Jackson v. Inland Oil and Transport Co.

• Decision Date: 25 June 1963
• Docket Number: No. 19579.,19579.
• Citation: 318 F.2d 802
• Parties: J. G. JACKSON and J. G. Jackson, Jr., Intervenors, Appellants, v. INLAND OIL AND TRANSPORT CO., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

318 F.2d 802 (1963)

J. G. JACKSON and J. G. Jackson, Jr., Intervenors, Appellants, v. INLAND OIL AND TRANSPORT CO., Appellee.

No. 19579.

United States Court of Appeals Fifth Circuit.

April 19, 1963.

Rehearing Denied June 25, 1963.

Edward S. Bagley, New Orleans, La., for appellants, Benjamin W. Yancey, Terriberry, Rault, Carroll, Martinez & Yancey, New Orleans, La., of counsel.

William S. Stone, Jack G. Carinhas, Jr., New Orleans, La., for appellee, Deutsch, Kerrigan & Stiles, New Orleans, La., of counsel.

Before RIVES and CAMERON, Circuit Judges, and BOOTLE, District Judge.

RIVES, Circuit Judge.

This appeal is from a decree ranking claims against the proceeds derived from the sale by the United States Marshal of the Tug Three Jacks, formerly owned by Gulf Transportation Company. Only two claims are now involved. The district court ranked the claim of appellee, Inland, as superior to that of appellants, the Jacksons. Inland had chartered to Gulf, the owner of the Three Jacks, certain oil barges, and had secured a judgment against Gulf to recover the unpaid charter hire. Gulf had purchased the Three Jacks from the Jacksons and, to secure the unpaid part of the purchase money, had granted to the Jacksons a nonmaritime mortgage.

At the outset certain jurisdictional questions must be decided. Inland insists that the Jacksons' ordinary commonlaw mortgage is beyond the pale of jurisdiction, and cannot be foreclosed or enforced in admiralty. The Jacksons concede that their mortgage cannot be made the subject of an original libel in admiralty, nor can it support a seizure in rem of the vessel. The principle was clearly expressed by Mr. Justice Matthews on circuit in the early case of The Guiding Star, Cir.Ct.S.D. Ohio, 1883, 18 F. 263, 264:

"The jurisdiction of the court, sitting in admiralty, is founded upon the nature of the liens sought to be enforced by its process, as maritime, although as to any surplus of the proceeds of sale remaining after satisfaction of all maritime liens, it will, having acquired jurisdiction as an admiralty court, proceed upon principles of equity to dispose of the entire fund, awarding it to the claimants, either as owners of the vessel or as having, either at law or in equity, by contract or liens, succeeded to the owners\' rights."

See also, Andrews v. Wall et al. 1845, 3 How. 568, 44 U.S. 568, 572, 11 L.Ed. 729.

Again, in The J. E. Rumbell, 1893, 148 U.S. 1, 15, 13 S.Ct. 498, 501, 37 L.Ed. 345, the Court said:

"An ordinary mortgage of a vessel, whether made to secure the purchase money upon the sale thereof, or to raise money for general purposes, is not a maritime contract. A court of admiralty, therefore, has no jurisdiction of a libel to foreclose it, or to assert either title or right of possession under it. The John Jay, 17 How. 399 15 L.Ed. 95; The Eclipse, 135 U.S. 599, 608 10 S.Ct. 873, 34 L.Ed. 269. But it has jurisdiction, after a vessel has been sold by its order, and the proceeds have been paid into the registry, to pass upon the claim of the mortgagee, as of any other person, to the fund, and to determine the priority of the various claims, upon petitions such as were filed by the mortgagees and the material-men in this case. The Globe, 3 How. 568, 573 11 L.Ed. 729; The Angelique, 19 How. 239 75 L.Ed. 625; The Lottawanna, 21 Wall. 558, 582, 583 22 L.Ed. 654; Rule 43 in Admiralty."

The litigation in this matter began on April 2, 1959 when Inland filed a libel, in personam, against Gulf Transportation Company to recover the unpaid charter hire. On April 4, 1959 the Marshal executed the writ of foreign attachment issued under that libel "by seizing and taking into custody the within named Tug Three Jacks engines, tackle, etc. as she lay in Bayou Sorrell at Plaquemine, La."

On May 12, 1959, the court permitted the Jacksons to file their petition for intervention asserting the mortgage claim which is the subject of this appeal. In their intervention the Jacksons prayed for preference and priority over Inland's claim "in and to the proceeds which may be realized from any sale of the * * * Three Jacks. * * *"

Gulf consented that Inland's claim might be reduced to final decree, and the Jacksons also agreed (by letter) "that you would proceed to obtain a final decree without reference to any execution against the Three Jacks." On May 29, 1959, the court entered a final in personam decree in favor of Inland against Gulf for $21,948.37, plus interest and costs.

Meanwhile, on May 26, 1959, a libel in rem had been filed by Avondale Marine Ways seeking to recover the cost of certain repairs performed by Avondale on the Three Jacks. On June 2, 1959, the Marshal executed the admiralty warrant issued on that libel by seizing the Three Jacks. On June 12, 1959, the court permitted the Jacksons to file a duplicate petition for intervention in that proceeding.

