Fox v. United States, No. 25374.

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: AINSWORTH and SIMPSON, Circuit , and SINGLETON
• Citation: 417 F.2d 84
• Parties: Sam FOX d/b/a A & M Sales Company, Appellant, v. UNITED STATES of America, Appellee.
• Decision Date: 30 September 1969
• Docket Number: No. 25374.

417 F.2d 84 (1969)

Sam FOX d/b/a A & M Sales Company, Appellant,
v.
UNITED STATES of America, Appellee.

No. 25374.

United States Court of Appeals Fifth Circuit.

September 30, 1969.

417 F.2d 85

Solomon H. Friend, Bass & Friend, New York City, for appellant.

Lloyd G. Bates, Jr., Asst. U. S. Atty., Miami, Fla., for appellee.

Before AINSWORTH and SIMPSON, Circuit Judges, and SINGLETON, District Judge.

SINGLETON, District Judge:

This appeal is from a judgment and decree entered by the district court pursuant to 21 U.S.C. § 334(a) of the Food, Drug and Cosmetic Act condemning quantities of a drug product marketed by appellant under the name of "Ordinex" and certain labeling accompanying the drug product.¹ The decree and judgment was entered upon a jury verdict returned in favor of appellee, and appellant now appeals, asserting numerous points of error. After giving thorough consideration to the record made in the court below and the briefs submitted by counsel on appeal, we have concluded that the case must be reversed and remanded for a new trial. At the outset, however, and before addressing ourselves to the error which requires reversal, we are met with a question concerning the jurisdiction of the district court.

This in rem proceeding was commenced on October 28, 1963 by the filing of a libel of information, which alleged that appellant was in possession of substantial quantities of the condemned product and accompanying labeling, that the product had been manufactured in Florida from

417 F.2d 86

raw materials shipped in interstate commerce, and that the product was at that time misbranded "while being held for sale after shipment in interstate commerce." On the same day, the articles specified in the libel of information were seized by a United States Marshal pursuant to a monition issued out of the district court. Thereafter, appellant, Sam Fox, doing business as A & M Sales Co., filed a claim to the articles and filed an answer which denied the allegations of misbranding and asserted a want of jurisdiction on part of the district court

Appellant's contention that the district court lacked jurisdiction is unique but unpersuasive. Prior to the filing of the libel in the instant case, in September of 1963 an unidentified agent of the Florida State Board of Health affixed to the articles involved in this case a tag reciting that the articles were not to be disposed of by sale or otherwise on the ground that the articles were misbranded. Section 500.43(1) of the Florida Food and Drug Act provides that when an article has been seized or detained the Commissioner of the State Board of Health or the Board of Health shall either petition a state court for an order of sale, if convinced that the articles are subject to seizure, or release the articles to their owner.² In the instant case, however, the label affixed to the articles bore the notation "HOLD FOR FEDERAL SEIZURE," and at no time has a petition of condemnation ever been filed in a Florida court. In fact, the record does not indicate that any action has been taken by authorities of the State of Florida in regard to these articles except the initial affixing of the tag to them in September of 1963. Despite this noticeable lack of interest by the State of Florida, however, appellant contends that the mere affixing of the label by the state agent has removed the articles in question from federal jurisdiction. We simply do not agree that so serious a consequence follows from so insignificant an act by some unidentified state official.

Under both Florida and federal law proceedings for the condemnation of misbranded articles of commerce are by their nature proceedings in rem. It is because of this fact that appellant seeks to invoke the aid of the well established principle as stated by the Supreme Court in Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 55 S.Ct. 386, 79 L.Ed. 850 (1935). There, the court stated:

"But if the two suits are in rem or quasi in rem, requiring that the court or its officer have possession or control of the property which is the subject of the suit in order to proceed with the cause and to grant the relief sought, the jurisdiction of one court must of necessity yield to that of the other."

See also Kline v. Burke Constr. Co., 260 U.S. 226, 43 S.Ct. 79, 67 L.Ed. 226 (1927); Palmer v. Texas, 212 U.S. 118, 29 S.Ct. 230, 53 L.Ed. 435 (1909).

As we have previously pointed out, there has never been any proceeding commenced in the Florida courts, and the Florida courts have never sought to exercise their jurisdiction. Indeed, Florida officials have not seen fit to take any action which might bring the articles involved here before the Florida courts. Appellant maintains, however, that the doctrine of prior in rem jurisdiction as stated in the Penn General case is applicable not only to those situations where there exists an actual, conflicting assertion of jurisdiction over a res by a state and a federal court, but also applies to

417 F.2d 87

those situations where the only previous action taken is the seizure or detention of the res by a state official. In short, appellant argues that when the unidentified state official first affixed the label to the articles in question they became subject to the constructive custody of the Florida courts and were thereby removed from federal jurisdiction

In support of this proposition appellant relies upon Department of Financial Institutions of Indiana v. Mercantile Commerce Bank & Trust Co., 92 F.2d 639 (7th Cir. 1937), cert. denied 303 U.S. 656, 58 S.Ct. 760, 82 L.Ed. 1116 (1938), and Cartlidge v. Rainey, 168 F.2d 841 (5th Cir. 1948). Both of these cases, we feel, are clearly distinguishable. In the Mercantile Bank case, the Indiana Department of Financial Institutions had taken possession of the assets of the Central Union Bank incident to the liquidation of the bank. Notice of...