Visayan Refining Co. v. Standard Transp. Co.

• Decision Date: 10 February 1927
• Citation: 17 F.2d 642
• Parties: VISAYAN REFINING CO., Inc., v. STANDARD TRANSP. CO. et al.
• Court: U.S. District Court — Southern District of New York

17 F.2d 642 (1927)

VISAYAN REFINING CO., Inc., v. STANDARD TRANSP. CO. et al.

District Court, S. D. New York.

February 10, 1927.

Platt, Field & Taylor, of New York City (Martin Taylor and Arthur C. Patterson, both of New York City, of counsel), for plaintiff.

Peter M. Speer, of New York City (G. H. Dorr and Stafford Smith, all of New York City, of counsel), for defendants.

THACHER, District Judge.

The motion is to remand the case to the state court, from which it was removed by defendants on the grounds that the suit arises under the Constitution and laws of the United States and the complaint discloses a separable controversy wholly between citizens of different states. The jurisdictional amount is involved.

In the first cause of action the complaint alleges that in June, 1917, defendants entered into an agreement with plaintiff to transport, during the years 1917 and 1918, all of the cocoanut oil manufactured by the plaintiff from the Philippine Islands to San Francisco at the rate of $40 per long ton. This agreement was conditioned upon the success of a trial shipment, upon the successful completion of which it is alleged the agreement became effective, and was confirmed by supplemental agreement in August, 1917. Pursuant to these agreements it is alleged that the plaintiff and defendants entered into certain charter parties for the transportation of cargoes of cocoanut oil at the rate of $40 per long ton, including a charter party dated April 4, 1918, covering a shipment from the Philippines on December 18, 1918, per steamship Royal Arrow, which arrived at San Francisco on February 5, 1919, and a charter party dated October 7, 1918, covering a shipment from the Philippines on November 11, 1918, per steamship Astral, which arrived at San Francisco on December 21, 1918. Each of these shipments exceeded 10,000 long tons of cocoanut oil. With respect to these two shipments it is alleged that in violation of their agreements the defendants compelled the plaintiff to pay, and the plaintiff paid under duress and protest, freight at the rate of $60 per net ton, in lieu of freight at the rate of $40 per long ton as provided in said agreements and in said charter parties. Recovery sought is for the excess freight moneys retained by defendants.

Two additional causes of action are set forth, in each of which it is alleged that the defendants accepted a certain quantity of cocoanut oil in the Philippine Islands, which they agreed to transport and deliver at San Francisco, Cal., at the agreed rate of $40 per long ton, but that, having transported each shipment to San Francisco, the defendants refused to deliver the oil until they had been paid at a rate in excess of the agreed rate, and that this excess was paid by the plaintiff under duress and protest in each case. There is no reference in either of these causes of action to any charter party or to any ship upon which the defendants agreed to or did transport the oil. As in the first cause of action, recovery of excess payments is sought.

The defendants contend that by reason of the Act of Congress of June 15, 1917 (40 Stat. 182), the executive order of the President of the United States issued pursuant to the provisions thereof on July 11, 1917, the General Order of the United States Shipping Board dated October 12, 1917, issued by authority of said executive order, and by reason of the Act of Congress of July 18, 1918 (40 Stat. 913 Comp. St. ? 3115 1/16f et seq.), and the President's proclamation of July 29, 1918, issued pursuant to said act, this suit is one of a civil nature at law, arising under the Constitution and laws of the United States. The question upon which decision turns is whether, in view of these statutes, executive proclamations, and orders, the right to recover from the defendants moneys paid under duress, and in excess of the agreed freight, arises from these laws and executive orders.

It is unnecessary to consider in detail the Act of Congress of June 15, 1917 (40 Stat. 182), the executive order of the President issued thereunder July 11, 1917, or the General Order of the United States Shipping Board dated October 12, 1917, because the authority to requisition vessels exercised by the Shipping Board, pursuant to the statute and order of the President is by the very terms of its order limited to the requisition of American steamers, and the exercise of this power does not touch the facts alleged in the complaint, because it is not alleged, even inferentially, that the shipments in question were made upon American vessels. By act of Congress trade between the Philippines and ports of the United States is open to foreign vessels. Act April 29, 1908, c. 152, ? 3 (35 Stat. 70 Comp. Stat. ? 3913). It cannot, therefore, be said that, from the facts alleged in the complaint, it appears that the suit arises under the Act of June 15, 1917, or the executive orders issued thereunder. This is controlling, because it is well settled that for the purposes of removal a suit is regarded as arising under the Constitution and laws of the United States only when the complainant's statement of his own cause of action shows by positive averment that it is based upon federal law. It is not enough that a defendant may find in the Constitution or laws some ground of defense controlling the plaintiff's asserted right to recover. Tennessee v. Bank of Commerce, 152 U. S. 454, 14 S. Ct. 654, 38 L. Ed. 511; Third St. & Suburban Ry. v. Lewis, 173 U. S. 457, 19 S. Ct. 451, 43 L. Ed. 766; Arkansas v. Kans. & Texas Coal Co., 183 U. S. 185, 22 S. Ct. 47, 46 L. Ed. 144; In re Winn, 213 U. S. 458, 29 S. Ct. 515, 53 L. Ed. 873; State of Ohio v. Swift & Co. (C. C. A.) 270 F. 141.

Nor can the court, by taking judicial notice of facts which are not alleged, change the case from that stated by the plaintiff. Mountain View Min. & Mill. Co. v. McFadden, 180 U. S. 533, 21 S. Ct. 488, 45 L. Ed. 656; Venner v. New York Central R. R. Co. (C. C. A.) 293 F. 373. Tested by these rules, as they must be, the causes of action alleged in the complaint do not arise under the Act of June 15, 1917.

It remains to consider whether the suit arises under the Act of July 18, 1918 (40 Stat. 913, c. 157), and the President's proclamation of July 29, 1918. The material provisions of these statutes are as follows:

"(a) The term `United States' includes any state, territory, or District of the United States, the insular possessions, the Canal Zone, and all lands or waters subject to the jurisdiction of the United States.

"(b) The term `person' includes corporations, partnerships, associations, and states, municipalities, and other subdivisions thereof.

"(c) The term `charter' means any agreement, contract, lease, or commitment by which the possession or services of a vessel are secured for a period of time, or for one or more voyages, whether or not a demise of the vessel.

"Sec. 2. That the President may exercise the power and authority hereby vested in him through such agency or agencies as shall determine from time to time.

* * * * *

"Sec. 5. That the President may, by proclamation, require that vessels of the United States of any specified class or description, or in any specified trade or trades, shall not be chartered unless the instrument in which such charter is embodied, and the rates, terms and conditions thereof are first approved by him. Whenever any vessel is comprised in any such proclamation, it shall be unlawful to make any charter thereof, or comply with or perform any of the rates, terms, or conditions of any charter thereof, or to operate such vessel under any...