1. To sustain federal jurisdiction on the ground of diversity of
citizenship, there must exist an actual, substantial controversy,
on one side of which the parties must all be citizens of States
different from those of which the parties on the other side are
citizens. P. 314 U. S.
2. Diversity jurisdiction cannot be conferred upon the federal
courts by the parties' own determination of who are plaintiffs and
who are defendants, and it is the duty of this Court, as well as of
the lower courts, to look beyond the pleadings and arrange the
parties according to their sides in the dispute. P. 314 U. S.
3. Whether there exists the necessary collision of interests to
sustain diversity jurisdiction must be ascertained from the
principal purpose of the suit and the primary and controlling
matter in dispute. P. 314 U. S.
4. Upon the facts of this case, which was a suit brought, in a
federal court of Indiana, by a New York bank against two Indiana
gas companies and an Indiana city, this Court holds that the
"primary and controlling matter in dispute" is whether a lease,
whereby one of the gas companies conveyed all of its gas plant
property to the other, was binding upon the city, to which the
property had been afterwards conveyed by the lessee corporation
pursuant to its franchise; that, with respect to that dispute, one
of the gas companies and the city ("citizens" of the same State)
are on opposite sides, and that, therefore,
Page 314 U. S. 64
federal jurisdiction, which depends on diversity of citizenship,
is lacking. Pp. 314 U.S.
, 314 U. S.
5. This Court's earlier denial of certiorari to review a
judgment of the Circuit Court of Appeals reversing a judgment of
the District Court which dismissed this suit for want of
jurisdiction could not confer on the federal courts a jurisdiction
which Congress has denied. P. 314 U. S.
6. The policy of the statute conferring diversity jurisdiction
upon the district courts calls for its strict construction. P.
314 U. S.
113 F.2d 217 reversed.
Certiorari, 311 U.S. 636, 637, to review the reversal of a
judgment which held a lease invalid. A petition for certiorari to
review the case in an earlier phase, 96 F.2d 363, was denied, 305
Page 314 U. S. 68
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
This is a suit instituted by the Chase National Bank, a New York
corporation, in the federal District Court for the Southern
District of Indiana, naming as defendants the Indianapolis Gas
Company, the Citizens Gas Company of Indianapolis (Indiana
corporations), and the City of Indianapolis. (For brevity's sake,
the parties will be referred to as Chase, Indianapolis Gas,
Citizens Gas, and the City, respectively.) The power of the
District Court to entertain this litigation was sustained by the
Page 314 U. S. 69
Court of Appeals for the Seventh Circuit under the provision of
the Judicial Code conferring upon the district courts jurisdiction
"[o]f all suits of a civil nature . . . where the matter in
controversy exceeds . . . $3,000, and . . . is between citizens of
different States. . . ." 36 Stat. 1091, 28 U.S.C. § 41(1). The
correctness of this jurisdictional ruling must be determined before
the merits of Chase's claims can be considered. The specific
question is this: does an alignment of the parties in relation to
their real interests in the "matter in controversy" satisfy the
settled requirements of diversity jurisdiction?
As is true of many problems in the law, the answer is to be
found not in legal learning, but in the realities of the record.
Though variously expressed in the decisions, the governing
principles are clear. To sustain diversity jurisdiction, there must
exist an "actual," Helm v. Zarecor, 222 U. S.
, 222 U. S. 36
"substantial," Niles-Bement-Pond Co. v. Iron Moulders'
Union, 254 U. S. 77
254 U. S. 81
controversy between citizens of different states, all of whom on
one side of the controversy are citizens of different states from
all parties on the other side. Strawbridge v.
3 Cranch 267. Diversity jurisdiction
cannot be conferred upon the federal courts by the parties' own
determination of who are plaintiffs and who defendants. It is our
duty, as it is that of the lower federal courts, to "look beyond
the pleadings, and arrange the parties according to their sides in
the dispute." Dawson v. Columbia Trust Co., 197 U.
, 197 U. S. 180
Litigation is the pursuit of practical ends, not a game of chess.
Whether the necessary "collision of interest," Dawson v.
