisdiction as an entity. And it adopted the view, earlier suggested in law review commentary, that Bouligny did not decide who the relevant members aré when a court determines the citizenship of an unincorporated association. The Court of Appeals concluded that when an organization has more than one class of members, it is necessary to determine on a case-by-case basis which class comprises the real parties in interest. Focusing its attention on Fidelity’s Declaration of Trust, the court held that the trustees were the real parties to this lawsuit because they were designated as having exclusive control of the trust’s activities, with the capacity to sue on the trust’s behalf and to be sued. See 597 F. 2d 421, 427 (CA5 1979).

I believe that the approach of the Court of Appeals in this case was consistent with this Court’s prior decisions. And I much prefer it to the simplistic approach the Court now adopts. I am particularly troubled by the Court’s intimation that business trusts are to be treated differently from other functionally analogous business associations — partnerships, limited partnerships, joint stock companies, and the like. I fear that, at bottom, the Court’s distinction between business trusts and these other enterprises hinges on the iocus of title to the trust assets, see ante, at 459, and 464-466, a formalistic criterion having little to do with a realistic assessment of the respective degrees of control over the trust's activities that may be exercised by shareholders and trustees.

While I prefer and accept the Court of Appeals’ approach to this case, I am persuaded, on that approach, that one cannot ignore the pervasive measure of control that Fidelity’s shareholders possess over the trustees’ actions taken in their behalf. See Part I, supra. That factor, in my view, is the principal distinction between the ongoing business entity at issue here and the trust relationship among certificate holders and the bondholders’ committee that was at issue in Bullard v. Cisco, 290 U. S. 179 (1933), cited and relied upon by the Court, ante, at 463-464. Though the question is not free from all doubt, in the light of these circumstances I believe that the citizenship of Fidelity should be determined according to the citizenship of its beneficial shareholders, and that diversity jurisdiction does not exist in this case. I therefore dissent from the Court’s holding to the contrary.

I would vacate the judgment of the Court of Appeals and remand this case for consideration of respondents’ claimed alternative bases for federal jurisdiction that were rejected by the District Court, but not reached by the Court of Appeals.

       Fidelity merged into a Delaware corporation in 1978, but Federal Rule of Civil Procedure 25 (c) permits the original parties to continue the litigation. Jurisdiction turns on the facts existing at the time the suit commenced. Louisville, N. A. & C. R. Co. v. Louisville Trust Co., 174 U. S. 552, 556 (1899).

       Fidelity Mortgage Investors Fifth Amended and Restated Declaration of Trust (hereinafter Fidelity Declaration of Trust), App. A44-A45.

        Id.., Art. 3.1, App. A49-A50.

         Id., Art. 1.1, App. A45.

        Id., Art. 3.2, App. A50-A55.

       Section 1332 (a)(1) provides:
      “The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between . . . citizens of different States. . . .”
      In view of our disposition of the case, we need not consider respondents’ alternative claim to jurisdiction under 28 U. S. C. § 1331 or their attempt to bring a class action under Federal Rule of Civil Procedure 23.2.

       Although overruled in Louisville, C., & C. R. Co. v. Letson, 2 How. 497 (1844), Deveaux was resurrected by Marshall v. Baltimore & Ohio R. Co., 16 How. 314 (1854). Marshall held that an artificial entity cannot be a citizen, but that the persons who “act under [corporate] faculties . . . and use [the] corporate name” are presumed to reside in the State of incorporation. Id., at 328; see St. Louis & S. F. R. Co. v. James, 161 U. S. 545, 562 (1896). This view endured until 1958, when Congress amended the diversity statute to provide explicitly that “a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” Act of July 25, 1958, § 2, 72 Stat. 415 (codified at 28 U. S. C. § 1332 (c)).

       The dissenting opinion, post, at 471-472, and n. 4, 476, n. 7, asserts that Massachusetts law would treat Fidelity as a trust for some purposes and as a partnership for others. Neither the parties nor the courts below addressed these questions of state law. Assuming that the dissent is correct, its observations cast no doubt on our conclusion that Fidelity is a form of express trust. It is black letter law that “[m]any of the rules applicable to trusts are applied to business trusts. . . .” Restatement (Second) of Trusts § 1, Comment b, p. 4 (1959). Many others are not. Our task is simply to determine, as a matter of federal law, whether the rules applicable to trustees who sue in diversity fall in the former or the latter category.

       There is a "rough symmetry” between the “real party in interest” standard of Rule 17 (a) and the rule that diversity jurisdiction depends upon the citizenship of real parties to the controversy. But the two rules serve different purposes and need not produce identical outcomes in all cases. Note, Diversity Jurisdiction over Unincorporated Business Entities: The Real Party in Interest as a Jurisdictional Rule, 56 Texas L. Rev. 243, 247-250 (1978); see 6 C. Wright & A. Miller, Federal Practice and Procedure § 1556, pp. 710-711 (1971). In appropriate circumstances, for example, a labor union may file suit in its own name as a real party in interest under Rule 17 (a). To establish diversity, however, the union must rely upon the citizenship of each of its members. Steelworkers v. Bouligny, Inc., 382 U. S. 145 (1965).

       The Court never has analogized express trusts to business entities for purposes of diversity jurisdiction. Even when the Court espoused the view that a corporation lacked citizenship, Bank of United States v. Deveaux, 5 Cranch, at 91, Mr. Chief Justice Marshall explained that the doctrine had no bearing on the status of trustees.
      “When [persons suing by a corporate name] are said to be substantially the parties to the controversy, the court does not mean to liken it to the ease of a trustee. A trustee is a real person capable of being a citizen . . . , who has the whole legal estate in himself. At law, he is the real proprietor, and he represents himself, and sues in his own right.”

        Thomas v. Board of Trustees, 195 U. S. 207 (1904), cited by Navarro, js not to the contrary. The Court there considered the Board of Trustees of a state university. Rejecting the contention that the Board was analogous to a corporation, the Court held that jurisdiction depended upon the citizenship of the individual trustees. Id., at 215-217. The Court did not discuss the nature of the “trust” or the possible existence of beneficiaries.

       The actual issue in Bullard was not citizenship but amount in controversy. The claims of certain individual bondholders were too small to satisfy the $3,000 jurisdictional threshold then in effect. The trustees, on the other hand, held legal title to unpaid bonds and coupons worth about $350,000. 290 U. S., at 180-181.

