U.S. Supreme Court KVOS, INC. v. ASSOCIATED PRESS, 299 U.S. 269 (1936)

[Page 299 U.S. 269, 275]

heard upon the prayer for preliminary injunction and upon the motion to dismiss. The court found the allegations as to citizenship of the parties were true; found 'the amount in controversy herein, by reason of defendant's motion to dismiss, must be construed to be in excess of $3,000. 00, exclusive of interest and costs'; found the facts as to the business and conduct of the parties substantially as alleged in the complaint; but found that the petitioner had not interfered with the normal operation of respondent's business or diverted any of respondent's profit.

As conclusions of law the court held that it had jurisdiction of the parties and the subject matter 'since defendant's motion to dismiss admits for the purpose of pleading all facts well pleaded in the bill of complaint and particularly the necessary diverse citizenship between complainant and defendant and the allegation that there is involved in the controversy herein more than $3,000.00, exclusive of interest and costs' and that 'the complainant is a proper party to prosecute this action on its own behalf and on behalf of its members.' Based upon certain of the findings of fact the court concluded the acts of the petitioner did not amount to unfair competition with respondent or any of its members and did not violate their property rights; held, therefore, that the complaint failed to state facts sufficient to constitute a cause of action; vacated the temporary restraining order, refused a preliminary injunction, and granted the petitioner's motion to dismiss with prejudice. [Footnote 1]

[Page 299 U.S. 269, 277]

decision should be modified. We have no occasion to consider the soundness of these conflicting contentions, for we hold that in the circumstances the respondent had the burden of showing that the case was within the District Court's jurisdiction, and failed to carry it.

The bill seeks redress for damage to the respondent's business and for damage to the business of some or all of its members. The right for which the suit seeks protection is, therefore, the right to conduct those enterprises free of the alleged unlawful interference by the petitioner. No facts are pleaded which tend to show the value of that right. The complaint contains nothing to the purpose save the general statement that the damage to which the respondent is being subjected is in excess of three thousand dollars and the amount involved is in excess of that sum. Such a formal allegation is sufficient, unless the bill contains others which qualify or detract from it in such measure that when all are considered together it cannot fairly be said that jurisdiction appears on the face of the complaint, in which case the suit should be dismissed by the court sua sponte3 or upon the defendant's motion. [Footnote 4] In this case the formal allegation is not reenforced or strengthened by other portions of the complaint; neither is it neutralized or weakened by qualifying or detracting allegations. In effect it stands alone. Therefore the court would not have been bound to dismiss upon a motion based solely on alleged insufficient pleading of the amount in controversy; though it might, of its own motion, have entered upon an inquiry to ascertain whether the cause was one over which it had jurisdiction. [Footnote 5] But

[Page 299 U.S. 269, 278]

where the allegations as to the amount in controversy are challenged by the defendant in an appropriate manner, the plaintiff must support them by competent proof. [Footnote 6] The petitioner's motion was an appropriate method of challenging the jurisdictional allegations of the complaint. It did not operate merely as a demurrer, for it did not assume the truth of the bill's averments and assert that in spite of their truth the complaint failed to state a case within the court's jurisdiction. On the contrary the motion traversed the truth of the allegations as to amount in controversy and in support of the denial recited facts dehors the complaint. This could have been done by answer but the time for answer had not arrived when the rule to show cause was issued and petitioner was faced with the possibility of an injunction. The motion required the trial court to inquire as to its jurisdiction before considering the merits of the prayer for preliminary injunction. And in such inquiry complainant had the burden of proof. [Footnote 7] The only attempt to meet that burden is a reply affidavit filed on behalf of respondent, wherein it is deposed 'that the payments made by newspapers for said news sold to them by complainant in the territory served by said radio station is upwards of $8,000 per month, which is being imperilled and jeopardized by the acts of defendant ... by its unlawful and wrongful appropriation of complainant's news, and said sum greatly exceeds the sum of Three Thousand Dollars, exclusive of interest and costs, and complainant is in danger of losing said memberships and payments if defendant's practices in respect to pirating said news is not enjoined.' This deposition must be read in connection with the statement in the bill that the respondent makes no profit from furnishing news to its members but equitably divides the expense amongst them. The association

[Page 299 U.S. 269, 280]

tude of the respondent's operations and expenditures. As pointed out in McNutt v. General Motors, etc., Corporation, supra, , at pages 180 and 181, 56 S.Ct. 780, 781, these factors are irrelevant upon the issue of the value of the right for which protection is here sought.

Since the allegation as to amount in controversy was challenged in appropriate manner, and no sufficient evidence was offered in support thereof, the bill should have been dismissed. McNutt v. General Motors, etc., Corp., supra, 298 U.S. 178, at page 190, 56 S.Ct. 780, 785. The Circuit Court of Appeals had jurisdiction of the appeal and as the District Court lacked jurisdiction its decree dismissing the bill should have been affirmed on that ground.

The decree of the Circuit Court of Appeals is reversed, and the cause is remanded to the District Court, with directions to dismiss the bill of complaint for want of jurisdiction.

REVERSED.

Mr. Justice STONE took no part in the consideration or decision of this case. Footnotes

Footnote 1 9 F.Supp.(D.C.) 279.

Footnote 2 80 F.(2d) 575, 579.

Footnote 3 Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382, 383 S., 4 S. Ct. 510; Bucyrus Co. v. McArthur (D.C.) 219 F. 266.

Footnote 4 Susquehanna & W.V.R. & Coal Co. v. Blatchford, 11 Wall. 172; Ladew v. Tennessee Copper Co. (C.C.) 179 F. 245, affirmed , 31 S.Ct. 81.

Footnote 5 Act of March 3, 1875, 5, c. 137, 18 Stat. 470, 472, Jud.Code, 37, 28 U.S.C. 80 (28 U.S.C.A. 80); McNutt v. General Motors, etc., Corp., 298 U.S. 178, 182, 184 S., 56 S.Ct. 780, 782, 783.

Footnote 6 McNutt v. General Motors, etc., Corp., supra, , at page 189, 56 S.Ct. 780, 785.

Footnote 7 McNutt v. General Motors, etc., Corp., supra, 298 U.S. 178, at page 189, 56 S.Ct. 780, 785.