Cory Bros. & Co. v. United States

• Decision Date: 21 July 1931
• Docket Number: No. 430.,430.
• Parties: CORY BROS. & CO., Limited, v. UNITED STATES.
• Court: U.S. Court of Appeals — Second Circuit

51 F.2d 1010 (1931)

CORY BROS. & CO., Limited, v. UNITED STATES.

No. 430.

Circuit Court of Appeals, Second Circuit.

July 21, 1931.

Choate, Larocque & Mitchell, of New York City (Joseph Larocque, of New York City, of counsel), for appellant.

George Z. Medalie, U. S. Atty., of New York City (William E. Collins, Sp. Asst. U. S. Atty., of New York City, of counsel), for the United States.

Before L. HAND, SWAN, and CHASE, Circuit Judges.

SWAN, Circuit Judge.

Proceeding under the Suits in Admiralty Act (41 Stat. 525 46 USCA §§ 741-752). Cory Bros. & Co., Limited, a corporation organized under the laws of Great Britain, filed its libel against the United States to recover the amount of disbursements incurred by it in defending a suit for cargo damage brought by a shipper against the steamship Milwaukee Bridge, in which suit Cory Bros. & Co., as ship's agent to attend to discharge of the cargo at Pernambuco, Brazil, had been impleaded upon the petition of the United States, claimant of the vessel. That litigation, the details of which need not now be stated, is reported in The Milwaukee Bridge (D. C.) 15 F.(2d) 249, affirmed 26 F.(2d) 327 (C. C. A. 2), certiorari denied Moore v. U. S., 278 U. S. 632, 49 S. Ct. 31, 73 L. Ed. 550. It resulted in exoneration of the impleaded respondent from fault in respect to discharge of the cargo. Thereupon Cory Bros. & Co. filed the present libel "in a cause of contract, civil and maritime" upon the theory that by reason of its employment as agent to attend to discharge of the cargo, the United States became obligated to reimburse it for expenses incidental to such employment, including the attorneys' fees and disbursements it had incurred as a respondent impleaded in the aforesaid suit. Exceptions to the libel were filed on the ground, first, of lack of jurisdiction in admiralty; and, second, that no cause of action was alleged in admiralty or otherwise. The opinion below, sustaining the exceptions and dismissing the libel with leave to amend, may be found in 43 F.(2d) 589. A premature appeal from that order was dismissed in Cory Bros. & Co. v. U. S. (C. C. A.) 47 F.(2d) 607. The present appeal is from a later order which dismissed the libel finally.

Assuming that the United States was under an obligation to reimburse Cory Bros. & Co. for the expenses in question, the first problem presented by this appeal is whether a suit to enforce such obligation is within the jurisdiction of the District Court.

