Tri-Continental Fin. Corp. v. Tropical M. Enterprises, No. 17543.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtHUTCHESON, , and TUTTLE and JONES, Circuit
Citation265 F.2d 619
Decision Date08 April 1959
Docket NumberNo. 17543.
PartiesTRI-CONTINENTAL FINANCIAL CORPORATION, Appellant, v. TROPICAL MARINE ENTERPRISES, INC., et al., Appellees.

265 F.2d 619 (1959)

TRI-CONTINENTAL FINANCIAL CORPORATION, Appellant,
v.
TROPICAL MARINE ENTERPRISES, INC., et al., Appellees.

No. 17543.

United States Court of Appeals Fifth Circuit.

April 8, 1959.


265 F.2d 620

Albert R. Connelly, New York City, Arthur W. Milam, Jacksonville, Fla., Claude Pepper, Miami, Fla. (John D. Calhoun, Donald Cronson, John F. Hunt, Jr., Cravath, Swaine & Moore, New York City, Milam, LeMaistre, Ramsay & Martin, Jacksonville, Fla., of counsel), for appellant.

William Alonzo Carter, John W. Ball, Jacksonville, Fla. (Adair, Ulmer, Murchison, Kent & Ashby, Jacksonville, Fla., of counsel), for Owens-Illinois Glass Co.

Harold B. Wahl, Jacksonville, Fla., J. Franklin Fort, Washington, D. C., Marshall S. Scott, Stuart W. Patton, Miami, Fla. (Loftin & Wahl, Jacksonville, Fla., Kominers & Fort, Washington, D. C., of counsel), for West India Fruit & Steamship Co., Inc., and others.

Before HUTCHESON, Chief Judge, and TUTTLE and JONES, Circuit Judges.

HUTCHESON, Chief Judge.

Appealing from a summary judgment entered in a proceeding to foreclose a mortgage on a vessel, the Abaco Queen, plaintiff-appellant, challenging as erroneous the findings and conclusions1 of the district judge, that the restrictive

265 F.2d 621
covenant in the bill of sale to the Queen against its use in the specified trade was valid and of binding force against the mortgagee and any purchaser at the foreclosure sale, seeks a reversal and rendition or at least a reversal and remand of the judgment giving effect to these findings and conclusions

The action which resulted in the judgment under attack was begun July 6, 1957, by plaintiff-appellant, Tri-Fi, the mortgagee, as an ordinary proceeding to foreclose its mortgage. Original parties to it were the mortgagor, Tropical Marine Enterprises, Inc. (T.M.E.), T.M.T. Trailer Ferry Co., Inc., parent of T.M.E., and insolvent guarantor of the mortgage indebtedness, and one Gibbs Corp. (Gibbs), a junior lienor.

On September 4, 1957, appellee Owens Illinois Glass Corp. (Owens) intervened, alleging: that on April 18, 1956, it had purchased the Queen from West India Fruit and Steamship Co. (West India), subject to a restrictive covenant;2 that on November 20, 1956, it had sold the

265 F.2d 622
vessel to T.M.E., subject to the covenant; and that Tri-Fi had taken the mortgage with knowledge of, and subject to the covenant. So alleging Owens prayed that the decree of foreclosure provide that the sale of the Queen be made subject to the restrictive covenant, and that it should be binding on the purchaser

Tri-Fi, admitting that it had taken its mortgage with notice of the covenant not to compete and opposing the relief sought by West India and Owens, prayed that the decree of foreclosure permit the Abaco Queen to be sold free of all restrictions on its use. Tri-Fi asserted two issues in defense, viz., (1) that the covenant on the Abaco Queen is, as a matter of law, not enforceable against Tri-Fi as a non-assenting mortgagee, i.e., that such covenants do not run with chattels and (2) that the terms of the covenant not to compete on the Abaco Queen constituted illegal restraints of trade under Sections 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1 and 2).