       The relative simplicity of this established principle, see post, at 475, is one of its virtues. “It is of first importance to have a definition . . . [that] will not invite extensive threshold litigation over jurisdiction,” although the resulting “differentiations of treatment . . . appear somewhat arbitrary.” American Law Institute, Study of the Division of Jurisdiction between State and Federal Courts 128 (1969). “Jurisdiction should be as self-regulated as breathing; . . . litigation over whether the case is in the right court is essentially a waste of time and resources.” Currie, The Federal Courts and the American Law Institute, Part I, 36 U. Chi. L. Rev. 1 (1968). The analysis proposed by the dissent, post, at 475-476, see post, at 467-472, and n. 4, could present serious difficulties for district courts called upon to determine questions of diversity jurisdiction.

       The shareholders may elect and remove trustees; they may terminate the trust or amend the Declaration; and they must approve any disposition of more than half of the trust estate. Fidelity Declaration of Trust, Arts. 2.2, 6.7, 8.2, 8.3, App. A47, A67, A79-A80. No other shareholder action can bind the trustees. Id., Arts. 3.1, 6.2, App. A49, A64.
      The dissent believes that these limited powers of intervention establish a “pervasive measure of [shareholder] control . . . over the trustees’ actions. . . .” Post, at 476. Therefore, the dissent would hold that Fidelity is a citizen of each State in which any of its 9,500 shareholders resides. But this form of “control” does not strip the trustees of the powers that make them real parties to the controversy for purposes of diversity jurisdiction. See supra, at 459, 463-465. Indeed, their authority over trust property — short of partial liquidation — is expressly made “free from any power and control of the Shareholders, to the same extent as if the Trustees were the sole owners of the Trust Estate in their own right. . . .” Fidelity Declaration of Trust, Art. 3.1, App. A49-A50.

       That business trusts may be treated as associations under the Internal Revenue Code, Morrissey v. Commissioner, 296 U. S. 344 (1935), is simply irrelevant.

       Compare the decision below, 597 F. 2d 421 (CA5 1979), rev’g 416 F. Supp. 1186 (ND Tex. 1976), with Belle View Apartments v. Realty ReFund Trust, 602 F. 2d 668 (CA4 1979), and Riverside Memorial Mausoleum, Inc. v. UMET Trust, 581 F. 2d 62 (CA3 1978), aff’g 434 F. Supp. 58 (ED Pa. 1977). See also cases cited in n. 6, infra, dealing with an analogous question presented in the context of limited partnerships.
      The Court of Appeals’ decision in this case also conflicts with a substantial body of recent holdings of Federal District Courts that uniformly have looked to the citizenship of the beneficial shareholders, and not the trustees, in determining the existence of diversity in suits brought by or against common-law business trusts. See National City Bank v. Fidelco Growth Investors, 446 F. Supp. 124 (ED Pa. 1978); Independence Mortgage Trust v. White, 446 F. Supp. 120 (Ore. 1978); Lincoln Associates v. Great American Mortgage Investors, 415 F. Supp. 351 (ND Tex. 1976); Heck v. A. P. Ross Enterprises, Inc., 414 F. Supp. 971 (ND Ill. 1976) ; Carey v. U. S. Industries, Inc., 414 F. Supp. 794 (ND Ill. 1976); Chase

        Manhattan Mortgage & Realty Trust v. Pendley, 405 F. Supp. 593 (ND Ga. 1975); Jim Walter Investors v. Empire-Madison, Inc., 401 F. Supp. 425 (ND Ga. 1975); Larwin Mortgage Investors v. Riverdrive Mall, Inc., 392 F. Supp. 97 (SD Tex. 1975); Fox v. Prudent Resources Trust, 382 F. Supp. 81 (ED Pa. 1974). Aa early decision that appears to be in accord with the Court’s “express trust” rationale in the present case is Simson v. Klipstein, 262 F. 823 (NJ 1920).

       The leading reference works dealing with the subject of trusts do not include business trusts within their scope:
      “Although many of the rules applicable to trusts are applied to business trusts, yet many of the rules are not applied, and there are other rules which are applicable only to business trusts. The business trust is a special kind of business association and can best be dealt with in connection with other business associations.” Restatement (Second) of Trusts § 1, Comment b, p. 4 (1959).
      See also 1 A. Scott, The Law of Trusts § 2.2 (3d ed. 1967).

       The current statutory requirements governing voluntary associations under a written instrument or declaration of trust are contained in Mass. Gen. Laws Ann., ch. 182, §§ 1-14 (West 1958 and Supp. 1980).

       In Priestley v. Treasurer & Receiver General, 230 Mass. 452, 120 N. E. 100 (1918), a trust agreement was held to create a partnership relation among the shareholders because they were associated, had a fixed annual meeting, could call special meetings upon the request of the holders of 10% of the shares, were empowered to fill vacancies in the number of trustees, and could remove the trustees and elect others in their place. The shareholders also were given direct powers to control the trustees' management of the trust property. In Howe v. Chmielinski, 237 Mass. 532, 130 N. E. 56 (1921), a partnership was found to exist among the shareholders, and the trustees were deemed to be their managing agents, despite the fact that legal title to the property stood in the trustees’ names. This result followed from the shareholders’ reserved powers under the trust agreement to fill vacancies among the trustees, remove them, direct the sale of trust property, ahd alter or terminate the trust. And where the shareholders of an unincorporated loan company were given the power to elect the company’s officers and directors, to remove them for cause, to fill vacancies, to hold annual and special meetings, and to amend or repeal the bylaws, the court concluded that the company’s bylaws “left in the shareholders the ultimate power of control of its affairs with the result that the relationship of partnership and not that of a trust was created.” First National Bank of New Bedford v. Chartier, 305 Mass. 316, 321, 25 N. E. 2d 733, 736 (1940). See also Ryder’s Case, 341 Mass. 661, 664, 171 N. E. 2d 475, 476-477 (1961).
      In Bouchard v. First People’s Trust, 253 Mass. 351, 360, 148 N. E. 895, 899 (1925), the court found that an express trust had been created where the arrangement established by a declaration of trust “involve[d] a total want of legal power by the shareholders as to the trust.” In that case the shareholders had no power to direct the management of the trust directly or indirectly, and they had no power to select the trustees or to control their conduct. The Federal District Court applied Massachusetts law in Gutelius v. Stanbon, 39 F. 2d 621 (Mass. 1930), and followed Bouchard in holding that a declaration of trust established a pure trust rather than a partnership. Although the trust agreement provided for shareholder meetings at which the trustees were elected, and permitted them to terminate the trust at any time, the court deemed it significant that they were not given the right to remove trustees or to amend the declaration of trust. Id., at 625. One must note, however, that every one of the four powers mentioned in Gutelius, with two of them lacking in that case, are possessed by the shareholders of Fidelity Mortgage Investors.
      The fact that a declaration of trust effectively creates a partnership relation rather than a pure trust has not led the Massachusetts courts to treat the entity as a partnership for all purposes. See State Street Trust Co. v. Hall, 311 Mass. 299, 41 N. E. 2d 30 (1942), in which it was held that the partnership nature of a real estate trust did not give minority shareholders the right to dissolve the trust at will.

