Kramer v. Caribbean Mills, Inc.

Caribbean Mills, Inc. (defendant) contracted in 1959 to buy stock from Panama and Venezuela Finance Company (Panama) for a down payment plus twelve annual installments, but failed to make any installment payments despite Panama's demands. In 1964, Panama assigned its contract rights to Kramer (plaintiff), a Texas attorney, who separately agreed to pay Panama 95% of any net recovery. Kramer then sued Caribbean Mills in federal court based on diversity jurisdiction and won $165,000 at trial. Caribbean Mills appealed, arguing the assignment was "improperly or collusively made" under 28 U.S.C. § 1359, which the Fifth Circuit agreed with in reversing; Kramer countered that the assignment's undisputed legality under Texas law made it valid for federal jurisdiction purposes.