text:
    BERWIND WHITE COAL MINING CO. v. CITY OF NEW YORK et al.
    No. 206.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.

      Macklin, Brown, Lenahan & Speer, of New York City (Horace L. Cheyney, of New York City, of counsel), for appellant.
    Arthur J. W. Hilly, Corp. Counsel, of New York City (William J. Leonard and Matthew J. Troy, both of New York City, of counsel), for appellee City of New York.
    Kirlin, Campbell, Hickox, Keating & McGrann, of New York City (Robert S. Erskine and Henry P. Elliott, both of New York City, of counsel), for appellee Transatlantica Italiana.
    Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   AUGUSTUS N. HAND, Circuit Judge.

The libelant, owner of the coal barge Eureka No. 5, was requested by respondent Transatlántica Italiana to deliver a barge-load of bunker coal to its steamship Guiseppe Verdi, which was lying on the north side of Pier 75, North River, Borough of Manhattan. . Libellant accordingly ordered its tug Admiral Dewey to tow the barge to the place. This was done on April 30, 1926, and the barge was moored astern of the Guiseppe Verdi to wait until some of the libellant’s other coal barges were unloaded, before discharging her cargo on the steamer. Libellant had no particular knowledge of the condition of the pier, though it had previously at times had its barges towed there to steamers of the French Line. The Eureka No. 5 was moored in the 'slip astern of the Guiseppe Verdi and bow-in. She was in good condition when the bargee left her for the night. The next morning she was found settled on the bottom of the slip. The bottom of the barge was penetrated by an oak pile which was sticking through her planking on the starboard side. The portion of the pile which was fast in the barge had apparently broken from the end of one of the fender piles of the pier. It was about two feet in length and from 12 to 14-inches in diameter. The remainder of the pile was something like 24 feet long and was still sticking in the mud of the slip when discovered. The end of the pile had evidently been under water and the barge had settled upon it with the ebb of the tide.

The fespondent Transatlántica Italiana had a permit from the City of New York (the owner of the premises) to use the pier for April 30, and had leased it for a term beginning May 1. There was some testimony that the break in the piece of the pile found embedded in the barge was new, but this evidence was of slight weight, as bearing upon the length of time during which the pile had been a hidden danger to navigation. The witness admitted that the pile was covered with mud and even an old pile might show new timber in its cross section when broken off.

A wharfinger, though not an insurer, is bound to exercise reasonable diligence to ascertain the condition of berths at which it invites vessels to moor. Smith v. Burnett, 173 U. S. 430, 19 S. Ct. 442, 43 L. Ed. 756; M. & J. Tracy y. Marks Lissberger & Son (C. C. A.) 283 F. 100; The Eastchester (C. C. A.) 20 F.(2d) 357. While it is true that the libelant can only recover damages by proving that the owner of the pier was negligent, and that the latter can only be found negligent if it knew, or ought to have known, the condition of the pier at the time it permitted its use, yet the pile had been part of the fender used to protect the pier from vessels in the slip. The owner had control of the premises and was presumptively in a position to say when the waters adjacent to the pier became dangerous from hidden obstructions. It had no excuse for not knowing when a fender pile broke off so that its end lay under water, a danger to vessels coming into the-slip. If the broken pile had not been there long enough to import notice, the wharfinger ought to have offered proof to show when it had last inspected the waters of the slip and what condition it then found. The existence of the broken pile at the time the barge was injured is evidence of an earlier defective condition. Best, J., in Regina v. Burdett, 4 B. & Ald. 124, said:

“I am to presume a thing always in the state in which it is found, unless I have evidence that in some previous time it was in a different state.”

Such is the general inference, the strength of which is dependent upon the particular circumstances of the case and the likelihood of the duration in the past of a state of facts found to be existing at present. Wigmore on Evidence, § 437; Wilmot Engineering Co. v. Charles Blanchard, 208 App. Div. at page 221, 203 N. Y. S. 700; Crowell Bros. v. Panhandle Grain & Elevator Co. (C. C. A.) 271 F. 129; Gaulden v. Lawrence, 33 Ga. 159; Phipps v. Consolidated Flour Mills Co., 113 Kan. 118, 213 P. 637.

