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PEYTON v. RAILWAY EXPRESS AGENCY, INC. et al.

Supreme Court of the United States1942-05-25No. No. 903
316 U.S. 35086 L. Ed. 152562 S. Ct. 11711942 U.S. LEXIS 1079SCDB 1941-050

Summary

Holding. The Court reversed the dismissal, holding that a negligence suit against an interstate carrier under the Carmack Amendment arises under a federal law regulating commerce and therefore falls within federal jurisdiction under 28 U.S.C. § 41(8), without regard to the amount in controversy.

A shipper brought suit in federal district court against an interstate carrier for negligently failing to deliver a package, claiming $750,000 in damages. The defendant carrier obtained dismissal based on lack of subject-matter jurisdiction, arguing the controversy involved only $50 (the valuation stated on the express receipt), which fell below the $3,000 amount-in-controversy requirement for general federal question jurisdiction. The lower courts upheld the dismissal.

The Supreme Court reversed, holding that suits arising under the Carmack Amendment—the federal statute governing interstate carrier liability—fall within federal jurisdiction as cases "arising under" a law regulating commerce, regardless of the amount in controversy. The Court determined that the shipper's complaint adequately disclosed a dispute whose resolution depended on interpreting the federal statute, satisfying the test for federal-question jurisdiction. Congressional history confirmed this understanding: when Congress prohibited removal of small Carmack Amendment cases to federal court in 1914, it implicitly acknowledged that such suits arise under federal law and may be brought originally in federal district courts without regard to the $3,000 threshold.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether suits under the Carmack Amendment arise under federal law for purposes of subject-matter jurisdiction
  • Whether the amount-in-controversy requirement applies to federal-question jurisdiction over Carmack Amendment claims
  • What test determines whether a claim arises under a federal statute

Procedural posture

The District Court for the Western District of Texas dismissed the complaint for lack of subject-matter jurisdiction, the Court of Appeals for the Fifth Circuit affirmed, and the Supreme Court granted certiorari.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Per Curiam.

Petitioner brought this suit in the District Court for the Western District of Texas, alleging that respondent, known to be an interstate carrier, had negligently failed to deliver to the addressee in California a package shipped from Waco, Texas, and claiming damages in the sum of $750,-000. The trial court ordered petitioner to attach to his complaint a copy of the express receipt which he received upon delivering the package to respondent. This receipt contained a $50 valuation. Thereupon the court granted respondent’s motion to dismiss the complaint on the ground that the amount in controversy was less than the $3,000 necessary to sustain jurisdiction under 28 U. S. C. § 41(1), Jud. Code § 24(1). The Court of Appeals for the Fifth Circuit affirmed. We granted certiorari to inquire whether the suit could be maintained under 28 U. S. C. § 41(8), Jud. Code § 24(8), granting the district courts jurisdiction “Of all suits and proceedings arising under any law regulating commerce,” irrespective of the amount involved.

The pertinent act of Congress is 49 U. S. C. § 20(11), originally the Carmack Amendment of 1906, 34 Stat. 593, since amended several times to its present form. The section requires an interstate common carrier receiving property for shipment to issue a receipt or bill of lading. The carrier is made liable to the holder “for any loss, damage, or injury to such property caused by it” or connecting carriers. If the injury does not occur on the initial carrier’s line, but it responds in damages, it is entitled to recover over from the responsible carrier. Further, the initial carrier is made liable to the shipper for full damages sustained, notwithstanding any limitation of liability in the receipt or bill of lading, with the exception, important here, that where a carrier by authority or direction of the Interstate Commerce Commission maintains rates dependent upon the value of the property declared in writing by the shipper, such declaration also limits liability of the carrier for loss or damage to an amount not in excess of the declared value.

Following the Carmack Amendment, this Court in several cases upheld the power of the receiving carrier to limit its liability to an agreed valuation, made to obtain the lower of two or more rates. See Adams Express Co. v. Croninger, 226 U. S. 491; Missouri, K. & T. Ry. Co. v. Harriman, 227 U. S. 657; Pierce Co. v. Wells, Fargo & Co., 236 U. S. 278. The so-called First Cummins Amendment of March 4, 1915, 38 Stat. 1196, prohibited in general any such limitation of liability. By the Second Cummins Amendment of August 9, 1916, 39 Stat. 441, Congress adopted the present provisions authorizing limitation of liability in the manner already noted, and substantially restored the rule of Adams Express Co. v. Croninger, supra.

Respondent, confessing error, asserts that under § 20 (11) as it now stands, a suit brought against a single interstate carrier for its negligent non-delivery, is one not merely to enforce a common law liability limited by an Act of Congress; but that petitioner’s cause of action has its origin in and is controlled by such Act, and so “arises under” it. Any doubts as to the correctness of this position are resolved by the Act of January 20,1914, c. 11, 38 Stat. 278, 28 U. S. C. § 71, regulating removal to the federal courts of suits brought under the Carmack Amendment in the state courts.

After the Carmack Amendment a conflict of decisions had developed in the lower federal courts on the question whether suits for damages brought against interstate carriers under the amendment were suits “arising under” an act regulating commerce, so that their removal from state to federal district courts would be permitted. McGoon v. Northern Pacific Ry. Co., 204 F. 998; Storm Lake Tub & Tank Factory v. Minneapolis & St. L. R. Co., 209 F. 895; Adams v. Chicago G. W. Ry. Co., 210 F. 362. The deci sion in the McGoon ease, sustaining removal jurisdiction irrespective of the amount in controversy, was followed by the removal of many small suits against carriers to the federal district courts. Congress ended this practice by the Act of January 20,1914, which forbade removal of suits under the Carmack Amendment involving less than $3,000.

The report of the House Judiciary Committee on H. R. 9994, 63d Cong., 2d Sess. (which was the same in substance as S. 3484, which became the 1914 law), expressly recognized the effect and authority of the decision in the McGoon case. In prohibiting removals where less than $3,000 is in controversy, instead of imposing the $3,000 limitation directly on all suits brought in the federal courts under the Carmack Amendment, Congress recognized that such suits arise under a law regulating commerce within the meaning of 28 U. S. C. § 41 (8), and sanctioned the exercise of original jurisdiction by the district courts in such cases. See H. Rep. No. 120, 63d Cong., 2d Sess.; also 51 Cong. Ree. 1327, 1544-1548.

Whether a suit arises under a law of the United States must appear from the plaintiff’s pleading, not the defenses which may be interposed to, or be anticipated by it. Petitioner’s pleading, which we have summarized, satisfies this requirement, since it adequately discloses a present controversy dependent for its outcome upon the construction of a federal statute. See Tennessee v. Union & Planters’ Bank, 152 U. S. 454; Louisville & Nashville Ry. Co. v. Mottley, 211 U. S. 149; The Fair v. Kohler Die & Specialty Co., 228 U. S. 22, 25; Taylor v. Anderson, 234 U. S. 74; Gully v. First National Bank, 299 U. S. 109, 113.

Reversed..

Compare Cincinnati, N. O. & T. P. Ry. Co. v. Rankin, 241 U. S. 319, 326; Chicago & E. I. R. Co. v. Collins Co., 249 U. S. 186, 191, with Adams Express Co. v. Croninger, 226 U. S. 491, 505; Missouri, K. & T. Ry. Co. v. Harriman, 227 U. S. 657, 672; Southern Ry. Co. v. Prescott, 240 U. S. 632, 639-40.