Layne & Bowler Corp. v. UNITED STATES S. BOARD E. FLEET CORP.

• Decision Date: 18 June 1928
• Docket Number: No. 5404.,5404.
• Parties: LAYNE & BOWLER CORPORATION et al. v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION et al.
• Court: U.S. Court of Appeals — Ninth Circuit

27 F.2d 39 (1928)

LAYNE & BOWLER CORPORATION et al. v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION et al.^*

No. 5404.

Circuit Court of Appeals, Ninth Circuit.

June 18, 1928.

Samuel W. McNabb, U. S. Atty., and Elden McFarland, Asst. U. S. Atty., both of Los Angeles, Cal., and F. R. Conway, Asst. Admiralty Counsel U. S. Shipping Board, of Washington, D. C.

Glensor, Clewe, Van Dine & Turcotte, of Los Angeles, Cal., for appellees.

Before RUDKIN, DIETRICH, and HUNT, Circuit Judges.

HUNT, Circuit Judge.

Appeal by the United States from a decree for libelants, growing out of a libel in rem and in personam, for the recovery of an alleged duplicate payment of freight for the transportation of certain pig iron shipped on April 11, 1921, by steamer Anna E. Morse, consigned to the order of libelants, from Mobile, Ala., to Los Angeles, Cal. The suit was brought under Suits in Admiralty Act March 9, 1920 (41 Stat. 525 46 USCA §§ 741-752; Comp. St. §§ 1251¼-1251¼k). The decree was against the United States. As against the Fleet Corporation, the libel was dismissed. The shippers were Tuffli Bros. Pig Iron & Coke Company. Layne & Bowler Corporation and Bayer-Rothgeb Company were the owners, and they or their assigns were consignees of the freight shipped. At the time the United States Shipping Board Emergency Fleet Corporation, for the United States, held the record title to the ship; the equitable ownership being in the Virginia Shipbuilding Corporation or its nominee, the United States Transport Company, the last-named company then having the management and possession of the ship.

Negotiable bills of lading were issued by the United States Transport Company, providing, among other things, "full rate to destination and all advance charges against the goods are due and payable to the United States Transport Company, Inc., upon receipt of the goods by the latter, and any further sums becoming payable to the carrier hereunder, * * * and any payments made and liability incurred by the carrier in respect to the goods * * * shall be deemed fully earned and due and payable to the carrier at any stage before or after loading of the service hereunder, without deduction (if unpaid) or refund in whole or in part (if paid), goods or vessel lost or not lost, and the carrier shall have a lien on the goods," etc. After the vessel left Mobile, the Transport Company demanded of, and was paid, the freight charges by libelants, but at Los Angeles on May 8th, before delivery of the freight, the United States, acting through the Shipping Board, seized the ship, and exacted and was paid a second freight charge by libelants. The suit is to recover from the United States the money paid to the Transport Company.

Attached to the bills of lading issued to libelants by the Transport Company were assignments with the name of the assignee left blank, made by the Transport Company, of its rights to the collection of freight due or to become due under the bills of lading. These assignments were forwarded to a bank in Los Angeles, with instructions to collect from libelants the amount of freight due from libelants for transporting the shipments. In order to release their goods, libelants had to pay the bank the freight charges, and, upon making such payments, libelants received the bills of lading. Subsequently, in foreclosure proceedings instituted by the United States in the federal court for the Eastern district of Virginia, the ship was sold to satisfy the mortgage debt due to the United States. A deficiency remained unpaid. Virginia Shipbuilding Co. v. U. S. Em. Fleet Corporation (C. C. A.) 22 F.(2d) 38; United States v. Virginia Shipbuilding Co. (D. C.) 292 F. 440; Id. (D. C.) 11 F.(2d) 156.

The evidence disclosed that in March, 1920, a general managing agency and operating contract between the Fleet Corporation, as owner, and the Transport Company, as managing agent, had been made, whereby the Transport Company was made agent of the Fleet Corporation as to management, operation, and conduct of the business of such vessels as the corporation then assigned or might thereafter assign to the agent for such purposes. The agent was to collect "at the proper time" all freights; also, to see that all freight was prepaid, except when otherwise instructed by the Fleet Corporation, or where the prevailing custom was to the contrary, in which case utmost diligence should be exercised by the agent as to acceptance of cargo and collection of freight money; to issue bills of lading in usual form, which should reserve to the Fleet Corporation lien adequate for its protection; to deposit all money collected in behalf of the Fleet Corporation as a separate trust fund in the name of the United States Shipping Board Emergency Fleet Corporation, which moneys should be the property of the corporation, to be accounted for, subject to check by the corporation as well as by the agent.

But prior to the date of the creation of that agency, under authority of a resolution of the Shipping Board, passed November 20, 1919, the Anna E. Morse was transferred to the Transport Company, under the same terms as other ships had been transferred to the Shipbuilding Company, by agreement of September 25, 1919. The receipt given by the Transport Company for the Anna E. Morse recited that delivery of the vessel was in pursuance of contracts between the Shipping Board Emergency Fleet Corporation and the Virginia Shipbuilding Company, and that delivery was "pending sale." The contracts referred to were made September 25, 1919, and July 19, 1920, respectively, between the Virginia Shipbuilding Company, party of the first part, the United States Shipping Board Emergency Fleet Corporation, party of the second part, and the United States Shipping Board, party of the third part.

It is unnecessary to state the particulars of those contracts. They have been carefully examined and construed in the District Court for the Eastern District of Virginia in Virginia Shipbuilding Corp. v. United States Shipping Board Emergency Fleet Corporation and Groton Iron Works and United States v. Virginia...