Bell v. Preferred Life Assur Soc of Montgomery, Ala

Decision Date08 November 1943
Docket NumberNo. 17,17
PartiesBELL v. PREFERRED LIFE ASSUR. SOC. OF MONTGOMERY, ALA., et al
CourtU.S. Supreme Court

Messrs. R. K. Wise, of Columbia, S.C., and Warren E. Miller, of Washington, D.C., for petitioner.

Mr. Richard T. Rives, of Montgomery, Ala., for respondents.

Mr. Justice BLACK delivered the opinion of the Court.

The question here is whether petitioner's complaint was properly dismissed on the ground that the matter in controversy did not really and substantially exceed $3,000 as required by §§ 24 and 37 of the Judicial Code.1

Filed in the federal court for the Middle District of Alabama, petitioner's complaint alleged that he had been induced to purchase an insurance certificate through fraudulent misrepresentations of respondents' agent bear- ing upon its actual value, and claimed $200,000 as actual and punitive damages.2 The record shows that at the time of the dismissal petitioner had paid only $202.35 on his certificate, and that its maximum potential value was only $1,000. From this the District Court declared that it was 'apparent to a legal certainty', St. Paul Mercury Indemnity Co. v. Red Cab Company, 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845, that petitioner could in no event be entitled to more than $1,000, and therefore concluded that the requisite $3,000 was not really and substantially involved. The Circuit Court of Appeals affirmed3 holding that the claim of $200,000 damages was 'entirely colorable for the purpose of conferring jurisdiction' since it was 'legally inconceivable' that petitioner's allegations could justify an award in excess of the value of his $1,000 certificate.

Where both actual and punitive damages are recoverable under a complaint each must be considered to the extent claimed in determining jurisdictional amount. 4 Therefore even though the petitioner is limited to actual damages of $1,000, as both courts held, the question remains whether it is apparent to a legal certainty from the complaint that he could not recover, in addition, sufficient punitive damages to make up the requisite $3,000. If the controlling law is that of South Carolina, where the alleged fraudulent misrepresentations are said to have occurred, petitioner clearly might recover an award exceeding $3,000.5 Respondents urge however that the law of Alabama, where the insurance certificate was issued and mailed, must control. We need not pass upon this question for we are satisfied that under the law of Alabama as well as that of South Carolina petitioner's allegations of fraud if properly proved might justify an award exceeding $3,000.

Respondents assert that petitioner's complaint does not allege that type of 'gross fraud' essential for an award of punitive damages under Alabama law. The Supreme Court of Alabama has declared that in an action for deceit 'gross fraud' which will support punitive damages may be defined as 'representations made with a knowledge of their falseness (or so recklessly made as to amount to the same thing), and with the purpose of injuring the plaintiff.' Southern Building and Loan Association v. Dinsmore, 225 Ala. 550, 552, 144 So. 21, 23. In the instant case the complaint alleges that the fraudulent representations 'were false, and were known to be false when made and uttered with a reckless disregard for the truth'; that petitioner 'relied upon them, and had a right to rely upon them'; and that he 'would not have applied for such certificate except for such false representations.' Plainly, then, this complaint alleges the equivalent of 'gross fraud' as those words are defined by the Alabama court.6 And, even if the fraud were not formally alleged to be 'gross', a complaint filed in a federal court should not be dismissed for want of jurisdiction because of a mere technical defect such as would make it subject to a special motion to clarify. See Sparks v. England, 8 Cir., 113 F.2d 579; cf. Chicago, Rock Island and Pacific Railway Company v. Schwyhart, 227 U.S. 184, 194, 33 S.Ct. 250, 251, 57 L.Ed. 473.

Respondents also maintain that, even if it would warrant some punitive damages, the complaint could not under Alabama law warrant enough to support a judgment of $3,000. It is true as respondents point out that the Alabama Supreme Court has said that the amount of punitive damages 'ought * * * to bear proportion to the actual damages sustained,' Mobile and Montgomery Railroad Co. v. Ashcraft, 48 Ala. 15, 33; and that, while such damages 'must rest in large measure within the discretion of the jury', this is not an 'unbridled discretion.' Alabama Water Service Co. v. Harris, 221 Ala. 516, 519, 129 So. 5, 7. But neither in these cases, nor in any others cited to us, has that court held that punitive and actual damages must bear a definite mathematical relationship.7 That there is no such legal formula seems apparent from the rule relied upon by respondents as the correct Alabama rule regarding the measure of punitive damages, namely that, 'The nature of the case should be considered, the character and extent of injury likely to result from disregard of duty, and all the attendant circumstances.' Alabama Water Service Co. v. Harris, supra, 221 Ala. 519, 129 So. 7. In the Harris case the court further emphasized the wide scope of allowable punitive damages by saying that a jury's award is not to be disturbed if, 'allowing...

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  • Howard v. Globe Life Ins. Co.
    • United States
    • U.S. District Court — Northern District of Florida
    • December 27, 1996
    ...a class action claim for punitive damages should be considered in the aggregate, without proration. See Bell v. Preferred Life Assur. Soc., 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943); Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1356 (11th Cir.1996). I agree. However, the complaints i......
  • Bennett v. EF Hutton Co., Inc.
    • United States
    • U.S. District Court — Northern District of Ohio
    • November 28, 1984
    ...under governing law, can be included in determining whether the amount in controversy has been met. Bell v. Preferred Life Assurance Society, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943). Addressing this issue in Sellers v. O'Connell, 701 F.2d 575 (6th Cir.1983), the court of appeals ... A ......
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    • November 5, 1981
    ...City of Inglewood v. City of Los Angeles, 451 F.2d 948, 952-53 (9th Cir. 1971). 109 Id. at 952. 110 Bell v. Preferred Life Assurance Society, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943). 111 See note 4 112 Even assuming the success of all 1800 claimants at their individual trials, a $10,00......
  • Pratt Central Park Ltd. Partnership v. Dames & Moore, Inc.
    • United States
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    • July 19, 1995
    ...after remand, 970 F.2d 355 (7th Cir.1992). Later cases converted the observation to a holding, see Bell v. Preferred Life Assurance Society, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943), which serves as a logical counterpart to the conclusion of Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 ......
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2 books & journal articles
  • Notice of Removal (Diversity Action)
    • United States
    • James Publishing Practical Law Books Archive New York Civil Practice Before Trial. Volume 1 - 2014 Appendices Forum Selection: Venue and Removal
    • August 20, 2023
    ...amount in controversy includes compensatory and punitive damages, as well as attorneys' fees. Bell v. Preferred Life Assurance Society, 320 U.S. 238, 240 (1943); Missouri State Life Insurance Co. v. Jones, 290 U.S. 199, 200 (1933); A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d 82, 87 (2nd Cir.......
  • Notice of Removal (Diversity Action)
    • United States
    • James Publishing Practical Law Books Archive New York Civil Practice Before Trial. Volume 1 - 2016 Appendices Forum Selection: Venue and Removal
    • August 20, 2023
    ...amount in controversy includes compensatory and punitive damages, as well as attorneys' fees. Bell v. Preferred Life Assurance Society, 320 U.S. 238, 240 (1943); Missouri State Life Insurance Co. v. Jones, 290 U.S. 199, 200 (1933); A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d 82, 87 (2nd Cir.......

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