Milwaukee County v. M.E. White Co.
Citation and Court
296 U.S. 268 (1935), Supreme Court of the United States
Facts
Milwaukee County obtained a tax judgment in Wisconsin against M.E. White Co. Wisconsin then sought to enforce the judgment in an Illinois federal court. Illinois courts had traditionally refused to enforce sister-state tax judgments under the principle that states do not enforce other states’ revenue or penal laws.
Issue
Whether the Full Faith and Credit Clause requires a sister state to recognize and enforce a tax judgment obtained in another state’s courts.
Holding
The Full Faith and Credit Clause requires recognition and enforcement of a Wisconsin tax judgment in Illinois; tax judgments are not excluded from full faith and credit as “penal” judgments, because the revenue rule applies to unperfected tax claims, not to final tax judgments.
Rule / Doctrine
While courts traditionally decline to enforce another sovereign’s revenue laws directly (the “revenue rule”), once a tax obligation has been reduced to a final judgment in the rendering state’s courts, that judgment is entitled to full faith and credit in other states. The revenue rule bars enforcing foreign tax laws; it does not bar enforcing tax judgments.
Significance
Milwaukee County drew a critical distinction between enforcement of foreign tax laws (not required) and enforcement of foreign tax judgments (required by Full Faith and Credit). This distinction remains important in both domestic and international contexts, though the revenue rule still bars enforcement of unadjudicated foreign tax claims.