General Exporting Co. v. Star Transfer Line

• Decision Date: 04 June 1943
• Docket Number: No. 9434.,9434.
• Parties: GENERAL EXPORTING CO. v. STAR TRANSFER LINE et al.
• Court: U.S. Court of Appeals — Sixth Circuit

136 F.2d 329 (1943)

GENERAL EXPORTING CO. v. STAR TRANSFER LINE et al.

No. 9434.

Circuit Court of Appeals, Sixth Circuit.

June 4, 1943.

Maxfield Weisbrod, of Chicago, Ill. (Benjamin I. Salinger, of Chicago, Ill., on the brief), for appellant.

Warner, Norcross & Judd and Joseph Shulsky, all of Grand Rapids, Mich., for appellees.

Before SIMONS, MARTIN, and McALLISTER, Circuit Judges.

MARTIN, Circuit Judge.

Controversy concerning the title to 799 cases of Scotch whisky has already brought four cases to the courts. Three of these cases yet pend, every case of the Scotch is still in a bonded warehouse, and the thirst of the hopeful consumer remains unquenched. Equity may aid the vigilant, but it has not yet relieved the thirsty.

Southard and Company, Ltd., of London, England, sold to appellant, General Exporting Company, an Illinois corporation, 799 cases of blended Scotch whisky on invoices evidencing terms of sale and trans-oceanic shipment. The English consignor, having no importer's basic permit, could not lawfully have the whisky, upon arrival in the United States, warehoused in its own name for its protection against default by the consignee in payment of the purchase price. On the other hand, the appellant consignee was entitled, by applicable law and customs regulations, to enter the whisky in its own name in a warehouse in the United States. The appellant warehoused the merchandise in Detroit, Michigan, with the appellee Star Transfer Line, and received negotiable warehouse receipts therefor. The appellant, however, failed to pay for the whisky purchased.

Southard and Company, claiming title as real owner of the whisky and the warehouse receipts covering the beverage, instituted suit on May 20, 1940, in the United States District Court at Chicago against the appellant General Exporting Co., and Benjamin I. Salinger, appellant's attorney in the case at bar. Procedural steps have been taken therein, but not to final judgment. Though dormant, the suit still lives.

John J. McKeown, claiming ownership of the whisky by virtue of his purchase of the negotiable warehouse receipts, brought suit in chancery on December 21, 1940, in the Circuit Court of Wayne County, Michigan, against both the appellant and the appellee Star Transfer Line, but did not join Southard and Company, Ltd., as a party defendant.

Soon after the commencement of the McKeown suit in Wayne County, the appellee Star Transfer Line filed, on January 22, 1941, an interpleader bill in chancery in the Superior Court of Grand Rapids, Michigan, and obtained an order enjoining any action or proceeding at law or in equity against it arising out of the storage of the controversial whisky in its warehouse. The further prosecution of the Wayne County suit was expressly enjoined. In the Grand Rapids interpleader suit, the party defendants named were the General Exporting Co., John J. McKeown, Southard and Company, Ltd., and the Receiver appointed by the United States District Court at Chicago.

After trial upon the merits, the Superior Court of Grand Rapids decreed Southard and Company to be sole owner of the 799 cases of whisky and the warehouse receipts therefor, subject to the liens of the appellee Star Transfer Line for storage and allowed expenses. It was decreed that neither John J. McKeown nor the appellant had any interest whatsoever in the whisky or in the warehouse receipts, and these, having been impounded, were ordered delivered by the Clerk of the Court to the appellee for cancellation. The decree directed that in due course, consistent with Federal statutes, the appellee warehouseman should be empowered to sell the whisky, subject to custom duties and internal revenue taxes owing on it, the purchaser to be responsible for the payment thereof; or, in the alternative, such custom duties and internal revenue taxes were to be paid out of the proceeds of the sale.

All four parties defendant were enjoined from commencing or prosecuting against the appellee any actions arising out of the storage of the whisky, or the issuance of the warehouse receipts, unless founded upon obligations of the appellee warehouseman pursuant to the provisions of the decree. The appellant and McKeown were enjoined from instituting any action "against the customs authorities of the United States, arising out of the storage of said whiskey in bond for payment of customs duties and internal revenue taxes;" from claiming ownership to the whisky contrary to the adjudication of the court; and from interference in any way with the sale of the whisky by the appellee, in accordance with the provisions of the decree.

