American Mfrs. Mut. Ins. Co. v. Manor Investment Co.

• Decision Date: 10 July 1968
• Docket Number: No. 68 Civ. 1410.,68 Civ. 1410.
• Citation: 286 F. Supp. 1007
• Parties: AMERICAN MANUFACTURERS MUTUAL INSURANCE CO., Plaintiff, v. MANOR INVESTMENT CO., Inc., as Owner; Mercantile Navigation Co., Ltd., as Operator; Westland Marine Corporation, as United States Agent; Mitsubishi Bank, Ltd., as Mortgagee; and Despard & Co., Inc., as Payee, Defendants.
• Court: U.S. District Court — Southern District of New York

286 F. Supp. 1007

AMERICAN MANUFACTURERS MUTUAL INSURANCE CO., Plaintiff, v. MANOR INVESTMENT CO., Inc., as Owner; Mercantile Navigation Co., Ltd., as Operator; Westland Marine Corporation, as United States Agent; Mitsubishi Bank, Ltd., as Mortgagee; and Despard & Co., Inc., as Payee, Defendants.

No. 68 Civ. 1410.

United States District Court S. D. New York.

July 10, 1968.

Poles, Tublin, Patestides & Stratakis, New York City, for plaintiff; by Melvin J. Tublin, Patrick V. Martin, Harvey F. Milman, New York City, of counsel.

Kroll, Edelman & Lanzone, New York City, for defendant Despard & Co., Inc.

Joseph Cardillo, Jr., New York City, for defendants Manor, Mercantile and Westlund; by Robert V. Corbett, New York City, of counsel.

OPINION

POLLACK, District Judge.

The plaintiff moves to remand this suit to the State Court. It was removed to this Court on the claim of two of the defendants that the laws of the United States and the requisite amount were in controversy.

This is a maritime matter. In removing the case to this Court the petitioning defendants relied on the notion that a maritime matter bottoms federal question jurisdiction and further that such a matter is removable without regard to citizenship of the parties. 28 U.S.C. § 1441. However, the law is to the contrary; such a matter is not one arising under the Constitution, treaties or laws of the United States; it is one of which the district courts do have original jurisdiction but it is removable only if none of the defendants properly joined is a citizen of the State in which the action is brought. 28 U.S.C. § 1441(b), second sentence.

1. The nature of the suit

The plaintiff insured the vessel S.S. SAN PATRICK under a marine policy of indemnity and excess coverage. On or about December 18, 1964, the vessel en route from Vancouver, B. C. to Yokohama ran aground near Ulak Island in the Aleutians due to weather conditions and unknown causes, resulting in the loss of the crew, the vessel and the cargo. This suit is by the insurer for a declaratory judgment to determine the rights of the parties to the contract of marine insurance involved herein. The plaintiff contends that it is under no duty either to defend the assureds in any action against them by reason of the loss or to indemnify them against liability therefor.

2. The parties defendant

The plaintiff insurance company is a New York corporation.

There are five defendants, four of whom are named in the policy as assureds, respectively, the owner of the vessel, Manor Investment Co., Inc.; the agent of the owner, Westland Marine Corporation; the operator, Mercantile Navigation Co. Ltd.; and the mortgagee, Mitsubishi Bank, Ltd. The fifth defendant is Despard & Co. which is named in the policy as the payee for distribution of the insurance payable.

Of the five defendants, only two, Westland and Despard are citizens of New York; the remaining defendants are not citizens of New York in which the action was initially brought.

3. Jurisdiction

A maritime or admiralty case does not arise under the Constitution or laws of the United States; such cases do not raise a federal question. Romero v. International Terminal Operating Co., 358 U.S. 354, 367, 371-372, 378, 79 S.Ct. 468, 3 L.Ed.2d 368, reh. den. 359 U.S. 962, 79 S.Ct. 795, 3 L.Ed. 2d 769 (1959). See also Karakatsanis v. Conquestador Cia. Nav., S.A., 247 F.Supp. 423, 426 (S.D.N.Y.1965); Harrisville Co. v. Home Insurance Company et al., 129 F.Supp. 300 (S.D.N.Y.1954).

