United Barge Co. v. Logan Charter Service, Inc.

• Decision Date: 21 August 1964
• Docket Number: No. 3-64-Civ. 98.,No. 3-64-Civ. 97,3-64-Civ. 97,3-64-Civ. 98.
• Parties: UNITED BARGE CO., Inc., Dairyland Power Cooperative and The Continental Insurance Company, Libelants, v. LOGAN CHARTER SERVICE, INC., in personam, and The Tug City of Joliet, her engines, tackle, furniture, etc., in rem, and the United States of America, Respondents. UNITED STATES of America, Cross-Libelant, v. UNITED BARGE CO., Inc., and Dairyland Power Cooperative, Cross-Respondents. UNITED STATES of America, Cross-Libelant, v. The M/V CITY OF JOLIET, her engines, tackle, apparel and furniture, etc., in rem, and Logan Charter Service, Inc., in personam, Cross-Respondents. CARGILL, INC. and The Continental Insurance Company, Libelants, v. LOGAN CHARTER SERVICE, INC., in personam and the Tug City of Joliet, her engines, tackle, furniture, etc., in rem, and the United States of America, Respondents.
• Court: U.S. District Court — District of Minnesota

237 F. Supp. 624

UNITED BARGE CO., Inc., Dairyland Power Cooperative and The Continental Insurance Company, Libelants, v. LOGAN CHARTER SERVICE, INC., in personam, and The Tug City of Joliet, her engines, tackle, furniture, etc., in rem, and the United States of America, Respondents.

UNITED STATES of America, Cross-Libelant, v. UNITED BARGE CO., Inc., and Dairyland Power Cooperative, Cross-Respondents.

UNITED STATES of America, Cross-Libelant, v. The M/V CITY OF JOLIET, her engines, tackle, apparel and furniture, etc., in rem, and Logan Charter Service, Inc., in personam, Cross-Respondents.

CARGILL, INC. and The Continental Insurance Company, Libelants, v. LOGAN CHARTER SERVICE, INC., in personam and the Tug City of Joliet, her engines, tackle, furniture, etc., in rem, and the United States of America, Respondents.

No. 3-64-Civ. 97, No. 3-64-Civ. 98.

United States District Court D. Minnesota, Third Division.

August 21, 1964.

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Nathan A. Cobb and Richards, Montgomery, Cobb & Bassford, Minneapolis, Minn., and T. C. W. Ellis and Faris, Ellis, Cutrone, Gilmore & Lautenschlaeger, New Orleans, La., for United Barge Co., Inc., Dairyland Power and Continental Insurance Co.

Curtis L. Roy and Dorsey, Owen, Marquart, Windhorst & West, Minneapolis, Minn., and George B. Matthews and Lemle & Kelleher, New Orleans, La., for Logan Charter Service, Inc.

Alan Raywid, Admiralty and Shipping Section, Dept. of Justice, Washington, D. C., Miles W. Lord, U. S. Atty., and Hartley Nordin, Asst. U. S. Atty., Minneapolis, Minn., for the United States.

LARSON, District Judge.

These actions are brought to recover damages for losses suffered when a barge loaded with grain struck a dam on the Mississippi river and sank. At the time of the accident the barge was being towed by a tug belonging to respondent Logan Charter Service, Inc. (Logan). Logan is a Mississippi corporation and has no offices or permanent employees in Minnesota. However, its tugs have come up to St. Paul several times each year in recent years to perform various towing contracts.

Logan was served under the Minnesota "One Act" statute, Minn.Stat. § 303.13, subd. 1(3).¹ It has moved to quash the service on three grounds. It argues that (a) the State statute may not be used to give an admiralty court jurisdiction, (b) there is no action involving a Minnesota "resident" as the statute requires, and (c) the application of the statute to it would be an unconstitutional burden on interstate commerce.

The first issue is whether the Minnesota One Act statute can be applied by this Court in the course of exercising the admiralty jurisdiction granted to it by the Constitution. There is abundant authority that Courts of Admiralty may give effect to State laws in appropriate cases. In Just v. Chambers, 312 U.S. 383, 61 S.Ct. 687, 85 L.Ed. 903 (1940) one of the issues was whether a Florida statute providing for the survival of wrongful death actions would be applied in an admiralty case arising within Florida. In the course of its opinion, the Supreme Court reviewed and commented on the case of The City of Norwalk, 55 F. 98 (S.D.N.Y.1893) as follows:

