3. Should all causes of action created by state law be outside 28 U.S.C. § 1331? In SMITH v. KANSAS CITY TITLE & TRUST CO., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577 (1921), a shareholder sued to enjoin the Trust Company, a Missouri corporation, from investing in certain federal bonds on the ground that the Act of Congress authorizing their issuance was unconstitutional. The plaintiff claimed that under Missouri law an investment in securities, the issuance of which had not been authorized by a valid law, was ultra vires and so enjoinable. Although the cause of action was created by state law, the Supreme Court held that the action arose under federal law for purposes of 28 U.S.C. § 1331:

The general rule is that where it appears from the bill or statement of the plaintiff that the right to relief depends upon the construction or application of the Constitution or laws of the United States, and that such federal claim is not merely colorable, and rests upon a reasonable foundation, the District Court has jurisdiction * * *.

Id. at 199, 41 S.Ct. at 245, 65 L.Ed. at 585. Justice Holmes dissented.