Light v. Schmidt

• Decision Date: 06 June 1978
• Docket Number: Docket No. 77-3650
• Citation: 269 N.W.2d 304,84 Mich.App. 51
• Parties: R. F. LIGHT d/b/a R. F. Light Diving & Salvage, Plaintiff-Appellee, v. Donald C. SCHMIDT, d/b/a Michigan Marine Salvage, Defendant, and Peter Bill, Defendant-Appellant. 84 Mich.App. 51, 269 N.W.2d 304
• Court: Court of Appeal of Michigan — District of US

Page 304

269 N.W.2d 304

R. F. LIGHT d/b/a R. F. Light Diving & Salvage, Plaintiff-Appellee, v. Donald C. SCHMIDT, d/b/a Michigan Marine Salvage,

Defendant,

and

Peter Bill, Defendant-Appellant.

Docket No. 77-3650.

84 Mich.App. 51, 269 N.W.2d 304

Court of Appeals of Michigan.

June 6, 1978.

Rehearing Denied July 14, 1978.

Released for Publication Sept. 7, 1978.

Peter Bill in pro. per., Lowell Blumberg, Gaylord, for defendant-appellant.

Gillard, Bauer & Mazrum by James L. Mazrum, Joel W. Gillard, Alpena, Stewart, O'Reilly, Cornell, Donovan, Lascoe & Rancilio by William M. Donovan, Sterling Heights, for plaintiff-appellee.

[84 MICHAPP 53] Before J. H. GILLIS, P. J., and D. E. HOLBROOK and KAUFMAN, JJ.

KAUFMAN, Judge.

This is an appeal by defendant Bill from an adverse verdict by a jury in the trial court, holding him liable to plaintiff in the amount of $20,672. Plaintiff had alleged that he provided certain diving services for inspection and salvage operations for which defendants failed to pay. It was also alleged that certain checks issued by defendant Schmidt and Michigan Marine Salvage were returned unpaid and that payment was wrongfully and fraudulently stopped on another check.

Plaintiff testified that he was a commercial diver who did substantial salvage work. In February, 1974, Schmidt contacted him concerning the possible salvage of a load of steel aboard a sunken vessel known as the "Monrovia". During the meeting, plaintiff and Schmidt discussed the cost of the operation and Schmidt informed plaintiff at that time that there was a third party who was backing the project financially. He did not disclose the [84 MICHAPP 54] name of that third party. It was not until later that plaintiff came to the conclusion that defendant Bill was in charge.

After their discussion, Schmidt agreed to the rates quoted by plaintiff. Under the terms of the agreement, plaintiff would furnish four divers in addition to himself (who were to be paid once a week), and Schmidt and Bill would furnish the equipment.

Pursuant to the parties' agreement, plaintiff arrived in Alpena on May 17, 1974. The parties intended to inspect the "Monrovia" the next day. However, on that occasion, they were unable to locate the wreck. It was when they returned from this trip that plaintiff met defendant Bill. The sunken vessel was located on May 27, 1974. It was after the ship was discovered that defendant Bill called in four extra divers against the recommendation of plaintiff and defendant Schmidt. Of the four weeks that plaintiff and his divers were on the job, they were in the water only seven days and retrieved only a small amount of steel from the ship.

Financial difficulties arose shortly after the project began. Schmidt instructed plaintiff to hold a check issued on June 4, 1974, until sufficient funds could be put in the account to cover it. A stop-payment order was later issued by Mr. Schmidt. Other checks issued by Schmidt were returned marked "non-sufficient funds".

When it became apparent that the divers might not be paid, they met with plaintiff and defendants Schmidt and Bill, and informed the latter that unless they were paid, they would stop working. At that time, Bill guaranteed payment of the money and ordered Schmidt to pay the fees of the divers. It was plaintiff's opinion that Bill was [84 MICHAPP 55] guaranteeing payment with his personal finances, since at no time did he mention a corporation.

The evidence at trial showed that plaintiff knew of the existence of a corporation that was connected with defendant Bill and also knew it was named after Peter Bill. However, defendant was not told nor was he aware that Peter Bill & Associates, Incorporated, was financing the project, if that in fact was the case. Plaintiff did acknowledge that checks had been made out by Peter Bill & Associates to plaintiff; however, there was no other writing between plaintiff and Peter Bill & Associates.

Plaintiff Light was the only witness called by plaintiff at trial. Following Light's testimony, a motion for directed verdict as to defendant Schmidt was granted by the trial court. The trial court held that Schmidt was an agent for Bill and was therefore not liable on the contract with plaintiff or on the checks issued for payment of plaintiff's services.

Defendant Bill was found liable for the difference between the amount plaintiff received, $1,813, and the total cost of the project, $22,485, as of June 18, 1974 the day operations were halted.

On appeal, defendant's (hereinafter, unless otherwise specified, reference to "defendant" shall mean reference to defendant Bill) major contention is that the trial court lacked subject matter jurisdiction to hear this case. Defendant argues that, by definition, this was a case properly cognizable only in admiralty jurisdiction.

The extent of Federal admiralty and maritime jurisdiction is set forth in 28 U.S.C. § 1333:

"The district courts shall have original jurisdiction, exclusive of the courts of the States, of:

[84 MICHAPP 56] (1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.

(2) Any prize brought into the United States and all proceedings for the condemnation of property taken as prize."

It is claimed here that the contract with plaintiff was of a maritime nature and therefore subject to admiralty jurisdiction. In order for a contract to be of a maritime nature, it must have a connection with navigation of a ship, its equipment, its preservation, or the maintenance or preservation of its crew. As noted in The W. T. Blunt, 291 F. 899, 901 (E.D.Mich.1923):

"If a contract pertains to maritime service or a maritime transaction, that is, if it has a direct or substantial connection or relation to navigation, it is maritime in nature and may afford a sufficient basis for the jurisdiction of a court of admiralty."

Thus, it is the subject matter of the contract or the nature of the transaction that determines whether the contract is maritime in nature and subject to Federal court jurisdiction and neither the place where the contract is made nor the place where obligations arising therefrom are to be performed is, in and of itself, conclusive of the maritime nature of the agreement. Franks v. Land & Marine Applicators, Inc., 347 F.Supp. 243 (E.D.La.1972). Accord, Ocean Science & Engineering Inc. v. International Geomarine Corporation, 312 F.Supp. 825, 828 (D.Del.1970), where Judge Latchum observed:

"Romero v. International Terminal Operating Co., 358 U.S. 354, 360, 79 S.Ct. 468, 474, 3 L.Ed.2d 368 (1958) recognized the organic growth and evolving nature of maritime law and jurisdiction by pointing out that [84 MICHAPP 57] Article III, § 2, Cl. 1 (3d provision) of the United States Constitution 'empowered the federal courts in their exercise of the admiralty and maritime jurisdiction * * * to continue the development of this law within constitutional limits.' Whether a contract is maritime is not a static concept; it depends, as always, upon the nature of the contract and the service to be rendered and performed and its manner of performance."

When a contract involves salvage services to vessels both afloat or wrecked on the high seas or on the public navigable waters of the United States or to property being transported on such vessels, it is generally held that such a contract is maritime in nature. Houseman v. The Cargo of the Schooner North Carolina, 40 U.S. (15 Peters) 40, 10 L.Ed. 653 (1841). It is not material that the salvage services were performed under a written contract and that the compensation was not dependent on...