Kramer v. Caribbean Mills, Inc.
United States Supreme Court
394 U.S. 823 (1969)
In 1959, Caribbean Mills, Inc. (defendant) entered into a contract with the Panama and Venezuela Finance Company (Panama). The contract provided that Caribbean Mills would pay Panama $85,000 down and an additional $165,000 in 12 annual installments, for 125 shares of corporate stock. Caribbean Mills failed to make any installment payments, despite requests for payment by Panama. In 1964, Panama assigned its interest in the 1959 contract to Kramer (plaintiff), an attorney in Texas. In a separate but related agreement, Kramer promised to pay Panama 95% of any net recovery on the assigned cause of action. Soon thereafter, Kramer brought this diversity suit against Caribbean Mills in the United States District Court for the Northern District of Texas. Kramer prevailed at trial and was awarded $165,000 by a jury. Caribbean Mills appealed on the grounds that the district court lacked jurisdiction because the assignment was “improperly or collusively made” under 28 U.S.C. § 1359. The United States Court of Appeals for the Fifth Circuit agreed, and reversed the judgment of the district court. Kramer appealed on the grounds that the undisputed legality of the assignment under Texas law rendered it valid for purposes of federal jurisdiction.
Rule of Law
Holding and Reasoning (Harlan, J.)
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