Columbia Trust Co., supra,
at 197 U. S. 181
exists is therefore not to be determined by mechanical rules. It
must be ascertained from the "principal purpose of the suit,"
East Tennessee, V. & G. R. Co. v. Grayson,
119 U. S. 240
119 U. S. 244
and the "primary and controlling matter in dispute,"
Merchants' Cotton-Press &
Storage Co. v. Insurance Co.,
Page 314 U. S. 70
151 U. S. 368
151 U. S. 385
These familiar doctrines governing the alignment of parties for
purposes of determining diversity of citizenship have consistently
guided the lower federal courts [Footnote 1
] and this Court. [Footnote 2
And so we turn to the actualities of this litigation.
Chase is the trustee under a mortgage deed to secure a bond
issue executed by Indianapolis Gas in 1902. In 1906, Citizens Gas
was formed to compete with Indianapolis Gas in the distribution of
light, heat, and power to the people of Indianapolis. Its franchise
provided that, after the expiration of twenty-five years and the
performance of certain specified conditions, the company should be
wound up and its property conveyed to the City subject to the
company's "outstanding legal obligations." The competition between
the two gas companies continued until 1913, when Indianapolis Gas
leased all of its gas plant property to Citizens Gas for a term of
ninety-nine years. Citizens Gas agreed to pay as rental (a) the
interest on the lessor's outstanding bonded indebtedness, and (b)
annual sums equal to a six percent return on Indianapolis Gas'
common stock. For twenty-two years thereafter, Citizens Gas
operated the mortgaged property and paid the interest on the bonds.
In 1935, pursuant to its franchise, Citizens Gas conveyed its
entire property, including that covered by its lease from
Indianapolis Gas, to the City. But the City refused to regard
itself bound by this lease. On March 2,
Page 314 U. S. 71
1936, the City and Indianapolis Gas agreed that, pending the
settlement of the "presently existing controversy" between them as
to whether the lease was valid and binding upon the City, the
latter would deposit in escrow sums equal to the interest and
dividend payments falling due. The agreement expressly provided
that it was made without prejudice to either party's "position or
Chase thereupon filed a bill of complaint in the District Court,
naming as defendants Indianapolis Gas, Citizens Gas, and the City.
It prayed that the lease from Indianapolis Gas to Citizens Gas be
declared valid and binding upon the defendants, and, as such, be
deemed part of the security for the performance of the mortgage
obligations; that the City be ordered to perform all of the
lessee's obligations in the lease and to pay directly to the
plaintiff all of the interest payments as they shall become due;
that judgment for overdue interest be entered against the
defendants "liable therefor;" and that the plaintiff be awarded
costs and attorneys' fees. The City and Citizens Gas specifically
denied that the lease was valid and binding upon them; they
alleged, further, that the controversy existed solely between
Indianapolis Gas and the City, "citizens" of the same state. In its
answer, Indianapolis Gas denied that it had "ever contended or
admitted that the said ninety-nine year lease was not and is not a
valid and binding obligation" upon the defendants.
Finding "no collision between the interests of the plaintiff and
the interests of the Indianapolis Gas Company," the District Court
realigned the latter as a party plaintiff, and, finding identity of
citizenship between some of the plaintiffs and the remaining
defendants, dismissed the suit for want of jurisdiction. The
Circuit Court of Appeals reversed, one judge dissenting, 96 F.2d
363, and certiorari was denied, 305 U.S. 600.
On remand to the District Court, Chase filed a supplemental bill
alleging default as to interest payments falling
Page 314 U. S. 72
due and praying judgment against the defendants in the amount of
the unpaid coupons. It alleged that
"neither The Indianapolis Gas Company nor Citizens Gas Company,
nor both of them, have property sufficient to pay their interest in
default on the Bonds, other than the property now in the possession
and under the control of the City of Indianapolis."
This was admitted by Indianapolis Gas. The District Court held
on the merits that the lease was not enforceable against either
Citizens Gas or the City, that the former had no power under its
franchise to bind the latter to the lease, and that, by conveying
the leased property to the City, Citizens Gas thereby discharged
itself of its lessee obligations. Accordingly, the Court ordered
that judgment be entered only against Indianapolis Gas for the
amount of the unpaid interest.
Asserting that the District Court erred in not holding the lease
valid and enforceable against the defendants, both Chase and
Indianapolis Gas appealed. The Circuit Court of Appeals sustained
their position, and again reversed, 113 F.2d 217. The Court held,
further, that Chase was entitled to a judgment for unpaid interest
against the parties in the following order of liability: the City,
Citizens Gas, and Indianapolis Gas. We granted certiorari, 311 U.S.
