Bournias v. Atlantic Maritime Co.

• Decision Date: 10 February 1955
• Docket Number: Docket 23124.,No. 39,39
• Citation: 220 F.2d 152
• Parties: John BOURNIAS, Libelant-Appellant, v. ATLANTIC MARITIME CO., Ltd., Navegacion Maritime Panama S.A. and the S.S. Atlantic Ocean, her engines, tackle, boilers, etc., Respondents-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

220 F.2d 152 (1955)

John BOURNIAS, Libelant-Appellant, v. ATLANTIC MARITIME CO., Ltd., Navegacion Maritime Panama S.A. and the S.S. Atlantic Ocean, her engines, tackle, boilers, etc., Respondents-Appellees.

No. 39, Docket 23124.

United States Court of Appeals, Second Circuit.

Argued December 10, 1954.

Decided February 10, 1955.

Lebovici & Safir, New York City, (Herbert Lebovici, New York City, of counsel), for libelant-appellant.

McNutt & Nash, New York City (James E. Freehill and Donald B. Allen, New York City, of counsel), for respondents-appellees.

Before CLARK, Chief Judge, MEDINA and HARLAN, Circuit Judges.

HARLAN, Circuit Judge.

Libelant, a seaman, was employed on respondents' vessel at the time she was changed from Panamanian to Honduran registry. As originally filed the libel contained two causes of action. The first was based on several Articles of the Panama Labor Code, under which the libelant claimed an extra three-months' wages payable to seaman upon change of registry, and other amounts for vacation, overtime and holiday pay. The second was for penalties under 46 U.S.C.A. § 596 for failure to pay these amounts promptly.

The respondents filed exceptive allegations asserting, inter alia, that the action was barred by the one-year statute of limitations contained in Article 623 of the Panama Labor Code. After an argument on respondents' motion to sustain such allegations, the libelant was permitted to amend his libel to include a third cause of action to recover the amount of advances made to him and deducted from his pay in alleged violation of 46 U.S.C.A. § 599; the exceptive allegations were deemed amended to plead laches to this new claim; and the question of whether the action was barred by lapse of time was set down for a separate hearing.

At this hearing the Court held that the defense of laches, which was treated by Court and counsel as going only to the claim for advances, had not been substantiated, but that the Panama statute of limitations did bar the claims under the Panama Labor Code, and that in consequence the claim for penalties must also fail pro tanto. Although the respondents appear to argue that we are free on this appeal to hold the claim for wages barred by laches, if not by limitation, we regard the correctness of the lower Court's decision on the applicability of the Panama statute of limitations as the only issue before us.

Article 623 of the Labor Code of Panama, applicable to Articles 127, 154, 166 and 170 of the Code, upon which the libelant based his first cause of action, reads:

"Actions and rights arising from labor contracts not enumerated in Article 621 shall prescribe i.e., shall be barred by the Statute of Limitations in a year from the happening of the events from which arise or are derived the said actions and rights."¹

The libelant's employment terminated on December 27, 1950, and since his libel was not filed until December 29, 1952, his first cause of action would be barred by Article 623 if it is controlling in this action.

In actions where the rights of the parties are grounded upon the law of jurisdictions other than the forum, it is a well-settled conflict-of-laws rule that the forum will apply the foreign substantive law, but will follow its own rules of procedure. Restatement of Conflict of Laws § 585; Beale, Conflict of Laws § 584.1 (1935); Stumberg, Conflict of Laws 134 et seq. (2d Ed. 1951). While it might be desirable, in order to eliminate "forum-shopping," for the forum to apply the entire foreign law, substantive and procedural — or at least as much of the procedural law as might significantly affect the choice of forum, it has been recognized that to do so involves an unreasonable burden on the judicial machinery of the forum, see Restatement of Conflict of Laws, Introductory Note to Chapter 12, and perhaps more significantly, on the local lawyers involved, see Ailes, Substance and Procedure in the Conflict of Laws, 39 Mich.L.Rev. 392, 416 (1941). Consequently, for at least some questions the law applied is that of the forum, with which the lawyers and judges are more familiar, and which can be administered more conveniently. In Levinson v. Deupree, 1953, 345 U.S. 648, 652, 73 S.Ct. 914, 916, 97 L.Ed. 1319, it was said that while a federal admiralty court was bound to enforce a foreign right as it found it, it was "not bound beyond that to strive for uniformity of results in procedural niceties with the courts of the jurisdiction which originated the obligatio." These are the ground rules which govern a federal admiralty court in enforcing an obligatio created by Panamanian law.

