AMERICAN CYANAMID COMPANY v. China Union Lines, Ltd.

• Citation: 306 F.2d 135
• Decision Date: 01 August 1962
• Docket Number: No. 19617.,19617.
• Parties: AMERICAN CYANAMID COMPANY; A/S A. O. Anderson & Co., Owner and Operator of M/V BEREAN; United States of America and Lucy Duncan, Appellants, v. CHINA UNION LINES, LTD., as Owner of the S.S. UNION RELIANCE, Appellee. CHINA UNION LINES, LTD., as Owner of the S.S. Union Reliance, Appellant, v. AMERICAN CYANAMID COMPANY, A/S A. O. Anderson & Co., Owner and Operator of M/V Berean; United States of America and Lucy Duncan, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

306 F.2d 135 (1962)

AMERICAN CYANAMID COMPANY; A/S A. O. Anderson & Co., Owner and Operator of M/V BEREAN; United States of America and Lucy Duncan, Appellants, v. CHINA UNION LINES, LTD., as Owner of the S.S. UNION RELIANCE, Appellee.

CHINA UNION LINES, LTD., as Owner of the S.S. Union Reliance, Appellant, v. AMERICAN CYANAMID COMPANY, A/S A. O. Anderson & Co., Owner and Operator of M/V Berean; United States of America and Lucy Duncan, Appellees.

No. 19617.

United States Court of Appeals Fifth Circuit.

August 1, 1962.

James E. Ross, J. Donald Stillwell, Houston, Tex., Bryan F. Williams, Jr., Galveston, Tex., Jack Shepherd, Asst. U. S. Atty., Houston, Tex., Donald M. Waesche, Jr., New York City, John W. Boult and Morton Hollander, Attys., Dept. of Justice, Washington, D. C., for the United States.

Platow & Lyon, New York City, Eastham, Watson, Dale & Forney, Houston, Tex., Robert Eikel, Houston, Tex., Edward F. Platow, New York City, Edward W. Watson, Galveston, Tex., of counsel, for China Union Lines, Ltd.

Newton M. Crain, Jr., Newton B. Schwartz, E. V. Greenwood, Joseph Newton, Houston, Tex., Preston Shirley, Galveston, Tex., Frank G. Harmon, Houston, Tex., for interested parties.

Before CAMERON, WISDOM and GEWIN, Circuit Judges.

CAMERON, Circuit Judge.

This complicated admiralty case is before us on interlocutory appeal pursuant to leave granted by this Court April 11, 1962. Eleven briefs are filed in behalf of seven parties: the United States, China Union Lines, Ltd., American Cyanamid Company, Lucy Duncan, Ben G. Sewell, Trustee, Mitsubishi International Corporation, Shinko Sangyo Trading, Ltd., and other owners of parcels of cargo aboard M/V Union Reliance and A/S A. O. Anderson & Co., owner and operator of M/V Berean. Other parties or prospective parties participated through their proctors in the hearings reported in the record.

We will adopt in the main, and with some omissions and additions, the Statement of the Case made in the brief of the United States as setting forth the salient "facts" sought to be presented to us:

On November 7, 1961 the M/V Union Reliance, owned and operated by China Union Lines, Ltd., a corporation organized under the laws of the Republic of China, collided with the M/V Berean, a Norwegian tank vessel. The collision occurred at night during clear weather in that portion of the Houston Ship Channel which passes through Galveston Bay. The Union Reliance, while departing from the Port of Houston, Texas, under the direction of a licensed pilot, was proceeding down the Houston Ship Channel when those aboard observed the lights of the inbound M/V Berean. As the Union Reliance approached the Berean she sounded a single blast on her whistle indicating a desire to pass port to port. However, shortly thereafter the Union Reliance failed to answer her wheel and she continued to swing to port across the channel. As a result, the bow of the Union Reliance collided with the port side of the Berean. The Berean was laden with highly volatile cargo which caught fire and spread to the foredeck and forward cargo holds of the Union Reliance. In addition to extensive hull and cargo damage to both vessels, twelve persons, including Pilot Duncan, lost their lives aboard the Union Reliance. After the collision the Union Reliance was left deserted by its owners in the heavily trafficked artificial channel, the Houston Ship Channel. As the improver and maintainer of this channel, the United States, pursuant to 33 U.S.C.A. § 415, removed the wreck, a service for which the owners refused payment, and which constitutes the basis of the claim filed by the United States against the limitations fund established by the subsequent sale of the remnants of the Union Reliance. Previously, a libel based on this claim had been instituted against China Union Lines by the United States in the United States District Court for the Southern District of Texas. This action, Admiralty No. 2012, was enjoined by order of the district court when China Union Lines filed its petition for limitation of liability.)