In the absence of evidence to the contrary, it is a reasonable” inference that the broken pile on which the barge settled had' remained in situ for a considerable time prior to the accident. If such was the case, the city of New York ought to have discovered an obstruction so dangerous to vessels coming to its pier.

The steamship company, however, was in a different situation from the city of New York. It had just begun to occupy the premises and had no opportunity-to become familiar with hidden obstructions to navigation existing prior to its occupancy, nor had it reason to suppose they existed where the slip was one in common use. Berwind-White Coal Mining Co. v. Bush Terminal Co. (C. C. A.) 296 F. 475; M. & J. Tracy v. Marks Lissberger & Son (C. C. A.) 283 F. 100. Nothing but actual notice could give rise to liability on its part, and of such notice there is no proof.

The city of New York* on the other hand was in a position to become aware of the breaking down of the piling and of the consequent dangerous condition of the slip. Its failure to discover such a hidden obstruction to navigation existing in its own slip and to repair the premises or to give warning to the vessels coming there was negligence, for which it alone is liable.

The decree is modified so as to hold the city of New York liable for the damage to libelant’s barge, and is otherwise affirmed.


source: Caselaw Access Project

author: CHASE, Circuit Judge

license: Public Domain

text:
    UNITED STATES v. TWO SOAKING UNITS AND VARIOUS OTHER ARTICLES (EXCELSIOR BREWING, Inc., et al. Claimants).
    No. 271.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.

      Howard W. Ameli, U. S. Atty., of Brooklyn, N. Y. (Herbert H. Kellogg, J. Bertram Wegman, and Emanuel Bubliek, Asst. U. S. Attys., all of Brooklyn, N. Y., of counsel), for the United States.
    Louis J. Castellano, of Brooklyn, N. Y., for appellees.
    Before L. HAND, CHASE, and MACK, Circuit Judges.
   CHASE, Circuit Judge

(after stating the facts as above).

It has been agreed by the parties that the libel is sufficient as a pleading, and no question is raised as to the seizure having been made by the Prohibition Administrator instead of by a collector or deputy collector. We are, therefore, faced with the issue of whether or not any federal officers had the lawful right to seize the property.

It is plain that there could be no seizure of real estate. Apparently there was none, but we need not now inquire further into that, for the attachment under the libel will not be vacated as to any property lawfully seized simply because other property may have been seized unlawfully at the same time. McGuire v. United States, 273 U. S. 95, 47 S. Ct. 259, 71 L. Ed. 556; Quandt Brewery Co., Inc., et al. v. United States, 47 F.(2d) 199.

When the beer and other personal property was seized on August 9th, it was known that the garage on De Kalb avenue contained beer barrels and all the necessary apparatus for filling those barrels with beer. It was known that that garage was so constructed as to permit whatever was done inside it to be done secretly. It was known that the rather elaborate precautions to hide the interior from view from the outside were not ordinarily resorted to in the construction of garages. It was known that beer had been in the pipe found in the drain in the floor and that beer had been in the racking machine. It was known that the pipe in the drain led to the drain in the Pulaski street garage. It was known that two quarts of illegal beer had been drawn from a faucet in the Pulaski street garage and that the pipe ran under the pavement in the street across to, or at least just outside, the brewery premises, and appeared to run into those premises. It was known that with simple hose connections all these pipes could be made one.' It was known that beer was being manufactured in the brewery and that there was a supply of beer in the vats there. All this was certainly enough to lead a reasonable man of ordinary judgment to the conclusion that beer of an unlawful alcoholic content was kept in those vats in the possession of the Excelsior Brewery, Inc., “for the purpose of being sold or removed by him [Excelsior Brewery Inc.] in fraud of the internal-revénue laws, or with design to avoid payment of said taxes,” in violation of section 3453 of the Revised Statutes. These facts and circumstances were so clearly sufficient to warrant a seizure of the property of the kind enumerated in the statute that it seems idle to urge the contrary, and we have no hesitation in holding that there was then reasonable cause to believe that this property was. possessed in violation of the statute and so could lawfully be seized. Nor was it necessary to obtain a search warrant. The premises in which the property was kept were the brewery buildings of a permittee empowered to manufacture cereal beverages according to the terms of its permit. The officers were entitled to inspect such premises. They had entered lawfully with the knowledge and consent of the owner, and, having so entered, seized the property found in possession of such -owner in violation of law and subject to seizure under the above-quoted statute. It is a mistake to assume that, when premises have lawfully been entered, a search and seizure that is reasonable must always be under a search warrant. Hilsinger et al. v. United States (C. C. A.) 2 F.(2d) 241. When the officers had the permission of the owner to enter and inspect the premises, no entry invito domino by virtue of a search warrant was necessary to accomplish, or would have added to the legality of, whatever seizure they made. United States v. Old Dominion Warehouse, Inc., 10 F.(2d) 736 (0. C. A. 2).

