Grubbs v. General Electric Credit Corporation

Respondent, a New York corporation, brought suit for $66,000 on a promissory note against petitioner, a citizen of Texas, in a Texas state court, and petitioner filed a cross-action for $25,000 seeking damages for slander, conversion, and conspiracy in restraint of trade. A later cross-action included the United States, which held a judgment against petitioner, as a party defendant. The action was removed to the Federal District Court for trial of the issues, on petition of the United States. The District Court, without objection, considered all the issues and awarded petitioner a $20,000 judgment against respondent. The Court of Appeals, sua sponte, held that the District Court lacked jurisdiction and ordered the case returned to the state court.

Held: Where after removal a case is tried on the merits without objection and the federal court enters a judgment, the issue on appeal is not whether the case was properly removed, but whether the District Court would have had original jurisdiction if the case had been filed in that court. Here there was diversity jurisdiction in the District Court if the action had been brought there originally. Pp. 702-706.

447 F. 2d 286, reversed and remanded.

REHNQUIST, J., delivered the opinion for a unanimous Court.

Bill J. Cornelius argued the cause for petitioner. With him on the brief was J. R. Cornelius.

Hubert D. Johnson argued the cause and filed a brief for respondent.