## Facts

- Iowa Homestead Co. sought to recover taxes (and interest) assessed for the years 1864–1871 from Des Moines Navigation & Railroad Co.
- The same parties previously litigated liability for substantially the same 1864–1871 taxes in a case removed from Iowa state court to federal circuit court.
- In the prior removed case, all defendants appeared, no party objected to federal jurisdiction, the federal court entered a final decree for the railroad, and the Supreme Court affirmed on the merits.
- Iowa Homestead Co. later filed a new Iowa state-court action to recover the same taxes for 1864–1871.
- The railroad pleaded the prior federal decree as a bar (res judicata).
- Homestead responded that the federal decree was null because the federal courts lacked jurisdiction, asserting that complete diversity was absent on the face of the record.
- The Iowa Supreme Court entered judgment for Homestead for the taxes and interest and declined to give preclusive effect to the prior federal decree.

## Issues

1. Whether the state court’s refusal to give effect to the prior federal judgment presented a reviewable federal question.
2. Whether a final federal judgment entered after removal—where all parties appeared and no jurisdictional objection was made—could be collaterally attacked in state court as void based on an apparent lack of complete diversity.

## Decision

- The Supreme Court held that the state court’s treatment of the prior federal decree was effectively a denial of a federal right, creating a reviewable federal question.
- The Court held that the prior federal decree remained binding on the parties unless and until judicially vacated, even if the record suggested incomplete diversity as to non-removing defendants.
- The Court ruled that Homestead was barred from relitigating the same tax claim because the earlier federal judgment had preclusive effect.
- The Supreme Court reversed the Iowa Supreme Court’s decree for Homestead.

## Legal Principles

- State courts must give binding effect to final federal judgments and may not disregard them as void in a later action based on jurisdictional objections that were not timely raised in the federal proceeding.
- When a case is removed in a procedurally regular manner, the federal court takes jurisdiction, all parties appear, and the matter proceeds to a final judgment affirmed on the merits, the judgment remains effective and conclusive on the parties until set aside through appropriate judicial proceedings.
- A party generally may not collaterally attack a final federal judgment for lack of subject-matter jurisdiction in subsequent state litigation when the jurisdictional objection could have been raised by motion to remand or by direct review.
- A prior final judgment between the same parties on the same claim operates as res judicata and bars a later suit seeking the same relief.

## Conclusion

The Supreme Court reversed the state-court judgment because a final federal decree entered after removal and affirmed on the merits was not open to collateral attack in state court for an asserted diversity defect and therefore barred the later action to recover the same taxes.


Des Moines Navigation & R.R. Co. v. Iowa Homestead Co., 123 U.S. 552 (1887)