## Facts

- E. L. Mottley and Annie E. Mottley, Kentucky citizens, were injured in a 1871 train collision involving Louisville & Nashville Railroad Company, also a Kentucky citizen.
- In 1871, the parties settled the Mottleys’ personal injury claims through a written contract requiring the railroad to issue free annual passes to the Mottleys for their lifetimes.
- The railroad honored the contract for decades but refused to renew the passes starting January 1, 1907.
- The Mottleys alleged the refusal rested solely on a federal statute (the Hepburn Act of 1906) restricting free passes.
- The Mottleys asserted the statute did not apply to their preexisting contract or, if it did, that it was unconstitutional under the Fifth Amendment.
- The Mottleys filed suit in federal circuit court seeking specific performance compelling issuance of the passes.

## Issues

1. Whether a federal court has federal question jurisdiction when the plaintiff’s claim is a state-law contract action and the only federal issues appear as anticipated defenses (and responses to those defenses).
2. Whether the Supreme Court must examine subject-matter jurisdiction sua sponte even when the parties litigate the merits.

## Decision

- The Supreme Court reversed the decree granting specific performance and directed dismissal for lack of subject-matter jurisdiction.
- The Court held the case did not “arise under” federal law because the Mottleys’ own cause of action was a contract claim, and federal law appeared only as an anticipated defense and a rebuttal.
- The Court declined to reach the merits concerning the statute’s applicability or constitutionality because jurisdiction was absent.
- The Court emphasized its obligation to police federal jurisdiction on its own motion, regardless of the parties’ positions.

## Legal Principles

- Federal question jurisdiction exists only when the plaintiff’s well-pleaded complaint shows that federal law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial federal issue.
- Jurisdiction cannot be established by anticipating a defendant’s federal defense, even if the plaintiff alleges the defense is invalid under federal law or the Constitution.
- Federal courts are courts of limited jurisdiction and must ensure statutory jurisdictional limits are not exceeded, including by raising jurisdictional defects sua sponte.
- When a lower federal court lacks subject-matter jurisdiction, the proper disposition is reversal with instructions to dismiss.

## Conclusion

The Court held that federal question jurisdiction must appear on the face of the plaintiff’s well-pleaded complaint and cannot rest on anticipated federal defenses; because the Mottleys pleaded only a state-law contract claim between nondiverse parties, the federal courts lacked jurisdiction and the case had to be dismissed.


Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908)