Fireman's Fund Ins. Co. v. Railway Express Agency

• Decision Date: 01 April 1958
• Docket Number: No. 13304.,13304.
• Citation: 253 F.2d 780
• Parties: FIREMAN'S FUND INSURANCE COMPANY, Assignee of Steve Radeff and Carl Robinson, Appellant, v. RAILWAY EXPRESS AGENCY, Inc., a Delaware Corporation, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

253 F.2d 780 (1958)

FIREMAN'S FUND INSURANCE COMPANY, Assignee of Steve Radeff and Carl Robinson, Appellant, v. RAILWAY EXPRESS AGENCY, Inc., a Delaware Corporation, Appellee.

No. 13304.

United States Court of Appeals Sixth Circuit.

April 1, 1958.

Arthur M. Sheridan, Detroit, Mich., Earl D. Ross, Detroit, Mich., on brief, for appellant.

Richard C. VanDusen, Detroit, Mich., Dickinson, Wright, Davis, McKean & Cudlip, Detroit, Mich., on brief, for appellee.

Before MILLER and STEWART, Circuit Judges, and MATHES, District Judge.

SHACKELFORD MILLER, Jr., Circuit Judge.

Appellant filed this action in the District Court seeking recovery from the appellee of the sum of $3,588.44, claiming jurisdiction by reason of diversity of citizenship and amount in controversy in excess of $3,000, excluding interest and costs. Diversity of citizenship is not disputed. The District Judge sustained appellee's motion to dismiss the action for lack of jurisdiction in that the requisite amount in controversy was not actually involved, notwithstanding the amount for which recovery was sought, from which ruling this appeal was taken.

The complaint consists of two counts. Count 1 alleges that appellant's assignors on September 29, 1954, entered into a written agreement with the appellee, Railway Express Agency, under the terms of which the appellee agreed to ship a package of furs from Detroit, Michigan, to a consignee in Owosso, Michigan, but that contrary to the terms of the agreement the appellee did not ship the goods to Owosso but shipped them instead to Muskegon, Michigan; that as a result of said misshipment said goods were never delivered to the consignee; that despite repeated demands the appellee has failed to produce said goods; that the contents of said package were insured by the appellant who, by reason of the foregoing, paid its assignors the sum of $3,588.44 and thereby became subrogated to the rights of said assignors against the appellee to the extent of said payment. The written agreement referred to was the Railway Express Agency receipt for the shipment, which was attached to and made a part of the complaint. Count 2, claiming the same amount in damages, was a tort action based on the alleged negligence of the appellee in failing to deliver the shipment to the consignee and in failing to exercise due care in preventing the theft of the shipment. Each count contained the statement that the amount in controversy exceeded the sum of $3,000 being $3,588.44, for which judgment was prayed, with interest and costs.

The appellee moved to dismiss the action on the ground that the Court lacked jurisdiction because the amount actually in controversy was less than $3,000, exclusive of interest and costs. The motion stated that the Uniform Express Receipt, attached to the complaint, showed that appellant's assignors declared to the appellee at the time of shipment that the value of said furs was $300, which declaration of value was binding upon the shipper and the appellant. This defense was also later made by answer to the complaint. An affidavit filed in support of the motion stated that under the tariffs applicable to the shipment of "value charge" to be paid to the appellee would have been 18 cents if the declared value was $300 and would have been $6.48 if the declared value was $3,588.44.

Appellant filed an answer to the motion to dismiss which alleged that the "declared value" referred to in the motion to dismiss was not binding because the appellee deviated from the agreed route by carrying the goods to Muskegon, Michigan, instead of to Owosso, Michigan.

