Jack Neilson, Inc. v. Tug Peggy

• Decision Date: 22 September 1970
• Docket Number: No. 27823.,27823.
• Citation: 428 F.2d 54
• Parties: JACK NEILSON, INC., Petitioner-Appellant, v. TUG PEGGY et al., TUG MARGARET et al., TUG CARMEN et al., Respondents-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

428 F.2d 54 (1970)

JACK NEILSON, INC., Petitioner-Appellant, v. TUG PEGGY et al., TUG MARGARET et al., TUG CARMEN et al., Respondents-Appellees.

No. 27823.

United States Court of Appeals, Fifth Circuit.

May 5, 1970.

On Rehearing June 30, 1970.

Rehearing Denied and Rehearing Denied September 22, 1970.

George O'Dowd, New Orleans, La., for appellant.

William L. Von Hoene, New Orleans, La., for appellees.

Before TUTTLE, WISDOM, and GOLDBERG, Circuit Judges.

Rehearing Denied and Rehearing En Banc Denied September 22, 1970.

PER CURIAM:

Apache Towing, Inc., contracted with Jack Neilson, Inc., to "lease" three vessels from Neilson for sixty months. Apache agreed to "buy" the vessels for a stipulated price at the end of this period. When Apache defaulted during the sixty months and returned the vessels, Neilson, sued in admiralty for damages. Apache moved to dismiss on the ground that the contract was one of purchase, not a charter hire, and that the district court therefore had no admiralty jurisdiction. The Ada, 2 Cir. 1918, 250 F. 194; Grand Banks Fishing Co. v. Styron, S.D.Me. 1953, 114 F.Supp. 1.

Neilson then amended its complaint to eliminate a claim for the purchase price and limited its request to damages under the "lease". The district court denied the motion to dismiss, finding that the "lease" provisions of the contract were severable from the "purchase" provisions and that Neilson could therefore sue in admiralty on the former. The district court allowed an interlocutory appeal on this order, however, under 28 U.S.C. § 1292(b). Twelve days later Apache filed in this court its application to appeal, and this Court granted it.

We conclude that we have no jurisdiction of this interlocutory appeal. Fed.R.App.P. Rule 5(a) provides a tenday period in which to file a petition for permission to appeal under § 1292(b). This Rule, as one of the Appellate Rules, supersedes 28 U.S.C. § 2107's provision of fifteen days for interlocutory appeals in admiralty. 28 U.S.C. § 2072; see Hansen v. Trawler Snoopy, 1 Cir. 1967, 384 F.2d 131. And Rule 26(b) prohibits our enlarging the time for a petition for permission to appeal.

Nor do we find jurisdiction under 28 U.S.C. § 1292(a). Part (3) of that subsection allows an appeal only from those interlocutory decrees in admiralty that "determine the rights and liabilities of the parties". The district court's denial of the motion to dismiss for lack of jurisdiction did not decide the parties' rights and liabilities within the meaning of the statute. It did not go to the merits of the claim. See Miskiewicz v. Goodman, 4 Cir. 1965, 341 F.2d 828, 830-831; Upper Mississippi Towing Corp. v. West, 8 Cir. 1964, 338 F.2d 823, 825.

We therefore dismiss the appeal.

ON PETITION FOR REHEARING

WISDOM, Circuit Judge:

The Court on May 5, 1970, dismissed this interlocutory appeal under Fed.R. App.P. Rule 5(a). The petition for permission to appeal appeared to have been filed two days after the expiration of the ten-day period allowed for filing such petitions. The Court has now learned that the tenth day fell on Sunday, March 31, 1969, and that appellant's counsel timely filed his petition with the Clerk of Court shortly before the close of business on Monday, April 1, 1969, but a newly employed clerk mistakenly waited until April 2, 1969, to mark the petition "Filed". Accordingly, we grant the petition for a rehearing, vacate our order of May 5, 1970, and allow the appeal from the interlocutory order.

* * *

The owner of three vessels seeks to recover unpaid monthly rentals for the lease of the vessels under a lease-purchase agreement cast in the form of a bareboat charter. We hold that the charter provisions of the contract are maritime in nature, are severable, and within the admiralty jurisdiction of the district court.

