303 U.S. 283 (1938), 274, Saint Paul Mercury Indemnity Co. v. Red Cab Company

Docket Nº:No. 274
Citation:303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845
Party Name:Saint Paul Mercury Indemnity Co. v. Red Cab Company
Case Date:February 28, 1938
Court:United States Supreme Court

Page 283

303 U.S. 283 (1938)

58 S.Ct. 586, 82 L.Ed. 845

Saint Paul Mercury Indemnity Co.

v.

Red Cab Company

No. 274

United States Supreme Court

Feb. 28, 1938

Submitted January 10, 1938

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

1. There is a strong presumption that the plaintiff in a state court has not claimed a large amount in order to confer jurisdiction by removal on a federal court, and that the parties have not colluded to that end. P. 290.

2. The status of the case as disclosed by the plaintiff's complaint is controlling in the case of a removal, since the defendant must file his petition before the time for answer, or forever lose his right to remove. P. 291.

3. Jurisdiction of the District Court acquired through removal is not lost by plaintiff's subsequent reduction of his claim to less than the jurisdictional amount. P. 292.

90 F.2d 229 reversed.

Certiorari, 302 U.S. 669, to review a judgment dismissing an appeal from a judgment recovered in an action on a contract of insurance. The action had been removed from a state court. The respondent here conceded that the ruling below was erroneous, and prayed that the cause be remanded for decision of the merits.

Page 284

ROBERTS, J., lead opinion

MR. JUSTICE ROBERTS delivered the opinion of the Court.

The decision under review is that, although at the time of removal of a cause from a state court, the complaint disclosed an amount in controversy requisite to the federal court's jurisdiction, a subsequent amendment, reducing the sum claimed to substantially less than that amount, necessitates remand to the state court. We granted the writ of certiorari because of alleged conflict with our decisions and with those of other federal courts.

The respondent, a corporation of Indiana, issued a summons out of the superior court of Marion county, Indiana, against the petitioner, a Minnesota corporation doing business in Indiana, and one Harlan as its agent. The complaint alleged that the respondent was subject to the provisions of the Indiana Workmen's Compensation Act, and had entered into a contract of insurance with the petitioner, evidenced by a binder, whereby the petitioner insured the respondent against loss or expense by reason of claims for compensation for a period of thirty days from December 30, 1933, and agreed to act for the respondent in the filing of reports and notices under the Act; that, during the term of the insurance employees of the respondent had suffered injury in the course of employment and made claims therefor; that the petitioner had been notified of each injury and investigated it in connection with the claim for compensation; that, after the expiration of the contract, the petitioner notified the respondent that it would not recognize any of the claims, and denied liability under the binder; that, as a consequence, respondent was compelled to employ attorneys, investigators, and medical assistants to investigate and satisfy claims covered by the contract and to pay employees who had suffered injuries during the contract period, and

Page 285

to pay, or obligate itself to pay, for medical, hospital, or dental bills in connection with such injuries, to the damage of the respondent in the sum of $4,000. It was alleged that the petitioner had acted, in making the contract, through Harlan, its authorized agent and representative, and an order was prayed that Harlan retain all moneys due by him to the petitioner for the purpose of answering any judgment which might be recovered. The complaint concluded by demanding $4,000 and other appropriate relief. Upon the petitioner's timely application, the cause was removed to the United States District Court for Southern Indiana. The respondent thereafter filed an amended complaint, the substance of which is not now material, and later a "second amended complaint for breach of contract and for damages," in which the allegations of the original complaint were repeated and damages were claimed in the sum of $4,000. An exhibit was attached which gave the names of the employees and the amounts expended in connection with their asserted injuries totaling $1,380.89. The court dismissed Harlan as a defendant, transferred the cause to the law docket, and overruled a demurrer to the complaint as not stating facts sufficient to constitute a cause of action. The answer denied the making of the contract. A jury trial was waived and the court made findings, stated its conclusions, and entered judgment for the respondent for $1,162.98. The petitioner appealed. The Circuit Court of Appeals refused to decide the merits on the ground that, as the record showed respondent's claim did not equal the amount necessary to give the [58 S.Ct. 589] District Court jurisdiction, the case should have been remanded to the State court.1

The question presented is one of statutory construction. The act defining the jurisdiction of district courts of the

Page 286

United States is § 24 of the Judicial Code.2 So far as here material, the Code confers jurisdiction of a suit of a civil nature, where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000 and is between citizens of different states.

Authority for removal of certain causes from a state to a federal court was first given by § 12 of the Judiciary Act of 1789,3 which permitted removal of a civil suit instituted by a citizen of the state in which the suit was brought against a citizen of another state where the matter in dispute exceeded the sum or value of $500, exclusive of costs. Such removal could be had only at the instance of the nonresident defendant. The Act of July 27, 1866,4 enlarged the privilege of removal by providing that if, in such a civil suit, it was shown that a nonresident defendant was party to a separable controversy, which could be determined without the presence of other defendants, that defendant might remove the cause.

