opinion: ANGEL v. BULLINGTON.
  No. 31.
  Argued March 5, 1946. Reargued November 18, 19, 1946.
  Decided February 17, 1947.
  George Lyle Jones argued the cause for petitioner. With him on the brief was George H. Ward.
  R. Roy Rush argued the cause for respondent. With him on the brief was John L. Walker.
  Mr. Justice Frankfurter
  delivered the opinion of the Court.
  In 1940, Bullington, a citizen of Virginia, sold land in Virginia to Angel, a citizen of North Carolina. Only part of the purchase price was paid. For the balance, Angel executed a series of notes secured by a deed of trust on the land. Upon default on one of the notes, Bullington, acting upon an acceleration clause in the deed, caused all other notes to become due and called upon the trustees to sell the land. The sale was duly made in Virginia and the proceeds of the sale applied to the payment of the notes. This controversy concerns attempts to collect the deficiency.
  Bullington began suit for the deficiency in the Superior Court of Macon County, North Carolina. Angel countered with a demurrer, the substance of which was that a statute of North Carolina (c. 36, Public Laws 1933, Michie’s Code § 2593 (f)) precluded recovery of such a deficiency judgment. This is the relevant portion of that enactment:
  “In all sales of real property by mortgagees and/or trustees under powers of sale contained in any mortgage or deed of trust hereafter executed, . . . the mortgagee or trustee or holder of the notes secured by such mortgage or deed of trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trust or obligation secured by the same: . . . .”
  The Superior Court overruled the demurrer, and an appeal to the Supreme Court of North Carolina followed. Bullington supported his Superior Court judgment on the ground that the United States Constitution precluded North Carolina from shutting the doors of its courts to him. The North Carolina Supreme Court, holding that the North Carolina Act of 1933 barred Bullington’s suit against Angel, reversed the Superior Court and dismissed the action. 220 N. C. 18, 16 S. E. 2d 411. Bullington did not seek to review this judgment here. Instead, he sued Angel for the deficiency in the United States District Court for the Western District of North Carolina. Angel pleaded in bar the judgment in the North Carolina action. The District Court gave judgment for Bullington, 56 F. Supp. 372, and the Circuit Court of Appeals for the Fourth Circuit affirmed. 150 F. 2d 679. We granted certiorari, 326 U. S. 713, because the failure to dismiss this action, on the ground that the judgment in the North Carolina court precluded the right thereafter to recover on the same cause of action in the federal court, presented an important question in the administration of justice.
  1. We start with the fact that the prevailing rule as to res judicata is settled law in North Carolina. An adjudication bars future litigation between the same parties not only as to all issues actually raised and decided but also as to those which could have been raised. Southern Distributing Co. v. Carraway, 196 N. C. 58, 60-61, 144 S. E. 535, 537; Moore v. Harkins, 179 N. C. 167, 101 S. E. 564. When the disposition of a prior litigation is invoked as a bar to an action, the identity of the causes of action in the two suits is usually the bone of contention. On this score there can here be no controversy. It is indisputable that the parties, the nature of the claim and the desired relief were precisely the same in the two actions successively brought by Bullington against Angel, first in the Superior Court of Macon County and then in the federal district court. For all practical purposes, the complaint in the present action was a carbon copy of the complaint in the State court action. If the North Carolina action had been dismissed because it was brought in one North Carolina court rather than in another, of course no federal issue would have been involved. See, e. g., Woods v. Nierstheimer, 328 U. S. 211. Had that been the case, a suit for the same cause of action could have been initiated in a North Carolina federal district court, just as another suit could have been brought in the proper North Carolina State court. But that is not the present situation. A quite different situation is before us. Being somewhat unusual, it calls for a critical consideration of the scope and purpose of the doctrine of res judicata.
  2. The judgment of the Supreme Court of North Carolina would clearly bar this suit had it been brought anew in a state court. For purposes of diversity jurisdiction a federal court is, “in effect, only another court of the State.” Guaranty Trust Co. v. York, 326 U. S. 99, 108; see Traction Company v. Mining Company, 196 U. S. 239, 253; Ex parte Schollenberger, 96 U. S. 369, 377. Of course, Bullington could not have succeeded in the District Court for the Western District of North Carolina after an adverse judgment in the State courts, had the decision in this case involved no federal ground. That is equally true where a federal question was decided in the State courts. That the adjudication of federal questions by the North Carolina Supreme Court may have been erroneous is immaterial for purposes of res judicata. Baltimore S. S. Co. v. Phillips, 274 U. S. 316, 325. A higher court was available for an authoritative adjudication of the federal questions involved. And so the question is whether federal rights were necessarily involved and adjudicated in the litigation in the State courts.