       Typically, for example, lower courts faced with the question whether a particular entity is a “corporation” within the meaning of the federal diversity statute, 28 U. S. C. § 1332 (c), have turned to the pertinent provisions of the law of the State under which the entity was organized. See, e. g., Baer v. United Services Automobile Assn., 503 F. 2d 393, 394-395 (CA2 1974). In contrast, the Court today evidently has found in our past cases a federal common law of trusts that enables it to ignore state law when the issue presented concerns the threshold question of jurisdiction. Cf. Erie R. Co. v. Tompkins, 304 U. S. 64, 78-80 (1938).
      State law is not of dispositive assistance in resolving the precise question presented in this case because Massachusetts statutory law recognizes an unincorporated business trust as an entity that may itself be sued in an action at law for the debts and obligations incurred by its trustees. Mass. Gen. Laws Ann., ch. 182, § 6 (West 1958); State Street Trust Co. v. Hall, 311 Mass., at 304, 41 N. E. 2d, at 34. The fact that a business trust has the capacity to sue under the laws of Massachusetts, does not, of course, give it the power to bring a suit on its own behalf in federal court. Great Southern Fire Proof Hotel Co. v. Jones, 177 U. S. 449, 455 (1900); see also 13 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure: Jurisdiction § 3630, pp. 840-841, and nn. 10 and 11 (1975).

       The Court of Appeals, 597 F. 2d, at 427, and n. 6, placed substantial reliance upon the student Comment, Limited Partnerships and Federal Diversity Jurisdiction, 45 U. Chi. L. Rev. 384 (1978). That Comment, in turn, credited the dissenting opinion of Judge James Hunter III, in Carlsberg Resources Corp. v. Cambria Savings & Loan Assn., 554 F. 2d 1254, 1262-1266 (CA3 1977), for the development of the real-party-in-interest approach in determining which members count in establishing the citizenship of an unincorporated association. 45 U. Chi. L. Rev., at 402-404.
      The Carlsberg Resources majority held that the citizenship of a limited partnership is determined according to the citizenship of all its partners. The Second Circuit has adopted the contrary view, that is, that the citizenship of the general partners alone is determinative. See Colonial Realty Corp. v. Bache & Co., 358 F. 2d 178, cert. denied, 385 U. S. 817 (1966). I read the Court’s opinion in this case as expressing no view on the diversity of citizenship issue that is presented when one of the parties is a limited partnership.

       The conclusion that the Massachusetts law under which the business trust was created would treat Fidelity as a partnership could lead one to hold that its citizenship is determined with respect to the citizenship of all its shareholder-partners. See Great Southern Fire Proof Hotel Co. v. Jones, 177 U. S., at 456. Nonetheless, because Fidelity is not a partnership for all purposes, see n. 4, supra, I hesitate to give such a characterization of its legal nature controlling weight. It seems preferable to me to treat Fidelity as a form of unincorporated business association, and determine its citizenship according to the real-party-in-interest test utilized by the Court of Appeals. One factor that would seem especially pertinent in applying that test is the conclusion that Massachusetts law would treat the relationship between Fidelity’s trustees and shareholders as one of agent to principal. See Part I, supra.

       The author of the Comment cited in n. 6, supra, suggests that determining the real parties in interest in an action involving a business trust is complicated by the fact that no uniform statutory framework clearly defines the relative rights and responsibilities of the trustees and the shareholders. The author notes, however, that certain factors may be relevant to a determination that the shareholders, rather than the trustees, are the controlling parties. These include: “(1) the right to remove the trustees, (2) the right to terminate the trust, (3) the right to modify the terms of the trust, (4) the right to elect trustees, and (5) the right to direct management decisions of the trustees.” 45 U. Chi. L. Rev., at 416. The first four are present in this case; in addition, Fidelity’s shareholders have the power to condition major dispositions of the trust assets on their affirmative approval.


author: Mr. Justice Rehnquist Mr. Justice Stevens, Mr. Justice Brennan,

text:
    BOARD OF REGENTS OF THE UNIVERSITY OF THE STATE OF NEW YORK et al. v. TOMANIO
    No. 79-424.
    Argued February 26, 1980
    Decided May 19, 1980

      Rehnquist, J., delivered the opinion of the Court, in which Burger, C. J., and Stewart, White, Blackmun, and Powell, JJ., joined. Stevens, J., filed an opinion concurring in the result, post, p. 492. Brennan, J., filed a dissenting opinion, in which Marshall, J., joined, post, p. 494.

      Donald 0. Meserve argued the cause for petitionefs. With him on the brief was Jean M. Coon.

      Vincent J. Mutari argued the cause and filed a brief for respondent.
   Mr. Justice Rehnquist

delivered the opinion of the Court.

We granted certiorari in this case, 444 U. S. 939, to review a judgment of the Court of Appeals for the Second Circuit holding that petitioners, the Board of Regents of the University of the State of New York and the Commissioner of Education, were required by the Fourteenth Amendment to the United States Constitution, to afford a hearing to respondent, Mary Tomanio, before denying her request for a waiver of professional licensing examination requirements. In so doing, the Court of Appeals rejected petitioners’ claims that both the statute of limitations and the doctrine of estoppel by judgment barred respondent’s maintenance of an action under 42 U. S. C. § 1983 in the federal courts. We find it necessary to consider only the defense based on the statute of limitations, since the resolution of that issue is virtually foreordained in favor of petitioners by our prior cases when the indisputably lengthy series of events which ultimately brought this case here is described.

