Peirce v. New York Dock Co.

• Citation: 265 F. 148
• Decision Date: 11 March 1920
• Docket Number: 110.
• Parties: PEIRCE et al. v. NEW YORK DOCK CO.
• Court: U.S. Court of Appeals — Second Circuit

265 F. 148

PEIRCE et al. v. NEW YORK DOCK CO.

No. 110.

United States Court of Appeals, Second Circuit.

March 11, 1920

The plaintiffs herein at the time the suit was brought were subjects of the kingdom of Italy and residents of Naples, in that kingdom. They were copartners engaged in business as owners, charterers, agents, consignees, and managers of steamships and other vessels, and as such operated a number of vessels between Italy and the port of New York. After the suit was begun, and before trial, one of the plaintiffs William Peirce, died, and the action was continued by the sole surviving partner, George Peirce, without objection by defendant. The defendant is a corporation organized under the laws of the state of New York. It is engaged in business in the Eastern District of New York as the owner of docks and warehouses.

Butler Wyckoff & Campbell, of New York City (Homer L. Loomis, of New York City, and J. Alvin Grace, of New York City, of counsel) for appellants.

Davis Auerbach & Cornell, of New York City (Charles E. Hotchkiss and Martin A. Schenck, both of New York City, of counsel), for appellee.

Before ROGERS, HOUGH, and MANTON, Circuit Judges.

ROGERS Circuit Judge (after stating the facts as above).

It appears that on March 27, 1913, the plaintiffs, through their agents, entered into a written contract with the defendant, leasing from it for a period of six years, ending on April 1, 1919, certain premises known as Columbia Pier No. 22, with its appurtenances, situated on the southerly side of South Ferry, in the borough of Brooklyn, in the city of New York. On January 23, 1918, the defendant sent its agents upon the pier for the purpose of resuming possession thereof and of ousting the plaintiffs therefrom. The defendant attempted and threatened to remove the plaintiffs' agents, employes, and representatives from the pier, as well as the plaintiffs' property. The attempt was made simultaneously with the service upon the plaintiffs of a notice declaring the lease forfeited for default:

'In that you have failed to abide by, perform, and carry out certain rules, regulations, or orders issued by the city of New York, embraced within the Code of Ordinances of the City of New York, relating to explosives, and particularly the provisions of section 65 of article IV of chapter 10 of said Code, and have, among other things, retained for more than 48 hours on board of a ship lying at Columbia Pier No. 22, with its appurtenances, explosives or explosive material in excess of the amount required for said ship's own use for signaling or life-saving purposes.'

The plaintiffs thereupon, and on the same day, without surrendering possession of the pier, commenced this suit, and as an incident thereof sought an injunction pendente lite. The complaint alleged that no violation of the lease had taken place and no forfeiture had been incurred; that if, contrary to their understanding, there did exist a ground for forfeiture, it was one from which a court of equity should relieve them; and that, unless the relief prayed for was granted, they would suffer immediate and irreparable damages. On the presentation of this complaint and an affidavit filed therewith the court granted an ex parte order restraining the defendant from interfering with the plaintiffs' possession and enjoyment of the premises under the lease, pending the hearing of the application for an injunction pendente lite. That hearing was had on January 30, 1918, and an opinion was handed down on May 14, 1918, holding that the injunction should continue pendente lite and the court refused to pursue a contrary course, as the opinion stated, 'particularly in a case where the matter at stake is the use of a pier for which rent is being promptly paid and where the cause of difficulty has been entirely removed. ' The court added that--

'The accusation is freely made that the object of the defendant is ulterior, and that it merely wishes to oust its tenant, so as to procure an increased rental, and this question enters into the merits of the matters in dispute.'

At the hearing on the merits the court found that the plaintiffs had violated the lease and that they were not entitled to relief from the forfeiture. It therefore dismissed the bill of complaint and enjoined the plaintiffs from in any manner interfering with the defendant in the sole custody, occupation, and possession of the premises. The court allowed defendant a money judgment in the sum of $59,218.63, with interest thereon from January 24, 1919, together with costs and disbursements; the money judgment being in an amount equal to the fair rental value of the premises from January 24, 1918, found to be $100,000, less $40,000 paid to defendant under a stipulation.