The search of the premises, made after lawful entry and seizure of personal property but without a search warrant, to disclose just how the beer the officers were then morally certain was being withdrawn unlawfully was piped from the vats to the garages is said to have been contrary to law. It is undisputed that the pipe with which beer was so withdrawn was so 'cleverly hidden that it took days to trace it to the vats. It is also undisputed that no unnecessary damage was done while the search to do that was made. Such a withdrawal of beer was in violation-of the terms of the"permit under which the brewery was operated. An adequate inspection of the premises of this permittee required whatever investigation by way of such a search as would disclose the actual facts to show how the permittee was conducting its business to enable the inspector to determine whether or not the terms.of the permit were being violated. A preliminary inspection having proceeded to the point where seizure was justified under section 3453, Rev. St., and a seizure having been made, the inspection was completed. As the right to inspect must include the right to make such reasonable investigation in the premises of a permittee of the manner in which the permitted business is conducted as will uncover the truth about it, it is unnecessary to inquire whether or not the search that did this without needless damage was lawful upon any other ground.

Decree reversed.


author: L. HAND, Circuit Judge.

text:
    THE R. LENAHAN, JR. THE JOHN J. RYAN. THE CARLOTTA.
    No. 254.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.

      Macklin, Brown, Lenahan & Speer, of New York City (Horace L. Chevney, of New York City, of counsel), for appellants Bethlehem Steel Co. and Mary Ryan.
    Barry, Wainwright, Thacher & Symmers, of New York City (John C. Crawley and Paul L. Clugston, both of New York City, of counsel), for appellant Continental Grain Co.
    Single & Single, of New York City (William J. Mahar of New York City, of counsel), for appellant Thomas Reddy.
    Stanley & Gidley, of Buffalo, N. Y. (Arthur E. Otten, of Buffalo, N. Y., of counsel), for appellee.
    Before L. HAND, CHASE, and MACK, Circuit Judges.
   L. HAND, Circuit Judge.

The Iroquois Transit Corporation, the carrier, was in the business of hauling merchandise through the Mohawk River Canal. Having no equipment of its own, or only an insufficient amount, it chartered empty barges and tugs for its purposes. Among the chartered barges were the two in question, whose hire was on a per diem basis; they were bare boats with a bargee in charge, employed and paid by the owners. The tug was small, driven by a Diesel engine, manned by a crew, apparently of only two, also employed and paid by the owner. The earner made up such tows as it needed, and put the tug in charge, using it at its pleasure without consulting the owner. Her hire was also on a per diem basis, and the charter was oral.

Late in the season of 1926, in November, the carrier secured a cargo of grain for one barge, and of pig iron for the other, for transport from Buffalo to the Hudson, and put the tug in charge. On the way, due to high water which then prevailed, she lost control of the barges, so that they took the ground, and they and their cargoes were damaged. The four libels were filed severally by the owners of the barges and the cargoes; and the circumstances of the grounding were such that the judge charged the tug with fault in her navigation. As the claimant does not in its brief or argument raise any question as to the propriety of this finding, we shall not discuss her negligence.

As to the barges, the tug was exonerated because both she and they were upon demise, “owned pro hae vice” by the carrier. For this reason no lien for negligent towage could arise against her, the notion apparently being that her fault was to be imputed to the tow. As to the cargoes, section 3 of the Harter Act (46 USCA § 192) applied, all the flotilla being treated as a single vessel under the rule in Sacramento, etc., Co. v. Salz, 273 U. S. 326, 47 S. Ct. 368, 71 L. Ed. 663, and In re O’Donnell, 26 F.(2d) 334 (C. C. A. 2). The three vessels being seaworthy, and properly manned and equipped, the faults of the tug’s navigation were excused.

