West Kentucky Coal Co. v. Dillman

• Decision Date: 25 September 1926
• Docket Number: No. 7076.,7076.
• Citation: 15 F.2d 25
• Parties: WEST KENTUCKY COAL CO. v. DILLMAN. In re METROPOLIS TOWING CO.
• Court: U.S. Court of Appeals — Eighth Circuit

15 F.2d 25 (1926)

WEST KENTUCKY COAL CO. v. DILLMAN.^* In re METROPOLIS TOWING CO.

No. 7076.

Circuit Court of Appeals, Eighth Circuit.

September 25, 1926.

James G. Wheeler, of Paducah, Ky. (Wheeler & Hughes, of Paducah, Ky., and Benson C. Hardesty, of Cape Girardeau, Mo., on the brief), for appellant.

C. G. Shepard, of Caruthersville, Mo., (E. E. Alexander, of Blytheville, Ark., on the brief), for appellee.

Before LEWIS, Circuit Judge, and MUNGER and JOHNSON, District Judges.

JOHNSON, District Judge.

The West Kentucky Coal Company filed a suit in admiralty in the court below on the 30th day of June, 1921, to enforce a maritime lien against the steamer Metropolis for coal alleged to have been furnished the steamer upon the order of the master, between the 26th day of June, 1920, and the 14th day of May, 1921, amounting to $7,098.33. Later the bill was amended, increasing the amount to $8,316.19. The vessel was seized by the marshal on the 1st day of July, 1921. On June 20, 1921, the Metropolis Towing Company, owner of the steamer Metropolis, was adjudicated a bankrupt in the court below. A trustee was appointed July 9th. Later the court ordered the marshal to release the steamer to the trustee in bankruptcy and transferred the suit of the coal company to the bankruptcy division of the court "for trial upon the issues as framed by the pleadings filed, or by such amendments as may be properly allowed, according to the course and practice of this court in causes of admiralty and maritime jurisdiction."

The court further ordered that the cause "be referred to Hon. H. E. Alexander, referee in bankruptcy, to take and hear such testimony as the nature of the case may require, and to determine whether under the admiralty law the libelant and intervening libelant are entitled to maritime liens, and to enforce such lien or liens, if allowed or adjudged to exist, against the bond heretofore given for the release of said vessel from the custody of the United States marshal and against the principal and sureties on said bond; that pending the hearing and determination before the referee and such review and appeals as may be had, if any, said bond shall be and remain in full force and effect."

The referee heard the case and disallowed the lien claimed by the coal company against the steamer, but allowed the claim as an unsecured claim against the estate of the bankrupt. Upon review the trial court confirmed the order of the referee. The coal company has appealed from the order of the District Court.

The first question presented is one of procedure. The appellant asserts that its suit in admiralty could not be lawfully transferred to the bankruptcy division of the court and heard by the referee, as was done in this case. In the absence of any act of Congress fixing the procedure in such cases, the question presented is not without difficulty. The Bethulia (D. C.) 200 F. 862; The Casco (D. C.) 230 F. 929. Courts of admiralty and bankruptcy courts are by statute given exclusive jurisdiction within their peculiar spheres, but the jurisdiction of both is vested in the District Courts of the United States. Each of these divisions of the court below had jurisdiction of the subject-matter of this litigation. The steamer, from the moment the towing company was adjudicated a bankrupt, was in the constructive possession of the bankruptcy division of the court. In admiralty the court had jurisdiction to seize the steamer at the suit of the coal company. In the administration of the estate of the towing company in bankruptcy the court had jurisdiction to establish liens and determine priorities; in admiralty it had like jurisdiction in respect to maritime liens. Whether in any particular case the court will proceed in one division or in the other or in both in our opinion must be left, until Congress acts, to the sound discretion of the District Court. If by the order made in the court below the coal company was deprived of no substantial right, if it had an opportunity to be heard and present its evidence, and if the determination of the case was in accordance with admiralty law, we are of opinion appellant has no ground for complaint. If, however, we were required here to decide between the two courts, we would be disposed to hold that the case was properly disposed of by the bankruptcy court which acquired constructive possession of the boat before the marshal's seizure. Taubel, etc., Co. v. Fox, 264 U. S. 426, 432, 44 S. Ct. 396, 68 L. Ed. 770.

Section 1 of the Act of Congress of June 23, 1910, 36 Stat. p. 604, re-enacted by Act June 5, 1920, 41 Stat. p. 1005, ß 30, subsec. P, being Comp. Stat. ß 8146ºooo, provides:

"Any person furnishing repairs, supplies, * * *, or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel."

And section 4 of the Act of June 23, 1910 (section 30, subsection S, of the Act of June 5, 1920, being Comp. St. ß 8146ºppp), provides:

"Nothing in this section shall be construed to prevent the furnisher of repairs, supplies * * * or other necessaries * * * from waiving his right to a lien * * * at any time, by agreement or otherwise; and this section shall not be construed to affect the rules of law now existing, in regard to (1) the right to proceed against the vessel for advances, (2) laches in the enforcement of liens upon vessels, (3) the right to proceed in personam * * *."

The referee and trial judge both found that all of the coal for which the coal company claimed a lien against the steamer Metropolis had been sold and delivered to the towing...