Less v. English, 830.

• Decision Date: 10 January 1898
• Docket Number: 830.
• Citation: 85 F. 471
• Parties: LESS v. ENGLISH.
• Court: U.S. Court of Appeals — Eighth Circuit

85 F. 471

LESS v. ENGLISH.

No. 830.

United States Court of Appeals, Eighth Circuit.

January 10, 1898

Morris M. Cohn and Charles Coffin, for appellant.

J. M Moore, for appellee.

Before SANBORN and THAYER, Circuit Judges, and RINER, District Judge.

RINER District Judge.

On the 31st day of January, 1894, Michael English, the appellee filed his bill in the circuit court for the Western division of the Eastern district of Arkansas for the foreclosure of a deed of trust executed by Isaac Less and Gussie Less, his wife, to secure a loan from English to Less. The material averments of the bill are that English is a citizen of the state of Missouri, and that the defendants are citizens of the state of Arkansas; that in May, 1893, Less applied to English for a loan of $4,500, and offered as security therefor a mortgage or deed of trust on certain real estate in Lawrence county, Ark.; that English stated to Less, at the time he applied for the loan, that he did not then have the money, but that he could get it within a short time, and make the loan as requested; that Less thereupon executed and delivered to one M. D. Baber a deed of trust on lot No. 1 and the north half of lot No. 2 in block No. 26, and on lot No. 7 in block No. 17, in the town of Walnut Ridge, Lawrence county, Ark.; that the deed of trust recited that it was executed for the purpose of securing the loan of $4,500 evidenced by nine promissory notes, each in the sum of $500 and payable on or before two years after date, with interest from date until paid at the rate of 10 per cent. per annum; that after the deed and notes were executed and delivered by Less, English 'advanced to defendant the sum of $2,000, and advanced, to pay the recorder's fee for recording said deed, the sum of $2.25, for which defendant is liable to him'; that, on account of stringency in the money market, and the difficulty in collecting money due him, English was unable to obtain the residue of the money necessary to advance to the defendant the full sum of $4,500; that, when he ascertained this fact, he at once informed the defendant, and offered to credit his notes, and to satisfy the record of the mortgage or deed of trust executed by Less to Baber by the sum of $2,500, and demanded that the notes and mortgage be delivered to him, and proposed, if defendant preferred to do so, that he could return the money which had been advanced him, and plaintiff would thereupon surrender the notes and satisfy the mortgage in full, charging him no interest for the time he had had the use of the money. It was further averred that Baber, the trustee in the deed of trust, had died, and that the deed of trust and notes were in the custody of J. M. Beakley, who was made a party defendant to the bill; that Less had covenanted to keep the mortgaged premises insured against fire for the benefit of English, and, if he should fail to observe his covenant to insure the property for the benefit of the plaintiff, the whole of said indebtedness and each and all of the notes should become due, and be considered due and payable at once; that Less had neglected and refused to keep the property insured, and had refused to allow the deed of trust and notes to be delivered to English. To this bill the defendant J. M. Beakley filed an answer in the nature of a disclaimer, stating that he had no interest in the case whatever, but, being the successor of M. D. Baber, who, at the time of his death, had the mortgage and notes described in the bill of complaint, they came into his possession, and he asked to be allowed to deliver the mortgage and notes into the custody of the court, and to be dismissed without costs.

The defendant Less filed a separate answer, admitting the execution of the deed of trust and notes, but alleging that they were executed for a loan of $4,500, which English agreed and contracted to advance and loan to him for the purpose of erecting a building on lot No. 7, in block 17, Walnut Ridge, Ark.; that English was advised of the purpose for which the money was borrowed, and, relying on the good faith of plaintiff, he executed and delivered the deed of trust and notes to Baber, as trustee, for the plaintiff, and that Baber had placed the deed on record. He also charged that the plaintiff failed to advance the amount of $4,500, as he had agreed to do; that, on account of his failure to advance the full amount, he was hindered and delayed in the construction of his building from the 1st of August, 1893, to the last of February, 1894; that he lost rents during that time the sum of $1,162.50, $400 on lumber, and interest on money obtained from other sources, $100, and offered to pay plaintiff the sum of $500 in full of all he owed him. He denied that he was bound, by the deed of trust, to keep the houses on the lots conveyed insured in any amount, for plaintiff's benefit, and that the contract of the plaintiff to advance the money was not based upon the condition that he would keep the property insured for plaintiff's benefit. A general replication was filed to this answer, and on the final hearing, January 24, 1896, a decree was entered in favor of English for the sum of $2,546.85, and directing that, if defendant Less failed to pay and satisfy the decree within 20 days from the date thereof, the mortgaged premises be sold. From this decree the defendant Less appealed to this court, assigning several errors, the first of which only we find it necessary to consider, namely, 'that the amount in controversy does not exceed the sum of two thousand dollars, exclusive of interest and costs.'