We shall assume for argument that all the vessels were demised. There can indeed be no doubt as to the barges. Dailey v. Carroll, 248 F. 466 (C. C. A. 2); Bushey v. Hedger, 40 F.(2d) 417 (C. C. A. 2). As to the tug there is more question. Normally a charter is only a contract of affreightment, when the owner gives the charterer no more than the use of his vessel, on board of which a crew, hired and paid by him, remains, and whose movements they direct. That is however not conclusive, and in The Charlotte, 299 F. 595, we held a charter very like that at bar to be a demise. To be sure, the language of the transfer in that case included the word, “leased,” but our decision did not depend upon that, and we think its omission here in an oral per diem agreement is not to be pressed so far. Plainly, there is much practical difference between a small boat, sent hither and yon in restricted waters, under the immediate direction of the charterer, and a ship sailing the seven seas, which the charterer is merely permitted to lade. At any rate, as we think the point not involved in the case at bar, we are content to assume that the tug, like the barges, was under the “control” of the carrier (U. S. v. Shea, 152 U. S. 186,14 S. Ct. 519, 38 L. Ed. 403), and had therefore been demised. The premises existed for the conclusion of the District Judge.

His theory was that because of the common bailment of all three, there remained for legal purposes but a single personality, and that therefore no rights or liabilities could arise. This is expressly supported by two decisions in The Dutchess (D. C.) 15 F.(2d) 198; Id. (D. C.) 16 F.(2d) 1003, and might perhaps be implied from our own decision in Monk v. Cornell Steamboat Co., 198 F. 472. In that case the injured scow had been domised, and the demisee pressed the tug, not on charter, to undertake dangerous towage. The owner of the scow sued the tug and was defeated because the demisee was “owner pro hae vice.” In the circumstances this only-meant that the tug was free to accept the demisee’s consent to the danger; the ease raised no more than a question of the bailee’s apparent authority. Third persons were not obliged to question the propriety of his directions, the scow being uneonditionálly delivered into his possession. When, however, both the injured and the guilty vessels are demised to one bailee, this is not true. The Willie, 231 F. 865 (C. C. A. 2). The fault in that case was of the common demisee’s foreman, and it was not imputed to the injured scow. There was no reason why it should be, since the tort-feasor had not relied upon the consent of the bailee. We'can see no distinction between this decision and the case at bar.

In principle we can see no reason for merging the personality of the owner into that of the demisee by virtue of a fiction, such as. ownership pro hae vic.e. The transaction is a bailment .and the bailee is liable, at least in contract, if he neglects to protect the property. If he owned the tug there could be no question, except as to the form of suit, a matter indifferent in the admiralty. That he personally shbuld be excused if he gets possession of it on demise, is of course impossible, and while it may indeed be a hard rule which imposes liability on a tug for the demisee’s fault, as to that we are concluded. A demise makes no difference in collision (The Barnstable, 181 U. S. 464, 21 S. Ct. 684, 45 L. Ed. 954), and negligent towage is equally a tort (The John G. Stevens, 170 U. S. 113, 18 S. Ct. 544, 42 L. Ed. 969). The notion that a thing may be guilty is archaic enough, no doubt an animistic survival from remote times; but once it be granted, it does not comport with convenience or precedent to interject exceptions, based on added irrational fictions. Moreover, while the doctrine has been pressed very far (The China, 7 Wall. 53, 19 L. Ed. 67), it has never, with the exceptions we have mentioned, been extended to the vicarious transfer of fault to an innocent vessel; and indeed, that would contradict even the atavistic conceptions on which the whole theory depends. The Del Norte (D. C.) 111 F. 542, affirmed 119 F. 118 (C. C. A. 9), was not such a case; it decided no more than that a charterer got no lien on the demised vessel through faults of his own servants. The contrary would surely have .been shocking.

