United Fruit Co. v. US Shipping Board Merchant Fleet Corp.

• Decision Date: 29 May 1930
• Docket Number: No. 3254.,3254.
• Citation: 42 F.2d 222
• Parties: UNITED FRUIT CO. v. UNITED STATES SHIPPING BOARD MERCHANT FLEET CORPORATION.
• Court: U.S. District Court — District of Massachusetts

42 F.2d 222 (1930)

UNITED FRUIT CO. v. UNITED STATES SHIPPING BOARD MERCHANT FLEET CORPORATION.

No. 3254.

District Court, D. Massachusetts.

May 29, 1930.

Storey, Thorndike, Palmer & Dodge, of Boston, Mass., for plaintiff.

Frederick H. Tarr, U. S. Atty., and A. Chesley York, Asst. U. S. Atty., both of Boston, Mass., for defendant.

BREWSTER, District Judge.

This is an action of contract, brought in the state court against the United States Shipping Board Merchant Fleet Corporation and removed to this court.

The case is presented upon defendant's motion to dismiss, which followed closely upon the opinion in Johnson v. United States Shipping Board Emergency Fleet Corporation, 280 U. S. 320, 50 S. Ct. 118, 74 L. Ed. 451. The question involved is whether, under that decision, this court as a court of law has jurisdiction to entertain the suit.

In Johnson v. United States Shipping Board Emergency Fleet Corporation, supra, the court dealt with four actions at law, two of which were brought in the state court and removed to the federal court, and two of them were brought originally in the federal court. Each was brought to recover damages for a maritime tort. The court held that the Suits in Admiralty Act (USCA tit. 46, §§ 741, 742) provided the exclusive remedy, and that such actions at law, either in the state or federal court, would not lie against the United States or against the United States Shipping Board Emergency Fleet Corporation, the name of which has now been changed to the United States Shipping Board Merchant Fleet Corporation.

The pertinent provisions of section 742 (46 USCA) are as follows:

"§ 742. Libel in Personam. In cases where if such vessel were privately owned or operated, * * * a proceeding in admiralty could be maintained at the time of the commencement of the action herein provided for, a libel in personam may be brought against the United States or against such corporation, as the case may be, provided that such vessel is employed as a merchant vessel or is a tugboat operated by such corporation. * * *"

It is the contention of the plaintiff that the provisions of the Suits in Admiralty Act do not apply to the case at bar for two reasons: (1) That the contract declared upon was nonmaritime and no proceedings in admiralty could have been maintained upon it if the vessels had been privately owned or operated; and (2) that, if the contract should be held to be maritime, it was of such a character that it did not give rise to maritime causes of action such as are covered by the Suits in Admiralty Act.

The first question, therefore, to be considered is whether the contract upon which the action is brought is maritime or nonmaritime. The declaration contains ten counts. The causes of action set out in counts 1 to 9 are based upon a certain agreement called an "operating agreement," whereby the plaintiff was appointed agent for the operation of three steamers owned by the defendant, namely, the Lake Weir, the Bayou Teche, and the Pascagoula.

The first three counts are alike, except that each deals separately with one of the three steamers. The same is true of counts 4, 5, and 6, and counts 7, 8 and 9. Therefore counts 1, 4, and 7 may be taken as illustrating the nature of the first nine counts. Count 10 is based upon a separate agreement relating to all of the steamers.

In the first count of the declaration, as amended, it is alleged that on June 12, 1919, the plaintiff entered into an agreement with the defendant whereby the defendant assigned the Lake Weir to the plaintiff for operation; that the plaintiff undertook to operate the steamer as agent for the defendant, issuing bills of lading in its own name, and in general assuming the obligations of a carrier of freight; "that by said agreement it was provided that the defendant, among other things, should man, equip and supply the said steamer, pay all wages and fees of the master, officers and crew, and exercise due diligence to maintain the said steamer in a thoroughly efficient state in hull, tackle, apparel, furniture and equipment, and the defendant agreed to maintain the said steamer in a seaworthy condition in all respects for the carriage of general cargo including potatoes. * * *" A copy of the agreement is annexed to the amended declaration. The plaintiff then goes on to allege in this count that, in the spring of 1919, it was authorized and directed by the defendant to use said steamer for the carriage of general cargo, including potatoes, from Boston to Havana, and that, pursuant to such authorization and direction, the steamer sailed on May 15, 1919, from Boston to Havana, carrying a cargo of potatoes, shipped by various individuals and corporations under bills of lading issued by the plaintiff in its own name; that the steamer was not seaworthy, although it might have been made seaworthy by the exercise of due diligence on the part of the defendant, which due diligence it failed to exercise, as a result of which failure the potatoes were damaged; that the shippers brought actions against the plaintiff, and the defendant was notified to come in and defend; that the defendant failing so to do, the actions were finally compromised by the payment of a stipulated amount to the shippers; and that the defendant owes the plaintiff the amount paid in settlement.