It is well settled that the jurisdiction of admiralty in matters of contract depends upon the subject-matter of the contract. North Pac. S. S. Co. v. Hall Bros. Co., 249 U. S. 119, 125, 39 S. Ct. 221, 63 L. Ed. 510; New England M. Insurance Co. v. Dunham, 11 Wall. 4, 26, 20 L. Ed. 90. While this test is not always easy of application, it seems obvious that the work of lading or discharging a ship's cargo is a maritime service, and that a contract engaging stevedores to do such work is of admiralty cognizance. The Hattie M. Bain, 20 F. 389 (D. C. S. D. N. Y.); Florez v. The Scotia, 35 F. 916 (D. C. S. D. N. Y.); The Gilbert Knapp, 37 F. 209 (D. C. E. D. Wis.). The libelant assumes its contract to be of this character (see The Milwaukee Bridge D. C. 291 F. 711), and argues that the implied obligation to reimburse the agent for expenses in defending a suit arising out of performance of the principal's business should likewise be held maritime. Cf. The Electron, 48 F. 689 (D. C. S. D. N. Y.); Linen Thread Co. v. Shaw, 9 F. (2d) 17 (C. C. A. 1). But it is by no means clear that libelant's assumption is correct. The contract employed Cory Bros. & Co. to act as ship's agent at Pernambuco, and the agent was instructed not only to attend to the discharge of cargo at that port, but also to book cargo for ports beyond. Whether it was contemplated that the libelant should itself perform stevedoring services or should engage others to do so is not clear from the letter which constitutes the contract, nor is it made clear by the allegations of the libel. The libel alleges merely that the libelant "properly attended to the discharge of said cargo and duly and properly made delivery thereof." If the contract merely employed libelant to procure maritime services instead of obligating it to perform them itself, it may well be that a suit to recover compensation and disbursements would be not of maritime cognizance. Such a distinction has been frequently observed. Thus, while a contract for the charter of a ship is clearly maritime in nature, a contract creating an agency to obtain charterings has been held nonmaritime. The Thames, 10 F. 848 (D. C. S. D. N. Y.); Taylor v. Weir, 110 F. 1005 (D. C. N. J.); Rhederei A. Gesellschaft Oceana v. Clutha Shipping Co., 226 F. 339 (D. C. Md.). Cf. Adler v. Galbraith, Bacon & Co., 156 F. 259 (D. C. W. D. Wash.); Brown v. West Hartlepool Steam Nav. Co., 112 F. 1018 (C. C. A. 5). The same has been held as to a contract with an agent to procure crews, The Retriever, 93 F. 480 (D. C. W. D. Wash.); insurance on a ship, Marquardt v. French, 53 F. 603 (D. C. S. D. N. Y.); freight and passengers, The City of Clarksville, 94 F. 201 (D. C. Ind.); The Humboldt, 86 F. 351 (D. C. Wash.); Richard v. Hogarth, 94 F. 684 (D. C. N. J.); The Crystal Stream, 25 F. 575 (D. C. S. D. N. Y.). The rationale has been thus stated: "The distinction between preliminary services leading to a maritime contract and such contracts themselves has been affirmed in this country from the first, and not yet departed from. It furnishes a distinction capable of somewhat easy application. If it be broken down, I do not perceive any other dividing line for excluding from the admiralty many other sorts of claims which have a reference, more or less near or remote, to navigation and commerce. If the broker of a charter-party be admitted, the insurance broker must follow, — the drayman, the expressman, and all others who perform services having reference to a voyage either in contemplation or executed." Brown, J., in The Thames (D. C.) 10 F. 848. See, also, The Harvey and Henry, 86 F. 656 (C. C. A. 2); 1 Benedict, Admiralty (5th Ed.) § 62. Apparently the same ground explains the decision in Minturn v. Maynard, 17 How. 477, 15 L. Ed. 235, where the libelant had been employed by the shipowner as general agent and had expended money for supplies, repairs, and advertising of the ship. The suit was for disbursements and commissions, and it was held that the agent's remedy was not a libel in admiralty, but a suit in assumpsit. See, also, St. Paul Fire & Marine Ins. Co. v. Birrell, 164 F. 104, 106 (D. C. Or.); The Esteban de Antunano, 31 F. 920, 923 (C. C. E. D. La.).

It is difficult, if not impossible, to distinguish Minturn v. Maynard from the case at bar, and that decision would seem to be a controlling authority against admiralty jurisdiction of the present suit. Moreover, the appellee invokes the principle that, even if the contract was maritime in so far as it related to attending to discharge of cargo, admiralty will not take jurisdiction of nonmaritime transactions arising subsequent to the execution of a maritime contract. Cf. Home Ins. Co. v. Merchants' Transp. Co., 16 F.(2d) 372, 373 (C. C. A. 9); United Transp. & L. Co. v. New York & Baltimore T. Line Co., 185 F. 386, 390 (C. C. A. 2). But we do not find it necessary to determine definitely these troublesome questions of admiralty jurisdiction, because, if the District Court lacked jurisdiction in admiralty, it possessed jurisdiction under the Tucker Act, 28 USCA § 41 (20). Hence on one ground or the other it had power to entertain the suit.

The Tucker Act confers upon the District Courts jurisdiction of suits against the United States for "all claims not exceeding $10,000 founded upon * * * any contract, express or implied, with the Government of the United States. * * *" The theory of the present libel is that the contract of agency contained the usual implied obligation of a principal to reimburse the agent for expenses incurred in the course of the agency, and that this obligation has been broken.

"* * * The United States, when they contract with their citizens, are controlled by the same laws that govern the citizen in that behalf. All obligations which would be implied against citizens under the same circumstances will be implied against them." United States v. Bostwick, 94 U. S. 53, 66, 24 L. Ed. 65; cf. Clark v. United States, 95 U. S. 539, 542, 24 L. Ed. 518.

It is apparent that the present action is "founded upon" a contract, partly written and partly implied from prior dealings entered into with duly authorized representatives of the United States, and brought to enforce alleged obligations of that contract. Such a claim is clearly included within the spirit and language of the Tucker Act. Cf. Heil v. United States, 273 F. 729, 731 (D. C. S. D. N. Y.); Crouch v. United States, 31 F. (2d) 211 (D. C. E. D. S. C.).

In United States v. James W. Elwell & Co., 250 F. 939, we held that a libel in admiralty might be converted into an action qui tam when the defendant by answering had waived a jury. In Owens v. Breitung (C. C. A.) 270 F. 190, 193, and Louis-Dreyfus v. Paterson Steamships (C. C. A.) 43 F.(2d) 824, 828, 72 A. L. R. 242, it is intimated that jurisdiction might be supported on diverse citizenship, although the pleadings were drawn on the erroneous assumption of jurisdiction in admiralty. In the case at bar, we see no...