Nutt v. General Motors Acceptance Corporation of Indiana

Citation80 L.Ed. 1135,56 S.Ct. 780,298 U.S. 178
Decision Date18 May 1936
Docket NumberNos. 709,710,s. 709
PartiesMcNUTT, Governor of Indiana, et al. v. GENERAL MOTORS ACCEPTANCE CORPORATION OF INDIANA, Inc
CourtU.S. Supreme Court

Appeal from the District Court of the United States for the Southern District of Indiana.

Messrs. Philip Lutz, Jr., Atty. Gen., Joseph W. Hutchinson, Asst. Atty. Gen., and Leo M. Gardner, of Indianapolis, Ind., for appellants.

Messrs. John Thomas Smith, Phillip W. Haberman, and Duane R. Dills, all of New York City, and Paul Y. Davis, of Indianapolis, Ind., for appellee.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

Respondent, General Motors Acceptance Corporation of Indiana, brought this suit to restrain the enforcement of chapter 231 of the Acts of 1935 of the General Assembly of Indiana. That act provides for the regulation of the business of purchasing contracts arising out of retail installment sales, including provisions for licenses, for classifications of contracts, and for fixing maximum 'finance charges.' The validity of the act was challenged as depriving respondent of its property without due process of law and denying it the equal protection of the laws in violation of the Fourteenth Amendment of the Federal Constitution. An interlocutory injunction was sought and, upon hearing by three judges (28 U.S.C. § 380, 28 U.S.C.A. § 380), a final decree was entered, upon findings of facts and conclusions of law, granting a permanent injunction. No opinion was rendered. The case comes here by direct appeal.

The question arises whether the matter in controversy exceeds the sum or value of $3,000, exclusive of interest and costs, so as to give the District Court jurisdiction. Jud.Code, § 24(1), 28 U.S.C. § 41(1), 28 U.S.C.A. § 41(1). The complaint alleged that the requisite amount was involved and this allegation was denied by the answer. On the argument in this Court, leave was given to file an additional brief upon the question of jurisdiction and respondent has submitted its brief accordingly.

Respondent points to the allegations of its bill that the 'net worth' of its business exceeds $50,000; that in 1934 it purchased retail installment contracts in Indiana aggregating in excess of $7,000,000; that the value of such purchases for the first six months of 1935 was in excess of $4,000,000; and that during 1934 respondent purchased in Indiana approximately 23,000 installment sales contracts from more than 500 retail dealers. These allegations were sustained by the findings of the District Court. The bill also alleged that respondent maintained offices in Indiana for which it paid yearly an aggregate rental of $13,147; that it employed on the average 85 employees whose aggregate annual salaries amounted to about $150,000. Respondent also refers to its allegations that the act limits the amount which respondent 'may receive as its gross profit for the purchase of an installment contract to a sum not exceeding the maximum 'finance charge' which may be fixed by the Department of Financial Institutions,' by prohibiting respondent 'from purchasing any retail installment contracts at a less price than the unpaid balance thereon'; that the act limits the amount which may be given by respondent 'to retail sellers out of the gross 'finance charge' received from retail buyers under installment sale contracts' sold to respondent, by requiring the Department 'to fix this maximum amount without regard to any differentiation as between contracts sold to licensees by retail sellers with recourse against such sellers, and contracts sold by retail sellers without recourse against them'; and that in other respects the statute imposes burdensome requirements which impair the 'efficiency of the operations and earnings' of respondent.

Respondent invokes the principle that jurisdiction is to be tested by the value of the object or right to be protected against interference. Hunt v. New York Cotton Exchange, 205 U.S. 322, 27 S.Ct. 529, 51 L.Ed. 821; Bitterman v. Louisville & Nashville R. Co., 207 U.S. 205, 28 S.Ct. 91, 52 L.Ed. 171, 12 Ann.Cas. 693; Berryman v. Board of Trustees of Whitman College, 222 U.S. 334, 32 S.Ct. 147, 56 L.Ed. 225; Glenwood Light Co. v. Mutual Light Co., 239 U.S. 121, 36 S.Ct. 30, 60 L.Ed. 174; Healy v. Ratta, 292 U.S. 263, 54 S.Ct. 700, 78 L.Ed. 1248. But in the instant case, the statute does not attempt to prevent respondent from conducting its business. There is no showing that it cannot obtain a license and proceed with its operations. The value or net worth of the business which respondent transacts in Indiana is not involved save to the extent that it may be affected by the incidence of the statutory regulation. The object or right to be protected against unconstitutional interference is the right to be free of that regulation. The value of that right may be measured by the loss, if any, which would follow the enforcement of the rules prescribed. The particular allegations of respondent's bill as to the extent or value of its business throw no light upon that subject. They fail to set forth any facts showing what, if any, curtailment of business and consequent loss the enforcement of the statute would involve. The bill is thus destitute of any appropriate allegation as to jurisdictional amount save the general allegation that the matter in controversy exceeds $3,000. That allegation was put in issue and the record discloses neither finding nor evidence to sustain it.