While the Three Jacks remained in the custody of the court under the seizure by Avondale Marine Ways, Inland caused its decree against Gulf, in personam, to be recorded in the office of the County Clerk for Harris County, Texas, on February 10, 1960, and on February 26, 1960, caused the same decree to be filed in the records of the Clerk of Court for the Parish of East Baton Rouge, State of Louisiana, where the Three Jacks was actually located during the time when she remained under seizure. On March 4, 1960, the Three Jacks was sold by the Marshal under a writ of venditioni exponas issued in the proceeding instituted by Avondale Marine Ways.

The Three Jacks sold for $38,000.00. Avondale Marine Ways and other admittedly prior claimants have been permitted to withdraw the amounts of their claims. Meanwhile, Gulf had filed a petition in bankruptcy which is still pending. See Parks v. B. F. Leaman & Son, Inc., 5 Cir., 1960, 279 F.2d 529. The proceeds of sale remaining in the registry are considerably less than the sum of the combined claims of Inland, $22,445.44 principal, and of the Jacksons, $31,000.00 principal. A determination of priority between the two claims is therefore essential. All libels were consolidated for the ranking of claims.

Under the doctrine of The J. E. Rumbell, supra, it is clear that the admiralty court has jurisdiction to make a proper distribution of the proceeds of sale, and to determine the priority of all claims, including that of the Jacksons on their nonmaritime mortgage.

Inland calls attention that the Jacksons intervened before, and not after, the Marshal's sale of the Three Jacks, and insists that their right under Admiralty Rule 42 accrued only after the proceeds of the sale were deposited in the registry. Our cases of Point Landing v. Alabama Dry Dock & Shipbuilding Co., 5 Cir., 1958, 261 F.2d 861, 866, and Crabtree v. The SS Julia, 5 Cir., 1961, 290 F.2d 478, 481, illustrate the liberality necessarily required in the allowance of interventions to assert claims against the proceeds of the sale of a vessel. It may be, as held in United States v. Maryland Casualty Co., 5 Cir., 1956, 235 F.2d 50, 52, 53, that nonmaritime claims cannot, prior to the sale, intervene against the proceeds as a matter of "right," but that case makes it clear that a "permissive" intervention may take place earlier. Such earlier intervention may, indeed, be necessary to defend against the establishment of maritime liens and the consequent depletion of the fund upon which the nonmaritime claimant must rely. Gray v. Hopkins-Carter Hardware Co., 5 Cir., 1929, 32 F.2d 876, 879; The Rupert City, W.D.Wash.1914, 213 F. 263, 266. See also, Schuchardt, et al. v. Ship Angelique, 1856, 60 U.S. (19 How.) 239, 241, 15 L.Ed. 625.

We conclude that the district court had jurisdiction over the Jacksons' nonmaritime claim.

Inland next urges that the notice of appeal was not timely so as to vest jurisdiction in this Court. The final decree ranking claims was rendered January 29, 1962. That decree recognized that the Jacksons had a right to take a "timely appeal":

"In view of the dispute between INLAND OIL & TRANSPORT CO. and J. G. JACKSON and J. G. JACKSON, JR., as to the right to the aforesaid proceeds, and the advices of proctors for J. G. JACKSON and J. G. JACKSON, JR., that they contemplate an appeal from this decree, INLAND OIL & TRANSPORT CO., has agreed that the aforesaid funds, except as to keeper\'s fees due to proctors for INLAND OIL & TRANSPORT CO., and except as to the funds due to AVONDALE MARINE WAYS, INC., should not be disbursed at this time; provided that J. G. JACKSON and J. G. JACKSON, JR. timely appeal from the decree entered herein.

* * * * * *

"IT IS FURTHER ORDERED, ADJUDGED AND DECREED that, since proceeds in the registry of this court are sufficient to cover the claim of INLAND OIL & TRANSPORT CO., with interest and costs, J. G. JACKSON and J. G. JACKSON, JR., shall, considering the consent of INLAND OIL & TRANSPORT CO., be relieved of the necessity of posting supersedeas pending their timely appeal from the decree entered herein."

The notice of appeal was filed February 19, 1962.

On two earlier occasions, prior to any hearing of evidence or trial for determination of their rights, the Jacksons had moved for summary relief and the court had denied those motions. In the final decree of January 29, 1962, the court recites that on oral argument on October 12, 1960, on the Jacksons' motion for rehearing from the court's second denial of summary relief, it "ruled that the ground of its decision was the failure of the Jacksons to record their ordinary mortgage in Harris County, Texas." Nonetheless, these earlier rulings amount to no more than a refusal to grant summary relief and do not deprive the Jacksons of the right to appeal from the final decree ranking claims. The appeal was timely and this Court has jurisdiction.

Inland's Claim

If Inland had been so fortunate as to intercept any cargo being transported in its oil barges it might have had a lien on that cargo for its unpaid charter hire (Gilmore...