292 F. 642 (N.D.Cal. 1923), 17811, The Nanking

Docket Nº:17811, 17815, 17823, 17844.
Citation:292 F. 642
Case Date:August 20, 1923
Court:United States District Courts, 9th Circuit, Northern District of California

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292 F. 642 (N.D.Cal. 1923)


Nos. 17811, 17815, 17823, 17844.

United States District Court, N.D. California, Southern Division.

August 20, 1923

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McCutchen, Olney, Mannon & Greene, J. F. Resleure, Ira S. Lillick, Wilson & Wilson, Bell, Simmons & Creech, Nathan H. Frank, Irving H. Frank, C. H. Sooy, Goodfellow, Eells, Moore & Orrick, C. H. Connick, and J. C. Meyerstein, all of San Francisco, Cal., for libelants and interveners.

Sullivan & Sullivan and Theo. J. Roche, of San Francisco, Cal., for the Nanking.

Heller, Ehrman, White & McAuliffe and Pillsbury, Madison & Sutro, all of San Francisco, Cal., for Union Trust Co. of San Francisco.

PARTRIDGE, District Judge.

In the matter of the Nanking, the case is before the court upon various exceptions to various answers and libels filed against the ship. During the course of the last few months, a very large number of intervening libels have been filed. Among them is the intervening libel of the Union Trust Company of San Francisco, which is the trustee under a certain mortgage upon this ship and also another vessel belonging to the same company. As additional security for the mortgage there were pledged certain shares of stock of one of these Chinese steamship companies.

The exceptions to the libels raise three questions: The first is that the so-called Ship Mortgage Act (41 Stat. 1000) is unconstitutional; the second is that, even if the act is constitutional, the mortgage which is attached to the intervening libel of the libelant Union Trust Company is void, in that it does not comply with the act; and then the United States of America, in addition, sets up that it has prior claims against the vessel in amount some $280,000, by virtue of certain fines levied upon the ship for illegal transportation of opium.

It is apparent that the Ship Mortgage Act had two main purposes. The first was to keep abreast with modern methods of finance and the ever-increasing volume of our foreign commerce. The decision of the Supreme Court in The John Jay, 17 How. 399, 15 L.Ed. 95, was written in 1854. At that time ships were small and largely in private ownership. The opinion of Mr. Justice Wayne shows that the John Jay was sold for $6,000. It has already appeared from other proceedings in this case that the Nanking cost 500 times as much, and, as I remember it, being a vessel in the neighborhood of 6,000 tons, is not a large ship as things go now. It is likewise certain, I think, that the

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disparity between the largest vessel afloat in 1854 and such a steamship as the Leviathan, for instance, would be almost as great. Necessarily, such huge sums are ordinarily beyond the capacity of any private fortune, and the forms of corporate finance become essential. Without the form of assembling funds afforded by deeds of trust and the sale of bonds, the financing of a great modern steamship company would be a sheer impossibility. That being so, can it be said that a contract is maritime by which a ship is financed for the immediate needs of a particular voyage, and nonmaritime when the purpose is to raise money necessary to permit her to make any voyage at all?

Supposing a corporation owns a fleet of great steamers, plying to all quarters of the world. Through the fall in charters, or what not, result of a general trade depression, they are unable to finance any voyage at all. Clearly, if money were advanced on a bottomry bond for the necessities of a particular voyage, the contract would be maritime, the vessel bound, and the jurisdiction in rem in admiralty would be complete. Nay, the maritime 'privilege' or lien adopted from the civil law would import a tacit hypothecation of the ship from the mere furnishing of supplies to a specific vessel, a jus in re, which could be executed and divested only by a proceeding in rem in admiralty. Now, supposing, on the other hand, the owner borrows a large sum, by the issuance of bonds based upon a deed of trust of all the vessels. How is the contract any the less maritime? Surely the language of the Constitution, giving this court jurisdiction in 'all cases in admiralty and maritime jurisdiction,' is broad and general enough.

