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June 24, 1949


The opinion of the court was delivered by: MURPHY

Plaintiff, a Maryland corporation, *fn1" in six counts sought damages from defendant, a Pennsylvania corporation engaged in this district in the business of distilling whiskey and as owner and operator of a United States Government bonded warehouse. The case was tried to the court without a jury.

The first three counts have been disposed of. *fn2" In Count Four plaintiff demands $ 534.80, a tax refund allegedly improperly withheld by defendant; and in Count Six $ 146.00, a duplicate payment admittedly due, subject to defendant's claim of set-off for $ 705.20 storage charges.

 In Count Five plaintiff seeks $ 5000.00 damages as a subpurchaser and assignee for breach of warranty as to excess outage of whiskey sold by defendant to plaintiff's vendor and assignor.

 Jurisdiction arises from diversity of citizenship and a controversy involving an amount in excess of $ 3000.00 exclusive of interest and costs. 28 U.S.C.A. § 41(1), Revised Code, § 1332.

 Defendant charges plaintiff with bad faith and insists that the requisite amount is not in controversy. We disagree.

 In determining the jurisdictional amount we consider the sum of all the claims which are properly joined. Gray v. Blight, 10 Cir., 112 F.2d 696, certiorari denied 311 U.S. 704, 61 S. Ct. 170, 85 L. Ed. 457.

 'The rule governing dismissal for want of jurisdiction * * * is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed. Events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.' St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288, 289, 58 S. Ct. 586, 590, 82 L. Ed. 845. *fn3"

 Defendant admits the tax was paid with plaintiff's money and that the refund when received by defendant belongs to plaintiff. Defendant contends, however, that it never received the check; plaintiff admits that defendant's books do not reflect such receipt. The evidence shows the government mailed the check to the defendant. Despite notice to the defendant that the check was mailed and not received, it is apparent defendant exercised no zeal in attempting to obtain the check or duplicate thereof. The money belongs to the plaintiff, subject, however, to defendant's claim of set-off.

 Plaintiff is entitled to $ 146.00, the amount of the duplicate payment, subject to defendant's claim of set-off.

 As to the claim for breach of warranty:

 In March, 1940, defendant sold to Wilson Distilling Co., Inc., a Maryland corporation (herein Old Wilson), 2535 barrels of rye whiskey then on storage in defendant's warehouse. The warehouse receipts covering the whiskey had previously been pledged by defendant with the York Trust Company at York, Pennsylvania, as collateral security for a loan. The warehouse receipts were surrendered, properly endorsed, cancelled, and new receipts issued to Old Wilson under date of March 1, 1940. As a part of the transaction defendant gave to Old Wilson a warranty *fn4" as to excess outage (an outage or loss beyond that allowed by the government for tax computation purposes) in the following terms:

 'We also wish to advise that we will guarantee any excess outage on the above lot in accordance with the statutory allowance given by the government. It is further understood that when the allowance is to be allowed, it will be determined on a regauge basis as of the time tax payments or shipments are made, which will be at the Foust Distilling Co., Inc., Glen Rock, Pa.'

 December 28, 1940, Old Wilson sold and assigned all of its assets, except shares of its stock and that of others, to Wilson Distilling Co., Inc., a Maryland corporation (herein New Wilson). *fn5"

 No notice was given to defendant as to the change in ownership. The warehouse receipts were apparently endorsed in blank by the president of Old Wilson. They contained no reference whatsoever to the warranty by defendant. *fn6" The agreement between ...

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