I

Respondent has practiced chiropractic medicine in the State of New York since 1958. Prior to 1963, the State did not require chiropractic practitioners to be licensed. But in that year the State enacted a statute which required state licensing, and established three separate methods by which applicants could obtain a license to practice chiropractic in the State of New York. 1963 N. Y. Laws, ch. 780, codified as amended, N. Y. Educ. Law §§ 6506 (5), 6554, 6556 (McKinney 1972 and Supp. 1979-1980). First, the statute established education and examination requirements for applicants who had not previously engaged in chiropractic practice. An alternative qualifying examination was made available to individuals already engaged in practice in New York on the date that the licensing statute became effective. Finally, the Act established a third means for current practitioners to qualify without taking any state-administered examination. Under § 6506 (5), they could obtain a waiver of “education, experience and examination requirements for a professional license . . . provided the board of regents shall be satisfied that the requirements of such article have been substantially met.”

Respondent has been unsuccessful in her efforts to obtain a license to practice in New York. On seven separate occasions between 1964 and 1971, she attempted to qualify by taking the special examinations designed for current practitioners. Respondent failed, by a narrow margin, to ever receive a passing score on the examinations. After this series of failures, she applied to the Board of Regents for waiver of the examination requirements pursuant to § 6506 (5). This application was based upon her claim that she had failed the examinations by only a very narrow margin, that she was licensed in the States of Maine and New Hampshire, and that she had passed an examination given by the National Board of Chiropractic Examiners. On November 22, 1971, the Board notified respondent that they had voted to deny her application for a waiver at a meeting held on November 19. Respondent was not afforded an evidentiary hearing on the denial of the waiver or given a statement of reasons for it.

In January 1972, respondent commenced a proceeding in the New York state courts attacking the decision of the Board of Regents not to grant a waiver as arbitrary and capricious, and seeking an order directing the Board to license her. She did not raise any constitutional challenge to the Board’s decision in this judicial proceeding. The trial court granted the requested relief, but its order was reversed by the Appellate Division. In November 1975, the New York State Court of Appeals affirmed the order of the Appellate Division holding that the Board of Regents had not abused their discretion in denying respondent’s application for a waiver. Tomanio v. Board of Regents, 38 N. Y. 2d 724, 343 N. E. 2d 755 (1975), aff’g 43 App, Div. 2d 643, 349 N. Y. S. 2d 806 (3d Dept. 1973).

Seven months later, on June 25, 1976, respondent instituted this action in Federal District Court under 42 U, S. C. § 1983. Respondent alleged that the refusal of petitioners to grant her a license to practice violated due process as guaranteed by the Fourteenth Amendment. Petitioners invoked res judicata and the statute of limitations as affirmative defenses to respondent’s action.

The District Court rejected these defenses. First, the court found that res judicata would not bar consideration of a § 1983 claim in federal court if the constitutional claim was not actually litigated and determined in the prior state-court proceeding. Since respondent had not raised any constitutional challenge to the Board’s action in state court, the trial court ruled that res judicata did not preclude the federal action.

The District Court also found that the § 1983 action was not barred by the statute of limitations. Respondent’s claim arose in November 1971 when her application for waiver was denied, more than three years prior to the date on which the suit in federal court was commenced. Although the District Court found that a 3-year New York statute of limitations was applicable to respondent’s action, the court held that it was appropriate to toll the running of that statute during the pendency of her state-court litigation. Relying on Mizell v. North Broward Hospital District, 427 F. 2d 468 (CA5 1970), the judge concluded that a federal tolling rule was appropriate, reasoning that

“[i]n my judgment, the present overburdening of the federal courts and the increased filings of civil rights complaints are factors that mitigate in favor of encouraging the utilization of effective and feasible administrative and judicial remedies, which exist under state law, in certain situations.”

Since respondent had diligently pursued her state-court remedy after the denial of waiver, and then diligently pursued her federal action after a final dismissal of her state-law claims in the New York State Court of Appeals, the judge found that “it cannot be said that plaintiff has slept on her rights.” On the merits of the federal constitutional claim, the District Court found that respondent was entitled to a hearing before the Board, relief which was more limited than she had sought. The Court of Appeals for the Second Circuit affirmed the District Court in its rejection of estoppel by judgment and the statute of limitations defense, finding that the tolling of the statute was justified “in the interests of advancing the goals of federalism.” 603 F. 2d 255. The court also agreed with the ruling of the District Court that respondent was entitled, as a matter of federal constitutional law, to a hearing before the Board on her eligibility for waiver of the examination requirements.

In unraveling this tangle of federal and state claims, and federal- and state-court judgments, we have decided that the case is best disposed of by resolving the statute of limitations question, which we believe has been all but expressly resolved against the respondent by our decisions in Robertson v. Wegmann, 436 U. S. 584 (1978); Johnson v. Railway Express Agency, Inc., 421 U. S. 454 (1975); and Monroe v. Pape, 365 U. S. 167 (1961). Under the reasoning of these decisions, the federal courts were obligated not only to apply the analogous New York statute of limitations to respondent’s federal constitutional claims, but also to apply the New York rule for tolling that statute of limitations.

II

Congress did not establish a statute of limitations or a body of tolling rules applicable to actions brought in federal court under § 1983 — a void which is commonplace in federal statutory law. When such a void occurs, this Court has repeatedly “borrowed” the state law of limitations governing an analogous cause of action. Limitation borrowing was adopted for civil rights actions filed in federal court as early as 1914, in O’Sullivan v. Felix, 233 U. S. 318. Although the Court of Appeals found that respondent’s action was governed by a 3-year New York statute of limitations, the court did not apply the New York rules governing the circumstances under which that statute of limitations could be tolled.

In § 1983 actions, however, a state statute of limitations and the coordinate tolling rules are more than a technical obstacle to be circumvented if possible. In most cases, they are binding rules of law. In 42 U. S. C. § 1988, Congress “quite clearly instructs [federal courts] to refer to state statutes” when federal law provides no rule of decision for actions brought under § 1983. Robertson v. Wegmann, supra. See also Carlson v. Green, ante, at 22, n. 10. As we held in Robertson, by its terms, § 1988 authorizes federal courts to disregard an otherwise applicable state rule of law only if the state law is “inconsistent with the Constitution and laws of the United States.”

