Pacific Surety Co. v. Leatham & Smith Towing & Wrecking Co.

• Decision Date: 02 January 1907
• Docket Number: 1,285.
• Citation: 151 F. 440
• Parties: PACIFIC SURETY CO. v. LEATHAM & SMITH TOWING & WRECKING CO.
• Court: U.S. Court of Appeals — Seventh Circuit

151 F. 440

PACIFIC SURETY CO. v. LEATHAM & SMITH TOWING & WRECKING CO.

No. 1,285.

United States Court of Appeals, Seventh Circuit.

January 2, 1907

Stuart G. Shepard, for appellant.

M. C Krause, for appellee.

Before GROSSCUP, BAKER, and SEAMAN, Circuit Judges.

SEAMAN Circuit Judge, after stating the facts, .

The liability with which the appellant is charged under the decree, in conformity with the libel, rests upon its execution of a bond, as surety, with Chamberlain as principal, which states the condition of the obligation to be that:

'Chamberlain fulfills a certain contract made with the Leatham & Smith Towing & Wrecking Co. managing owners of the Steamer Jos L. Hurd to guarantee a contract covering the charter of said steamer for a period or term commencing May 14, 1901, and ending November 30th, 1901, unless otherwise provided for, guaranteeing the paying of all bills for running expenses, wages and repairs, except as otherwise provided in the contract and release of all liens that may arise on said steamer, by reason of her employment or navigation. * * * '

The contract thus referred to-- disregarding the inaccuracy of the reference, as the intention is plain-- was made on the same day, chartering to Chamberlain the steamer Joseph L. Hurd, for the season, with personal covenants on the part of Chamberlain (as usual in charter parties) respecting the use, limits of navigation, keeping properly manned and equipped, payment of bills, release of liens, and redelivery in good condition at the end of the term. It recites, as considerations for the charter, that monthly payments are to be made for the use, 'a satisfactory bond furnished,' and the conditions mentioned to be kept and performed. Thus the inquiry of jurisdictional subject-matter is sharply presented, under the settled doctrine that cognizance of contract obligations in the admiralty is limited to contracts which are purely maritime; and its solution is not without difficulty under the various distinctions pointed out in the reported decisions.

That the charter party was a maritime contract and the undertaking of the charterer was for maritime service and transactions is unquestionable. Morewood v. Enequist, 23 How. 491, 493, 16 L.Ed. 516. The appellant, however, as surety on the bond, was no party to the maritime undertaking; neither promised performance of the charter service, nor was authorized under the contract terms to perform. Chamberlain was the sole contractor under the charter, which was neither assignable in terms, nor subject to performance of the obligations by another. The charter use and service were coupled with liabilities which made them personal and not open to performance by the appellant, if it so desired. Arkansas Smelting Co. v. Belden Co., 127 U.S. 379, 388, 8 Sup.Ct. 1308, 32 L.Ed. 246; Clark on Contracts, 524. The obligation of the appellant as surety on the bond was not for performance of the charter party, but for the payment of damages in the event of nonperformance on the part of the charterer. Unless this bond is a maritime contract, within the tests established for admiralty jurisdiction, it is plain that the libel founded thereon cannot be entertained.

The Constitution grants, as the judiciary act provides, in general terms only, for the exercise of judicial power in 'all cases of admiralty and maritime jurisdiction,' leaving the extent of that jurisdiction to be ascertained by the courts. For many years the limits were unsettled, both in reference to locality and subject-matter, and the broader definitions which are now established were not recognized in the early cases in the Supreme Court, although the research of great admiralty judges in the Circuit and District Courts furnished valuable light in that direction. Ultimately, however, the Supreme Court departed from certain restrictions which appeared in these early cases, notably, in Cutler v. Rae, 7 How. 729, 730, 12 L.Ed. 890, 1221, and adopted as the jurisdictional test of contract subject-matter the nature of the contract-- whether it was maritime or nonmaritime. If the undertaking is for maritime service or transactions, it is within the cognizance of admiralty; otherwise it is not. New Jersey Steam Navigation Co. v. Merchants' Bank, 6 How. 344, 392, 12 L.Ed. 465; Insurance Co. v. Dunham, 11 Wall. 1, 26, 20 L.Ed. 90; The Richard Winslow, 34 U.S.App. 542, 545, 71 F. 428, 18 C.C.A. 344. This rule extending the limits to include all maritime contracts, instead of a specific class of such contracts, resulted from reference to and adoption of like rules of the maritime law as administered in the continental courts, as within the intention of the constitutional grant, rather than the English precedents, which had narrowed the admiralty jurisdiction, through jealous regard for the common-law jurisdiction. No relaxation was intended of the elementary rule that the limits so established must be strictly observed, and the decisions of the Supreme Court are uniform in such requirement. Without a contract purely maritime in its nature, the obligation is not enforceable in the admiralty.

The rule of strict limitation is uniformly recognized and generally applied in the admiralty courts. Instances are numerous of its application and denial of jurisdiction in reference to causes which appear to be maritime in certain aspects, but are not purely maritime in the jurisdictional sense. These examples will suffice for illustration: A 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. ' The J. E Rumbell, 148 U.S. 1, 15, 13 Sup.Ct. 498, 37 L.Ed. 345, and cases cited. Neither a contract for building a vessel nor one for furnishing materials therefor is a maritime contract. Edwards v. Elliott, 21 Wall. 532, 555, 22 L.Ed. 487. The fact that the vessel is launched when materials were furnished does not make the contract therefor maritime. The William Windom (D.C.) 73 F. 496, and cases ...