Young v. Main

• Decision Date: 08 August 1934
• Docket Number: No. 9963.,9963.
• Citation: 72 F.2d 640
• Parties: YOUNG v. MAIN et al.
• Court: U.S. Court of Appeals — Eighth Circuit

72 F.2d 640 (1934)

YOUNG v. MAIN et al.

No. 9963.

Circuit Court of Appeals, Eighth Circuit.

August 8, 1934.

Mart M. Monaghan, of Minneapolis, Minn., for appellant.

E. A. Johnson, of Cedar Rapids, Iowa (George C. Claassen, of Cedar Rapids, Iowa, on the brief), for appellees.

Before GARDNER and SANBORN, Circuit Judges, and DEWEY, District Judge.

DEWEY, District Judge.

Jurisdiction of the court is invoked on the ground of diversity of citizenship, and the question for determination is whether the declaration, designated as the petition of the plaintiff, shows on its face an amount in controversy in excess of $3,000.

The petition, in so far as it bears upon the question raised, states the diversity of citizenship of the parties. That the plaintiff seeks a money judgment against the defendants for the sum of $17,950, and "that during all of the times herein mentioned, and for some time prior thereto, the above named defendants, and each of them, and one N. Y. Hokanson, as plaintiff is informed and believes, conceived and formulated and agreed among themselves to, and they did, conspire and collaborate together in executing the fraudulent plan and scheme hereinafter specifically described, of selling such vending machines and such merchandise at highly exorbitant and unreasonable prices, and of inducing inexperienced and unwary people, including this plaintiff, to purchase said machines and merchandise, and to enter into contracts for the purchase thereof with said defendant, W. F. Main, under one or other of his aliases above specified, by making, and causing and inducing to be made to said prospective purchasers of such machines and merchandise, including this plaintiff, false, fraudulent and untrue statements and representations both of past events and past and existing facts and estimates and opinions commingled with representations of past and existing facts, and promises and assurances made and given with the present existing intention at the time of giving and making said promises and assurances of not keeping or performing said promises or assurances, as more specifically detailed in setting up the transactions between plaintiff and said defendants hereinafter, and said defendants, and each of them, and said N. Y. Hokanson so conspired and collaborated together thus to cheat and defraud such prospective purchasers of said machines, including this plaintiff, over a widespread territory and in many different states."

That as a part of the fraudulent plan, and in furtherance of the conspiracy, the defendants made certain false and fraudulent representations, as follows: That enormous profits were guaranteed to purchasers; that a surety company bond would be furnished by the National Surety Company; that every person who had bought the machines had made an average net profit of more than $2 per month on such machines; that, unless a profit of 120 per cent. was made from the operation of the machines, the defendants would repurchase them at the full purchase price; that plaintiff would be given the exclusive privilege of operating said machines in the city of St. Paul, Minn.

That each of the representations were false, fraudulent, and untrue, and were well known by the defendants and each of them to be false and untrue when made. That the plaintiff relied upon the representations and believed them to be true, and acted upon them and was induced to enter into a contract of purchase and to pay to the defendant W. F. Main $2,891. The plaintiff has, however, duly rescinded by his own act the aforesaid contract of purchase with W. F. Main.

That said false representations were made maliciously, fraudulently, willfully, wantonly, and in reckless disregard of the rights of the plaintiff, and the plaintiff has been damaged by the matters alleged in the sum of $2,891, actual damages, and $15,000 exemplary damages, and he asks for judgment against the defendants in the sum of $17,891.

A motion was duly filed to dismiss the complaint on the ground the petition on its face failed to show a jurisdictional amount in controversy. The trial court found that the petition was one for the recovery of the purchase price upon prompt rescission of the contract; that exemplary damages were not a proper element of damages; that the matter in controversy was less than $3,000; and dismissed the petition for want of jurisdiction.

The questions for determination are, first, does the cause of action sound in tort, or is it an action in implied assumpsit for the return of the purchase price? and, second, if the latter, may exemplary damages be pleaded and recovered as a proper element of damages?

As to the first question, the petition of the plaintiff may be easily analyzed. It claims, first, that the plaintiff entered into a contract with the defendant W. F. Main to purchase machines at the agreed price of $2,891; second, that said agreement of purchase was caused and induced by a conspiracy on the part of the defendants and others to procure such agreement by means of fraudulent statements, and that, in the carrying out of such conspiracy, such fraudulent statements were made to the plaintiff, relied upon by him and he was induced thereby to purchase the machines; third, that promptly thereafter the plaintiff by his own act rescinded the contract of purchase and demanded the return of the purchase price; fourth, that the fraudulent statements were made willfully and maliciously; and, fifth, that plaintiff is entitled to recover as damages the amount of the purchase price, and exemplary damages because of the willful misrepresentations.

From this it is clearly evident that the cause set out in its entirety is for the recovery of the purchase price, and not, as claimed by the plaintiff, an action in tort.

The jurisdiction of the federal court is not aided by any presumption; every presumption is against its jurisdiction; and the court is presumed to be without jurisdiction until the contrary is made affirmatively to appear. Robertson v. Cease, 97 U. S. 646, 24 L. Ed. 1057.

The charge in the petition that the defendants conspired to sell the machines by misrepresentations does not make the suit one to recover for conspiracy, but, if anything, is an augmentation of the claims that the contract was obtained by deceit.

Our conclusion is supported by the laws of Iowa governing pleadings in actions at law. Under the Conformity Act (section 724, title 28, U. S. C. 28 USCA § 724), the pleading in this case must conform to those requirements existing at the time under the laws of the state of Iowa. Section 11112 of the 1931 Code of Iowa provides: "Where the petition contains more than one cause of action, each must be stated wholly in a count or division by itself, and must be sufficient in itself....