This section is from the book "The Constitutional Law Of The United States", by Westel Woodbury Willoughby. Also available from Amazon: Constitutional Law.
The Constitution provides that the federal judicial power shall extend to "all cases, in law or equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made under their authority."
In order that federal judicial power may attach under this grant it is necessary that the controversy shall constitute what in law is technically known as a "case;" and that, for its decision, the enforcement of some federal right is substantially involved.44
41 176 U. S. 181; 20 Sup. Ct. Rep 311; 44 L. ed. 423. 42 Citing Cheever v. Wilson, 9 Wall. 108; 19 L. ed. 604. 43 Wood v. Wagnon. 2 Cr. 9; 2 L, ed. 191; Wolfe v. Hartford Life Insurance Co., 148 U. S. 389; 13 Sup. Ct. Rep. 602; 37 L. ed. 493.
A case is not brought within federal judicial cognizance simply because, in the progress of the litigation, it becomes necessary to refer to or give a construction to the federal Constitution or laws of the United States. "The decision of the case must depend upon that construction. The suit must, in part at least, arise out of a controversy between the .parties in regard to the operation and effect of the Constitution or laws upon the facts involved." 45
In Cableman v. Peoria, etc., R. R. Co.46 it is held that the bare fact that the appointment of a receiver is by a federal court does not make all actions against him cases arising under the Constitution or laws of the United States which he can remove on that ground into the federal court, unless his appointment has been not under the general equity powers of a chancery court, but pursuant to a special federal law. The court, citing previous cases, say: "When a suit does not really and substantially involve a dispute or controversy as to the effect or construction of the Constitution or laws of the United States, upon the determination of which the result depends, it is not a suit arising under the Constitution or laws. And it must appear on the record, by a statement in legal and logical form, such as is required in good pleading, that the suit is one which does really and substantially involve a dispute or controversy as to a right which depends on the construction of the Constitution or some law or treaty of the United States, before jurisdiction can be maintained."
44 In Osborn v. Bank of United States (9 Wh. 738; 6 L. ed. 204) Chief Justice Marshall says: "This clause enables the judicial department to receive jurisdiction to the full extent of the Constitution, laws, and treaties of the United States, when any question respecting them shall assume such a form that the judicial power is capable of acting on it. The power is capable of acting only when the subject is submitted to it by a party who asserts his rights in the form prescribed by law. It then becomes a case, and the Constitution declares that the judicial power shall extend to all cases arising under the Constitution, laws, and treaties of the United States."
45 Gold Washing & Water Co. v. Keyes, 6 Otto, 199; 24 L. ed. 656.
46 179 U. S. 335: 21 Sup. Ct. 171; 45 L. ed. 220. The ordinary rule is that no receiver may be sued except by leave of the Court which appointed him, but Congress has provided that every receiver or manager of any property appointed by any Court of the United States may be sued in respect of any act or transaction of his in carrying on the business connected with such property without the previous leave of the Court in which such receiver or manager was appointed.
But the federal judicial power attaches when it is shown that a federal right is substantially involved, whether express or implied: "The jurisdiction of the courts of the United States is properly commensurate with every right and duty created, declared, or necessarily implied, by and under the Constitution and laws of the United States. Those courts are created courts of common law and equity; and under whichsoever of these classes of jurisprudence such rights and duties may fall, or be appropriately ranged, they are to be taken cognizance of and adjudicated according to the settled and known principles of that division to which they belong." 47
In Shoshone Mining Co. v. Rutter48 the general extent of the federal judiciary power as determined by subject-matter rather than diversity of citizenship, is stated and the authorities reviewed.