Thereafter West India, made a party by Owens, filed a plea and prayer in general effect the same as the one Owens had filed, except that, unlike Owens, it sought a declaratory judgment that the covenant was not illegal under the Sherman Act. Tri-Fi then moved on the pleadings and the undisputed facts3 for "an order (1) granting plaintiff summary judgment against defendant, Tropical Marine Enterprises, Inc., for the relief demanded in the Complaint (with the amount of attorneys' fees to which plaintiff is entitled,

265 F.2d 623
subsequently to be determined), (2) granting plaintiff summary judgment against defendant, Gibbs Corporation, for the relief demanded in the Complaint; (3) granting summary judgment in plaintiff's favor on the issues raised by the petition of Owens-Illinois Glass Company, the answer to that petition and counterclaim of plaintiff, and the petition of West India Fruit and Steamship Co., Inc., on the ground that the restrictive agreement relied upon by Owens-Illinois and West India do not `run with the boat' so as to bind plaintiff or the purchaser at a foreclosure sale; * * *". (Record p. 142.)

The district judge rejecting plaintiff's contentions and embodying in the judgment of foreclosure provisions directly contrary thereto, appellant is here arguing with earnestness and conviction that in so holding and adjudging, the district judge went counter to established law.

With equal earnestness, insisting that it did not ask for a summary judgment on the anti-trust issue, it urges upon us that in holding and adjudging that the covenant was not in violation of the Sherman Act and illegal, the district judge erred (1) procedurally (a) in dealing with that issue, though plaintiff did not present it for summary determination, and (b) in concluding that in respect to it, there was no issue as to any material fact, and (2) as a matter of substantive law, in holding (a) that the covenant is reasonable in time, territory and extent, (b) that it does not violate the anti-trust laws; and (c) that it is binding on the mortgagee and will be on the purchaser at foreclosure sale.

Taking no position with respect to the validity of the restriction under the Sherman Act, except to assert that appellant, for the purpose of the determination of its motion for summary judgment, conceded its validity in that respect, but taking strong issue with appellant's position that the finding and judgment, that the mortgagee took subject to the restrictive covenant and the purchaser at the foreclosure sale would likewise take subject thereto, were erroneous, appellee Owens is here insisting that the judgment must be affirmed.

Posing the ultimate issue for decision below and here as whether the covenant between vendor and vendee of the Queen restricting her use in respect to a specific trade is binding upon the mortgagee who with full knowledge of the covenant loaned the vendee the money necessary to purchase the vessel and consequently is binding upon the purchaser at the sale, appellee West India insists that this issue and all the facets of it, including the validity of the covenant against the claim that it violated the anti-trust laws, was properly before the court for decision, the parties, in support of their respective views, its cross action and the intervention of Owens, and was properly decided by the district judge on the undisputed facts.

Upon the interesting questions thus presented for decision, the parties, in support of their respective views, have in briefs and arguments, exhibiting a high order of advocacy, marshalled the facts and canvassed the applicable law, and, greatly aided thereby, we have reached the firm conclusion that the district judge was right in permitting the introduction of parties into the foreclosure suit and the tender for declaratory judgment thereon of issues other than those necessary to the mere foreclosure of the mortgage lien.

This is not to say that, since under the general doctrine, "In a proceeding to foreclose a mortgage lien, while it is proper to make anyone claiming under the mortgagor a party to such foreclosure proceedings, it is not allowed to put in issue the mortgagor's title",4 i.e., the foreclosure passes the mortgaged interest, it neither adds to nor detracts therefrom, we have not had some difficulty in concluding that the district

265 F.2d 624
judge was right in determining that there was an actual controversy as to the matters introduced into the foreclosure suit by the pleadings of the parties. It is to say, though, that, considering the wideness of the discretion vested in the district judge by the declaratory judgment statute, Sec. 2201, Title 28 U.S.C. and Rule 57, Federal Rules of Civil Procedure, Title 28 U.S.C.,5 we conclude that the district judge did not abuse his discretion in proceeding as he did to a judgment which, not at all undertaking to add to or subtract from the mortgagor's interest foreclosed, merely declared the existing nature and condition of that interest

For the reasons hereafter stated, we think that he was right (1) in regarding all of the issues decided by him as properly before him for decision, (2) in the conclusions that he reached as to these issues, and (3) in the judgment entered in accordance therewith. We recognize that appellants present and argue, not queryingly and tentatively but positively and with confidence, that the anti-trust question was not in issue in the summary judgment proceeding, and we have no disposition to treat this contention lightly. We think, however, that, in the light of the proceedings below taken as a whole, including the pleadings of the parties and particularly plaintiff's motion seeking specifically summary judgment for debt and foreclosure and "summary judgment in plaintiff's favor on the issues raised by the petition of Owens Illinois Glass Co., the answer to that petition and counter claim of plaintiff, and the petition of West India...