The Judiciary Act of 18755 altered preexisting law to permit suits involving a controversy between citizens of different states to be removed by either party. The Judiciary Acts of 1887-18886 increased the jurisdictional amount to more than $2,000, exclusive of interest and costs, and confined the right of removal to a nonresident defendant, and the Judicial Code increased the limit to over $3,000, exclusive of interest and costs, and also restricted the privilege to nonresident defendants.7 The

Page 287

statute governing dismissal or remand for want of jurisdiction is § 37 of the Judicial Code:8

If, in any suit commenced in a district court, or removed 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.

This provision first appeared as § 59 of the Act of March 3, 1875 (supra), and, save for the elision of a concluding clause, and the substitution of "district court" for "circuit court", is identical with that section. It was included in the Judiciary Acts of 1887, 1888, supra, and has been continuously in force since 1875. It altered the practice by requiring the court to dismiss or remand of its own motion in a proper case although want of jurisdiction was not raised by appropriate motion or by plea or answer,10 but did [58 S.Ct. 590] not change the substantial basis for

Page 288

the court's action. The principles governing dismissal of a cause initiated in the federal court or the remand of one begun in a state court have remained as they were before the section was adopted.

The intent of Congress drastically to restrict federal jurisdiction in controversies between citizens of different states has always been rigorously enforced by the courts. The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls11 if the claim is apparently made in good faith.12

Page 289

It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.13 The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction.14 Nor does the fact that the complaint discloses the existence of a valid defense to the claim.15 But if, from the face of the pleadings, it is apparent to a legal certainty that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed.16 Events occurring

Page 290

subsequent [58 S.Ct. 591] to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.17 What already has been said and circumstances later to be discussed lead to the conclusion that a dismissal would not have been justified had the suit been brought in the federal court. The principles which govern remand of a removed cause more urgently require that it should not have been remanded. In a cause instituted in the federal court, the plaintiff chooses his forum. He knows or should know whether his claim is within the...