In the absence of any showing in the record to support that general allegation, the question is upon which party lay the burden of proof. Respondent contends that the burden of proving the lack of jurisdiction rests upon the party challenging the jurisdiction and cites decisions of this Court to that effect. The question is thus sharply presented.

The jurisdiction of the District Court in a civil suit of this nature is definitely limited by statute to one—'where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, and (a) arises under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, or (b) is between citizens of different States, or (c) is between citizens of a State and foreign States, citizens, or subjects.' Jud.Code, § 24(1), 28 U.S.C. § 41(1), 28 U.S.C.A. § 41(1).

Further, the Act of March 3, 1875, c. 137, § 5 (18 Stat. 472) as now applied to the District Courts (Jud.Code, § 37, 28 U.S.C. § 80, 28 U.S.C.A. § 80), explicitly charges those courts with the duty of enforcing these jurisdictional limitations. The provision in its present form is as follows: 'If in any suit commenced in a district court, or remove from a State court to a district court of the United States, it shall appear to the satisfaction of the said district court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said district court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this chapter, the said district court shall proceed no further therein, but shall dismiss the suit or remand it to the court from which it was removed, as justice may require, and shall make such order as to costs as shall be just.'

It is incumbent upon the plaintiff properly to allege the jurisdictional facts, according to the nature of the case.' 'Where the law gives no rule, the demand of the plaintiff must furnish one; but where the law gives the rule, the legal cause of action, and not the plaintiff's demand, must be regarded.' Wilson v. Daniel, 3 Dall 401, 407, 408, 1 L.Ed. 655; Barry v. Edmunds, 116 U.S. 550, 560, 6 S.Ct. 501, 29 L.Ed. 729; Vance v. W. A. Vandercook Co. (No. 2), 170 U.S. 468, 481, 18 S.Ct. 645, 42 L.Ed. 1111; Lion Bonding Co. v. Karatz, 262 U.S. 77, 85, 86, 43 S.Ct. 480, 67 L.Ed. 871. Where the pleadings properly alleged the jurisdictional facts, as, for example, with respect to diversity of citizenship and jurisdictional amount, it was necessary at common law, and before the passage of the act of 1875, to raise the issue of want of jurisdiction by plea in abatement. And where the jurisdictional issue was thus raised, the burden of proof was upon the defendant. The objection was waived by pleading to the merits. D'Wolf v. Rabaud, 1 Pet. 476, 498, 7 L.Ed. 227; Sheppard v. Graves, 14 How. 505, 510, 14 L.Ed. 518; De Sobry v. Nicholson, 3 Wall. 420, 423, 18 L.Ed. 263; Farmington v. Pillsbury, 114 U.S. 138, 143, 5 S.Ct. 807, 29 L.Ed. 114. In equity, the defense could be presented by plea or demurrer but not by answer. Livingston v. Story, 11 Pet. 351, 393, 9 L.Ed. 746; De Sobry v. Nicholson, supra; Hunt v. New York Cotton Exchange, 205 U.S. 322, 333, 27 S.Ct. 529, 51 L.Ed. 821. Demurrers and pleas were abolished by Rule 29 of the Equity Rules promulgated in 1912. 226 U.S. appendix p. 8.

By the Conformity Act of 1872 (17 Stat. 197; R.S. § 914; 28 U.S.C. § 724, 28 U.S.C.A. § 724), all defenses in civil actions at law were made available to a defendant in the federal courts under any form of plea, answer, or demurrer which would have been open to him under like pleading in the courts of the state within which the federal court was held. In that view we decided that where, under the Nebraska Code of Civil Procedure, the answer took the place of all pleas at common law, in abatement or to the merits, the allegation of the citizenship of the parties, which was properly made in the petition and put in issue by the answer, must be proved by the plaintiff. And where the record showed 'no proof or finding upon this essential point' the judgment was reversed for want of jurisdiction. Roberts v. Lewis, 144 U.S. 653, 656—658, 12 S.Ct. 781, 783, 36 L.Ed. 579. See, to the same effect, Wells...

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