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10 practice notes
  • Stevens v. State Mineral Bd., No. 49894
    • United States
    • Supreme Court of Louisiana
    • March 30, 1970
    ...Lloyd v. Franklin Life Insurance Company, 9 Cir., 245 F.2d 896 and Tri-Continental Financial Corporation v. Tropical Enterprises, 5 Cir., 265 F.2d 619. Besides we do not feel compelled to follow such practice in connection with the article involved inasmuch as it is not a replica of Rule 56......
  • Denison Mattress Factory v. Spring-Air Company, No. 18774.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • October 31, 1962
    ...him from the dangers of an unjust use of those fruits by the other party." Tri-Continental Fin. Corp v. Tropical M. Enterprises, 5 Cir., 265 F.2d 619 (1959), held a restrictive covenant prohibiting the purchaser of a vessel from operating the vessel for a period of ten years between ports i......
  • American Bell Inc. v. Federation of Telephone Workers of Pennsylvania, No. 83-1772
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • July 20, 1984
    ...much less complex than a collective bargaining agreement. See, e.g., Tri-Continental Financial Corp. v. Tropical Marine Enterprises, Inc., 265 F.2d 619 (5th Cir.1959) (covenant not to compete); In re Waterson, Berlin & Snyder, 48 F.2d 704 (2d Cir.1931) (obligation to pay royalties on copyri......
  • Alders v. AFA Corporation of Florida, Civ. No. 72-933.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • January 22, 1973
    ...the reasonableness of the covenant is supported by the case law. In Tri-Continental Financial Corp. v. Tropical Marine Enterprises, Inc., 265 F.2d 619 (5th Cir. 1959), aff'g 164 F.Supp. 1 (S.D.Fla.1958), a covenant prohibiting the buyer of a vessel from operating the boat for ten years as a......
  • Request a trial to view additional results
10 cases
  • Stevens v. State Mineral Bd., No. 49894
    • United States
    • Supreme Court of Louisiana
    • March 30, 1970
    ...Lloyd v. Franklin Life Insurance Company, 9 Cir., 245 F.2d 896 and Tri-Continental Financial Corporation v. Tropical Enterprises, 5 Cir., 265 F.2d 619. Besides we do not feel compelled to follow such practice in connection with the article involved inasmuch as it is not a replica of Rule 56......
  • Denison Mattress Factory v. Spring-Air Company, No. 18774.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • October 31, 1962
    ...him from the dangers of an unjust use of those fruits by the other party." Tri-Continental Fin. Corp v. Tropical M. Enterprises, 5 Cir., 265 F.2d 619 (1959), held a restrictive covenant prohibiting the purchaser of a vessel from operating the vessel for a period of ten years between ports i......
  • American Bell Inc. v. Federation of Telephone Workers of Pennsylvania, No. 83-1772
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • July 20, 1984
    ...much less complex than a collective bargaining agreement. See, e.g., Tri-Continental Financial Corp. v. Tropical Marine Enterprises, Inc., 265 F.2d 619 (5th Cir.1959) (covenant not to compete); In re Waterson, Berlin & Snyder, 48 F.2d 704 (2d Cir.1931) (obligation to pay royalties on copyri......
  • Alders v. AFA Corporation of Florida, Civ. No. 72-933.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • January 22, 1973
    ...the reasonableness of the covenant is supported by the case law. In Tri-Continental Financial Corp. v. Tropical Marine Enterprises, Inc., 265 F.2d 619 (5th Cir. 1959), aff'g 164 F.Supp. 1 (S.D.Fla.1958), a covenant prohibiting the buyer of a vessel from operating the boat for ten years as a......
  • Request a trial to view additional results

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