The fourth count contains a recital of substantially the same allegations, but in this count plaintiff bases its claim upon the defendant's alleged agreement to reimburse the plaintiff for all disbursements properly incurred by it in the operation of the vessel.

In the seventh count the claim is based upon an alleged agreement on the part of the defendant to pay to the plaintiff a small commission for its services as operating agent and to reimburse it for any expense incurred in the performance of such services.

To briefly recapitulate the three distinct claims made against the defendant respecting the steamer Lake Weir, it appears that the plaintiff alleges in count 1 a breach in the defendant's contractual obligation to maintain the steamer in a seaworthy condition, in count 4 a breach in the defendant's contractual obligation to reimburse the plaintiff for any disbursements made by it in operating the steamer, and in count 7 a breach of defendant's contractual obligation to pay the plaintiff all expenses properly incurred by it in the performance of the service. The only remaining count in the declaration is count 10, which is based upon an alleged breach by the defendant of an independent agreement to cause the plaintiff to be insured and to be kept insured against liability to shippers for cargo damage.

Thus it appears clearly that the plaintiff, in the first nine counts of its declaration, is seeking to recover damages for alleged breach of a written agreement relating to the use and operation of three vessels owned by the defendant, and in the tenth count is seeking to recover damages for breach of some promise, whether written or oral does not appear, obligating the defendant to procure insurance against the events complained of.

If these causes of action are not of a maritime nature, the admiralty court is without jurisdiction. It has long been settled that the admiralty jurisdiction in matters of contract is limited to those, and those only, which are maritime. The Steamboat Orleans v. Phoebus, 11 Peters, 175, 183, 9 L. Ed. 677.

It is equally well settled that a contract, in order to come within the admiralty jurisdiction, must be wholly maritime. Grant v. Poillon, 20 How. (61 U. S.) 162, 15 L. Ed. 871; The Ada (C. C. A.) 250 F. 194; The Pennsylvania (C. C. A.) 154 F. 9.

This latter rule, however, seems to be subject to at least two modifications: First, that, if the nonmaritime feature is only incidental and relatively unimportant, it will not defeat jurisdiction. "If a contract is maritime in itself it carries all the incidentals with it and the latter, though non-maritime in themselves, will, unless separable, be heard and decided." Benedict on Admiralty (5th Ed.) § 62; Union Fish Co. v. Erickson (C. C. A.) 235 F. 385, affirmed 248 U. S. 308, 39 S. Ct. 112, 63 L. Ed. 261; North Pacific Steamship Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 249 U. S. 119, 39 S. Ct. 221, 222, 63 L. Ed. 510.

The second exception apparently is the case of a contract both maritime and nonmaritime which is capable of being divided so that the maritime contract may be separately adjudicated. Compagnie Francaise, etc., v. Leon Bonnasse et al. (C. C. A.) 19 F. (2d) 777, 779.

In that case Learned Hand, Judge, said: "A contract both maritime and non-maritime is ordinarily indivisible, so that the rights of the parties cannot be adjusted separately, those maritime in the admiralty, and the rest elsewhere. Admiralty must refuse to assume any jurisdiction over it at all, because it must either ignore the principles of the law of contract, or extend its powers beyond their constitutional scope. But in so far as the maritime obligations may, consistently with those principles, be separately adjudicated, there is no objection to the jurisdiction of the admiralty pro tanto. This is clearly intimated in Turner v. Beacham, Fed. Cas. No. 14,252, and The Pennsylvania, 154 F. 9 (C. C. A. 2), though the decisions did not require such a holding. The mere fact that the contract covers a subject-matter of both kinds is not therefore decisive; that would make the mere form control. The substantial question is whether the maritime obligations can be separately enforced...