In another action subject to § 1988, we held that the state statute of limitations and the state tolling rules governed federal actions brought under 42 U. S. C. § 1981 except when “inconsistent with the federal policy underlying the cause of action under consideration.” Johnson v. Railway Express Agency, Inc., supra, at 465. We there restated the general principle that since there was no specifically stated or otherwise relevant federal statute of limitations for the federal substantive claim created by Congress in that case, “the controlling period would ordinarily be the most appropriate one provided by state law.” 421 U. S., at 462, and eases cited therein. We went on to observe that this “borrowing” logically included rules of tolling:

“Any period of limitation ... is understood fully only in the context of the various circumstances that suspend it from running against a particular cause of action. Although any statute of limitations is necessarily arbitrary, the length of the period allowed for instituting suit inevitably reflects a value judgment concerning the point at which the interests in favor of protecting valid claims are outweighed by the interests in prohibiting the prosecution of stale ones. In virtually all statutes of limitations the chronological length of the limitation period is interrelated with provisions regarding tolling, revival, and questions of application. In borrowing a state period of limitation for application to a federal cause of action, a federal court is relying on the State’s wisdom in setting a limit, and exceptions thereto, on the prosecution of a closely analogous claim.” Id., at 463-464.

As Robertson and Johnson make clear, therefore, resolution of this case requires us to identify the New York rule of tolling and determine whether that rule is “inconsistent” with federal law.

Ill

New York has codified the limitations of actions and the circumstances under which those limitations can be tolled together. N. Y. Civ. Prac. Law §§ 201-218 (McKinney 1972 and Supp. 1979-1980). The general rule is set forth unambiguously in § 201 (McKinney 1972): “An action . . . must be commenced within the time specified in this article. . . . No court shall extend the time limited by law for the commencement of an action.” The statute codifies a number of the tolling rules developed at common law. No section of the law provides, however, that the time for filing a cause of action is tolled during the period in which a litigant pursues a related, but independent cause of action. If a plaintiff wishes to pursue his claims in succession, rather than concurrently, the legislature has required the plaintiff either to obtain a judicial stay of the time for commencing an action, or to litigate at risk. See § 204. The New York Legislature has apparently determined that the policies of repose underlying the statute of limitations should not be displaced by whatever advantages inure, whether to the plaintiff or the system, in a scheme which encourages the litigation of one cause of action prior to another.

Respondent's failure to comply with the New York statute of limitations, therefore, precluded maintenance of this action unless New York’s tolling rule is “inconsistent” with the policies underlying § 1983. In order to gauge consistency, of course, the state and federal policies which the respective legislatures sought to foster must be identified and compared. On many prior occasions, we have emphasized the importance of the policies underlying state statutes of limitations. Statutes of limitations are not simply technicalities. On the contrary, they have long been respected as fundamental to a well-ordered judicial system. Making out the substantive elements of a claim for relief involves a process of pleading, discovery, and trial. The process of discovery and trial which results in the finding of ultimate facts for or against the plaintiff by the judge or jury is obviously more reliable if the witness or testimony in question is relatively fresh. Thus in the judgment of most legislatures and courts, there comes a point at which the delay of a plaintiff in asserting a claim is sufficiently likely either to impair the accuracy of the fact-finding process or to upset settled expectations that a substantive claim will be barred without respect to whether it is meritorious. By the same token, most courts and legislatures have recognized that there are factual circumstances which justify an exception to these strong policies of repose. For example, defendants may not, by tactics of evasion, prevent the plaintiff from litigating the merits of a claim, even though on its face the claim is time-barred. These exceptions to the statute of limitations are generally referred to as “tolling” and, as more fully discussed in Johnson v. Railway Express Agency, Inc., 421 U. S. 454 (1975), are an integral part of a complete limitations policy.

The importance of policies of repose in the federal, as well as in the state, system is attested to by the fact that when Congress has provided no statute' of limitations for a substantive claim which is created, this Court has nonetheless “borrowed” what it considered to be the most analogous state statute of limitations to bar tardily commenced proceedings. Supra, at 483-484. This is obviously a judicial recognition of the fact that Congress, unless it has spoken to the contrary, did not intend by the mere creation of a “cause of action” or “claim for relief” that any plaintiff filing a complaint would automatically prevail if only the necessary elements of the federal substantive claim for relief could be established. Thus, in general, state policies of repose cannot be said to be disfavored in federal law. Nonetheless, it is appropriate to determine whether Congress has departed from the general rule in § 1983.

In Robertson v. Wegmann, 436 U. S. 584 (1978), the Court first emphasized that “a state statute cannot be considered 'inconsistent’ with federal law merely because the statute causes the plaintiff to lose the litigation. If success of the § 1983 action were the only benchmark, there would be no reason at all to look to state law, for the appropriate rule would then always be the one favoring the plaintiff, and its source would be essentially irrelevant.” Id., at 593. The Court went on to identify two of the principal policies embodied in § 1983 as deterrence and compensation. Neither of these policies is significantly affected by this rule of limitations since plaintiffs can still readily enforce their claims, thereby recovering compensation and fostering deterrence, simply by commencing their actions within three years.

Uniformity has also been cited as a federal policy which sometimes necessitates the displacement of an otherwise applicable state rule of law. Carlson v. Green, ante, p. 14; Occidental Life Ins. Co. of California v. EEOC, 432 U. S. 355, 362 (1977). The need for uniformity, while paramount under some federal statutory schemes, has not been held to warrant the displacement of state statutes of limitations for civil rights actions. Johnson v. Railway Express Agency, Inc., supra. In Robertson v. Wegmann, supra, we held:

“[W]hatever the value of nationwide uniformity in areas of civil rights enforcement where Congress has not spoken, in the areas to which § 1988 is applicable Congress has provided direction, indicating that state law will often provide the content - of the federal remedial rule. This statutory reliance on state law obviously means that there will not be nationwide uniformity on these issues.” 436 U. S., at 594, n. 11.

The Court of Appeals and the District Court in this case apparently believed that policies of federalism would be undermined by the adoption of the New York tolling rule since litigants would not be encouraged to resort to state remedies prior to the maintenance of a federal civil rights action under § 1983. The conclusion of the lower courts that this result would be “inconsistent” with federal law is at odds with the reasoning in our prior opinions in this field as well as at odds with federalism itself.

