Greene County Bank v. J.H. Teasdale Commission Co.

• Decision Date: 29 January 1902
• Citation: 112 F. 801
• Parties: GREENE COUNTY BANK v. J. H. TEASDALE COMMISSION CO.
• Court: U.S. District Court — Eastern District of Missouri

112 F. 801

GREENE COUNTY BANK v. J. H. TEASDALE COMMISSION CO.

United States Circuit Court, E.D. Missouri, Eastern Division.

January 29, 1902

F. H Sullivan, for complainant.

R. F Walker, for defendant.

ADAMS District Judge.

This is a bill for a discovery and an accounting. The complainant charges, in substance, that it is a banking corporation, and that one Ritter is its cashier; that the defendant is a commission house transacting the business of buying and selling grain and other commodities for customers, and that in the course of its business it has been in the habit of permitting its customers to put up 'margins,' as it is called, and thus to buy and sell partially on credit, in lieu of paying for the grain or other commodities purchased in full. The complainant charges that beginning with the year of 1896, and ending with the year 1900, its cashier, Ritter took advantage of his situation as custodian of its money and used the same for the purpose of speculating in grain with the defendant commission company; that Ritter so used its money to the extent of more than $2,000, the exact amount of which the complainant did not know, but believed to be not less than $15,000. It is charged in the bill that defendant commission company knew that Ritter was making use of complainant's money for the purpose of carrying on his speculations, and that the commission company received from time to time during the four years in question a large sum of money from Ritter, which he had abstracted from complainant's funds, and which the defendant knew he had so abstracted. Complainant alleges ignorance as to the exact amount so employed by Ritter, and submits divers interrogatories in the bill for defendant's officers to answer. The defendant appears and files a plea to the jurisdiction, alleging, in substance, that the suit does not involve a controversy amounting to $2,000, exclusive of interest and costs. By several affidavits made by the officers and agents of defendant company it is made to appear that Ritter first began to do business with defendant, and to make purchases and sales of grain through defendant's agency, on December 9, 1899, and continued such business only until November 27, 1900; that the total amount of all business transactions between Ritter and defendant company during this period was $1,715.56, and that the total amount of money paid by Ritter directly or indirectly during the entire period, covering the business transactions between Ritter and the defendant, was only $1,094.59; therefore that under no circumstances could there be a recovery of over $1,094.59. On the foregoing showing it is claimed that the plea to the jurisdiction should be sustained.

I think this plea discloses a misconception of the rule governing the question of jurisdiction. According to the method adopted by defendant's counsel, it would be competent in any case for the defendant to allege in a plea to the jurisdiction that the amount claimed by a plaintiff was too much, and then proceed to have a hearing by ex parte affidavits touching the same; and on the same theory, of course, defendant might challenge the jurisdiction of the court on the ground that nothing was due the plaintiff, and proceed to try the whole case by ex parte affidavits. This method substitutes the trial by affidavit for the ancient and well-established method of taking the testimony by deposition or by an examiner, in such way as to permit searching examination and cross-examination of the witnesses. The general rule is that the sum demanded in the declaration or bill determines, for all jurisdictional purposes, the amount in controversy. Hilton v. Dickinson, 108 U.S. 165, 174, 2 Sup.Ct. 424, 27 L.Ed. 688. This is especially true in all actions for recovery of money only, like the action now before the court. The amount demanded by the plaintiff in good faith is the test of jurisdiction, so far as that is dependent upon the amount in controversy. In Schunk v. Moline, Milburn & Stoddart Co., 147 U.S. 500, 505, 13 Sup.Ct. 416, 417, 37 L.Ed. 255, it is said:

'The fact of a valid defense 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 defense will be presented by defendants, or, if presented, will be sustained by the court?'

From the foregoing cases the rule appears to be that in all actions for the recovery of money the amount claimed in the complaint in good faith determines the jurisdiction of the court, so far as the amount in controversy may be involved. There is a well-recognized exception, however, to this rule where it appears from the complaint that the amount claimed is evidently fictitious, and alleged for the purpose simply of giving color to jurisdiction,-- in other words, where the plaintiff obviously is by allegation attempting to commit a fraud upon the jurisdiction of the court. Cases of this character are represented by the following: Bowman v. Railroad Co., 115 U.S. 611, 6 Sup.Ct. 192, 29 L.Ed. 502; Bank of Arapahoe v. David Bradley & Co., 19 C.C.A. 206, 72 F. 867, and cases cited. These cases, after recognizing the general rule that, in all actions for the recovery of money only, the amount demanded by the plaintiff in good faith determines the jurisdiction, also recognize an exception,-- that where the claim asserted in the complaint is manifestly fictitious, and made for the purpose of imposing upon the court a case not within its jurisdiction, the court will ignore...