636, because of the important jurisdictional issue involved in the
The facts leave no room for doubt that, on the merits, only one
question permeates this litigation: is the lease whereby
Indianapolis Gas in 1913 conveyed all its gas plant property to
Citizens Gas valid and binding upon the City? This is the "primary
and controlling matter in dispute." The rest is window-dressing
designed to satisfy the requirements of diversity jurisdiction.
Everything else in the case is incidental to this dominating
controversy, with respect to which Indianapolis Gas and the
Page 314 U. S. 73
"citizens" of the same state, are on opposite sides. [Footnote 3
] That the case presents
"only one fundamental issue," and that that is the obligation of
the City under the lease, Chase admits, and indeed insists upon in
its brief on the merits. Chase and Indianapolis Gas have always
been united on this issue: both have always contended for the
validity of the lease and the City's obligation under it. The
opinion of the District Court lays bare the heart of this
"There can be no doubt that both plaintiff and the defendant,
The Indianapolis Gas Company, have at all times asserted that the
lease in question is valid and is binding upon the City, as
Trustee. Neither is there any doubt as to their interest in
sustaining the validity of such lease at the time of the
institution of this action, prior hereto, and at all times
subsequent thereto, and that many conferences have been held by and
between them, through their attorneys, and many letters have passed
between them relating
Page 314 U. S. 74
to this subject. . . . Later, when the parties [i.e.,
Indianapolis Gas and the City] were unable to adjust their
differences and arrive at an agreement, it was decided by The
Indianapolis Gas Company and the plaintiff that a suit should be
instituted. The common stockholders of that company, of course, had
a vital interest in the question of the validity of the lease,
because, if the lease is valid, they are assured of a six percent
return upon their stock for many years. If, however, a foreclosure
suit should have been begun, or if the lease is invalid, no such
return is assured. It was natural, therefore, that the Gas Company
should take an active interest in the litigation and attempt to
guide it along the course that would be most advantageous to it and
to its stockholders."
Plainly, therefore, Chase and Indianapolis Gas, are,
colloquially speaking, partners in litigation. The property covered
by the lease is now in the City's possession; Chase is simply
acting to protect the bondholders' security. As to Indianapolis
Gas, if the lease is upheld, it will continue to receive a six
percent return on its capital, and the burden of paying the
interest on its bonded indebtedness will be not upon it, but upon
the City. What Chase wants, Indianapolis Gas wants and the City
does not want. Yet the City and Indianapolis Gas were made to have
a common interest against Chase when, as a matter of fact, the
interests of the City and of Indianapolis Gas are opposed to one
another. Therefore, if regard be had to the requirements of
jurisdictional integrity, Indianapolis Gas and Chase are on the
same side of the controversy, not only for their own purposes, but
also for purposes of diversity jurisdiction. But such realignment
places Indiana "citizens" on both sides of the litigation and
precludes assumption of jurisdiction based upon diversity of
citizenship. We are thus compelled to the conclusion that the
Page 314 U. S. 75
District Court was without jurisdiction. [Footnote 4
] And, of course, this Court, by its
denial of certiorari when the case was here the first time, could
not confer the jurisdiction which Congress has denied.
Page 314 U. S. 76
This is not a sacrifice of justice to technicality. For the
question here is not whether Chase and Indianapolis Gas may pursue
what they conceive to be just claims against the City, but whether
they may pursue them in the federal courts in Indiana, rather than
in its state courts. The fact that Chase prefers the adjudication
of its claims by the federal court is certainly no reason why we
should deny the plain facts of the controversy and yield to
illusive artifices. Settled restrictions against bringing local
disputes into the federal courts cannot thus be circumvented.
These requirements, however technical seeming, must be viewed in
the perspective of the constitutional limitations upon the judicial
power of the federal courts, [Footnote 5
] and of the Judiciary Acts in defining the
authority of the federal courts when they sit, in effect, as state
courts. See Madisonville Traction Co. v. St. Bernard Mining
Co., 196 U. S. 239
196 U. S. 255
and Ex parte Schollenberger, 96 U. S.
, 96 U. S. 377
The dominant note in the successive enactments of Congress relating
to diversity jurisdiction is one of jealous restriction, of
avoiding offense to state sensitiveness, and of relieving the
federal courts of the overwhelming burden of "business that
intrinsically belongs to the state courts" in order to keep them
free for their distinctive federal business. See
The Historic Basis of Diversity Jurisdiction, 41 Harv.L.Rev. 483,
510; Shamrock Oil & Gas Corp. v. Sheets, 313 U.