In April 1965 Apache Towing, Inc., entered into three contracts with Jack Neilson, Inc., covering the lease for sixty months and purchase of three tugboats. The contracts are entitled "Bareboat Charter Party and Option". The terms of the three contracts are virtually identical, except that the monthly rental ($800, $667, and $533 for the Peggy, the Carmen, and the Margaret respectively) and the stipulated purchase price ($60,000, $50,000, and $40,000 respectively) are different for each vessel. The terms and the conditions are characteristic of a typical bareboat charter. Each contract, however, contains an option to purchase the vessel during the charter period, "with credit against above purchase price and `add-on' interest thereon accruing at six percent per annum for all charter hire previously paid." The contract also provides: "At the termination of the sixty month period, The Charterer agrees to purchase the vessel and the Owner agrees to sell said Vessel to the Charterer for cash" $30,000, $25,000, $20,000 for the Peggy, the Carmen, and the Margaret respectively. Except as to the stipulated amount, each contract provides that:

If charterer fails to pay any charter hire or other amount herein provided after the same is due and payable, or if Charterer fails to observe, keep or perform any other provisions of this charter party required to be observed, kept or performed by Charterer, then upon written notice of said default Charterer is to have (30) thirty days from receipt of said notice to purchase said Vessel for $50,000.00 plus six (6%) per cent interest per annum accrued thereon up to the time of the purchase. The full charter hire previously paid as of the date of the written notice shall be applied toward the purchase price and accumulated interest."

As early as December 1966, Apache was three months in arrears on the charter hire. The charterer then voluntarily returned the ships to their owner.

In May 1966 Neilson, as owner of the Tug "Peggy", brought a libel and complaint against Apache and others¹ for breach of contract, civil and maritime". Neilson sued for the full amount of the purchase price of $60,000 less $4000, the amount previously paid by Apache. In addition, Neilson asked for $7500 for the cost of repairs made necessary by damage to the Tug Peggy during Apache's operation of the vessel. Neilson brought similar actions to recover the purchase price of $50,000 for the Carmen and $40,000 for the Margaret. In these actions too the complainant asked for costs of repairs to the vessels. The cases were consolidated in the district court.

The defendants answered, asserting, among other defenses, that the "libellant failed to provide a seaworthy vessel at the inception of the charter". Shortly thereafter, the defendants filed an exception to the jurisdiction on the ground that the subject matter of the dispute was a non-maritime ship-purchase agreement. The district court upheld the exception but granted the plaintiff leave to file a supplemental amended complaint.

The amended complaint bears little resemblance to the original complaint. It rests entirely on those terms of the parties' agreements which relate to chartering the vessels. Neilson now avers that the contract was a bareboat charter party; that Apache failed to pay the monthly charter hire; that Neilson is entitled to sixty months of rentals on each of the three vessels, less a deduction for the amounts the charterer previously paid as charter hire. The total claim now asserted for the charter payments is $119,920 as against the original claim of $150,000 for the purchase price subject to a deduction for the charter rentals paid.

Benedict broadly states the generally accepted rule governing the extent of admiralty jurisdiction over contracts.

The celebrated and learned commentators upon the maritime codes and other writers of textbooks upon the maritime law, such as Selden, Grotius, Stracha, Bynkershoek, Valin, Stypmanus, Loccenius, Casa Regis, Emerigon, Kuricke, Pothier, Roccus, Malynes, Cleirac, Boucher, Boulay, Paty, Pardessus, Vennius, Lubeck, Targa and many others, whose works have been the universally known and everywhere conceded evidence of the admiralty and maritime law, have not adopted any narrow rule respecting the extent of the admiralty jurisdiction. The question, whether the cause of action arose within the limits of a country, or in a harbor, or was founded upon an instrument, sealed or unsealed, or made on shore or on shipboard, in a usual or unusual form, appears never to have entered the minds of those legislators and jurists. They have always looked solely to the maritime nature and character of the transactions, which cannot depend upon any such considerations, and they treat of all cases of service, contract, tort or accident relating to ships, shipping and maritime commerce. It is now settled law in the United States that the jurisdiction of admiralty in matters of contract depends upon the subject-matter, i. e., the nature and character of the contract, and that the English rule which conceded jurisdiction (with few exceptions) only to contracts made and to be performed upon navigable waters is inadmissible, the true criterion being that the contract has reference to maritime service or maritime transactions.

1 Benedict, The Law of American Admiralty, § 62, p. 127 (6th Ed. 1940).

Unfortunately, "when a highlevel abstraction such as `maritime' has to be used to draw a line between concrete cases", the "test of maritime subject-matter" is difficult to apply.² Not infrequently the test has resulted in anomalies. Suits or contracts for the building and sale of vessels "might be thought to be included, but actually are not" maritime in nature.³ Yet ship mortgages are within admiralty jurisdiction.⁴

Here, no doubt the owner of the three tugs hoped that the charterer would exercise the option to purchase during the charter period. No doubt the owner felt comfortable about the charter's agreement to purchase at the expiration of the charter. But the subject of each contract was a vessel that might be afloat and in the control of the charterer for five...