On November 28, 1961 China Union Lines filed a Petition for Exoneration from or Limitation of Liability pursuant to the Limitation of Liability Act, 46 U.S.C.A. § 181 et seq., praying, inter alia, for transfer of its interest in the Union Reliance and pending freight to a court-appointed trustee for the benefit of claimants, and for an order directing the discharge of all cargo remaining aboard the vessel.

On November 29, 1961, the district court entered an order directing the transfer of the Union Reliance to a trustee for the benefit of claimants. On that date the vessel was accordingly transferred to the trustee by Robert Eikel acting as Agent and Attorney-in-fact for China Union Lines. Also on November 29, 1961, the district court entered an order citing all claimants in the limitations proceeding to appear on or before March 5, 1961, and restraining the prosecution elsewhere of all claims arising from the collision. Finally, also on November 29, 1961, the district court entered an order entitled "Order to Unload Cargo from SS Union Reliance." This order, prepared by counsel for China Union Lines, stated in part:

"* * * The vessel is now moored in Galveston Harbor in a condition requiring the taking of immediate steps to salve, preserve and deliver to the rightful owners the cargo now remaining on board the vessel, and that substantial expenditures have heretofore been made by the petitioner in an endeavor to salve the cargo. * * *"

Thus, the court ordered that the cargo be discharged, and that China Union Lines be reimbursed out of the proceeds of the sale of the vessel for expenses incurred by it in unloading and handling the cargo. The court, on December 20, 1961, verbally added $20,000.00 to be disbursed to China Union under the same terms as the initial $40,000.00.

Pursuant to the district court's order of sale, dated January 3, 1962, the vessel was sold by the trustee on January 12, 1962 for scrap for a purchase price of $109,100.00. The sale was confirmed by order of the district court on January 12, 1962.

Subsequently, China Union Lines filed a Motion for Disbursement of Funds requesting a disbursement to it of $90,000.00 from the proceeds of sale as reimbursement for expenses incurred by it in salving and unloading the cargo from the vessel. On March 12, 1962 the district court entered its Order on Petitioner's Motion for Disbursement of Funds, authorizing therein the disbursement to China Union Lines of $60,000.00 for expenses incurred by it to salve, preserve and protect the Union Reliance and her cargo. The district court entered an amendment to the order staying the disbursement of funds pending application by interested parties to this Court pursuant to the provisions of 28 U.S.C. § 1292 (b).

On April 11, 1962, this Court, under the provisions of 28 U.S.C. § 1292(b), granted permission to appeal from the interlocutory order of the district court authorizing the above-mentioned disbursement of funds.

The libel of the United States claimed a sum in excess of thirty thousand dollars for its services in connection with the handling and removal of the Union Reliance from the traffic lanes. The proceeding brought November 28, 1961 for exoneration and limitation by China Union Lines bears the number 2018 on the records of the court below. On April 26, 1962, the United States filed in each case a motion to dismiss the injunction which had been issued upon the surrender of the China Union to the trustee. The motions were based on the ground that the petition of China Union had been verified only by the local proctor, that the proctor had not complied with the order of March 16th directing him to produce, within thirty days from the date thereof, a certified copy of the corporate resolution or other document issued under the laws of the Republic of China authorizing the surrender of the vessel to the trustee, and showing authorization to the proctor to act on behalf of China Union Lines. The district court did not pass on these motions.

The trial court did not hear any evidence as that term is generally used, but had three extensive conferences with the proctors representing the several parties. Transcripts of what transpired at those conferences are before us. All of the parties chiefly interested were represented except that Mrs. Lucy Duncan was justifiably absent from the first two and no proctor was present representing the estates of any of the others killed in the collision or any party claiming personal injuries. The conference of November 29th was followed by the entry of the order of that date, pertinent parts of which are reproduced in the margin.¹

The second meeting of the court and proctors was held December 20, 1961 in the judge's chambers with substantially the same parties represented by their proctors. It appeared from statements of the clerk of court that by then a half dozen actions had been begun in connection with the collision. The court announced that the conference had been called at the instance of the trustee and the proctors for China Union and its underwriters chiefly to discuss the duties and authority of the trustee, the court stating: "Mr. Eikel China Union's proctor was of the view that Mr. Sewell's the trustee position, I think, was one more or less as a figure-head, and that he, Mr. Eikel, on behalf of the original owner, would look after these various matters that needed attention, and so forth, and I wanted the advice and thoughts of you gentlemen before we proceed further in the matter * * *." Ideas were swapped at length and it was apparent that the dozen proctors present were bent upon upholding the rights of their respective clients. At one time, the court said in effect that he doubted if the proctors "could agree that today is Wednesday." The tangible thing emanating from this conference was the announcement by the court that the additional...