, 313 U. S.
-109; Healy v. Ratta, 292 U.
, 292 U. S.
"The policy of the statute [conferring diversity jurisdiction
upon the district courts] calls for its strict construction. The
power reserved to the states, under the
Page 314 U. S. 77
Constitution, to provide for the determination of controversies
in their courts, may be restricted only by the action of Congress
in conformity to the judiciary sections of the Constitution. . . .
Due regard for the rightful independence of state governments which
should actuate federal courts requires that they scrupulously
confine their own jurisdiction to the precise limits which the
statute has defined."
Healy v. Ratta, supra,
at 292 U. S. 270
In defining the boundaries of diversity jurisdiction, this Court
must be mindful of this guiding Congressional policy.
See Hepburn & Dundas v.
2 Cranch 445; New Orleans
1 Wheat 91; Morris v. Gilmer,
129 U. S. 315
129 U. S.
-329; Coal Company v.
11 Wall. 172; Shamrock Oil &
Gas Corp. v. Sheets, 313 U. S. 100
and compare 26 U. S.
1 Pet. 248; Elgin v. Marshall, 106 U.
; Healy v. Ratta, 292 U.
; McNutt v. General Motors Acceptance
Corp., 298 U. S. 178
* Together with No. 12, Chase National Bank, Trustee v.
Citizens Gas Co., et al.,
and No. 13, Chase National Bank,
Trustee v. Indianapolis Gas Co., et al.,
also on writs of
certiorari to the Circuit Court of Appeals for the Seventh
E.g., Pittsburgh, C. & St.L. Ry. Co. v. Baltimore &
Ohio R. Co.,
61 F. 705; Cilley v. Patten,
62 F. 498;
Board of Trustees v. Blair,
70 F. 414; Allen-West
Commission Co. v. Brashear,
176 F. 119; Lindauer v.
247 F. 428; De Graffenreid v. Yount-Lee
30 F.2d 574.
In addition to the cases cited in the text, see Removal
Cases, 100 U. S. 457
100 U. S.
-470; Pacific R. Co. v. Ketchum,
101 U. S. 289
101 U. S.
-299; Corbin v. Van Brunt, 105 U.
; Evers v. Watson, 156 U.
, 156 U. S. 532
Doctor v. Harrington, 196 U. S. 579
Venner v. Great Northern R. Co., 209 U. S.
; Steele v. Culver, 211 U. S.
, 211 U. S. 29
Lee v. Lehigh Valley Coal Co., 267 U.
; Sutton v. English, 246 U.
It is contended that, notwithstanding their indissoluble bond on
the controlling issue, there are "sufficient matters in
controversy" between Chase and Indianapolis Gas to preclude their
alignment on the same side. Chase, of course, did not bring this
suit in order to obtain a declaration that, regardless of the
validity of the lease, Indianapolis Gas is still ultimately
responsible for the interest payments on its bonded indebtedness.
That was not really in issue, and, by its answer, Indianapolis Gas
took it out of the case. The further argument is made that, by
entering into the escrow agreement with the City, Indianapolis Gas
has asserted a claim to the interest payments adverse to that of
Chase and the bondholders. But the facts are against this
contention. The agreement deals merely with the disposition of the
interest falling due during the pendency of the litigation.
Moreover, the lease between Indianapolis Gas and Citizens Gas
contains no provisions requiring payment of the interest direct to
Chase or the bondholders. Nor can diversity jurisdiction be rested
upon so flimsy a basis as Chase's prayer for reimbursement of costs
and attorneys' fees. The tail flies with the kite.
Compare Dawson v. Columbia Trust Co., 197 U.
, a suit by a Pennsylvania mortgagee of a Georgia
waterworks company to restrain a Georgia city from building a new
waterworks and to compel specific performance of the city's
contract with the waterworks company. The latter was joined as a
defendant on the theory that it was a party to the contract sought
to be enforced. The Court held that the bill should be dismissed
for lack of jurisdiction:
". . . the court will look beyond the pleadings, and arrange the
parties according to their sides in the dispute. When that is done,
it is obvious that the waterworks company is on the plaintiff's
197 U.S. at 197 U. S. 180
Ayres v. Wiswall, 112 U. S. 187
Coney v. Winchell, 116 U. S. 227
not applicable here. They hold merely that, in a foreclosure suit,
the mortgagee may join the mortgagor and his assignee as
defendants; they did not involve any controversy between the
mortgagor and the "assignee" as to whether the assignment is
binding upon the latter.