This decree of the Superior Court of Grand Rapids was not entered until July 7, 1942, which was after the institution of the instant action, but the judge of that court had announced his opinion, upon which the subsequent decree was based, prior to the institution on May 19, 1942, of the present suit in the United States District Court for the Eastern District of Michigan. Moreover, upon commencement of the interpleader suit in the Superior Court of Grand Rapids, a temporary injunction was granted restraining the defendants therein from filing or prosecuting against appellee any court proceeding arising out of the storage of the whisky in its Detroit warehouse.

The civil action, dismissal of which by the District Court is the basis of the present appeal, was brought by the appellant, General Exporting Co., "as consignee and for the benefit of John J. McKeown" of Illinois, against the appellees, Star Transfer Line, Martin B. Bradley, U. S. Collector of Customs at the Port of Detroit, Michigan, and the Honorable Thaddeus B. Taylor, Judge of the Superior Court of Grand Rapids, Michigan. In the complaint, an adjudication was prayed that no other person than McKeown possesses any right, title or interest in and to the whisky in controversy, except to the amount that may be due for customs and storage charges. The "said Collector of Internal Revenue" was sought to be enjoined from forfeiting or disposing of the whisky, in whole or in part, until the rights of the parties should be determined. It was prayed further that the liquor, upon payment of the duties thereon, should be ordered released to appellant; and that the storage charges of the appellee warehouseman be determined and, when paid by appellant, delivery of the entire 799 cases of whisky should be made to appellant by the appellee warehouseman. The complaint also prayed that the Judge of the Superior Court of Grand Rapids, Michigan, be enjoined "from taking any further proceedings" in the chancery cause pending before him, and from citing appellant or its attorneys or agents for contempt in instituting the instant action in violation of the injunction issued by the state court judge. It was prayed further that the injunction issued in the Superior Court of Grand Rapids, and all the proceedings therein "be declared null, void and of no effect;" and that "all parties be restrained both temporarily and permanently from proceeding in any manner in said Chancery suit." A restraining order was asked pending hearing on an order to show cause why the injunction, as prayed, should not be granted.

The appellees, Star Transfer Line and the Honorable Thaddeus B. Taylor, Judge of the Superior Court of Grand Rapids, Michigan, filed a joint motion to dismiss the complaint, or to abate the cause, or to stay proceedings therein, for the reasons that (1) the complaint fails to allege facts sufficient to constitute a good cause of action; (2) the district court has no jurisdiction and should not attempt to enjoin the judge of a state court of coordinate jurisdiction; (3) another action is pending between the appellant and the appellee Star Transfer Line, wherein all issues raised herein can be determined, and all relief to which appellant may be entitled — if any — can be obtained; and that the joinder of the Collector of Customs and the Judge of the Superior Court of Grand Rapids as parties was unnecessary and improper; (4) the complaint improperly attempts to cause the United States District Court "to act as an appellate court with respect to the Superior Court of Grand Rapids, Michigan;" and (5) the commencement of this action was in violation of the injunction of the State Court.

The Collector of Customs for the Port of Detroit, Michigan, filed an answer to the complaint in which he stated that unless the aggregate duties and internal revenue taxes on the whisky be paid before specified dates, he would be authorized by law to offer the whisky at public sale. In his answer, the Government official further averred that the whisky is being held subject to the order of the United States District Court, and that "any disposition or order of a court other than that of the United States would be disregarded by your defendant in the performance of his peculiar duties in the premises." In conclusion, it was asserted in the answer that the Collector would abide the dictates of the District Court; that he has no other interest in the premises than collection of the customs duties and internal revenue taxes, which is an interest not in personam, but in rem; and that, notwithstanding whether disposition is made by the District Court of the proprietary interest in the whisky, "the same would be subject to the aforesaid customs duties and internal revenue taxes."

Upon the pleadings, "and upon evidence received in open court," and after hearing argument and considering briefs, the District Judge filed an opinion in which he announced that the motion to dismiss would be granted, and later entered findings of fact, conclusions of law, and a decree, in conformity with the opinion which he had previously promulgated.

1. Appellant contends that a Federal Court, alone, possesses jurisdiction to determine title to and ownership of whisky in bond; and that the Superior Court of Grand Rapids, Michigan, was not vested with...