On several prior occasions, we have reasoned that when Congress intended to establish a remedy separate and independent from other remedies that might also be available, a state rule which does not allow a plaintiff to litigate such alternative claims in succession, without risk of a time bar, is not “inconsistent.” In Johnson v. Railway Express, supra, the Court found that a state rule which did not toll the statute of limitations applicable to a claim under 42 U. S. C. § 1981 during the pendency of a charge under Title VII of the Civil Rights Act of 1964 filed with the Equal Employment Opportunity Commission, was not inconsistent with § 1981 because Congress had “retained § 1981 as a remedy . . . separate from and independent of the . . . procedures of Title VII.” 421 U. S., at 466. The Court premised its conclusion that Title VII and § 1981 were separate and independent on the fact that Congress had not required resort to Title VII as a prerequisite to an action under § 1981 and did not “expect that a § 1981 court action usually would be resorted to only upon a completion of Title VII procedures. . . .” 421 U. S., at 461. Adopting the same reasoning, we held in Electrical Workers v. Robbins & Myers, Inc., 429 U. S. 229 (1976), that it would not be inconsistent with Title VII to decline to toll the statute of limitations during labor grievance or arbitration procedures because “contractual rights under a collective-bargaining agreement and the statutory right provided by Congress under Title VII ‘have legally independent origins and are equally available to the aggrieved employee.’ ” Id,., at 236, quoting Alexander v. Gardner-Denver Co., 415 U. S. 36, 52 (1974). Applying the converse of this reasoning, this Court found in Occidental Life Ins. Co. of California v. EEOC, supra, that it would be inconsistent with federal law to apply a state statute of limitations to actions instituted by the EEOC under Title VII since the EEOC was “required by law to refrain from commencing a civil action until it ha[d] discharged its administrative duties.” 432 U. S., at 368.

The District Court’s conclusion that state remedies should be utilized before resort to the federal courts may be an entirely sound and sensible observation, but in our opinion it does not square with what must be presumed to be congressional intent in creating an independent federal remedy. Unless that remedy is structured to require previous resort to state proceedings, so that the claim may not even be maintained in federal court unless such resort be had, see Love v. Pullman Co., 404 U. S. 522 (1972), it cannot be assumed that Congress wishes to hold open the independent federal remedy during any period of time necessary to pursue alternative state-court remedies. It is difficult to conclude that a state policy of repose which likewise does not encourage litigants to resort to other available remedies is inconsistent with such congressional intent. We find the congressional intent here to be virtually indistinguishable from that found in Johnson v. Railway Express, supra, and Electrical Workers v. Robbins & Myers, Inc., supra, to be consistent with a rule prohibiting tolling.

As in those cases, there is no question that respondent’s i 1983 action was “separate and independent” from the state judicial remedy pursued in state court. This Court has not interpreted § 1983 to require a litigant to pursue state judicial remedies prior to commencing an action under this section. In Monroe v. Pape, 365 U. S., at 183, we held: “It is no answer that the State has a law which if enforced would give relief. The federal remedy is supplementary to the state remedy, and the latter need not be first sought and refused before the federal one is invoked.” Thus the very independence of § 1983 reveals that the New York rule precluding tolling in the circumstances of this case is not “inconsistent” with the provisions of § 1983.

Finally, we do not believe that this construction of congressional intent is overridden, as the Court of Appeals found, “in the interests of advancing the goals of federalism.” We believe that the application of the New York law of tolling is in fact more consistent with the policies of “federalism” invoked by the Court of Appeals than a rule which displaces the state rule in favor of an ad hoc federal rule. The result reached by the District Court and Court of Appeals might encourage more plaintiffs with both state and federal constitutional claims to initially bring an action in the state courts. But it would just as surely frustrate the often complex combination of limitations and tolling provisions enacted by the State in question. While New York might have chosen a tolling rule designed to encourage prior resort to state-law remedies, it has not. Here New York has expressed by statute its disfavor of tolling its statute of limitations for one action while an independent action is being pursued. Considerations of federalism are quite appropriate in adjudicating federal suits based on 42 U. S. C. § 1983. See, e. g., Younger v. Harris, 401 U. S. 37 (1971). But the Court of Appeals’ rule allowing tolling can scarcely be deemed a triumph of federalism when it necessitates a rejection of the rule actually chosen by the New York Legislature.

Since we therefore hold that respondent’s action was barred by the New York statute of limitations, we find it unnecessary to reach petitioners’ other contentions. The judgment of the Court of Appeals is accordingly Reversed

Mr. Justice Stevens,

concurring in the result.

The federal claim asserted by respondent was that New York had deprived her of the right to practice her profession without the due process of law required by the Fourteenth Amendment to the United States Constitution. The New York proceedings that ultimately determined that she had no such right as a matter of state law were not concluded until November 1975. Since her federal action was filed only seven months later, I believe it was timely, though for somewhat different reasons than those stated by the Court of Appeals.

Having relied on developments in the state-court litigation to defend the merits of respondent’s due process challenge, I would not permit the State simultaneously to contend that all aspects of the federal controversy had crystalized before respondent sought review in the state court system. Cf. Bonner v. Coughlin, 517 F. 2d 1311, 1319 (CA7 1975), modified, 545 F. 2d 565 (1976) (en banc), cert. denied, 435 U. S. 932. As the Court notes, ante, at 491, a litigant is not required to exhaust state remedies before bringing a § 1983 action in federal court. Monroe v. Pape, 365 U. S. 167, 183. But I would not penalize a litigant who decides to bring suit in the state courts first; for such a decision gives the State an opportunity to correct, through construction of state law, a potential constitutional error, and may obviate entirely any need to present the claim to a federal court. It would also make no sense to me in terms of either federalism or judicial administration to require a litigant who files an action in state court to proceed simultaneously in federal court in order to avoid a time bar. I therefore disagree with the Court’s holding that respondent’s claim is barred by limitations.

On the merits, however, I am not persuaded that New York’s licensing procedure is unfair. Examinations are a permissible method of determining qualifications, and lines must be drawn somewhere. The fact that respondent was just short of the passing mark does not raise any federal question. Indeed, respondent does not claim that the examination itself denied her due process. And I agree with Judge Lumbard, who dissented in the Court of Appeals, that the fact that New York has provided for a waiver in the discretion of the Board of Regents does not substantially change the State’s licensing procedure. Respondent was given an adequate opportunity to advise the Board of the reasons why she should receive a waiver and she ultimately received an adequate explanation for the refusal. She does not allege that others who have failed the examination have obtained a waiver, or, indeed, any facts suggesting any arbitrariness in the New York procedure.

In short, I find no merit in respondent’s constitutional challenge and would reverse for that reason.

Mr. Justice Brennan,

with whom Mr. Justice Marshall joins,

dissenting.

