Putnam v. Lower

• Decision Date: 30 July 1956
• Docket Number: No. 14645.,14645.
• Parties: Fred I. PUTNAM and James A. Overman, Appellants, v. Harry C. LOWER, John Kadlec, George S. Herning, Edgar L. Peecher, William E. Barquist and Norman L. Bunker, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

236 F.2d 561 (1956)

Fred I. PUTNAM and James A. Overman, Appellants, v. Harry C. LOWER, John Kadlec, George S. Herning, Edgar L. Peecher, William E. Barquist and Norman L. Bunker, Appellees.

No. 14645.

United States Court of Appeals Ninth Circuit.

July 30, 1956.

COPYRIGHT MATERIAL OMITTED

Peyser, Cartano, Botzer & Chapman, Seattle, Wash., William H. Botzer, for appellants.

M. Bayard Crutcher, Bogle, Bogle & Gates, Seattle, Wash., for appellees.

Before STEPHENS, POPE, and FEE, Circuit Judges.

STEPHENS, Circuit Judge.

Fred I. Putnam and James A. Overman, as holders of a valid recorded preferred ship mortgage on the oil screw vessel Silver Spray, her engines, tackle, apparel, furniture and equipment, bring this appeal from a decree of the district court for the western district of Washington, northern division, foreclosing said mortgage and subordinating it to the wage liens of appellees.

In May of 1954, Robert J. Tobin, owner and mortgagor of the Silver Spray, conceived the idea of conducting a tuna fishing venture in Southern California waters. Since he lacked the necessary funds to outfit such an operation, he placed advertisements¹ in the Seattle Times, and other Northwest Coast papers, seeking persons to invest money on a working share arrangement or fishing lay.² In this manner, Tobin contacted appellees Lower, Kadlec, Herning, Peecher and Barquist, and represented to them that he was the owner of the Silver Spray, which was an 80' tuna clipper, and either was or would be equipped with live bait tanks and refrigeration, in order that it could leave Seattle for San Diego by May 15, 1954, to fulfill a tuna fishing contract with the Van Camp Sea Food Company. Induced by these representations, appellees Lower, Herning, Peecher, each paid $2500 for a working one-tenth share on the Silver Spray.³

Appellee Kadlec did not sign a share agreement, but was employed by Tobin as a crew member of the Silver Spray for a wage of $100 per week.

In mid-May, 1954, Tobin informed the crew that the Silver Spray would go to Alaska to haul a load of shrimp. This was to be in the nature of a shakedown run for the vessel and crew. While it appears that many of the appellees had secret objections to such a venture, none were voiced, and on May 18, 1954, the Silver Spray left Seattle for Wrangel, Alaska. In some unexplained way the shrimp, which were to be taken aboard, were gone when the vessel reached Wrangel, and Tobin subsequently left the boat at Ketchikan and returned to Seattle with appellee Peecher, whose health was adversely affected by the cold northern weather. Thereafter, Tobin sent a wire⁴ to the Silver Spray directing its return to Seattle to make ready for the voyage south.

On June 2, 1954, appellee Bunker agreed to captain the Silver Spray on its fishing expedition. The following day the vessel arrived in Seattle from Alaska. It appears that during the interim, Tobin had been making efforts to secure bait and refrigeration equipment in order to outfit the Silver Spray for tuna fishing. It became necessary to dry dock the ship for repairs, and during this time Tobin left town on personal business. Provisions were growing short and the affairs of the fishing lay were in a confused state, which does not appear to have been caused by any of the appellees. As a result, on June 10, 1954, appellee Lower libeled the boat, her engines, tackle, apparel, furniture and equipment, and Tobin personally; setting out in his libel many of the above facts. It was alleged this was a cause within the admiralty and maritime jurisdiction of the court; that Tobin had abandoned the vessel at Ketchikan, Alaska, and had since refused to repair it or provide it with the necessary provisions or funds to carry out the tuna fishing venture. It was further alleged that libelant was wrongfully discharged without fault on his part, and was entitled to the sum of $5,000 as the value of his share of the catch, had the venture been carried out.

On June 10, 1954, pursuant to the libel, the Silver Spray was attached and held by the United States Marshal. Substantially similar intervening libels were filed on July 26, 1954, by appellees Bunker and Kadlec, and by Doss R. Payne; and on August 26, 1954, by appellees Barquist, Peecher, and Herning. On August 26, 1954, appellants Putnam and Overman filed their intervening libel in rem and in personam against the Silver Spray, and against Tobin personally, setting out the admiralty jurisdiction of the court, and alleging the sale of the Silver Spray to Tobin for a $5,000 down payment and a $30,000 promissory note secured by a duly recorded preferred ship mortgage, and praying that the mortgage be foreclosed and adjudged superior to any liens the other libelants might have for shares.

