Exxon Corporation v. Central Gulf Lines, Inc

• Decision Date: 03 June 1991
• Docket Number: No. 90-34,90-34
• Citation: 114 L.Ed.2d 649,500 U.S. 603,111 S.Ct. 2071
• Parties: EXXON CORPORATION, Petitioner v. CENTRAL GULF LINES, INC., et al
• Court: U.S. Supreme Court

500 U.S. 603

111 S.Ct. 2071

114 L.Ed.2d 649

EXXON CORPORATION, Petitioner

v CENTRAL GULF LINES, INC., et al.

No. 90-34.

Argued April 15, 1991.

Decided June 3, 1991.

Syllabus

Petitioner Exxon Corporation and Waterman Steamship Corporation negotiated a marine fuel requirements contract, in which Exxon agreed to supply Waterman's vessels with fuel when the vessels called at ports where Exxon could supply fuel directly and, when the vessels were in ports where Exxon had to rely on local suppliers, to arrange for, and pay, those suppliers to deliver the fuel and then invoice Waterman. In the transaction at issue, Exxon acted as Waterman's agent, procuring fuel from a local supplier in Jeddah, Saudi Arabia, for a ship owned by respondent Central Gulf Lines, Inc., but chartered by Waterman. Exxon paid for the fuel and invoiced Waterman, but Waterman filed for bankruptcy and never paid the bill's full amount. When Central Gulf agreed to assume personal liability for the bill if a court were to hold the ship liable in rem, Exxon commenced litigation in the District Court against Central Gulf in personam and the ship in rem, claiming to have a maritime lien on the ship under the Federal Maritime Lien Act. The court concluded that it did not have admiralty jurisdiction. Noting that a prerequisite to the existence of a maritime lien based on a breach of contract is that the contract's subject matter must fall within the admiralty jurisdiction, it followed Second Circuit precedent, which holds that Minturn v. Maynard, 17 How. 477, 15 L.Ed. 235—in which an agent who had advanced funds for repairs and supplies necessary for a vessel was barred from bringing a claim in admiralty against the vessel's owners—established a per se rule excluding agency contracts from admiralty. However, the court ruled in Exxon's favor on a separate unpaid bill for fuel that Exxon supplied directly to the ship in New York. The Court of Appeals affirmed.

Held:

1. Because there is no per se exception of agency contracts from admiralty jurisdiction, Minturn is overruled. Minturn is incompatible with current principles of admiralty jurisdiction over contracts. The rationales on which it apparently rested—that an action cognizable as assumpsit was excluded from admiralty and that a claimant had to have some form of a lien interest in a vessel to sue in admiralty on a contract—have been discredited and are no longer the law of this Court. See Archawski v. Hanioti, 350 U.S. 532, 536, 76 S.Ct. 617, 621, 100 L.Ed. 676; see also, e.g., North Pacific S.S. Co. v. Hall Bros. Marine Railway & Shipbuilding Co., 249 U.S. 119, 126, 39 S.Ct. 221, 223, 63 L.Ed. 510. Minturn § approach is also inconsistent with the principle that the "nature and subject-matter" of the contract at issue should be the crucial consideration in assessing admiralty jurisdiction. Insurance Co. v. Dunham, 11 Wall. 1, 26, 20 L.Ed. 90. And a per se bar of agency contracts from admiralty ill serves the purpose of the grant of admiralty jurisdiction, which is the protection of maritime commerce, Foremost Ins. Co. v. Richardson, 457 U.S. 668, 674, 102 S.Ct. 2654, 2658, 73 L.Ed.2d 300. There is nothing in the agency relationship that necessarily excludes such relationships from the realm of maritime commerce, and rubrics such as "general agent" reveal nothing about whether the services actually performed are maritime in nature. Pp. 608-612.

2. Admiralty jurisdiction extends to Exxon's claim regarding the delivery of fuel in Jeddah. The lower court correctly held that the New York transaction is maritime in nature. Since the subject matter of both claims—the value of the fuel received by the ship—is the same as it relates to maritime commerce, admiralty jurisdiction must extend to one if it extends to the other. P. 612-613.

3. This Court expresses no view on whether Exxon is entitled to a maritime lien under the Federal Maritime Lien Act and leaves that issue to be decided on remand. P. 613.

904 F.2d 33 (CA 2 1990), reversed and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court.

Armand Maurice Pare, Jr., New York City, for petitioner.

Stephen L. Nightingale, Washington, D.C., for U.S., as amicus curiae, in support of petitioner, by special leave of Court.

Francis A. Montbach, New York City, for respondents.

Justice MARSHALL delivered the opinion of the Court.

This case raises the question whether admiralty jurisdiction extends to claims arising from agency contracts. In Minturn v. Maynard, 17 How. 477, 15 L.Ed. 235 (1855), this Court held that an agent who had advanced funds for repairs and supplies necessary for a vessel could not bring a claim in admi- ralty against the vessel's owners. Minturn has been interpreted by some lower courts as establishing a per se rule excluding agency contracts from admiralty. We now consider whether Minturn should be overruled.