I cannot agree with the Court that respondent’s federal action is time-barred. In my view, when applied to these facts the New York statute of limitations and tolling rules are “inconsistent with the Constitution and laws of the United States,” and thus should not be “extended to . . . govern” respondent’s suit. 42 U. S. C. § 1988.

While the precise content of New York’s statute of limitations and tolling rules is not crucial to my analysis, I think it appropriate to note that the Court’s conclusion that respondent’s action would be time-barred under state law is far from persuasive. The Court relies heavily upon the absence of any provision that expressly tolls the statute of limitations “during the period in which a litigant pursues a related, but independent cause of action,” ante, at 486. I would not attach controlling significance to the absence of particular statutory language. Nor would I conclude on the basis of that absence that New York had consciously determined “that the policies of repose underlying the statute of limitations should not be displaced by whatever advantages inure, whether to the plaintiff, or the system, in a scheme which encourages the litigation of one cause of action prior to another.” Ante, at 487. Legislative silence is simply not that communicative. Indeed, there may be no New York rule that actually deals with the present situation. That State has a unitary court system, and in consequence its judges and legislators are unlikely to have focussed upon the filing in two different court systems of two different suits dealing with the same transaction or occurrence.. Further, the situation upon which they probably have focussed — the filing in a single system of two consecutive suits — would not really be analogous because there would be no conceivable reason for separating the actions. Moreover, even in that case it is not clear that state lawmakers would expect to derail the second action by applying the statute of limitations. On the contrary, the doctrine of res judicata would seem a more probable reason for dismissal. In sum, I think the precise content of state law when applied to a case such as the present one is sufficiently opaque to render any supposition as to what state policies are at stake extremely speculative.

More broadly, I would not find respondent’s § 1983 action time-barred even were I confident that application of the New York rules would produce that result. Monroe v. Pape, 365 U. S. 167, 183 (1961), settled that the plaintiff in a § 1983 case need not resort to state judicial remedies prior to filing a federal suit. There are, however, circumstances in which this Court has decided that a federal determination may be delayed pending resolution of certain state-law issues, see Railroad Comm’n v. Pullman Co., 312 U. S. 496 (1941). Beyond that, even in cases not technically within the abstention doctrine, advantages may be realized from permitting the state courts to decide claims that state administrative determinations were arbitrary, capricious, or otherwise contrary to state law. Accordingly, I can conceive of situations in which a plaintiff in a case like the present one might resort initially to state courts either under the view that he would be required to do so by the abstention doctrine or because doing so, while not compulsory, would be a more efficacious way of resolving his claim. Either reason strikes me as entirely legitimate. Abstention decisions are presumably there to be read by plaintiffs as well as district courts, and permitting plaintiffs to act upon them might spare the federal courts some unnecessary work. More generally, where the plaintiff voluntarily concludes that it is worth the time and money, resort to state judicial review under state law would not be inconsistent with Monroe v. Pape, supra, and could both reduce strains on federal-state relations and ease the task facing the district courts that must eventually resolve those cases not settled in state proceedings.

While I believe the foregoing benefits may be substantial, I think it vital to ensure that they are not obtained at the expense of the plaintiff's right ultimately to try his federal claims in a federal forum. Thus, while I recognize that a plaintiff may be bound by a deliberate choice to present both state and federal claims to the state court, I would not be too quick to find that such a choice has been made. In the present case, there is no indication that respondent had any intention of relinquishing her right to a federal forum, and I would eschew any course that in effect forces her to do so. In consequence, on these facts I would think it inconsistent with federal law and the Constitution to enforce state timing or res judicata rules that close the door of the federal courthouse.

In the abstention context, England v. Louisiana State Board of Medical Examiners, 375 U. S. 411 (1964), sets forth a procedure for preserving a plaintiff’s right to a federal forum for his federal claims while giving effect to the concerns and policies underlying Railroad Comm’n v. Pullman Co., supra. Under that procedure, a plaintiff remitted to state court may file a formal reservation in that court preserving his federal claims. If he does so, he can litigate those claims on his return to federal court. If he fails to do so, he risks being held to have submitted all his claims to the state court. It seems to me that the present case is in many respects simply a variation of the basic England situation. Accordingly, I believe that a similar reservation procedure would be appropriate here. Permitting a plaintiff to reserve his federal claims would make the choice to litigate state claims in state court a palatable one; and where that choice is exercised the parties and system alike may benefit. Further, requiring that plaintiffs who want to make such a reservation do so expressly would supply a relatively simple means of preventing the relitigation of claims submitted to and decided by state courts.

While I would impose a reservation requirement on cases like this for the future, I would not be inclined to do so on the present facts for reasons akin to those that led us to make England. itself prospective. 375 U. S., at 421-423. Specifically, there is no reason why respondent should have anticipated that she would be required to reserve her federal questions. On the contrary, I think she could reasonably have assumed that so long as her federal claims were not raised or decided in state court she could try them in a subsequent § 1983 action. I would give effect to that assumption and make the reservation requirement wholly prospective.

Because I think the importation of either the state statute of limitations or its estoppel-by-judgment rule would be inconsistent with federal law and the Constitution, I would reach the merits. The courts below were of the view that the licensing scheme in general and the waiver provisions in particular conferred on respondent some minimal property right. I see no reason to second-guess that determination. As a result, it is axiomatic that some procedural protections are required by the Due Process Clause. The extent of those protections is a difficult question, and I think the Court of Appeals may have gone too far when it ordered an adjudicative hearing. It does, however, seem quite clear that at minimum respondent was entitled to a statement of the reasons for her rejection. Further, I cannot agree with Mr. Justice Stevens that this requirement was satisfied by the statement given by the Board in its answer to respondent’s original complaint. Respondent’s right was to receive a statement of reasons when a waiver was denied, not upon her resort to state judicial remedies. As a result, I would affirm the Court of Appeals insofar as it held that respondent was entitled as a matter of federal constitutional law to some additional procedures, but would reverse insofar as that court held that she was entitled to a full adjudicative hearing. Accordingly, I dissent.

       This waiver section is available to all applicants for professional licenses and not just those seeking admission to the practice of chiropractic.

       In 1972, respondent also took, and failed, the examinations administered to applicants without prior experience in practice.

       See, e. g., the authorities cited in Johnson v. Railway Express Agency, Inc., 421 U. S. 454, 462 (1975).