Respondent Tobin answered the libels of appellees Lower, Bunker, Herning, Peecher, and Barquist, and as an affirmative defense set out the share agreement⁵ and alleged that each of the libelants became dissatisfied with the proposed venture, but violated the agreement by refusing to give respondent the requisite 30 days notice of intention to withdraw from the venture, as required by paragraph 6 thereof. Appellees replied alleging that they were induced to execute the share-agreement by respondent's intentionally false representations that the Silver Spray was equipped to fish for tuna; that respondent was experienced in commercial fishing, and that he had a fishing contract with the Van Camp Seafood Company; and as a result the share contracts were null and void and of no effect. When the cause came on for trial, the trial judge found that on or before the date of the libel, Tobin by his actions had abandoned his contracts with libelants, abandoned the tuna fishing voyage for the 1954 tuna fishing season, and thereby wrongfully discharged libelants.

By the decree of October 28, 1954, appellees Lower, Herning, Peecher, Barquist, and Bunker were each awarded what the court termed "seamans' wage liens" of $7,500, less their respective earnings to the end of the 1954 tuna season. This award was based upon their probable share had the fishing lay been carried out.

Kadlec, as a salaried employee rather than a working shareholder, was awarded a lien for $495 for wages earned and unpaid.

Appellants, as mortgagees of the vessel, were awarded a lien of $30,725, together with attorney's fees of $2,500, superior in rank and prior in time to any and all maritime liens against the vessel, excepting the above mentioned wage liens, which were held to be superior in rank and prior to the lien of appellants' preferred ship mortgage.

Pursuant to said decree, a writ of venditioni exponas issued, under which the United States Marshal sold the Silver Spray, realizing only $11,000 from the sale. Inasmuch as this amount is inadequate to satisfy even partially their subordinated mortgage lien, appellants Putnam and Overman bring this appeal.

No appeal is taken by respondent Tobin.

Certain of the court's findings of fact are questioned. In this respect, appellants contend the court erred in finding that the libelant and intervening libelants were ready, willing, and able to continue performance of their fishing contracts, and that they were wrongfully discharged. In admiralty, as in other fields of the law, findings of the trier of fact will not be disturbed on appeal, unless the error is manifest clearly against the evidence.⁶

There is no contention that Tobin formally discharged anyone; rather, the finding under attack finds its basis in Tobin's actions during the period from May 18, 1954, until the original libel was filed on June 7, 1954. It was the opinion of the trial court that by sailing to Alaska rather than to Southern California, by leaving the vessel at Ketchikan, by seeking to divert the enterprise to other grandiose schemes, by continuing to absent himself from the vessel, and by failing to provision it, Tobin had manifested his intention to terminate the proposed fishing lay, and thereby had wrongfully discharged appellees without fault on their part. There is, of course, no necessity that discharge be accompanied by formal words of firing. Words or conduct which would logically lead a prudent person to believe his tenure had been terminated are in themselves sufficient.⁷

The record shows that subsequent to his alleged abandonment of the vessel in Alaska, Tobin wired appellees directing them to return in order to start the tuna venture; that he had made inquiries regarding necessary bait and refrigeration equipment after his return to Seattle; that he had paid a drydock bill and had attempted to lift the libel by posting bond; and that as late as June 3, 1954, he engaged appellee Bunker to captain the vessel on the lay. Such factors could well support a position contrary to that reached by the trial court, but while we might have reached such a contrary result, had we initially heard the case, we cannot say the result reached by the trial court is clearly erroneous,⁸ and hence the finding under attack must stand.

For the same reasons, the finding that appellee Kadlec was hired on a wage basis must be sustained. The testimony on this point was confused and conflicting, but the court heard the witnesses and observed their demeanor,⁹ and there is substantial evidence to support the finding.

We are next faced with a jurisdictional question, it being the contention of the appellants that the causes of action asserted by the appellees are essentially common-law actions for fraud and deceit, and as such not cognizable by the district court sitting as a Court of Admiralty. This argument is founded upon the replies of the respective libelants to Tobin's affirmative defense setting out the share agreements. To avoid the effect of the share agreements, the respective replies admitted their execution, but alleged that they were induced by Tobin's false representations, and were accordingly null and void.¹⁰ The argument is...