We have assumed in the foregoing that the carrier was at fault, which could be true only in case the tug’s crew were his servants. In fact, this was probably not the case, but as it makes no difference in the result, we avoid that debatable question by assuming it for the claimant. If they remained the servants of the tug owner, there is even less reason for imputing their fault to the barges. They were not misled by any consent of the carrier which the owner had authorized him to give; they charged their principal and his property as in any other ease. We cannot approve the rule laid down in The Dutchess, supra.

As to the cargoes, upon the assumptions we have already made, the decision depends upon a question of fact; that is, whether all the flotilla was seaworthy and well-manned, an issue on which the claimant has the burden. In re O’Donnell, 26 F.(2d) 334 (C. C. A. 2). The proof as to the barges was enough, but we think it failed as to the tug. The currents which she encountered were apparently not usual in spring and autumn, and while the lock-tender opened all the gates at once, and let loose a flood of water, it is at least open to question whether even this presented to her an emergency with which she should not have been able to deal. We are not therefore entirely satisfied that she was fit for the service on which she was engaged, as much a condition of her seaworthiness as that she should be well-found and staunch. Be that as it may, certainly the claimant did not prove, though it alleged, that she was well manned. Her master had not served as such for more than three months, before which he had been an engineer; he held no license save one granted without examination of his fifc ness; and the record is bare of any other evidence of his competency. In the only instance in which this was put to the test, it failed. Nor can we find any evidence as to the competency of her mate, except that he had been for many years employed in the canal. Section 3 of the Harter Act gives a privilege, excusing the carrying vessel from admitted faults, and all the prescribed conditions must be shown to exist. The District Judge appears to have supposed that the libellant must establish the negative.

Decrees reversed; causes remanded with instructions to enter interlocutory decrees for the libellants.


text:
    COMMERCIAL TRUST CO. v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION.
    No. 266.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.
    Lampke & Stein, of New York City (William H. D arrow, of New York City, of counsel), for appellant.
    George Z. Medalie, of New York City (John C. Donovan, and William E. Collins, Sp. Assts. to U. S. Atty., both of New York City, of counsel), for appellee.
    Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
   L. HAND, Circuit Judge.

The plaintiff took out a summons, which it served upon the defendant, and which disclosed nothing further as to its place of incorporation than that the plaintiff’s name was the Commercial Trust Company of New Jersey. The defendant, the Fleet Corporation, appeared, and by stipulation obtained several extensions of its time to answer. When, by the filing of the complaint, it appeared that the plaintiff was a New Jersey corporation, it moved to dismiss the complaint because the action was not brought in the .proper district. The District Judge so held, and the plaintiff appealed.

There are two possibilities, between which we need not choose. The Fleet Corporation is organized under the laws of the District of Columbia, from which it may follow that, as it is not a citizen of any state, it may he sued without its consent in no federal court except that of the District. Yaselli v. U. S. Shipping Board Emergency Fleet Corporation (D. C.) 298 F. 198; Caceres v. U. S. Shipping Board Emergency Fleet Corporation (D. C.) 299 F. 968. This would not apply to actions brought under the Jones Act (46 USCA § 688), which specifically provides otherwise. Leon v. U. S. Shipping Board Emergency Fleet Corporation (D. C.) 286 F. 681. The other possibility is that the question of venue coalesces in this instance with that of the corporation’s “presence” ih the district. Puget Sound, etc., v. U. S. Shipping Board Emergency Fleet Corporation (D. C.) 293 F. 768. So far as we know, however, it has never been held that actions against the Fleet Corporation are between citizens of diverse states, and we can perceive no ground for so holding.

It follows that the dismissal was wrong in any ease. If the Fleet Corporation may be sued without its consent only in the District of Columbia, then the defect appeared when the summons was served, and the general appearance excused it. Ex parte Chicago, R. I. & P. R. Co., 255 U. S, 273, 279, 41 S. Ct. 288, 65 L. Ed. 631. If it can be sued wherever it is “present,” then the action was well brought, if it was in fact “present” in the Southern District of New York. If it was not, the error was at once apparent, and if the defendant meant to raise the question, it was bound to do so before general appearance.