Federal jurisdiction in admiralty and maritime matters is granted to district courts by statute, 28 U.S.C. § 1333. The state courts have concurrent jurisdiction in admiralty and maritime cases under a saving clause contained in the same statute which provides that:

"The district courts shall have original jurisdiction, exclusive of the courts of the States, of: (1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." emphasis added.

In Matter of Arbitration between Victorias Milling Co., Inc. and Hugo Neu Corp., 196 F.Supp. 64 (S.D.N.Y. 1961) this Court, in granting a remand to the State Court, said that:

"It should be clear by this time that maritime matters brought in the state courts pursuant to the `saving to suitors' clause are not removable absent diversity of citizenship. See Romero * * *" 196 F.Supp. at 70.

A suit on maritime insurance is a case within the saving clause permitting suit on a maritime matter in a state court. Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955); New England Mutual Marine Insurance Co. v. Dunham, 11 Wall. 1, 78 U.S. 1, 20 L.Ed. 90 (1871).

Since all defendants herein are not citizens of states other than New York, the removal statute, 28 U.S.C. § 1441(b) may not be employed here, unless it is held that the New York defendants were improperly or unnecessarily joined as parties, or unless the inability of an admiralty court to grant a declaratory judgment renders the suit one involving "a claim or right arising under the Constitution, treaties or laws of the United States". 28 U.S.C. § 1441(b).

The defendants correctly contend that a declaratory judgment is not available in admiralty actions, citing States Marine Lines, Inc v. United States, 196 F.Supp. 562 (N.D.Cal.S.D.1960). From this, defendants argue that this case is not within 28 U.S.C. § 1333 which grants federal jurisdiction in admiralty matters. Therefore, the defendants conclude that since maritime law is federal, this case is one arising under § 1331 of 28 U.S.C. and was properly removed.

In support of their contention, the defendants cite Marine Cooks & Stewards, AFL v. Panama Steamship Co., Ltd., 265 F.2d 780 (1959), rev'd on other grounds, 362 U.S. 365, 80 S.Ct. 779, 4 L.Ed.2d 797, reh. den., 363 U.S. 809, 80 S.Ct. 1235, 4 L.Ed.2d 1151 (1960), in which the Ninth Circuit Court of Appeals held that an action seeking to enjoin a maritime tort was not within the admiralty or maritime jurisdiction of the federal courts because a court of admiralty could not grant injunctive relief. The Court held that the suit was governed by federal law, and was therefore within the provisions of 28 U.S.C. § 1331, as arising under the "Constitution or laws of the United States". The Court thereby distinguished Romero and accepted jurisdiction under § 1331.

The reasoning of the Ninth Circuit in Marine Cooks and Stewards, supra, was, however, expressly disapproved by the Second Circuit in Khedivial Line, S.A.E. v. Seafarers' International Union, 278 F.2d 49 (2d Cir. 1960). Khedivial held that in a maritime case, jurisdiction is not conferred on the federal courts under 28 U.S.C. § 1331 merely because a federal court of admiralty is powerless to grant the relief requested. The Court stated

"Decision on this issue is controlled by Romero v. International Terminal Operating Co. * * * We cannot follow what we understand to be the reasoning of the Ninth Circuit in Marine Cooks, namely, that because admiralty was always powerless to grant an injunction, a proposition that we fully accept, an equitable remedy for a maritime tort therefore would be within the grant of 28 U.S.C. § 1331. * * * we find nothing in Romero to justify reading `under the Constitution, laws or treaties of the United States' in 28 U.S.C. § 1331 to include the general maritime law in cases where admiralty is not competent to give the remedy the plaintiff seeks." 278 F.2d at 53.

Thus, the phrase contained in 28 U.S.C. § 1331 "under the Constitution, laws or treaties of the United States" excludes all maritime or admiralty cases, not merely those in which a court of admiralty is empowered to provide a remedy, and jurisdiction in this case is saved to the State Courts under 28 U.S.C. § 1331.

It need hardly be added that the declaratory judgment statute, 28 U.S.C. § 2201 and Rule 57, F.R.Civ.P., are not jurisdictional and do not create a case arising under the Constitution or laws of the United States within the meaning of 28 U.S.C. § 1331 or § 1441. Skelly Oil Company v. Phillips Petroleum Company, 339 U.S. 667, 671, 70 S.Ct. 876, 94...