Sutton v. English, 246 U. S. 199
clearly holds that the parties must be aligned according to their
"attitude towards the actual and substantial controversy." 246 U.S.
at 246 U. S. 204
The plaintiffs, who included all of the heirs of Mary Jane except
Cora, sought to establish their right to certain property claimed
to have belonged to Mary Jane. The claimants could not recover
unless they proved that a residuary bequest to Cora was invalid --
and, with respect to this issue, their position was completely
adverse to Cora's.
"But, as already pointed out, even could complainants succeed in
showing that Mary Jane Hubbard, at the time of her death, was
entitled to the community property, her will giving all the residue
of her property to Cora D. Spencer still stands in the way of their
succeeding to it as heirs at law, and hence their prayer to have
that will annulled with respect to the residuary clause is
essential to their right to any relief in the suit."
246 U.S. at 246 U. S. 207
If the plaintiffs prevailed on this issue of the validity of the
residuary gift to Cora, their interests and hers would then be the
same with respect to the remaining issues in the case. But the
Court held that, in relation to the "actual and substantial
controversy," Cora and the plaintiffs were on opposite sides,
thereby sustaining diversity jurisdiction. In Sutton v.
alignment of the parties with respect to their real
interests sustained diversity; such alignment here precludes
jurisdiction. That case and this are applications of the same
Cf. 7 U. S.
3 Cranch 267; California v. Southern Pacific
Co., 157 U. S. 229
157 U. S. 261
Treinies v. Sunshine Mining Co., 308 U. S.
, 308 U. S.
MR. JUSTICE JACKSON.
THE CHIEF JUSTICE, MR. JUSTICE ROBERTS, MR. JUSTICE REED, and I
are unable to concur in this disposition of these writs in view of
what we consider to be the controlling facts of this
Chase is trustee under a mortgage executed in 1902 by
Indianapolis Gas to secure a bond issue. The mortgage covered a
public utility gas plant and distribution system, together with
after-acquired property, including intangibles.
In 1913, Indianapolis Gas turned the mortgaged utility system
over to Citizens Gas, a competitor, under a lease for a term of
ninety-nine years. Citizens Gas undertook, among other things, to
pay the interest "as the same shall from time to time fall due" on
the bonds secured by the mortgage, and also to pay certain sums,
subject to some variation by reference to the price received for
gas, to the stockholders of Indianapolis Gas. Citizens Gas
Page 314 U. S. 78
this leased plant with its own, and in 1935 conveyed to the City
the entire property in conformity to statute which, it is
contended, obligates the City to assume the obligations of the
lease. The City took possession of the property, but refused to
accept the obligations of the lease. The City and Indianapolis Gas
then agreed that, pending settlement of the controversy thus
precipitated, sums payable under the lease as interest should be
deposited in escrow, instead of being paid to Chase. Accordingly,
there was default in the payment to the trustee of interest on the
For jurisdictional purposes, Indianapolis Gas, the mortgage
debtor, and the City, whose possession of the property under the
circumstances was alleged to result in an assumption of the debt,
as well as Citizens Gas, the intermediate owner (who seems of no
consequence to the issues under discussion), were all citizens of
the Indiana, while Chase, the trustee, was a citizen of New York.
Under these circumstances, Chase began an action in the federal
District Court for the Southern District of Indiana, joining
Indianapolis Gas, Citizens Gas, and the City as defendants. It
asked that the interest of Indianapolis Gas in the lease be
adjudged a part of its security for the performance of the mortgage
obligations; that the lease be declared valid and binding upon all
the defendants; that the City be ordered to pay directly to the
trustee all of the interest payments as they fell due; that
judgment for overdue interest be entered against the defendants
liable therefor, including Indianapolis Gas, and that plaintiff be
awarded costs and attorneys' fees.
This Court now destroys federal jurisdiction of the case by a
transposition of parties, the radical nature of which appears most
clearly from the judgments rendered below. It forces into the
position of co-plaintiff one party which the District Court
adjudged entitled to recover over a million dollars and another
which the District Court adjudged
Page 314 U. S. 79
solely liable to pay that sum. This same adversity was found by
the Circuit Court of Appeals, which held the one entitled to
receive and the other obligated to pay this sum with increase due
to the lapse of time. It modified the judgment only by including
two additional judgment debtors on whom it fixed primary and
secondary liability, but continued the judgment against
Indianapolis Gas with a tertiary liability for its satisfaction.
