Sword Line v. United States

• Decision Date: 24 February 1956
• Docket Number: No. 160,Docket 23723.,160
• Citation: 230 F.2d 75
• Parties: SWORD LINE, Inc., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

230 F.2d 75 (1956)

SWORD LINE, Inc., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 160, Docket 23723.

United States Court of Appeals Second Circuit.

Petition Filed January 18, 1956.

Decided February 24, 1956.

Theodore J. Breitwieser, New York City, for libelant-appellant.

Warren E. Burger, Asst. Atty. Gen., Leavenworth Colby, Chief, Admiralty & Shipping Section, Dept. of Justice, Washington, D. C., Benjamin H. Berman, Atty., Admiralty & Shipping Section, Dept. of Justice, New York City, and Paul W. Williams, U. S. Atty. for Southern Dist. of New York, New York City, for respondent-appellee.

Before CLARK, Chief Judge, and HAND and WATERMAN, Circuit Judges.

CLARK, Chief Judge.

Though interesting and important, the further material supplied us for the first time on rehearing does not convince us of any error of law in our decision of December 14, 1955, 228 F.2d 344. But since this material is important in itself and does indicate wider reaches to the issues involved than we had known, it seems desirable to cite it here; and because Judge WATERMAN and I take a slightly different approach from Judge HAND, we ought to avoid any chance of confusion by stating our views more explicitly, though Judge HAND was perfectly fair in his opinion to our divergencies.

This was a libel in admiralty in quasi contract for alleged overpayment of charter hire for government merchant vessels. We held that admiralty had jurisdiction, that the claim was time barred, and that additionally it was also barred by a release and compromise with the government effected by a confirmed plan in completed arrangement proceedings of the Sword Line as debtor. At that time libelant had expressly accepted admiralty jurisdiction, leading to the government's somewhat perfunctory notation of jurisdiction, with a formal citation or two; but nevertheless we raised the question at the argument and necessarily considered it with some care, as was our duty. Though our conclusion accorded with that then held by counsel, it obviously suggested to libelant a point it had overlooked; for now the real issue on this rehearing has centered upon libelant's claim vigorously pressed that admiralty lacked jurisdiction and that we had overlooked relevant authorities in holding otherwise.

While the other two issues were also reargued, there is nothing further really to be said on them. We are still all agreed that the release in the Plan of Arrangement ended all claim by libelant; the old Latin maxim expressio unius cannot be stressed to defeat the very obvious intent of the parties, as we pointed out before. As to the statute of limitations, the whole point was whether the two-year period dated from the time of the acts involved, namely, the overpayments, or only from a later audit provided for in Clause 13 of the charter party. While Judge HAND felt that under the circumstances the audit was necessary to start the time running, we thought the authorities required the contrary view. See, e. g., United States v. Atlantic Mut. Ins. Co., 298 U.S. 483, 56 S.Ct. 889, 80 L. Ed. 1296. There is nothing to the point that payment of an unearmarked portion of the agreed-upon compromise of the government's four million dollar claim in the arrangement proceedings started the time running anew. And so we turn to the interesting and important question of admiralty jurisdiction.

The problem arises because earlier cases in this circuit and elsewhere, cited in our original opinion, had ruled that admiralty had no jurisdiction in quasi contract. The general thesis was that such action arose out of an implied contract and that such implied contract was collateral to any maritime contract, such as the one here for charter hire, and was not within the purview of admiralty. Part of the supporting rationale was that this form of remedy was really an equitable one and that admiralty had no jurisdiction over equity. The theory was brilliantly criticized, see, e. g., Chandler, Quasi Contractual Relief in Admiralty, 27 Mich.L.Rev. 23; Morrison, The Remedial Powers of the Admiralty, 43 Yale L.J. 1; Robinson on Admiralty 197-200 (1939), and, being of somewhat doubtful character, was not followed so consistently in the cases as to leave a line of clear demarcation of its aegis. In fact, the rationale had little to commend it even on its own ground, for admiralty does resort to and employ equitable principles rather widely. See discussion by Mr. Justice Frankfurter in Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 689-696, 70 S.Ct. 861, 94 L.Ed. 1206, 19 A.L.R.2d 630, citing eminent authority. And the ancient remedy in quasi contracts, whatever its origin or slant, was distinctly not a proceeding in equity, but was the very means historically of getting into the nonchancery courts. Stone v. White, 301 U.S. 532, 57 S.Ct. 851, 81 L.Ed. 1265; Moses v. Macferlan, 2 Burr. 1005, 97 Eng.Rep. 676 (K.B. 1760); Ames, The History of Assumpsit, 2 Harv.L.Rev. 53, Lectures on Legal History 129 (1913).

Moreover, as these and other well-known authorities show, the existence of a contract, implied in law, is a pleasant, if productive, fiction. Actually recovery is based upon principles of justice and good conscience; and it is fictitious to think of some collateral nonmaritime implied contract as even existing, not to speak of controlling. In truth this is a refund of maritime payments originally enforceable in admiralty; there is no good reason for holding that the court which would decree the payment in the first instance should not decree the repayment which the admiralty law now requires. Logic, as well as convenience, dictates such jurisdiction, rather than the discovery of some narrow distinction to send a litigant elsewhere for perhaps a part of an entire claim. For certainly the claim, together with a natural counterclaim or offset, should properly come up in the same litigation without dismemberment and splitting into two lawsuits separately considered.

Against this background the views of the Supreme Court are of course most pertinent. In Krauss Bros. Lumber Co. v. Dimon S. S. Corp., 290 U.S. 117, 54 S. Ct. 105, 78 L.Ed. 216, that Court held that recovery of an admiralty overcharge there enforced by lien against a vessel was properly had in the admiralty; and in the course of the discussion it minimized the form of recovery, saying — in addition to the quotation made in our original opinion — in answer to the claim that "the demand is upon a cause of action for money had and received, which lies only at common law and not in admiralty," that "Admiralty is not concerned with the form of the action, but with its substance." 290 U.S. at page 124, 54 S.Ct. at page 107. Hence this case is taken quite generally by commentators as overruling the earlier line of cases barring quasi contractual claims in admiralty. See, e. g., 23 Calif.L.Rev. 343; 34 Col.L.Rev. 358; 47 Harv.L.Rev. 519; 43 Yale L.J. 506; Robinson, "Contract" Jurisdiction in Admiralty, 10 Tulane L.Rev. 359, 396; Robinson on Admiralty, supra 200, n. 173. The form of the remedy there enforced, a lien in rem, would not seem to suggest any point of distinction; the opportunity to seize a vessel does not of itself transform a land to a maritime cause; and actually in personam jurisdiction had there already been upheld in the decision of the Ninth Circuit below, reversing the district court's outright dismissal. See The Pacific Cedar, 9 Cir., 61 F.2d 187, reversing The Pacific Hemlock, D.C.W.D. Wash., 53 F.2d 492, and which is itself reversed only on its dismissal of the libel in rem, the sole issue before the Supreme Court.

It is true, as Judge HAND points out, that Justice Stone did find a breach of the maritime contract in the overcharge; and hence Judge HAND has limited his agreement with us that jurisdiction obtains to the finding of such a breach as a prerequisite. But we think this limitation is difficult to work out in any practical sense and may bring back the kind of arbitrary restriction which the Krauss case wiped out. This was stated not as a condition of decision in the Krauss case, but only as a fact illustrating the narrowness of a distinction that the original charter party may be in admiralty, while refund of an exaction under it may not. So Justice Sto...