  3. For purposes of res judicata, the significance of what a court says it decides is controlled by the issues that were open for decision. What were the issues in the North Carolina litigation? Bullington sought a deficiency judgment. Angel, by demurrer, resisted on the ground that a North Carolina statute precluded a deficiency judgment. The North Carolina Supreme Court, reversing the trial court, found the North Carolina statute a bar to such a suit. It said that
  “the limitation created by the statute is upon the jurisdiction of the court in that it is declared that the holder of notes given to secure the purchase price of real property 'shall not be entitled to a deficiency judgment on account’ thereof. This closes the courts of this State to one who seeks a deficiency judgment on a note given for the purchase price of real property. The statute operates upon the adjective law of the State, which pertains to the practice and procedure, or legal machinery by which the substantive law is made effective, and not upon the substantive law itself. It is a limitation of the jurisdiction of the courts of this State.” 220 N. C. 18, 20, 16 S. E. 2d 411, 412.
  But the allowable “limitation of the jurisdiction of the courts” of North Carolina presents more than a question of local law for determination by the North Carolina Supreme Court. Speaking for a unanimous Court, Mr. Justice Brandeis thus expressed the subordination to the requirements of the Constitution of the power of a State to withdraw jurisdiction from its courts: “The power of a State to determine the limits of the jurisdiction of its courts and the character of the controversies which shall be heard in them is, of course, subject to the restrictions imposed by the Federal Constitution.” McKnett v. St. Louis & S. F. Ry. Co., 292 U. S. 230, 233. The Contract Clause, the Full Faith and Credit Clause, the Privileges or Immunities Clause, all fetter the freedom of a State to deny access to its courts howsoever much it may regard such withdrawal of jurisdiction “the adjective law of the State,” or the exercise of its right to regulate “the practice and procedure” of its courts. Broderick v. Rosner, 294 U. S. 629, 642. A State “cannot escape its constitutional obligations by the simple device of denying jurisdiction in such cases to courts otherwise competent.” Kenney v. Supreme Lodge, 252 U. S. 411, 415; and see White v. Hart, 13 Wall. 646. This pervasive principle of our federal law, constitutional and statutory, was thus put by Mr. Justice Holmes: “ Whatever springes the State may set for those who are endeavoring to assert rights that the State confers, the assertion of federal rights, when plainly and reasonably made, is not to be defeated under the name of local practice.” Davis v. Wechsler, 263 U. S. 22, 24.
  4. Here, claims based on the United States Constitution were plainly and reasonably made in the North Carolina suit. The North Carolina Supreme Court met these claims. It met them by saying that the North Carolina statute did not deal with substantive matters but merely with matters regulating local procedure. But whether the claims are based on a federal right or are merely of local concern is itself a federal question on which this Court, and not the Supreme Court of North Carolina, has the last say. That Court could not put a federal claim aside, as though it were not in litigation, by the talismanic word “jurisdiction.” When an asserted federal right is denied, the sufficiency of the grounds of denial is for this Court to decide. Titus v. Wallick, 306 U. S. 282, 291. Bullington could have come here, not merely by the grace of this Court on certiorari, but on appeal, as did White in White v. Hart, supra, to challenge, successfully, the right of Georgia to limit the jurisdiction of the Georgia courts; as did the East New York Savings Bank in the recent case of East New York Bank v. Hahn, 326 U. S. 230, to challenge, though unsuccessfully, the limitation which New York placed upon the jurisdiction of its courts. Cf. Kenney v. Supreme Lodge, 252 U. S. 411, 416. Since it was open for Bullington to come here to seek reversal of the decision of the North Carolina Supreme Court shutting him out of the North Carolina courts and he chose not to do so, the decision of the North Carolina Supreme Court concluded an adjudication of a federal question even though it was not couched in those terms. For purposes of litigating the issues in controversy in the North Carolina action, the North Carolina Supreme Court was an intermediate tribunal. If a litigant chooses not to continue to assert his rights after an intermediate tribunal has decided against him, he has concluded his litigation as effectively as though he had proceeded through the highest tribunal available to him. An adjudication of an issue implies that a man had a chance to win his case. The chance was necessarily afforded by the North Carolina litigation. It was in process of determination when the Supreme Court of North Carolina decided it against him. He forewent his right to have a higher court, this Court, enable him to win his chance by holding that he was right and that the North Carolina Supreme Court was wrong. He cannot begin all over again in an action involving the same issues before another forum in the same State.