Is it not flexible enough, also, that the federal courts shall be able to keep in step with advancing civilization, and to do their part in fulfilling the splendid destiny of this republic upon the sea? That the law, as administered by courts of justice, must be a thing of growth, and keep pace with the ever-changing conditions of human affairs, is recognized by everybody. In the process of this development, however, the courts must be alert to see that the limitations placed by the Constitution upon legislation and judicial decision are not weakened in the slightest degree, and particularly that the powers reserved to the federal government are not extended beyond the language and reasonable intendment of the Constitution. This court should be as ready to decline jurisdiction, when Congress attempts to confer it beyond the constitutional reservations, as alert to assume and exercise it when it comes fairly within those reservations. But, before this court should declare an act of Congress void, it should be convinced beyond any doubt that the jurisdiction conferred cannot fairly and reasonably be brought within the four corners of the charter of our fundamental law.

In determining that question, of course, it is proper to inquire what was the state of jurisdiction at the time the Constitution was adopted. But does that mean that we are to shut our eyes to progress, or narrowly conclude that the far-sighted framers of that instrument could not have beheld the splendid vision of a nation lying fair from sea to sea, with a commerce that should be commensurate with its territorial extent? Surely not. The Constitution of the United States was an inspired document. Precise though its language may be, the words are alive, vital with the spirit of progress, and with the sublime quality

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of everlasting youth. It is not too much to say that, if the time ever comes when the soul of that instrument shall be out of touch with the aspirations of mankind, then, and not till then, will civilization be in danger of perishing from the earth.

Did the framers of the Constitution mean, when they framed that section, and did the people of the 13 colonies understand, when they adopted it, that the jurisdiction should be limited to the matters which were then of maritime cognizance, either here or in England? Or was not the intent rather to give jurisdiction to the federal courts of all such matters as in the progress of the years and the development of sea-borne trade, might fairly come within the terms employed? The answer to these alternatives is found in the reasons why jurisdiction of maritime matters was reserved to the federal courts at all, to the exclusion of the tribunals of the various states.

Let us take the case of The Thomas Jefferson, 10 Wheat. 428, 6 L.Ed. 358. The matter concerned the wages of seamen. Judge Story held that the federal courts had no jurisdiction, because the services were rendered on waters above the ebb and flow of the tide. And why? Because in England there are practically no waters above the tidal influence which are navigable. A quarter of a century later, however, Chief Justice Taney wrote his opinion in The Genessee Chief, 12 How. 443, 13 L.Ed. 1058. The matter involved there was a collision on Lake Ontario. Since the decision in The Thomas Jefferson, Congress had enacted a statute extending the jurisdiction of this court to the Great Lakes, and thus the question was squarely presented as to whether or not the Congress had the power so to extend it. It was pointed out that the Supreme Court had already, in The Thomas Jefferson, declared that waters where there was no tide were not within the jurisdiction of the admiralty. Surely that was as solemn and binding a decision as The John Jay. But the court pointed out that conditions were changed. At the time of the adoption of the Constitution, there was no water-borne commerce except by sea, or the great tidal rivers. The steamboat had not come into use. But by 1851, when The Genessee Chief was decided, there had come into being a considerable commerce on the Mississippi and the Great Lakes, and steamers were in very general use. So Chief Justice Taney points out that the reason for the rule of The Thomas Jefferson no longer existed, and it would be too narrow a view of the Constitution to limit it to tidewater, when there was no real distinction between a ship on the Thames and one on the Mississippi, between one on the inlets of the sea in Scotland, within the ebb and flow of the tide, and the lakes of America, where there is no tide.

Then, again, in Fretz v. Bull, 12 How. 466, 13 L.Ed. 1068, this jurisdiction was specifically extended to the Mississippi above tide-water, and in The Magnolia, 20 How. 296, 15 L.Ed. 909, to the Alabama, a river whose navigable course is wholly within a single state. Judge Story, moreover, in his work on the Constitution, says that the word maritime was 'doubtless' added 'to guard against any narrow interpretation of the preceding word 'admiralty."""'

In Waring v. Clarke, 5 How. 457, 12 L.Ed. 226, Mr. Justice Wayne considered the question as to whether the jurisdiction of admiralty

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extended to a collision on waters infra corpus comitatus. That jurisdiction was denied...

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