Rubel-Jones Agency, Inc. v. Jones

• Decision Date: 24 September 1958
• Docket Number: No. 11970.,11970.
• Citation: 165 F. Supp. 652
• Parties: RUBEL-JONES AGENCY, INC., a corporation, Plaintiff, v. Ruth J. Rubel JONES, Defendant.
• Court: U.S. District Court — Western District of Missouri

165 F. Supp. 652

RUBEL-JONES AGENCY, INC., a corporation, Plaintiff, v. Ruth J. Rubel JONES, Defendant.

No. 11970.

United States District Court W. D. Missouri, W. D.

September 24, 1958.

Reeder, Gisler, Griffin & Dysart, Kansas City, Mo., for plaintiff.

Barker, Fallon, Jones & Barker, Kansas City, Mo., for defendant.

R. JASPER SMITH, District Judge.

This action was begun by plaintiff, Rubel-Jones Agency, Inc., in the Magistrate Court for the Fourth District of Jackson County, Missouri. The complaint states a cause of action in unlawful detainer, seeking recovery of possession, damages for the unlawful detention of $500, and alleges the monthly rental value of the premises to be $100.

Thereafter defendant, Ruth J. Rubel Jones, removed the cause here on diversity of citizenship grounds under 28 U.S. C. Section 1441. The record discloses the basic nature of the controversy involved. Ruth J. Rubel Jones, who is Mrs. John P. Jones, has been engaged in the insurance business in the Missouri-Kansas area since 1929. She operated this business as a sole proprietorship under the name of the Ruth J. Rubel Agency. The underwriter for the insurance which was sold was the Continental Casualty Company of Chicago, Illinois. In 1953 through the auspices of the Continental Casualty Company negotiations were begun for Mrs. Jones to sell the agency to Mr. Forrest T. Jones. The sale was consummated through a series of complicated financial transactions, involving four parties with their correspondent interests in the business. The plan evolved by which the transfer was made is as follows:

(1) The agency was incorporated under the name of Ruth J. Rubel Agency, Inc.

(2) The shares of this corporation were sold to Mr. Forrest Jones for a down payment of $50,000 plus five per cent of the gross premium income of the agency for the succeeding ten years.

(3) In order to assure the payment of the installments in (2), supra, it was arranged through a series of contracts between the incorporated agency, Continental Casualty Company and Mrs. Jones that five per cent of the gross premiums due to the agency should be withheld by the underwriter from the agency and paid directly to Mrs. Jones.

(4) Forrest Jones guaranteed under contract with Mrs. Jones that the five per cent premium installments would amount to at least $15,000 per year for ten years, and that if there should be a deficit he would make up the difference.

(5) Other provisions included certain covenants not to compete, the procedure to be followed in case of default, the right of Mrs. Jones to engage in certain other non-conflicting business, and the promise of Mrs. Jones to render consultation services to the underwriter and the agency.

The transfer of the agency to Mr. Forrest Jones was completed in the fall of 1953. Mrs. Jones continued to occupy an office in the premises which the agency leased. In December of 1956 the name of the agency was changed to the Rubel-Jones Agency, Inc., the name presently used by plaintiff. In April, 1958, plaintiff served notice upon defendant that her tenancy in the office in question had been terminated. When she refused to move, this suit was instituted.

Plaintiff has now moved to remand the cause to the state court. The contentions in support of this motion are: (1) that this is a statutory action and that under the law of the State of Missouri it is cognizable only before a magistrate; and (2) that the amount in controversy does not exceed $3,000, exclusive of interest and costs (removal having occurred prior to July 25, 1958, the effective date of the amendments to Sections 1331 and 1332 of Title 28 U.S.C.A.).

The significant problem involved in this case and the major burden defendant assumes in maintaining the action here is the establishment of a sufficient amount in controversy to meet the minimum jurisdictional standard. It is defendant's contention that she has the right to occupy an office with the agency for the ten year period that the contracts are in force. The right of occupancy, it is maintained, is directly correlated to defendant's financial interests in the contracts in question. Since these contracts involve some several hundred thousand dollars, the reasoning is that there is a sufficient amount in controversy for federal jurisdiction. Essentially defendant has advanced the theory that the probative effect of an adverse judgment will impair her security interests in the various contracts and will result in a loss to her of an undefined but sufficiently large amount to exceed $3,000, exclusive of interest and costs.

Disposition requires answer to three separate issues: (1) Whether a state statute which provides that certain types of actions shall be heard in a particular forum is an effective limitation on federal jurisdiction; (2) whether the possible injury to defendant's contract rights through the probative effect of an adverse judgment may be considered in determining the amount in controversy; and (3) the computation of the actual amount involved in an action of unlawful detainer under Missouri law.

1. While it might be argued with certain logic that federal courts cannot take part of a state statute and reject its remaining limitations, this theory has not been followed. The rule has been firmly established that when the jurisdictional prerequisites provided by the Constitution and laws of the United States are present, a state statute cannot place a limitation upon this jurisdiction. Kern v. Huidekoper, 1880, 103 U.S. 485, 26 L.Ed. 497; Home Ins. Co. of New York v. Morse, 1874, 20 Wall. 445, 87 U.S. 445, 22 L.Ed. 365; Chicago & N. W. R. Co. v. Whitton, 1871, 13 Wall. 270, 80 U.S. 270, 20 L.Ed. 571; Katz v. Herschel Mfg. Co., C.C.D.Neb.1906, 150 F. 684. In the Chicago & N. W. R. Co. case, supra, the court said:

"* * * In all cases, where a general right is thus conferred, it can be enforced in any Federal court within the State having jurisdiction of the parties. It cannot be withdrawn from the cognizance of such Federal court by any provision of State legislation that it shall only be enforced in a State court. The statutes of nearly every State provide for the institution of numerous suits, such as for partition, foreclosure, and the recovery of real property in particular courts and in the counties where the land is situated, yet it never has been pretended that limitations of this character could affect, in any respect, the jurisdiction of the Federal court over such suits where the citizenship of one of the parties was otherwise sufficient. Whenever a general rule as to property or personal rights, or injuries to either, is established by state legislation, its enforcement by a Federal court in a case between proper parties is a matter of course, and the jurisdiction of the court, in such case, is not subject to State limitation."

The fact that Missouri Statutes provide that unlawful detainer actions are to be brought only before a magistrate does not limit a federal court's jurisdiction if the requisite elements of jurisdiction are present.

2. The relief sought by plaintiff in its complaint was restitution of the premises, damages of $500, and $100 per month as rental from demand for possession until restitution. Defendant removed, maintaining that an adverse judgment against her would result in the impairment of her security in a series of contracts worth several hundred thousand dollars. There has been no counterclaim, but defendant has pointed to three specific factors to substantiate her argument that there is a sufficient amount in controversy. It is first stated that the real objective of the suit is to oust defendant from her place of business. Her right to conduct business from the same place and with an agency bearing her name is valued at $10,000. Therefore, the amount in controversy is the sum of at least $10,000. Secondly, defendant maintains that her interest in the contracts under which the agency was sold...