National Surety Corporation v. Chamberlain
Decision Date | 02 March 1959 |
Docket Number | Civ. A. No. 787. |
Citation | 171 F. Supp. 591 |
Parties | NATIONAL SURETY CORPORATION v. Hershel CHAMBERLAIN. |
Court | U.S. District Court — Northern District of Texas |
W. A. Griffis, Jr., Upton, Upton, Baker & Griffis, San Angelo, Tex., for plaintiff.
Aubrey D. Stokes, Webb, Schulz & Stokes, San Angelo, Tex., for defendant.
The jurisdiction of this court is invoked by plaintiff, National Surety Corporation's appeal from an award of the Industrial Accident Board of Texas.1 The award of the Board was in the amount of $2,000. The maximum amount recoverable by defendant Chamberlain on his claim before the Industrial Accident Board for total and permanent disability was $14,035. Chamberlain filed an appeal in State court within the 20 days provided by the Texas Statute. The instant suit was later brought by the National Surety Corporation. Chamberlain has now filed a motion to dismiss this action for want of jurisdiction.
A District Court of the United States is presumed to be without jurisdiction unless the contrary affirmatively appears from the record. Birmingham Post Co. v. Brown, 5 Cir., 1954, 217 F. 2d 127. Its jurisdiction is both limited and derived wholly from the authority of Congress. Kline v. Burke Construction Co., 260 U.S. 226, 43 S.Ct. 79, 67 L.Ed. 226; Mason v. Hitchcock, 1 Cir., 108 F.2d 134.2 It is a part of an independent system for administering justice and state law cannot alter its essential character or function. Byrd v. Blue Ridge Rural Elec. Co-op. Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953. "The jurisdiction of the circuit courts of the United States has been defined and limited by the acts of congress, and can be neither restricted nor enlarged by the statutes of a state." Mexican Central Railway Co. v. Pinkney, 149 U.S. 194, 206, 13 S.Ct. 859, 864, 37 L.Ed. 699.
Where "federal jurisdiction is doubtful" the Federal court should dismiss an action, since it "is justified in assuming jurisdiction only if jurisdiction is clearly shown". 1 Barron & Holtzoff Fed. Prac. and Proc. Sec. 109, p. 204-5.
In this diversity action the actual amount in controversy must be established to be within the limits set by Congress. The National Surety Corporation would uphold federal jurisdiction by reliance on the state rule that the measure of the amount in controversy for the purposes of compensation appeals by the insurer is the amount of the original claim before the Industrial Accident Board. Booth v. Texas Employers' Insurance Association, 132 Tex. 237, 123 S.W.2d 322, is cited as evidence of the state rule.
It seems to me illogical to transplant the state standard to this case filed originally in the federal court. At the time of the filing of the complaint, the immediately ascertainable amount in controversy is only $2,000 since that is the only monetary certainty then known between the parties. Chamberlain could come forward and limit the alleged nature of his injuries and incapacities to such a degree and duration that the maximum recovery could not equal as much as $10,000. If Chamberlain saw fit to default and not pursue any claim further in court and the Company should recover a default judgment, setting aside the ruling and award of the Board, the monetary consequence would be $2,000, the amount found by the Board. The same thing stated conversely is that when this suit was filed the only defined liability to that time against the Company was the Board's award of $2,000 and had no appeal been taken by either party, the insurer could have discharged its whole liability by payment of the last named sum. The only monetary relief sought when the suit was filed—the date on which, by Fed.Rules Civ.Proc. Rule 3, 28 U.S.C.A., the action was commenced —was the discharge of a fixed liability of $2,000. It is the only monetary relief sought at that time. Finding jurisdiction here would mean that cases which when commenced do not involve $10,000 may remain pending until some indefinite future date when it appears, if it does appear, that there is, in fact, a sum greater than that involved. Compare: Lorraine Motors Inc. v. Aetna Casualty & Surety Co., D.C., 166 F.Supp. 319.
The order or award of the Industrial Accident Board appealed from has fixed the amount of the insurance carrier's liability at $2,000. "The final award of the board unappealed is entitled to the same faith and credit as a judgment of the court". Ocean Accident & Guarantee Corporation v. Pruitt, Tex.Com.App., 58 S.W.2d 41, 45.
In 1 Moore Fed. Prac. (1938 Ed.) p. 511, it is said:
Under Fed.Rules Civ.Proc. Rule 3 "Upon the filing of the complaint the action is * * * commenced and pending and the court acquires jurisdiction thereof". 3 Cyc. Fed. Proc. 3 Ed. Sec. 10.07. See Abraham Rotween in 73 U.S.L. Review 21, 25.
In determining whether the requisite jurisdictional amount affirmatively appears, the Court looks to the plaintiff's initial pleading for it. 35 C.J.S. Federal Courts § 82 p. 920; 15 C.J. p. 773. I quote from the following cases so holding:
Cumberland v. Household Research Corp. of America, D.C.Mass., 145 F. Supp. 782 at page 783:
"The jurisdictional amount * * is to be judged as of the time of bringing suit * * * St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845."
Warren v. Employers' Indemnity Corp., D.C.N.D.Cal., 3 F.Supp. 221 at page 222:
Barnes v. Parker Const. Co., D.C.W. D.Mo., 126 F.Supp. 649, 651.
I am aware of the language in General Accident, Fire & Life Assurance Corporation v. Mostert, 5 Cir., 1942, 131 F.2d 596, to the effect that the amount in controversy was for purposes of that case assumed by both the court and the parties to be the largest amount that could be recovered under the claim, such language being incidental to the holding.
Since the decision in the Mostert case, supra, Congress has moved to restrict diversity jurisdiction by the enactment of Public Law 85-554; 72 Stat. 415 Amending Title 28, Sections 1331, 1332 and 1445. It has buttressed this purpose by the addition in the amended statute of subsection (b) of Section 2 which permits the trial judge to impose costs on the "plaintiff" if plaintiff should "recover less than the sum or value of $10,000."
Where the Industrial Accident Board's award against the insurance carrier is less than $10,000, the cost sanction of sub-section (b) could not be justly applied as Congress intended in cases in which the insurance carrier is the "plaintiff who files the case originally in the Federal courts" since it cannot "recover * * * $10,000, computed without regard to any * * * counter claim to which the defendant may be adjudged to be entitled."
It would be illogical for the Court to say to the insurance carrier plaintiff that it has established jurisdiction by pointing to the amount of defendant's claim before the Industrial Accident Board, but that, nevertheless, costs will be cast against the insurance carrier "plaintiff", because it knew when it instituted suit that it could not "recover * * * $10,000" regardless of the amount of any counter claim of the defendant.
On the other hand, it would be unjust for the Court to ignore the fact that the insurance carrier is the "plaintiff", treat the defendant workman as "plaintiff" and cast the costs against him if he should be adjudged entitled to less than $10,000, regardless of what position he may subsequently take in Federal court (or as here, by timely appeal from the Board's award to the State court under Art. 8307, Sec. 5, Vernon's Ann.Civ.Stat. Tex.), because he had presented a claim for more than $10,000 before the Industrial Accident Board.
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