Grow v. Steel Gas Screw Loraine K
Decision Date | 08 December 1962 |
Docket Number | No. 14773.,14773. |
Citation | 310 F.2d 547,1963 AMC 2044 |
Parties | Robert J. GROW, J. Alfred Grow, Jr., Edwin S. Englebert d/b/a Grow Sumner Englebert Agencies, a Co-partnership, Libelants-Appellees, v. STEEL GAS SCREW LORAINE K, Her Engines, Tackle, Apparel and Furniture, Respondent-Appellant. |
Court | U.S. Court of Appeals — Sixth Circuit |
Robert L. Coopes, Detroit, Mich., for appellant.
Fred H. Keidan, Watson, Lott & Wunsch, Detroit, Mich., for appellee.
Before WEICK and O'SULLIVAN, Circuit Judges, and DARR, Senior District Judge.
Insurance brokers filed a libel in Admiralty in the District Court and attached the tug LORAINE K to enforce a lien for insurance premiums created by a Michigan statute.1
The District Court overruled exceptions to the libel in an opinion reported in 185 F.Supp. 803. Thereafter, the District Court heard the case on its merits and in an opinion, which was adopted as findings of fact and conclusions of law, decided in favor of the brokers. The court entered judgment for the premiums, interest and costs which amounted to $2,339.92 and ordered the vessel sold for nonpayment thereof. This appeal followed.
The vessel was owned by Joseph H. Carollo. He and his attorney caused a corporation known as Marine Transport Corporation to be organized under the laws of Michigan. Out of 5,000 issued shares Carollo owned 2,250 shares or 45% thereof and his attorney owned 500 shares or 10%. They controlled the company. Carollo was president and director of the company. His attorney was also an officer, director and resident agent for the company.
After the corporation had been organized Carollo entered into a bareboat charter with it. In the charter agreement Carollo reserved the right to use the tug for his own operations when not in use by the charterer.
The charter provided for insurance.2 It also contained a clause in which the charterer agreed not to permit or suffer any lien or encumbrance upon the vessel.3
Prior to the charter Carollo carried no insurance on the vessel.
The attorney ordered the insurance policies from the brokers with the assent of Carollo. Seven policies were issued and in all of them Carollo and Marine Transport Corporation were the named insureds. Three of the policies were mailed to Carollo. The brokers had knowledge of the charter.
The brokers billed Marine Transport Corporation for the premiums and later instituted an action in the state court in Michigan to collect them. Bankruptcy of Marine Transport Corporation ensued and the present libel in Admiralty was filed.
Appellant contends that the federal courts have no admiralty jurisdiction under Article III, Section 2 of the Constitution of an action in rem to enforce a lien for marine insurance premiums created by state statute.
The insurance policies were marine contracts and the federal court without question had jurisdiction of actions in personam to enforce them. In re Insurance Co. of Pennsylvania, 22 F. 109 (D.C.N.D.N.Y.), affirmed Insurance Co. of Pennsylvania v. Proceeds of Sale of Barge Waubaushene, C.C., 24 F. 559; The Jennie B. Gilkey, 19 F. 127 (Cir.Ct. D.Mass., 1884); The Mame, 184 F. 968 (D.Conn., 1911); The Wabash, 279 F. 921 (D.Conn., 1922); The Minnie, 24 F. 2d 604 (D.Mass., 1927); The Hall, 48 F.2d 646 (D.Mass., 1931); The Prilla, 21 F.Supp. 383 (D.Mass., 1937). See also: 1 Benedict, Admiralty (6th ed.) § 110a; 2 Am.Jur.2d, Admiralty, § 70 p. 758.
Neither admiralty law nor the Federal Maritime Lien Act4 (46 U.S.C. §§ 971-975) provided for a lien for unpaid insurance premiums. Gilmore & Black, The Law of Admiralty, p. 512; The Minnie V, D.C., 24 F.2d 604; The Hall, D.C., 48 F.2d 646; The Prilla, D.C., 21 F.Supp. 383.
Prior to the Federal Maritime Lien Act, a state lien for insurance premiums was enforced in Admiralty. The Guiding Star, 9 F. 521 (D.C.S.D.O.), affirmed 18 F. 263; Marine Insurance Co. v. The Daisy Day, 40 F. 603 (Cir.Ct., W.D.Mich., 1889). The brokers sole reliance for a lien is on the Michigan statute. Since no lien for insurance premiums was provided by the Federal Maritime Lien Act, we see no reason why Admiralty should not enforce a state lien.
State legislation, maritime in nature but applicable to areas not considered by federal maritime law or covered by enactments of Congress, is enforceable in the federal courts and this includes state statutes creating in rem liens for insurance premiums. 1 Benedict, Admiralty (6th ed.) § 35, pp. 79, 83; 2 Am. Jur.2d Admiralty, § 70 p. 759, § 92 pp. 772, 773.
One of the most significant cases considering the status of state laws in the maritime field is Wilburn Boat Co. v. Fireman's Insurance Company, 348 U.S. 310, at 313, 75 S.Ct. 368, at 370, 99 L.Ed. 337 (1955) rehearing den. 349 U.S. 907, 75 S.Ct. 575, 99 L.Ed. 1243 (1955), wherein the Court succinctly stated:
As to the contention that the Federal Government had pre-empted the regulation of all marine law, including insurance, the Court commented 348 U.S. at 321, 75 S.Ct. at 374:
In Romero v. International Terminal Operating Co. et al., 358 U.S. 354, 79 S. Ct. 468, 3 L.Ed.2d 368 (1959) the Court reaffirmed this doctrine. The Court said:
See also Just v. Chambers, 312 U.S. 383, 388, 61 S.Ct. 687,...
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