## Facts

- National Mutual Insurance Company was incorporated in the District of Columbia.
- Tidewater Transfer Company, Inc. was incorporated in Virginia and was amenable to suit in Maryland.
- National Mutual filed a contract-based action for money damages in the U.S. District Court for the District of Maryland.
- The complaint alleged no federal question; jurisdiction depended solely on statutory diversity jurisdiction between a District of Columbia citizen and a state citizen.
- Congress had enacted a statute extending diversity jurisdiction to civil actions “between citizens of the District of Columbia and citizens of a State,” later reflected in 28 U.S.C. § 1332.
- Earlier precedent had treated District of Columbia citizens as not being “citizens of a State” for diversity purposes.

## Issues

1. Whether Article III permits Congress to authorize federal diversity jurisdiction over civil actions between citizens of the District of Columbia and citizens of a State.
2. Whether the federal statute extending diversity jurisdiction to District of Columbia (and territorial) citizens is constitutional.

## Decision

- The Supreme Court reversed the Fourth Circuit and upheld the statute.
- A plurality concluded Congress could validly provide federal jurisdiction for controversies between District of Columbia citizens and state citizens, consistent with Article III when considered with Congress’s powers to structure federal jurisdiction.
- A separate concurrence agreed with the judgment on different reasoning, producing a majority to sustain the statute.
- Two dissents would have held the statute unconstitutional as an impermissible expansion of Article III beyond controversies “between citizens of different States.”

## Legal Principles

- Congress may constitutionally extend statutory diversity jurisdiction to controversies between citizens of the District of Columbia (and U.S. territories) and citizens of a State, as provided in 28 U.S.C. § 1332.
- The statute is valid even though District of Columbia citizens are not, in a geographic sense, “citizens of a State”; Congress may treat them as state citizens for diversity-jurisdiction purposes.
- The decision substantially limits the practical effect of prior precedent that had excluded District of Columbia citizens from diversity jurisdiction in federal courts sitting in the states.

## Conclusion

The Court held that Congress may authorize federal diversity jurisdiction for suits between District of Columbia (and territorial) citizens and state citizens, sustaining the statute and permitting such litigants to access federal court on diversity grounds.


National Mut. Ins. Co. v. Tidewater Transfer Co., 337 U.S. 582 (1949)