I

This case arose over an unpaid bill for fuels acquired for the vessel, Green Harbour ex William Hooper (Hooper). The Hooper is owned by respondent Central Gulf Lines, Inc. (Central Gulf) and was chartered by the Waterman Steamship Corporation (Waterman) for use in maritime commerce. Petitioner Exxon Corporation (Exxon) was Waterman's exclusive worldwide supplier of gas and bunker fuel oil for some 40 years.

In 1983, Waterman and Exxon negotiated a marine fuel requirements contract. Under the terms of the contract, upon request, Exxon would supply Waterman's vessels with marine fuels when the vessels called at ports where Exxon could supply the fuels directly. Alternatively, in ports where Exxon had to rely on local suppliers, Exxon would arrange for the local supplier to provide Waterman vessels with fuel. In such cases, Exxon would pay the local supplier for the fuel and then invoice Waterman. Thus, while Exxon's contractual obligation was to provide Waterman's vessels with fuel when Waterman placed an order, it met that obligation sometimes in the capacity of "seller" and other times in the capacity of "agent."

In the transaction at issue here, Exxon acted as Waterman's agent, procuring bunker fuel for the Hooper from Arabian Marine Operating Co. (Arabian Marine) of Jeddah, Saudi Arabia. In October 1983, Arabian Marine delivered over 4,000 tons of fuel to the Hooper in Jeddah and invoiced Exxon for the cost of the fuel. Exxon paid for the fuel and invoiced Waterman, in turn, for $763,644. Shortly thereafter, Waterman sought reorganization under Chapter 11 of the Bankruptcy Code; Waterman never paid the full amount of the fuel bill. During the reorganization proceedings, Central Gulf agreed to assume personal liability for the unpaid bill if a court were to hold the Hooper liable in rem for that cost.

Subsequently, Exxon commenced this litigation in federal district court against Central Gulf in personam and against the Hooper in rem. Exxon claimed to have a maritime lien on the Hooper under the Federal Maritime Lien Act, 46 U.S.C. § 971 (1982 ed.).¹ The District Court noted that "[a] prerequisite to the existence of a maritime lien based on a breach of contract is that the subject matter of the contract must fall within the admiralty jurisdiction." 707 F.Supp. 155, 158 (SDNY 1989). Relying on the Second Circuit's decision in Peralta Shipping Corp. v. Smith & Johnson (Shipping) Corp., 739 F.2d 798 (CA2 1984), cert. denied, 470 U.S. 1031, 105 S.Ct. 1405, 84 L.Ed.2d 791 (1985), the District Court concluded that it did not have admiralty jurisdiction over the claim. See 707 F.Supp, at 159-161. In Peralta, the Second Circuit held that it was constrained by this Court's decision in Minturn v. Maynard, supra, and by those Second Circuit cases faithfully adhering to Minturn, to follow a per se rule excluding agency contracts from admiralty jurisdiction. See Peralta, supra, at 802-804. The District Court also rejected the argument that Exxon should be excepted from the Minturn rule because it had provided credit necessary for the Hooper to purchase the fuel and thus was more than a mere agent. To create such an exception, the District Court reasoned, " 'would blur, if not obliterate, a rather clear admiralty distinction.' " 707 F.Supp., at 161, quoting Peralta, supra, at 804.²

The District Court denied Exxon's motion for reconsideration. The court first rejected Exxon's claim that in procuring fuel for Waterman it was acting as a seller rather than an agent. Additionally, the District Court declined Exxon's invitation to limit the Minturn rule to either general agency or preliminary service contracts.³ Finally, the District Court determined that even if it were to limit Minturn, Exxon's contract with Waterman was both a general agency contract and a preliminary services contract and thus was excluded from admiralty jurisdiction under either exception. See 717 F.Supp. 1029, 1031-1037 (SDNY 1989).

The Court of Appeals for the Second Circuit summarily affirmed the judgment of the District Court "substantially for the reasons given" in the District Court's two opinions. App. to Pet. for Cert. A2, judgt. order reported at 904 F.2d 33 (1990). We granted certiorari to resolve a conflict among the Circuits as to the scope of the Minturn decision ⁴ and to consider whether Minturn should be overruled. 498 U.S. ----, 111 S.Ct. 750, 112 L.Ed.2d 770 (1991). Today we are constrained to overrule Minturn and hold that there is no per se exception of agency contracts from admiralty jurisdiction.

II

Section 1333(1) of Title 28 U.S.C. grants federal district courts jurisdiction over "[a]ny civil case of admiralty or maritime jurisdiction." In determining the boundaries of admiralty jurisdiction, we look to the purpose of the grant. See Insurance Co. v. Dunham, 11 Wall. 1, 24, 20 L.Ed. 90 (1871). As we recently reiterated, the "fundamental interest giving rise to maritime jurisdiction is 'the protection of maritime commerce.' " Sisson v. Ruby, 497 U.S. ----, ----, 110 S.Ct. 2892, 2897, 111 L.Ed.2d 292 (1990), quoting ...