"The grounds of objection to the admiralty jurisdiction in enforcing liability for wrongful death were similar to those urged here; that is, that the Constitution presupposes a body of maritime law, that this law, as a matter of interstate and international concern, requires harmony in its administration and cannot be subject to defeat or impairment by the diverse legislation of the States, and hence that Congress alone can make any needed changes in the general rules of the maritime law. But these contentions proved unavailing and the principle was maintained that a State, in the exercise of its police power, may establish rules applicable on land and water within its limits, even though these rules incidentally affect maritime affairs, provided that the state action `does not contravene any acts of Congress, nor work any prejudice to the characteristic features of the maritime law, nor interfere with its proper harmony and uniformity in its international and interstate relations'. It was decided that the state legislation encountered none of these objections. The many instances in which state action had created new rights, recognized and enforced in admiralty, were set forth in The City of Norwalk, and reference was also made to the numerous local regulations under state authority concerning the navigation of rivers and harbors. There was the further pertinent observation that the maritime law was not a complete and perfect system and that in all maritime countries there is a considerable body of municipal law that underlies the maritime law as the basis of its administration. These views find abundant support in the history of the maritime law and in the decisions of this Court.

* * * * * *

"This criterion is manifestly not limited to cases of wrongful death. It is a broad recognition of the authority of the States to create rights and liabilities with respect to conduct within their borders, when the state action does not run counter to federal laws or the essential features of an exclusive federal jurisdiction."² (Footnotes omitted.)

In the instant case Minnesota has adopted a policy of providing a forum for its residents who suffer harm within the State from the actions of non-residents. This does not affect any of the "characteristic features" of admiralty law nor does it encroach upon an area where uniformity of practice seems important.

Thus the statute can be appropriately applied if it does not contravene Admiralty Rules 1 and 2.³ Logan urges that Rule 1 requires that the marshal deliver the monition personally to Logan or an agent actually authorized to accept service. But no satisfactory reason is suggested why such a narrow reading should be adopted. Certainly the language of the rule does not compel such a conclusion. Although Rule 1 was formulated at a time when substituted service under State law would have been held invalid,⁴ this merely suggests that its framers did not have our current situation in mind, not that they would have desired to have the rule construed so as to deny effect to a substituted service statute of the forum State. The better policy would appear to be that Rule 1 is complied with when the marshal serves the monition on anyone who could validly receive it under State law.⁵ The basic protection to Logan against abuse of this procedure is in the requirements of notice and minimal contacts imposed by due process standards.⁶

The second point made by respondent Logan is that since libelants are all foreign corporations, they are not Minnesota "residents" as the One Act statute requires.

While this is a question of State law, there are no reported Minnesota decisions which deal with it. The only guide which this Court really has is the principle that the Court should construe the term "resident" so as to allow the statute to fulfill the purposes for which it was designed.⁷ In considering this question, the following facts taken from affidavits submitted to the Court seem relevant.

Dairyland Power Company is organized under the laws of Wisconsin, but it has also elected to be treated as a Minnesota cooperative association for many purposes under a special statutory provision which allows such an election.⁸

United Barge Co. is a Delaware corporation licensed to do business in Minnesota. It has an office in Minneapolis and all of its officers and directors are citizens of Minnesota.

Cargill, Inc., is a Delaware corporation licensed to do business in Minnesota and has its principal place of business here. It has offices and facilities throughout the State.

Continental Insurance Company is licensed to do business in Minnesota and has permanent offices and employees here.

Dairyland Power has the best case for being treated as a "resident" of Minnesota under the traditional doctrines which look to the State of incorporation as the corporate residence or domicile.⁹ It has elected to conform to the Minnesota statutes on cooperative associations and has received such benefits as their provisions grant. It might well be treated as domiciled in Minnesota for all relevant purposes, but the Court feels that the Minnesota Supreme Court would at least consider it "resident" for purposes of the One Act Statute.¹⁰ This may be all that is strictly necessary to the decision on this point because the other libelants in No. 3-64-Civil 97 could be treated as intervenors, but since the other issues are properly presented and are likely to recur, it seems better to express my views on them.

The Court believes that Cargill, United Barge and Continental Insurance Company are all residents of Minnesota within the meaning of the One Act Statute. There are two considerations which have led me to this conclusion. The first is that the Minnesota Supreme Court has been giving the statute a very broad reading and appears prepared to take jurisdiction over any case in which Minnesota has a reasonable interest in providing a remedy for plaintiffs.¹¹

Equally important is the fact that when the Legislature enacted the One Act statute it was moving into an area of the law which was considered very unsettled. The extent to which a State can subject nonresidents to personal jurisdiction is a subject which has been extensively discussed and litigated in the past few years.¹² In the light of this background, the Court feels that the restriction of the right to sue to residents of the State can best be understood as an attempt to insure that the jurisdiction the State was attempting to exert would be valid within the due process clause. The Legislature was extending its protection only to those parties for whom the State had a considerable interest in providing a forum because of their continuous and established contacts with Minnesota. Thus viewed, the crucial test as to whether a foreign...