Upon the face of the bill it is apparent that the actual value of the matter in dispute, exclusive of interest and costs, is the amount which the plaintiff advanced to the defendant, namely $2,000, and no more. The allegation of the bill is that, after the execution of the notes and deed of trust, the 'plaintiff advanced to the defendant the sum of $2,000, and advanced, to pay the fee for recording the said deed, the sum of $2.25, for which defendant is liable to him. ' The amount in controversy is not sufficient to give the circuit court jurisdiction unless it can be said that this $2.25 is a part of the matter in dispute. This was a suit to foreclose a mortgage given to secure the payment of certain promissory notes amounting in the aggregate to $2,000. It was entirely competent, of course, for the parties to have stipulated in the mortgage that the defendant should pay for recording it, but it is not alleged in the bill that he did so, or that he ever requested the plaintiff to pay the recording fee, and agreed to become responsible to the plaintiff therefor. No fact whatever in relation to such an agreement is alleged in the bill. The allegation is that the plaintiff 'advanced to pay the recorder's fee for recording the said deed the sum of $2.25, for which the defendant is liable to him. ' This is not an allegation of fact, but a conclusion of law. No proof whatever was offered tending to show that the defendant had ever at any time requested the plaintiff to pay this amount for him, or that he had agreed to be liable to the plaintiff for it, and, in the absence of such agreement on his part, either express or implied, there would be no liability on his part to pay it. It was no part of the original claim, and, if the defendant is liable therefor, it is by reason of a contract or agreement to pay it.

The jurisdiction of the federal court upon a money demand is governed by the value of the actual matter in dispute as shown by the whole record, and not by the damages claimed, or the prayer for judgment alone. In the case of Hilton v. Dickinson, 108 U.S. 165, 2 Sup.Ct. 424, the supreme court announced the rule as follows:

'It is undoubtedly true that, until it is in some way shown by the record that the sum demanded is not the matter in dispute, that sum will govern in all cases of jurisdiction; but it is equally true that, when it is shown that the sum demanded is not the real matter in dispute, the sum shown, and not the sum demanded, will prevail.'

When it clearly appears in the progress of the case that it does not substantially involve a dispute or controversy within the jurisdiction of the circuit court, it is the duty of that court to dismiss the suit; and when a groundless and fictitious claim is set up for the purpose of swelling the plaintiff's claim on the face of his bill to an amount within the jurisdiction of the court, it must necessarily fail of its purpose. In this case, if the parties had stipulated in the mortgage; or otherwise agreed, that the defendant should be liable to the plaintiff for this recording fee, it would have been an easy matter to have so alleged in the bill. We cannot assume that there was such an agreement between the parties, in the absence of allegation or proof of that fact. The plaintiff's claim, so far as it relates to the amount required to give jurisdiction to the circuit court, must be made in good faith, and it should be made to appear by the bill that he has a valid claim against the defendant for an amount sufficient to give the court jurisdiction. When so made, the jurisdiction will be maintained, although the plaintiff may fail to make good his contention for the amount. Thus, in actions where the jury have it in their power to assess the damages in a given case,-- as in trespass and the like,-- the court cannot ordinarily assume that the plaintiff's claim to cover the requisite jurisdictional amount is merely colorable, and not made in good faith; but, as stated by this court in the case of Bank of Arapahoe v. David Bradley & Co., 19 C.C.A. 206, 72 F. 867:

'In determining whether a claim is made in good faith, or is fictitious, and made only for imposing on

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