The pertinent provisions of the lease so far as the questions herein involved are concerned may be found in the margin. ^[1]

The answer alleged as the default whereby defendant was entitled to a forfeiture of the lease that the plaintiff--

'landed and stored, or allowed to be landed and stored, on, in, and about the demised premises, high explosives, and also failed to abide by, perform, and carry out certain rules, regulations, or orders then duly made and issued by the municipality of the city of New York with respect to the use of the said demised premises, which said rules, regulations, and orders * * * were the ordinances of the city of New York relative to explosives and inflammable materials, some of which are embraced within section 65 of article IV of chapter 10 of the said Code of Ordinances of the City of New York.'

The pertinent provisions of the Code of Ordinances of the City of New York are to be found in the margin. ^[2]

The Italian steamer Napoli, operating under the requisition and control of the Italian government, on January 8, 1918, berthed alongside of Pier 22. The office of the Italian Ministry of Shipping in New York had arranged with different shippers, including the United States Navy Department, for the shipment of various articles of merchandise on the ship and the process of loading was under way. Some of this merchandise was being loaded aboard the Napoli from lighters lying alongside her and other merchandise was being loaded thereon from the pier. Among the merchandise being loaded on the ship were receptacles said to contain harbor defense mines, which in turn were said to contain charges of TNT, a box said to contain detonators, and certain cases said to contain small arms, ammunition, and certain chemicals, viz. monochlor benzol and ammonium nitrate. But none of this alleged objectionable material was ever brought upon the pier. It was brought to the waters adjacent to the pier on lighters operated by the United States government, or the New York Central Railroad Company, and loaded from such lighters directly upon the Napoli. While this boat was being operated as already stated under the requisition and control of the Italian government, she was owned by an Italian corporation, the Trans-Oceanica Societa, the local agent of which was also the agent of the plaintiffs. This agent made inquiry of the Italian Ministry of Shipping and of the representatives of the United States Navy Department as to whether any of the goods to be loaded aboard the Napoli were explosive or dangerous, and was assured that the goods were nonexplosive and nondangerous, and that the receptacles were to be filled and made ready for use only when they reached the other side and were about to be deposited in Italian waters.

It further appears that after certain of the harbor defense mines had been loaded aboard the Napoli and while a New York Central car float containing seven sealed cars said to contain other such mines was lying outside other lighters at Pier 22, the New York Fire Department required the master of the Napoli to keep a tug in attendance on the Napoli ready to tow it out into the stream if occasion arose. And thereafter the fire department required the car float to which reference has before been made to be removed from the vicinity of the pier and the harbor defense mines in the Napoli to be discharged therefrom and also removed from the vicinity of the pier. Thereafter the defendant sent to plaintiffs the notice, hereinbefore referred to, claiming the forfeiture of the lease.

The plaintiff is in this court claiming: (1) That the terms of the lease heretofore cited in the margin-- section 11-- were not violated, inasmuch as the alleged objectionable material was never 'on the said premises,' meaning Pier No. 22. (2) That section 12, also found in the margin, has not been violated, inasmuch as all rules or orders made thereunder were performed and carried out. (3) That the material alleged to be objectionable was not proven to be so in fact.

The burden of proof rests upon a party seeking to establish a forfeiture. In Henderson v. Carbondale Coal & Coke Co., 140 U.S. 25, 11 Sup.Ct. 691, 35 L.Ed. 332, the court declared that forfeitures are never favored, and added:

'Equity always leans against them, and only decrees in their favor when there is full, clear, and strict proof of a legal right thereto.'

The law looks upon a forfeiture as a harsh way of terminating contracts, and one who insists upon forfeiture is himself held 'to walk strictly within the limits of the authority which gives the right. ' Palmer v. Ford, 70 Ill 369, 377. With this rule as to the burden of proof in mind, did the defendant establish by full, clear, and strict proof that the Napoli was loaded with explosive mines? The fact has been adverted to that the agent in charge had been assured by the Italian Ministry of Shipping and by the representatives of the Navy Department of the United States that the goods were nonexplosive...