Full faith and credit
Significance: Although the original clause is somewhat unclear, the Supreme Court has interpreted it as meaning that judgments rendered in one state have conclusive effect in other states and that federal and state courts must grant full faith and credit to one another.
The full faith and credit clause, Article IV, section 1, of the Constitution, mandates that each state must give at least the same effect to the laws and court judgments of another state as would that other state. Although this clause covers “public acts” and “records” as well as judicial proceedings, it is most often applied to the recognition of court judgments from other states. Not all state court judgments are entitled to full faith and credit. Every state that is asked to recognize another state's court judgment must determine what effect, if any, the judgment would have in the state that rendered it. Generally, if that judgment is not a final judgment on the merits, it is not entitled to full faith and credit. For example, a judgment based on a procedural error is not a “judgment on the merits.” Likewise, a judgment rendered by a state court that lacked jurisdiction over the subject matter of the lawsuit or over the parties to the lawsuit is not entitled to full faith and credit in another state. To be a final judgment on the merits, a court judgment must have been entered by a state court that had the power to hear the particular dispute and based on the substantive law applicable to the dispute. After determining the effect and validity of a particular state court judgment in the state that rendered it, then the other state must give the same force and effect to that court judgment. The application of the full faith and credit clause can lead to peculiar results. In Fauntleroy v. Lum (1908), an arbitration decision was entered against Lum to pay off a gambling debt. Under Mississippi law at the time, gambling was illegal. However, Lum failed to raise this defense, and the arbitrators were convinced that Lum's debt was not an illegal gambling debt. The plaintiff, Fauntleroy, then found Lum in Missouri and requested the Missouri state court to give full faith and credit to the Mississippi arbitration decision. Justice Oliver Wendell Holmes, in writing the opinion for the Supreme Court, ruled that because the Mississippi arbitration decision is a final judgment on the merits under Mississippi law, then Missouri must give the Mississippi arbitration decision full faith and credit. Justice Holmes also stated that full faith and credit applies even if the Mississippi arbitration decision is contrary to Mississippi law.