is therefore faced with a situation where it must balance the equities in order to determine the rights and liabilities of the parties in this action.
In the present case, it seems that the most equitable result would be derived by giving a right of subrogation to the insurer. The insured has been made whole and it would be an unnecessary legal fiction to force it to proceed as party plaintiff and hold any potential recovery as constructive trustee for the insurer. Fidelity & Casualty Co., although sustaining no present loss, did replace the bonds to the insured by virtue of its promise to the issuer of the bonds to replace them if they appear in the hands of a bona fide purchaser. The insurer therefore has a superior right to proceed against a third-party wrongdoer, and will thus be subrogated to the rights of Walston.
Under a subrogation theory, Fidelity & Casualty can have no rights superior to those possessed by Walston. See Mayfair Fabrics v. Henley, 101 N.J. Super. 363, 244 A.2d 344 (L.Div.1968). Walston has a valid cause of action for conversion against the defendants and such claim, by virtue of subrogation, inures to the benefit of Fidelity & Casualty. The purpose which the law seeks to accomplish by giving a right of action against one who converts is not to enrich the owner of the property at the expense of the wrongdoer, but to give compensation for the loss of property. In the present case, until the insurer pays some amount to cancel bonds that appear in the hands of a bona fide purchaser, no compensation is necessary, since no loss has been sustained. A recovery before such time would unjustly enrich the insurer.
This Court is troubled by the fact that none of the converted bonds has yet appeared in the hands of a bona fide purchaser and no one has yet sustained a pecuniary loss. The Court does not feel that it would be equitable to allow the insurer to fully recover the face value of the bonds in question when there is the possibility that the converted bonds might never be presented to the transfer agent. Further consideration has been given to the fact that if a full recovery were allowed, a possible market fluctuation would allow the insurer to purchase similar bonds at a lower price and return them to the issuer for cancellation. This again would constitute a windfall to the insurer which cannot be allowed under equitable principles.
It is this Court's opinion that a subrogated insurer should not be allowed to recover from a wrongdoer claims which it may in the future be compelled to satisfy. See Ocean Accident & Guarantee Corp. v. Hooker Electro-Chemical Co., 240 N.Y. 37, 147 N.E. 351 (Ct.App.1925); 16 Couch on Insurance 2d § 61, at 39 (2d ed. 1966). Subrogation is based on payment and not on liability. See Luce v. Fidelity & Casualty Co., 222 Wis. 50, 268 N.W. 131 (1936).
Plaintiff cites United States Fidelity & Guaranty Co. v. Newburger, 263 N.Y. 16, 188 N.E. 141 (Ct.App.1933), as having facts "strikingly similar to the case at bar." However, there are striking differences as well which make it clearly distinguishable. In that case, plaintiff insurance company paid the insured for the converted bond and at that point a new certificate was issued. Subsequently, the converted bond appeared requiring the insurer, "which stood in the place of the insured", to return the new certificate for cancellation. The insurer in that case suffered an out-of-pocket loss. No such expenditure has been shown in the present case.
Having carefully reconsidered this matter and having had the benefit of additional briefs and oral arguments, it appears to this Court that the alleged conversion of stock in this case constituted a mere technical violation of plaintiff's rights since no actual damages have been shown. Because, at this point, only a nominal sum would be recoverable for this technical conversion, the Court finds that the $10,000 jurisdictional amount necessary to bring on action in this Court has not been met. Although the parties have not raised the issue of jurisdiction, it is clear that this Court is not bound by the pleadings of the parties and may, on its own motion, inquire into the facts concerning jurisdiction. Hoyt v. Merrit-Chapman & Scott Corp., 79 F. Supp. 106 (D.N.J.1948); Industrial Union v. New York Shipping Corp., 79 F. Supp. 104 (D.N.J.1948); 2A J. Moore, Federal Practice para. 8.07  at 1640 (2d ed. 1974).
Further, the district court has the power to evaluate a diversity case for the purpose of ascertaining the necessary jurisdictional amount prior to trial. Where sufficient information has been made available through pretrial discovery and proceedings, and potential damages do not bear a reasonable relationship to the minimum jurisdictional floor, the Court may make a pretrial determination that the action does not satisfy federal jurisdictional requirements. Nelson v. Keefer, 451 F.2d 289 (3rd Cir. 1971). In this case, the Court has heard oral arguments on two occasions concerning the issue of damages and has had the benefit of extensive pretrial discovery and briefs. This Court concludes to a legal certainty, based on the considerations found in Nelson v. Keefer, supra, that a recovery for technical conversion could not reach the $10,000 jurisdictional floor.
Therefore, the complaint in this matter is dismissed without prejudice. The Court has taken into consideration the fact that New Jersey provides for a six year statute of limitations in actions for conversion. The possibility of an action under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, should be explored by plaintiff. See The Gray Line Co. v. The Goodyear Tire & Rubber Co., 280 F.2d 294 (9th Cir. 1960).
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