Opinion
No. 70.
April 7, 1930.
Appeal from the District Court of the United States for the Southern District of New York.
Action by Abraham J. Weinstein, doing business under the trade-name of Weinstein Bros., against the Black Diamond Steamship Corporation, sued with the United States Shipping Board Merchant Fleet Corporation for cargo damage. Complaint was dismissed as against the defendant Fleet Corporation, and, from the judgment rendered, both parties appeal; defendant contending that the case should have been taken from the jury and that the court erred in its charge, and the plaintiff contending that the amount of the judgment was too small.
Reversed and remanded, with directions, unless plaintiff makes proof as to jurisdiction.
See, also, 31 F.2d 519.
Slatted crates of cabbage were transported by the steamer Anaconda from Rotterdam to New York on a voyage which began December 29, 1925. The bill of lading acknowledged receipt "in apparent good order and condition" of "4,000 crates fresh White Cabbage." Upon arrival at New York, January 20, 1926, the cabbage was found to be so badly decayed that the whole shipment was a total loss. The bill of lading contained the usual clause of exemption from liability for damage due to decay, unless caused by negligence. The plaintiff, who had purchased the cabbage from the shipper, c.i.f. New York, and had paid for it under a letter of credit before arrival of the ship, offered evidence that the decay was due to insufficient ventilation resulting from improper stowage or unnecessary closing of the ventilators leading to No. 2 'tween decks, where the cabbage was stowed. The issue of negligence in either or both of these respects was left to the jury. It returned a verdict for the plaintiff for the invoice value of $6,500 and interest.
The steamer was owned by the United States, and the suit was originally brought against the United States Shipping Board Emergency Fleet Corporation as well as the Black Diamond Steamship Corporation; each defendant being charged in the complaint with "operating" the steamer on the voyage in question. As against the Fleet Corporation, the complaint was dismissed by the trial court on the ground that there was no evidence to connect it with the carriage of the merchandise. A motion to dismiss as against the other defendant on the same ground was denied, the court holding that the bill of lading was the contract of the Black Diamond Steamship Corporation. The bill of lading, issued at Rotterdam, was signed by American Shipping Agency Holland, agents. It read in part as follows:
"We, American Shipping Agency Holland, Agents for the Black Diamond Steamship Corporation, hereby acknowledge having received in apparent good order and condition from Jac. A. Vonk, Rotterdam on board of the steamer Anaconda Capt. ______ or other steamship which shall be appointed to sail from Rotterdam for New York * * * and failing shipment by such steamer, then by one of the following steamers, belonging to, or employed by the Black Diamond Steamship Corporation * * * and to be delivered from the Ship's Deck (where the Ship's Owners' responsibility shall cease) in the like good order. * * *
"In witness whereof the above agents of the said ship have affirmed to one Bill of Lading. * * *"
In the left-hand margin appeared in large type, "American Diamond Lines operated for United States Shipping Board by the Black Diamond Steamship Corporation, Managing Operators."
The action was commenced in the Supreme Court, New York county, and was removed into the District Court on diversity of citizenship.
Edgar G. Wandless, of New York City (William E. Collins, of New York City, of counsel), for appellant Black Diamond Steamship Corporation.
Finkler McEntire, of New York City (Frank I. Finkler and Jesse H. Finkler, both of New York City, of counsel), for appellee.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
Subsequent to the argument of this appeal, and after the decision of the Supreme Court of the United States in the several cases reported under the title of Johnson v. U.S. Shipping Board Emergency Fleet Corporation, 280 U.S. 320, 50 S. Ct. 118, 74 L. Ed. ___, the appellant raised before us the question of the District Court's jurisdiction to enter the judgment appealed from, on the ground that the Suits in Admiralty Act (41 Stat. 525 [46 USCA § 741 et seq.]) furnishes the exclusive remedy on maritime causes of action arising out of Shipping Board operations. Lack of jurisdiction may be raised at any stage of a proceeding, and is a matter of which a court takes notice ex mero motu.
In one of the cases before the Supreme Court the plaintiff Lustgarten had obtained a judgment at law against the United States Shipping Board Merchant Fleet Corporation and Consolidated Navigation Company for injuries negligently inflicted upon him by the ship's officers while he was employed as a seaman on board a merchant vessel owned by the United States and operated for it by the navigation company as agent pursuant to an agreement made by the United States acting through the Shipping Board represented by the Fleet Corporation. This judgment was reversed, and the cause remanded, with directions to dismiss the complaint against both the Fleet Corporation and the navigation company. We have examined the mandate filed in the District Court on March 7, 1930, to make certain that no modification of the court's direction as to dismissal against the navigation company had occurred. Mr. Justice Butler, writing for the court, said (page 326 of 280 U.S. 50 S. Ct. 118, 120):
"On the facts above stated it is clear that each of the causes of action arose out of the possession or operation of a merchant vessel by or for the United States. Directly or mediately, the money required to pay a judgment against any of the defendants in these cases would come out of the United States. It is the real party affected in all of these actions. Section 8, Suits in Admiralty Act (46 USCA § 748). Cf. Minnesota v. Hitchcock, 185 U.S. 373, 385, 22 S. Ct. 650, 46 L. Ed. 954.
"* * * We conclude that the remedies given by the act are exclusive in all cases where a libel might be filed under it. As shown above, sec. 2 [46 USCA § 742] authorizes a libel in personam against the United States or against the Fleet Corporation in each of these cases. It follows that on disclosure — whether by pleading or proof — of the facts aforesaid, the District Court should have dismissed each case for lack of jurisdiction."
The question is whether this decision is controlling of the case at bar. We think it is. The complaint charged that Black Diamond Steamship Corporation operated the vessel; and the answer admitted that this corporation operated it, "as agent only, for the United States, which was the owner thereof." The bill of lading disclosed that the defendant was "managing operators" for the Shipping Board. It was stipulated that the vessel was owned by the United States as represented by the United States Shipping Board. Hence, on the admitted facts, the plaintiff could have sued the United States under the Suits in Admiralty Act. Instead of doing so, it sued the agent, Black Diamond Steamship Corporation, on the theory that the agent had bound itself by the contract evidenced by the bill of lading. Assuming without decision that the bill of lading was properly construed to bind the agent — for on no other theory could the judgment against it be sustained, see Mallory S.S. Co. v. Garfield (C.C.A.) 10 F.2d 664 — the agent apparently would have a right of indemnity against its principal, since there is no suggestion that the agent went beyond its authority in contracting for the carriage of these goods. Thus we think it sufficiently appears that "directly or mediately, the money required to pay a judgment against [defendants] would come out of the United States." Hence the suit could not be brought in the state court. See Shea v. Export Steamship Corp., 253 N.Y. 18, 170 N.E. 477, 479.
It is true that the Lustgarten Case, 280 U.S. 320, 50 S. Ct. 118, 74 L. Ed. ___, and the Shea Case were actions founded in tort rather than contract; but we can see no reason to differentiate them on this account. Harsh as the doctrine appears in its practical results, we find no escape from it in view of the Supreme Court's opinion. Although prima facie the court was without jurisdiction, if it can be shown that the agent would have no right of indemnity against the United States, jurisdiction will exist; and the plaintiff will be allowed an opportunity to make that proof, if it desires.
Accordingly, the cause is reversed and remanded, with directions to dismiss the complaint unless the plaintiff shall make proof as to jurisdiction as aforesaid.