The appellant showed by depositions of two of appellee's employees the following facts about which there appeared to be no dispute. An employee of the appellee received the goods in Detroit for shipment to Owosso and filled out and delivered the Railway Express Receipt therefor, and that he either wrote in the stated value of $300 as stated to him by the shipper or it was already written on the package. He did not explain what route the shipment would go by, other than by passenger train. The train carrying the shipment passed through Owosso about 3 o'clock in the morning and, according to the regular procedure relative to shipments arriving at that time in the night, the shipment was carried on to Muskegon, approximately one hundred miles farther, from which point it would be later returned to Owosso for delivery during the day. However, the shipment was not delivered to any person at Muskegon but was put in a pile of "come-back freight" that was to be sent to Owosso. It was left unguarded and thereafter disappeared. Appellant also filed an affidavit showing the value of the shipment to be $3,520.94, and the payment by appellant to its assignors under its policy of insurance of the sum of $3,588.44, and moved for summary judgment.

The District Judge denied appellant's motion for summary judgment. Thereafter, he granted appellee's motion to dismiss the complaint and entered an order which stated, "It appearing to the Court to a legal certainty that plaintiff cannot recover the amount claimed, and that the claim is really for less than the jurisdictional amount for the reason that plaintiff is estopped to deny the $300 agreed valuation on the property in question. It is hereby ordered that the said motion to dismiss be, and the same is hereby granted." The District Judge cited in support of the ruling, St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845; Lichten v. Eastern Air Lines, D.C., 87 F.Supp. 691; Peyton v. Railway Express Agency, 5 Cir., 124 F.2d 430, and M.S.A. §§ 22.26 and 22.1192, Comp.Laws 1948, §§ 462.7, 469.502.

As stated in St. Paul Mercury Indemnity Co. v. Red Cab Co., supra, the well settled rule governing dismissal for want of jurisdiction in cases brought in the federal court is that the sum claimed by the plaintiff controls if the claim is apparently made in good faith, 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 so that his claim was colorable for the purpose of conferring jurisdiction, the suit will be dismissed. However, the opinion in that case also points out that in order for the court to disregard the amount claimed by the plaintiff it must appear to a legal certainty that the claim is really for less than the jurisdictional amount. In explanation of this statement, the opinion said, "The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim." 303 U.S. at page 289, 58 S.Ct. at page 590. (Emphasis added.) Although the case itself did not involve the effect on jurisdiction of the existence of a valid defense to the claim, the statement appears strongly supported by the authorities.

In Schunk v. Moline, etc., 147 U.S. 500, 13 S.Ct. 416, 417, 37 L.Ed. 255, the complaint sought recovery from the defendant both for a specified amount which was overdue and an additional amount which was to become payable in the following month, it being necessary for both amounts to be in controversy in order for the jurisdictional amount to exist. In sustaining jurisdiction, the Court said, "Although there might be a perfect defence to the suit for at least the amount not yet due, yet the fact of a defence, and a good defence, too, would not affect the question as to what was the amount in dispute. * * * In short, the fact of a valid defence to a cause of action, although apparent on the face of the petition, does not diminish the amount that is claimed, nor determine what is the matter in dispute; for who can say in advance that that defence will be presented by the defendant, or, if presented, sustained by the court?"

In Smithers v. Smith, 204 U.S. 632, 27 S.Ct. 297, 300, 51 L.Ed. 656, the trial judge, without a jury, upon motion of the defendants, heard evidence and ruled that the plaintiff could not recover as much as the requisite jurisdictional amount, finding that the court had no jurisdiction and dismissing the action. In reversing the judgment, the Supreme Court commented upon the authority of the judge to dismiss an action for lack of jurisdiction and said, "Such an authority obviously is not unlimited, and its limits ought to be ascertained and observed, lest, under the guise of determining jurisdiction, the merits of the controversy between the parties be summarily decided without the ordinary incidents of a trial, including the right to a jury." The Court held that the trial judge in ruling as he did, exceeded his authority under the statute, and in determining jurisdiction, in effect, decided the controversy between the parties as to the amount recoverable upon the merits.

This Court has also made similar rulings. In Calhoun v. Kentucky-West Virginia Gas Co., 6 Cir., ...