Smith v. Kansas City Title & Trust Co.
Supreme Court of the United States
Argued October 14, 1920 Decided February 28, 1921
Full case name	Smith v. Kansas City Title & Trust Company et al.
Citations	255 U.S. 180 (more) 41 S. Ct. 243; 65 L. Ed. 577; 1921 U.S. LEXIS 1811; 2 A.F.T.R. (P-H) 252
Case history
Prior	Appeal from the District Court of the United States for the Western District of Missouri.
Holding
Federal jurisdiction existed when a state law claim involves an inquiry into the constitutionality of a federal statute.
Court membership
Chief Justice Edward D. White Associate Justices Joseph McKenna · Oliver W. Holmes Jr. William R. Day · Willis Van Devanter Mahlon Pitney · James C. McReynolds Louis Brandeis · John H. Clarke
Case opinions
Majority	Holmes, joined by White, Pitney, Van Devanter, McReynolds
Dissent	McKenna
Laws applied
28 U.S.C. § 1331, 28 U.S.C. § 1338

American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257 (1916)^[1], was an early United States Supreme Court case governing the scope of federal question jurisdiction.

Plaintiff American Well Works Co. manufactured, sold, and held the patent to a particular type of pump, which was known to be the best on the market. The plaintiff sued defendant Layne & Bowler Co. on the grounds that defendant had maliciously libeled and slandered plaintiff's title to the pump by stating that the pump, and certain of its component parts, were infringements upon defendant's pump. Layne & Bowler had also filed lawsuits against others who used plaintiff's pump, and were threatening to sue all who used it.

American Well Works filed suit in the Arkansas state court, claiming actual damages of $50,000 as well as punitive damages. Layne & Bowler removed the suit to the United States District Court for the Eastern District of Arkansas on the grounds that the federal courts have exclusive jurisdiction over matters of patent law. The district court then dismissed the action. Plaintiff appealed directly to the United States Supreme Court.

Did the district court properly dismiss the matter; i.e. was federal question jurisdiction present here?

In a brief opinion, Justice Holmes wrote that this claim was based upon the allegedly defamatory actions and statements of the defendant, not any violation of the federal patent laws. The plaintiff alleged that defendant's conduct had damaged its business, and was not bringing suit to prove who had proper title to the patent. Holmes held that a suit for damages to a business caused by the defendant's allegations of patent infringement and threat to sue under the patent law was a matter of state law, and therefore the state courts had jurisdiction to hear the case. Whether or not defendant's statements about the patent were true was simply a piece of evidence to be examine by the state trial court.

Thus, under the rule stated by this case, whether a suit arises under state or federal law determines whether or not federal question jurisdiction exists. It is therefore consistent with the "well-pleaded complaint rule" set forth in Louisville & Nashville Railroad Company v. Mottley, 211 U.S. 149 (1908), just eight years earlier.

Justice McKenna dissented without opinion, on the grounds that he felt the case involved a direct and substantial controversy under the patent laws.

• List of United States Supreme Court cases, volume 241

English Wikisource has original text related to this article:

American Well Works Company v. Layne & Bowler Company

• ^241 U.S. 257 (Full text opinion from Findlaw.com)