McDonald v. Patton

• Decision Date: 07 January 1957
• Docket Number: No. 7273.,7273.
• Parties: Marion F. McDONALD, Appellant, v. C. Y. PATTON, Sr., trading and doing business as Patton's Gulf Service, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

240 F.2d 424 (1957)

Marion F. McDONALD, Appellant, v. C. Y. PATTON, Sr., trading and doing business as Patton's Gulf Service, Appellee.

No. 7273.

United States Court of Appeals Fourth Circuit.

Argued November 14, 1956.

Decided January 7, 1957.

Loren D. Packer, Asheville, N. C. (Meekins, Packer & Roberts, Asheville, N. C., on the brief), for appellant.

Ralph H. Ramsey, Jr., Brevard, N. C. (Ramsey & Hill, Brevard, N. C., on the brief), for appellee.

Before PARKER, Chief Judge, SOBELOFF, Circuit Judge, and HOFFMAN, District Judge.

SOBELOFF, Circuit Judge.

In a suit grounded on diversity of citizenship, how far may a federal court inquire preliminarily into the merits of the asserted claim in order to determine whether or not the required jurisdictional amount of $3,000.00 is involved? This is the question raised for decision on the appeal of a plaintiff whose suit was dismissed, before trial, upon the defendant's motion. The District Court held, after inquiry into the merits of certain items set forth in the plaintiff's bill of particulars, that the Court lacked jurisdiction "because the amount actually in controversy" was less than required. (Italics ours.)

Before beginning a journey from North Carolina to his home in Florida, the appellant stopped at the appellee's filling station in Brevard, North Carolina, to purchase gasoline and to have the wheels of his station wagon "rotated" to effect an even distribution of wear on the tires. After this had been done and he had proceeded a short distance in the vehicle, the left rear wheel came off, causing the chassis to drag the ground and damaging the gas tank. Gasoline poured out and burst into flames, completely destroying the station wagon and its contents. The appellant sued the appellee, charging negligence in failing to tighten and secure the wheels properly. The damages alleged were slightly in excess of $3,000.00.

On motion of the defendant, the plaintiff was required to furnish a bill of particulars, from which it appeared that the claim included two items upon which the dispute in this case is focused. The first is a "towing charge for burned vehicle, $14.00"; the second is "bus fare for three laborers and self from Brevard, North Carolina, to Miami, Florida, $67.90." If both items are deducted, the claim falls below $3,000.00; but if either may be included, the requisite jurisdictional amount is present. Before Answer, a motion to dismiss was filed and, the Court being of the opinion that neither of the two items was recoverable, the complaint was dismissed.

It is the firmly established general rule of the federal courts that the plaintiff's claim is the measure of the amount in controversy and determines the question of jurisdiction; and it is indisputably the law that if the ultimate recovery is for less than the amount claimed, this is immaterial on the question of jurisdiction. Scott v. Donald, 165 U.S. 58, 17 S.Ct. 265, 41 L.Ed. 632. From early days, the broad sweep of the rule has been subject to a qualification namely, that the plaintiff's claim must appear to be made in good faith. Bowman v. Chicago & Northwestern Railway Co., 115 U.S. 611, 6 S.Ct. 192, 29 L.Ed. 502; Schunk v. Moline, Milburn & Stoddart Co., 147 U.S. 500, 505, 13 S.Ct. 416, 37 L.Ed. 255. Where it is plain that there is a mere pretense as to the amount in dispute, the amount of the claim will not avail to create jurisdiction, but where the plaintiff makes his claim in obvious good faith, it is sufficient for jurisdictional purposes; and this is so even where it is apparent on the face of the claim that the defendant has a valid defense. Upton v. McLaughlin, 105 U.S. 640, 26 L.Ed. 1197; Schunk v. Moline, Milburn & Stoddart Co., supra; Smithers v. Smith, 204 U.S. 632, 27 S.Ct. 297, 51 L.Ed. 656. In the last cited case, the Supreme Court said, 204 U.S. at page 644, 27 S.Ct. at page 300, that when a plaintiff in good faith asserts a claim in an amount within the jurisdiction of the Court, the Judge is forbidden "to interpose and try a sufficient part of the controversy between the parties to satisfy himself that the plaintiff ought to recover less than the jurisdictional amount, and to conclude, therefore, that the real controversy between the parties is concerning a subject of less than the jurisdictional value."

In applying this test, it has been further recognized that while good faith is a salient factor, it alone does not control; for if it appears to a legal certainty that the plaintiff cannot recover the jurisdictional amount, the case will be dismissed for want of jurisdiction. Such is the doctrine laid down in St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845. However, the legal impossibility of recovery must be so certain as virtually to negative the plaintiff's good faith in asserting the claim. If the right of recovery is uncertain, the doubt should be resolved, for jurisdictional purposes, in favor of the subjective good faith of the plaintiff.

In certain of the older cases, a somewhat different statement of the rule is found. It was formerly said that "if, from the nature of the case as stated in the pleadings, there could not legally be a judgment for an amount necessary to the jurisdiction, jurisdiction cannot attach." Vance v. W. A. Vandercook Co., 170 U.S. 468, 18 S.Ct. 645, 647, 42 L.Ed. 1111. The possible difference between the two formulations was the subject of some discussion in Calhoun v. Kentucky-West Virginia Gas Co., 6 Cir., 166 F.2d 530, but the difference may be more apparent than real. Cf. Scott v. Donald, supra, 165 U.S. at page 89, 17 S.Ct. 265, and Barry v. Edmunds, 116 U.S. 550, 559, 6 S.Ct. 501, 29 L.Ed. 729. However this may be, if the older version was different, it yields to the one more recently declared in the St. Paul-Mercury case.

The case of Levering & Garrigues v. Morrin, 289 U.S. 103, 53 S.Ct. 549, 550, 77 L.Ed. 1062, furnishes a useful example of the rule's application and marks what may be regarded as the outer limit beyond which courts should not go in denying jurisdiction in the face of the plaintiff's allegation. While this case was not one of diversity, but dealt with a question of jurisdiction under the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note, it is illustrative of the Court's attitude. There the Court declared a lack of federal jurisdiction, because the claim was "plainly unsubstantial" and "obviously without merit," and because "its unsoundness so clearly results from the previous decisions of this court as to foreclose the subject and leave no room for the inference that the questions sought to be raised can be the subject...