The subtlety by which a judgment debtor is transfigured into a
creditor for jurisdictional purposes deserves analysis, if for no
other reason than because of its novelty.
The Court cannot resort to a decision of the merits of the case
over which it holds itself to be without jurisdiction in order to
justify its characterization of some of the trustee's claims as
"window dressing" and "artifice." The measure of jurisdiction
should be taken from the pleadings unless the claims are frivolous
on their face. That is not the case here. In ultimate effect, Chase
alleged a cause of action and sought judgment against the City upon
its personal undertaking to assume and pay the indebtedness upon
the mortgage given by Indianapolis Gas to the plaintiff. It also
alleged a cause of action and sought judgment against Indianapolis
Gas for the amount of the coupon interest. Both demands were in
excess of $3,000. If the plaintiff had asserted these demands in
two separate actions, no one would doubt that both were within the
jurisdiction of the District Court. In each, there is an adequate
diversity of citizenship, and each involves the requisite
jurisdictional amount and each is "actual" and "substantial" enough
to support the jurisdiction, if this means anything more than that
a demand exceeding $3,000 must be involved. A United States
district court is not without jurisdiction to render a judgment
exceeding $3,000 on confession if there is the requisite diversity
of citizenship. In re Metropolitan Railway Receivership,
208 U. S. 90
208 U. S. 108
The trustee's right to judgment against the mortgagor,
Page 314 U. S. 80
even though uncontested, is a matter of substance, for the
judgment is the important -- indeed indispensable -- means of
pursuing the mortgaged property into the hands of the City in the
event that it should turn out in the suit against the City that it
had not become personally liable for any part of the mortgage
Jurisdiction of the federal courts is indeed a variable and
illusory thing if the jurisdiction which a District Court
admittedly has of two separate causes of action is lost when they
are united in one, agreeably to the federal rules of procedure,
because the one defendant, as a surety, seeks to enforce its
equitable right to be exonerated by the other, who is alleged to be
the principal debtor.
The doctrine of realignment permits and requires a nominal
defendant to be treated as a plaintiff for the purpose of defining
the real controversy where no real cause of action is asserted
against him by the plaintiff, but it does not admit of such
treatment of a defendant against whom the plaintiff asserts a cause
of action within the jurisdiction of the court. The plaintiff
cannot rightly be deprived of the benefit of that jurisdiction,
conferred upon him by laws enacted pursuant to the Constitution of
the United States, because the court may think that such a cause of
action is relatively less important than that asserted against
another defendant, or because one action "dominates" the other, or
because one is more "actual" or "substantial" than the other. The
statute itself sets up the criterion of substantiality by fixing
the jurisdictional amount at $3,000. Moreover, in this case,
whether either of the rights asserted is more substantial than the
other depends on the outcome of the litigation, which can hardly be
used to determine jurisdiction which must exist at the beginning of
If we examine this controversy in detail, it appears that the
conflicts between the trustee and its mortgagor were
Page 314 U. S. 81
not feigned or merely formal. While the mortgage and the debt,
which created the opposition inherent in the relation of mortgagor
and mortgagee or between debtor and creditor, were undenied, Chase
was asking that its lien be judicially construed to cover not
merely the physical property described therein, but also the entire
interest of Indianapolis Gas in the lease which required payments
to stockholders over and above the interest payments for the
bondholders. Furthermore, Chase asked the Court to set aside the
escrow agreement by which Indianapolis and the City had assumed to
exclude Chase from dominion over the escrow funds. Chase demanded
that Indianapolis Gas be denied future control over such funds, and
that they be paid directly to itself. These were conflicts as to
the extent of its interest in and control over any cause of action
against the City. They existed between Chase and the defendant
Indianapolis Gas, and concerned them alone.
There was also an issue as to the aggregate amount of the
trustee's claim, which all defendants had a common interest in
minimizing. The trustee claimed to be entitled to interest at 6%
after default on coupons which bore a 5% interest rate, and it also
claimed interest on overdue interest. This Court has held that,
where the only issue concerns the amount of the debt, as to which a
mortgagor agrees with the plaintiff, but the issue is contested
only by another mortgagor who has assumed the entire mortgage debt,
the mortgage and the debt are the real subject matter of the
controversy; that the decree, when the amount is ascertained, must
run against all debtors, and that the uncontesting mortgagor is a
necessary party on the side opposite the mortgagee. Ayres v.