  5. It is suggested that the North Carolina Supreme Court did not adjudicate the “merits” of the controversy. It is a misconception of res judicata to assume that the doctrine does not come into operation if a court has not passed on the “merits” in the sense of the ultimate substantive issues of a litigation. An adjudication declining to reach such ultimate substantive issues may bar a second attempt to reach them in another court of the State. Such a situation is presented when the first decision is based not on the ground that the distribution of judicial power among the various courts of the State requires the suit to be brought in another court in the State, but on the inaccessibility of all the courts of the State to such litigation. And that is the essence of the present case. The only issue in controversy in the first North Carolina litigation was whether or not all the courts of North Carolina were closed to that litigation. The merits of that issue were adjudicated. And that was the issue raised in the second litigation in North Carolina—that in the federal district court. The merits of this issue having been adjudicated, they cannot be relitigated.
  The “merits” of a claim are disposed of when it is refused enforcement. If an asserted federal claim is denied enforcement on a professed local ground, but a so-called local ground which is subject to review here because it is in fact the adjudication of a federal question, then the “merits” of that claim were adjudicated in the only sense that adjudication of the “merits” is relevant to the principles of res judicata. A State court cannot sterilize federal claims by putting on the adjudication a local label.
  6. The merits of this controversy were adjudicated by the North Carolina Supreme Court since that court, or this Court on appeal, might have decided that the North Carolina statute did not bar Bullington’s first action. The North Carolina statute might have been found unconstitutional. Federal issues were thus involved in the adjudication by the North Carolina Supreme Court. Bullington knew that there were federal issues in the State suit because he raised them. He was then content to drop them and let the intermediate adjudication stand. Now he wants an encore.
  7. It is suggested that the North Carolina Supreme Court construed the North Carolina statute to close only the North Carolina State courts but not the federal court sitting in North Carolina. In the first place, the North Carolina Supreme Court said no such thing. It construed the statute expressive of State policy and spoke only of the jurisdiction of the State courts because it was concerned only with the State courts. Secondly, it is most incongruous to attribute to the legislature and judiciary of North Carolina the imposition of a restriction against all its citizens from suing for a deficiency judgment, while impliedly authorizing citizens of other States to secure such deficiency judgments against North Carolinians. Thirdly, a North Carolina statute, upheld by the highest court of North Carolina, is of course expressive of North Carolina policy. The essence of diversity jurisdiction is that a federal court enforces State law and State policy. If North Carolina has authoritatively announced that deficiency judgments cannot be secured within its borders, it contradicts the presuppositions of diversity jurisdiction for a federal court in that State to give such a deficiency judgment. North Carolina would hardly allow defeat of a State-wide policy through occasional suits in a federal court. What is more important, diversity jurisdiction must follow State law and policy. A federal court in North Carolina, when invoked on grounds of diversity of citizenship, cannot give that which North Carolina has withheld. Availability of diversity jurisdiction which was put into the Constitution so as to prevent discrimination against outsiders is not to effect discrimination against the great body of local citizens.
  Cases like Lupton’s Sons Co. v. Automobile Club, 225 U. S. 489, are obsolete insofar as they are based on a view of diversity jurisdiction which came to an end with Erie Railroad v. Tompkins, 304 U. S. 64. That decision drastically limited the power of federal district courts to entertain suits in diversity cases that could not be brought in the respective State courts or were barred by defenses controlling in the State courts. Compare Suydam v. Broadnax, 14 Pet. 67, 75. Of course, where resort is had to a federal court not on grounds of diversity of citizenship but because a federal right is claimed, the limitations upon the courts of a State do not control a federal court sitting in the State. Holmberg v. Armbrecht, 327 U. S. 392.
  8. After an adverse decision against Bullington on a cause of action created by State law, Bullington wants to start all over again in another North Carolina court, albeit a federal court. The first litigation raised and adjudicated federal issues every one of which is again involved in the second suit. To allow such a second suit is to say that a federal right in issue in a State court evaporates because the State court calls it a State right and the litigant accepts the decision. If tolerated, our federal system would afford fine opportunities for needlessly multiplying litigation in this way. The doctrine of res judicata is a barrier against it. Litigation is the means for vindicating rights, but it may also involve unwarranted friction and waste. The doctrine of res judicata reflects the refusal of law to tolerate needless litigation. Litigation is needless if, by fair process, a controversy has once gone through the courts to conclusion. Compare, e. g., Hazel-Atlas Co. v. Hartford Co., 322 U. S. 238, 244. And it has gone through, if issues that were or could have been dealt with in an earlier litigation are raised anew between the same parties. Chicot County Dist. v. Bank, 308 U. S. 371.
  Judgment reversed.