The general rule appears established that for the purpose of deciding whether to apply local law or foreign law, statutes of limitations are classified as "procedural." Stumberg, Conflict of Laws 147 (1951); Lorenzen, Statutes of Limitation and the Conflict of Laws, 28 Yale L.J. 492 (1919). Hence the law of the forum controls. See Order of United Commercial Travelers v. Wolfe, 1947, 331 U.S. 586, 607, 67 S.Ct. 1355, 91 L.Ed. 1687; Janes v. Sackman Bros. Co., 2 Cir., 1949, 177 F.2d 928. This rule has been criticized as inconsistent with the rationale expressed above, since the foreign statute, unlike evidentiary and procedural details, is generally readily discovered and applied, and a difference in periods of limitation would often be expected to influence the choice of forum. Lorenzen, supra; Stumberg, op. cit., supra. The rule is in fact an accident of history. Lorenzen, supra; see also Developments in the Law — Statutes of Limitations, 63 Harv.L.Rev. 1177, 1187 (1950). And although it may perhaps be explained as a device for giving effect to strong local policies on limitations, this explanation would not satisfy the objections of its critics. Lorenzen, supra. Be all this as it may, this general rule is firmly embedded in our law.

But as might be expected, some legislatures and courts, perhaps recognizing that in light of the rationale of the underlying conflict-of-laws doctrine it is anomalous to classify across-the-board statutes of limitation as "procedural," have created exceptions to the rule so categorizing such statutes. A legislative example are the so-called "borrowing statutes" which require the courts of the forum to apply the statute of limitations of another jurisdiction, often that where the cause of action arose, when the forum's statute has been tolled. See Note, Legislation Governing the Applicability of Foreign Statutes of Limitation, 35 Col.L.Rev. 762 (1935). A court-made exception, and the one with which we are concerned here, is that where the foreign statute of limitations is regarded as barring the foreign right sued upon, and not merely the remedy, it will be treated as conditioning that right and will be enforced by our courts as part of the foreign "substantive" law. See Beale, Conflict of Laws §§ 604.3, 605.1 (1935). Such exceptions operate pro tanto to give the result which commentators have advocated.

It is not always easy to determine whether a foreign statute of limitations should be regarded as "substantive" or "procedural," for the tests applied by the courts are far from precise. In The Harrisburg, 1886, 119 U.S. 199, 7 S.Ct. 140, 30 L.Ed. 358, the Supreme Court held "substantive" a limitation period contained in a wrongful death statute, emphasizing that "the liability and the remedy are created by the same statutes, and the limitations of the remedy are therefore to be treated as limitations of the right," 119 U.S. at page 214, 7 S.Ct. at page 147. It now appears settled that limitation periods in wrongful death statutes will be regarded as "substantive." Restatement of Conflict of Laws § 397. And the rule of The Harrisburg has been stated to apply not merely to rights to sue for wrongful death, but to any statute-created right unknown to the common law. See Zellmer v. Acme Brewing Co., 9 Cir., 1950, 184 F.2d 940; Lewis v. R. F. C., 1949, 85 U.S.App.D.C. 339, 177 F.2d 654; Ford, Bacon & Davis, Inc. v. Volentine, 5 Cir., 1933, 64 F.2d 800. The rule was also carried a step further in Davis v. Mills, 1904, 194 U.S. 451, 24 S.Ct. 692, 694, 48 L.Ed. 1067. Suggesting that in the instances where courts have found some statutes of limitation to be "substantive" they were seeking a "reasonable distinction" for escaping from the anomaly of the rule that limitations are generally to be regarded as "procedural," Mr. Justice Holmes continued, "The common case where limitations are treated as "substantive" is where a statute creates a new liability, and in the same section or in the same act limits the time within which it can be enforced, whether using words of condition or not. The Harrisburg, 119 U.S. 199 7 S.Ct. 140, 30 L.Ed. 358. But the fact that the limitation is contained in the same section or the same statute is material only as bearing on construction. It is merely a ground for saying that the limitation goes to the right created, and accompanies the obligation everywhere. The same conclusion would be reached if the limitation was in a different statute, provided it was directed to the newly created liability so specifically as to warrant saying that it qualified the right." See also Maki v. George R. Cooke Co., 6 Cir., 1942, 124 F.2d 663, 146 A.L.R. 1352, where the test of "specificity" was found satisfied by a separate statute imposing a limitation on all statutory rights.

Two other approaches to the problem were suggested in our opinion in Wood & Selick, Inc., v. Compagnie Generale Transatlantique, 2 Cir., 1930, 43 F.2d 941. First, that the foreign law might be examined to see if the defense possessed the attributes which the forum would classify as "procedural" or "substantive"; that is, for example, whether the defense need be pleaded, as a "substantive" period of limitations need not be in this country. Second, the foreign law might be examined to see if the operation of limitation completely extinguished...