       The Court of Appeals for the Second Circuit established a number of years ago that New York’s 3-year time limitation for actions “to recover upon a liability, penalty or forfeiture created or imposed by statute,” N. Y. Civ. Prac. Law §214(2) (McKinney Supp. 1979-1980), governs §1983 actions brought in Federal District Court in New York. Romer v. Leary, 425 F. 2d 186 (1970); Meyer v. Frank, 550 F. 2d 726, cert. denied, 434 U. S. 830 (1977). While petitioners suggest that §217 (McKinney 1972) of the New York statutes of limitations, requiring the commencement of proceedings to review administrative action within four months, more appropriately governs this action, we need only hold that the Court of Appeals erred by tolling the 3-year limitation. The respondent does not maintain that a limitation period longer than three years governs this action. Thus we may assume for the purposes of this opinion that the 3-year period was applicable since respondent is in any event barred.

       Section 1988 provides:
      “The jurisdiction in civil and criminal matters conferred on the district courts by the provisions of this [Chapter and Title 18], for the protection of all persons in the United States in their civil rights, and for their vindication, shall be exercised and enforced in conformity with the laws of the United States, so far as such laws are suitable to carry the same into effect; but in all cases where they are not adapted to the object, or are deficient in the provisions necessary to furnish suitable remedies and punish offenses against law, the common law, as modified and changed by the constitution and statutes of the State wherein the court having jurisdiction of such civil or criminal cause is held, so far as the same is not inconsistent with the Constitution and laws of the United States, shall be extended to and govern the said courts in the trial and disposition of the cause, and, if it is of a criminal nature, in the infliction of punishment on the party found guilty.”

       See, e. g., § 207 (McKinney 1972) (tolling during defendant’s absence fr.om State or residence under false name); § 208 (McKinney Supp. 1979— 1980) (tolling during period in which plaintiff is under a disability such as infancy, insanity, or imprisonment).

       Section 204 (b) does provide that if a plaintiff attempts to submit a claim for arbitration, but it is ultimately held that there is no obligation to arbitrate, the limitations period will not run during the time between the date of demand and the date of the judgment providing that arbitration is unavailable. This section does not provide for general tolling during arbitration, but only in situations where the plaintiff is unable to obtain an adjudication on the merits because the remedy is legally unavailable.

       We note that respondent does not maintain that any provision of New York law operated to toll the statute of limitations.

       The remedy pursued by plaintiff in state court was a state judicial remedy authorizing actions against administrative bodies to review “whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion. . . N. Y. Civ. Prac. Law §7803 (McKinney 1963). While the parties and the courts below were in agreement that a constitutional challenge to the agency action could have been brought under Art. 78, only the state-law claims were pursued by respondent in that proceeding.

       “[N]or shall any State deprive any person of life, liberty, or property, without due process of law. . . .” U. S. Const., Amdt. 14, § 1.

       Petitioners rely on the papers in the New York action as having provided respondent with an adequate statement of the reasons for the denial of a waiver. See Brief for Petitioners 4.

       Even if I agreed with the view that the federal claim was complete in November 1971 when respondent’s application for a waiver was denied, I would remand to the Court of Appeals to determine the state-law tolling issue rather than have this Court decide that state-law question in the first instance.

       The Court also makes reference to- respondent’s failure to “maintain that any provision of New York law operated to toll the statute of limitations.” Ante, at 487, n. 8.

       Cf. Powell, The Still Small Voice of the Commerce Clause, in 3 Selected Essays on Constitutional Law 931, 932 (1938).

       See Winters v. Lavine, 574 F. 2d 46, 56 (CA2 1978) (citing New York cases).

       If the Court is persuaded that state law should govern, I agree with Mr. Justice SteveNS that it would be appropriate to seek the advice of the Court of Appeals as to the precise content of the state rule as applied to facts such as these. Ante, at 493, n. 3.

       In this regard, too, I am in agreement with my Brother SteveNS. See ante, at 493.

       Curiously, the Court’s decision regarding the New York statute of limitations could have a broadly parallel effect. As I understand it, the Court would simply require plaintiffs either to lodge a federal complaint in federal court before the limitations period expires or to obtain an order from the state court tolling the running of that period. Either step would put the State on notice that a federal constitutional challenge loomed, cf. Government Employees v. Windsor, 353 U. S. 364 (1957), and, assuming that the Court would not give effect to the state res judicata rules, either would ultimately permit plaintiffs in future cases to raise their federal claims in federal forums. Thus, while I am not persuaded by the Court’s reasoning, and while I think the result in this particular ease anomalous, the overall effect of the Court’s rule may be satisfactory.

       In 1970 the Court of Appeals for the Fifth Circuit concluded that a state statute of limitations would be tolled in such a situation. Mizell v. North Broward Hospital District, 427 F. 2d 468, 473-474. The Court of Appeals for the Second Circuit apparently had not ruled on this precise issue at the time of respondent’s suit, although it had held that New York’s res judicata and collateral estoppel rules would not bar a federal civil rights suit dealing with issues not actually litigated in a prior state-court suit, Ornstein v. Regan, 574 F. 2d 115 (1978); Lombard v. Board of Education, 502 F. 2d 631, 635-637 (1974).

       Even were the England requirement fully applicable, respondent’s failure to make an express reservation might not be dispositive on these facts. Normally the reservation rule will serve two functions — it will force the plaintiff to declare his intentions, and thus keep him from getting two chances to litigate a single claim, and it will put the parties and the state court on notice that there lurks a constitutional issue. Here the first purpose is not implicated because respondent’s federal claims were not litigated in state court. And while it may be appropriate to hold that a plaintiff who fails to reserve federal claims will be bound by a state court’s actual determination of those claims, the proper result where a failure to reserve has led only to silence on the federal issue is less obvious. Government Employees v. Windsor, supra, for example, merely concluded that a state-law determination made without warning or discussion of related constitutional claims was inadequate and ordered a remand to give the state courts an opportunity to construe their statute in a different manner. 353 U. S., at 366. Neither party has requested such a disposition here, and I am not convinced that one would be appropriate. But it does seem that the consequence of failure to reserve in the present context need not be a complete bar to pursuit of respondent’s federal claims in federal court.

       In the wake of Bishop v. Wood, 426 U. S. 341, 347 (1976), it is clear that such second-guessing will rarely if ever be appropriate.

       Cf. Home Telephone & Telegraph Co. v. Los Angeles, 227 U. S. 278 (1913).