Wiswall, 112 U. S. 187
There were other issues on which the defendants were in sharp
conflict between themselves. Indianapolis Gas
Page 314 U. S. 82
and Chase both served their respective interests by contending
against the City that its acts had the legal effect of binding it
to the terms of the lease. But their common attitude in relation to
this issue sprang from different legal origins. The rights of Chase
had their source and their measure in the mortgage. The mortgage
might or might not, depending upon the outcome of the litigation,
be construed to give Chase a right to enforce for its own benefit
the lease terms as against the City. Indianapolis Gas, on the other
hand, derived no rights against the City from that instrument, and
was not, like Chase, limited by it. Indianapolis Gas' rights had no
other measure than that found in the terms of the lease itself.
We would be diligent no less than the majority to prevent
imposition on the jurisdiction of the federal courts by means of
"window dressing" or "artifice." We find in this case nothing that
warrants either characterization, and we think that the precedents
invoked to support today's action reveal the gap which divides the
doctrine of realignment as heretofore applied by this Court from
the application made of it today.
The majority opinion leans heavily on Dawson v. Columbia
Trust Co., 197 U. S. 178
Justice Holmes in that case said:
". . . it is obvious that the waterworks company is on the
plaintiff's side, and was made a defendant solely for the purpose
of reopening, in the United States court, a controversy which had
been decided against it in the courts of the state."
And he said again:
". . . when the arrangement of the parties is merely a
contrivance between friends for the purpose of founding a
jurisdiction which otherwise would not exist, the device cannot be
allowed to succeed."
And so say we, but there is not the slightest indication of this
kind of connivance in the case before us.
In Helm v. Zarecor, 222 U. S. 32
Court refused to align with the plaintiff a corporation although
Page 314 U. S. 83
and officers were in entire agreement with the position of
complainants on the merits of the case. Another of the cases
invoked is Niles-Bement-Pond Co. v. Iron Moulders' Union,
254 U. S. 77
a New Jersey corporation sought to break a strike by filing a bill
in an Ohio District Court against labor unions, individual
strikers, and an Ohio corporation, all citizens of Ohio. The New
Jersey plaintiff owned a controlling interest in the Ohio
defendant, the two had common officers and directors, and no relief
whatever was asked against the Ohio company, which the bill alleged
was being delayed in delivery of goods because of the strike. The
Court refused to allow such an imposition on its jurisdiction. In
Sutton v. English, 246 U. S. 199
this Court held it to be error to align one of the defendants with
the plaintiff for jurisdictional purposes where her interest was
adverse to plaintiff on one out of four issues, although with
plaintiff as to three of the four.
We take the statement in the opinion of the Court that its basis
is "not in legal learning, but in the realities of the record," to
be another way of saying that it disagrees with the lower court's
view of the facts, rather than with its view of the law. Review of
facts is not the conventional function of this Court, and resort to
it at this stage of this litigation is somewhat less than fair to
the courts below, as well as to the litigants.
Three years ago, this Court refused to review the decision of
the Circuit Court of Appeals that this controversy was within the
federal jurisdiction. Indianapolis v. Chase National Bank,
305 U.S. 600. Of course, a denial of certiorari is not to be taken
as a ruling on the merits of any question presented. However, where
the case is again brought here after some years of litigation,
jurisdiction ought not to be overturned on light or inconsequential
grounds, or on disagreements with the court below on matters of
fact. To do so here is likely to result in further and, as we see
it, needless delay in settling the status of
Page 314 U. S. 84
an important utility and the obligations and rights of a
populous municipality. We think it the duty of the Court to end
this controversy by proceeding to judgment on the merits, and that
nothing in this record justifies ousting these parties from the
federal courts. If, as the opinion intimates, the forefathers are
thought to have been unwise in creating a federal jurisdiction
based on diversity of citizenship, we would think the remedy of
those so minded would be found in Congressional withdrawal of such
jurisdiction, rather than in the confusing process of judicial
We would follow the words of the jurisdictional statute when it
is sought to restrict its application quite as faithfully as when
the effort is to enlarge it by recourse to doctrines which conflict
with its words. Compare Healy v. Ratta, 292 U.
, 292 U. S.