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4641 practice notes
  • 122 F.2d 746 (7th Cir. 1941), 7430, Aiken v. Insull
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Seventh Circuit
    • August 22, 1941
    ...clearly show that the requisite jurisdictional amount is involved. This showing is sufficient. St. Paul Mercury Indemnity v. Red Cab, 303 U.S. 283, 288, 289, 58 S.Ct. 586, 82 L.Ed. 845; Page 755 Norton v. Larney, 266 U.S. 511, 515, 45 S.Ct. 145, 69 L.Ed. 413; Mutual Life Ins. v. Thompson, D......
  • 132 F.Supp.3d 1014 (N.D.Ill. 2015), 15 C 6203, Midland Management Co. v. American Alternative Insurance Corp.
    • United States
    • Federal Cases United States District Courts 7th Circuit Northern District of Illinois
    • December 31, 2015
    ...amount.'" Oshana, 472 F.3d at 511 (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)); see also Meridian Sec. Ins. Co., 441 F.3d at Midland asserts that American has failed to satisfy its burden. Pl.'s Br. ......
  • 151 F.R.D. 311 (N.D.Ill. 1993), 93 C 3488, Eltman v. Pioneer Communications of America, Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Northern District of Illinois
    • October 4, 1993
    ...92 S.Ct. 1344, 1347, 31 L.Ed.2d 612 (1972). Jurisdiction must exist at the time of removal. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938); Shaw, 994 F.2d at The Court has personal jurisdiction over this matter based on diversity of cit......
  • 181 F.Supp.2d 914 (N.D.Ill. 2002), 01C5130, CIGNA HealthCare of St. Louis, Inc. v. Kaiser
    • United States
    • Federal Cases United States District Courts 7th Circuit Northern District of Illinois
    • January 16, 2002
    ...that the claim is really for less than the jurisdictional amount." Id. at 1205 (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). In the case of a petition to compel arbitration, the amount in controversy is measured by the amount......
  • Free signup to view additional results
4604 cases
  • 122 F.2d 746 (7th Cir. 1941), 7430, Aiken v. Insull
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Seventh Circuit
    • August 22, 1941
    ...clearly show that the requisite jurisdictional amount is involved. This showing is sufficient. St. Paul Mercury Indemnity v. Red Cab, 303 U.S. 283, 288, 289, 58 S.Ct. 586, 82 L.Ed. 845; Page 755 Norton v. Larney, 266 U.S. 511, 515, 45 S.Ct. 145, 69 L.Ed. 413; Mutual Life Ins. v. Thompson, D......
  • 132 F.Supp.3d 1014 (N.D.Ill. 2015), 15 C 6203, Midland Management Co. v. American Alternative Insurance Corp.
    • United States
    • Federal Cases United States District Courts 7th Circuit Northern District of Illinois
    • December 31, 2015
    ...amount.'" Oshana, 472 F.3d at 511 (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)); see also Meridian Sec. Ins. Co., 441 F.3d at Midland asserts that American has failed to satisfy its burden. Pl.'s Br. ......
  • 151 F.R.D. 311 (N.D.Ill. 1993), 93 C 3488, Eltman v. Pioneer Communications of America, Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Northern District of Illinois
    • October 4, 1993
    ...92 S.Ct. 1344, 1347, 31 L.Ed.2d 612 (1972). Jurisdiction must exist at the time of removal. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938); Shaw, 994 F.2d at The Court has personal jurisdiction over this matter based on diversity of cit......
  • 181 F.Supp.2d 914 (N.D.Ill. 2002), 01C5130, CIGNA HealthCare of St. Louis, Inc. v. Kaiser
    • United States
    • Federal Cases United States District Courts 7th Circuit Northern District of Illinois
    • January 16, 2002
    ...that the claim is really for less than the jurisdictional amount." Id. at 1205 (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). In the case of a petition to compel arbitration, the amount in controversy is measured by the amount......
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24 firm's commentaries
  • Guzzardo v. Quixtar
    • United States
    • JD Supra United States
    • October 26, 2009
    ...the amount claimed by the plaintiff controls if the claim is apparently made in good faith. St. Paul Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938). It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to......
  • Removal Under The Class Action Fairness Act: Proving Jurisdictional Amount-In-Controversy In Light Of Standard Fire Insurance V. Knowles
    • United States
    • Mondaq United States
    • July 12, 2013
    ...1 Lowdermilk v. United States Bank Nat'l Ass'n, 479 F.3d 994, 998-99 (9th Cir. 2007). 2 St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294 (1938). 3 Lowdermilk, 479 F.3d at 1000. 4 See, e.g., Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009). 5 No. 11-1450, 2013 BL 72103 (U.......
  • Litigating California Wage & Hour and Labor Code Class Actions
    • United States
    • JD Supra United States
    • September 28, 2016
    ...the grounds that there was “no reasonably foreseeable possibility” that a class would be 399 St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293 400 McGaughey v. Treistman, 2007 WL 24935 at *3-4 (S.D.N.Y. 2007); Gonzalez v. Pepsico, Inc., 2007 WL 1100204, at *4 (D. Kan. 2007). 401......
  • Litigating California Wage & Hour and Labor Code Class Actions
    • United States
    • JD Supra United States
    • September 11, 2015
    ...v. Equifax Info. Serv. LLC., 2008 WL 2693625, at *4 (N.D. Cal. 2008). 382 Id. 383 Id. 384 St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293 Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (15th Edition) 81 certified in the future.385 Oth......
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15 books & journal articles
  • Amount in controversy and removal: current trends and strategic considerations.
    • United States
    • Defense Counsel Journal Vol. 62 Nbr. 4, October 1995
    • October 1, 1995
    ...Ivory, 906 F.2d 999, 1000 n.1 (4th Cir. 1990). [29.] Gaitor v. Peninsular & Occidental S.S. Co., 287 F.2d 252 (5th Cir. 1961). [30.] 303 U.S. 283 (1938). [31.] Id. at 288-90 (emphasis added). [32.] Id. at 291-93 (emphasis added). [33.] See, e.g., Klepper v. First Am. Bank, 916 F.2d 337 ......
  • CAFA's impact on forum shopping and the manipulation of the civil justice system.
    • United States
    • Suffolk Journal of Trial & Appellate Advocacy Vol. 17 Nbr. 1, February 2012
    • February 1, 2012
    ...note 63, at 1416 (describing effect different burdens of proof would have on defendants). (74) See St. Paul Mercury Indem. Co. v. Red Cab, 303 U.S. 283, 288-89 (1938) (announcing "legal certainty" test). The Red Cab "legal certainty" test seeks to "rigorously" ......
  • Supplemental jurisdiction and section 1367: the case for a sympathetic textualism.
    • United States
    • University of Pennsylvania Law Review Vol. 148 Nbr. 1, November 1999
    • November 1, 1999
    ...a diversity case must separately meet the amount-in-controversy requirement). (59) See Stromberg Metal Works, Inc., 77 F.3d at 931. (60) 303 U.S. 283 (1938). (61) See id. at 288. (62) 58 F. 3d 106 (4th Cir. 1995). (63) See id. at 112 (holding that "[i]f some event subsequent to the com......
  • Don't get thrown out on your derriere: common mistakes in establishing federal subject-matter jurisdiction.
    • United States
    • Defense Counsel Journal Vol. 83 Nbr. 2, April 2016
    • April 1, 2016
    ...Am., Inc., 42 F.3d 668, 673-675 (1st Cir. 1994). (52) 28 U.S.C. [sections] 1332(a). (53) St. Paul Mercury Indent. Co. v. Red Cab Co., 303 U.S. 283, 288-289 (1938); Back Doctors Ltd. v. Metro. Prop. & Cas. Ins. Co., 637 F.3d 827, 830 (7th Cir. 2011). (54) Rockwell Int'l Corp. v. United S......
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