Upon appeal, however, the question was raised of the substantive jurisdiction of the District Court; and as this is a point which' can be taken at any stage of the proceedings, and of which indeed we must take notice ourselves, we are bound to consider it. It involves a consideration of the complaint. This alleged that the plaintiff was the assignee of certain freights due to a corporation, known as the United States Transport Company, upon two ships, operated by that company under a tripartite operating agreement between the defendant, a third company, and itself. The assignment was security for loans made by the plaintiff to the assign- or, the Transport Company, which transferred to it the bills of lading. With knowledge of the assignment the defendant repossessed itself of the vessels, and collected the freights from the consignees by refusing delivery until they had paid.

In form, the action is in the common count for money had and received; in substance, it is a legal substitute for the equitable right to follow the proceeds of the plaintiff’s property into the hands of a constructive trustee. The question is whether a suit might have been brought under the Suits in Admiralty Act for the same relief; for, if so, that remedy is exclusive. Johnson v. Fleet Corporation, 280 U. S. 320, 50 S. Ct. 118, 74 L. Ed. 451. When the loan is itself maritime, the admiralty will entertain a suit to trace the security into the hands of one with whom the pledgor has wrongfully mixed the proceeds with his own; so we held in Bank of British America v. Freights of the Hutton (C. C. A.) 137 F. 534. The initial maritime character of the transaction persists, into whatever form the proceeds may go. . In general, if the loan be maritime, the admiralty has jurisdiction over the collection of such property. Freights of The Kate (D. C.) 63 F. 707; The Advance (C. C. A.) 72 F. 793. However, it is not enough that the security be itself maritime in nature; for instance, a mortgage, even upon a ship, could not, before Congress otherwise provided, be foreclosed in a court of admiralty. Bogart v. The John Jay, 17 How. 399, 15 L. Ed. 95. Rather it depends upon the character of the loan, whether that be to disburse the ship, or for some other recognized maritime purpose. In re Atlantic, etc., Co. (D. C.) 3 F.(2d) 309; affirmed Standard Oil Co. v. Miller (C. C. A.) 3 F.(2d) 438 (C. C. A. 4).

We think that the form of the action cannot prevail over its substance, and that if the loans were maritime, it is indifferent that the plaintiff chose to sue in a common count, based upon the unlawful detention of the security. The reasoning of Johnson v. U. S. Shipping Board Emergency Fleet Corporation, applies, and the remedy under the Suits in Admiralty Act (46 USCA §§ 741-752) is exclusive. The complaint does not allege what was the nature of the loans, which, for aught that appears, may have been for ordinary financial purposes; and while this is -not probable, we cannot at this stage of the action dismiss it. We .must assume that it states a good cause of action at law, and remand it to the District Court with instructions to entertain it, unless it appear that the loans were maritime, in which case it must be dismissed for lack of jurisdiction.

The plaintiff cites United T. & L. Co. v. N. Y. & B. T. Line, 185 F. 386 (C. C. A. 2), and Home Insurance Co., New York, v. M. T. Co., 16 F.(2d) 372 (C. C. A. 9), as holding that a cause of action like this is not cognizable in the admiralty. In the first, the question was of a cause of action arising because of the overpayment of lighterage hire; the hire was excessive, and the libelant and respondent had had common directors. The second was to recover payments under a. marine policy fraudulently procured from the underwriter. In each case it is true that the obligee might have sued in the admiralty upon the obligation discharged, a charter or a marine policy; but he did not so sue; he had collected under such circumstances as made him a constructive trustee, and it was the obligor who sued to unravel the transaction. As the "reasons which made it unlawful for him to retain the proceeds were not maritime, the obligor failed. In the case at bar the situation is reversed, since there is no effort to unravel a closed transaction. It is the obligee who is the complaining party, and who seeks to collect the loan out of the security in the hands of one who has taken it away from the obligor. It is still the loan which is being collected; whose enforcement is the gravamen of the suit. If that be maritime, the admiralty assumes all incidents in its collection, including the pursuit of the security into the hands of one who holds as trustee. Perhaps the plaintiff might have-sued the consignees; that would certainly have been upon a maritime contract. It prefers to accept the payment as a discharge, and to follow the proceeds into the defendant’s hands; it is still collecting its loan, and the jurisdiction of the District Court depends upon whether that loan was itself maritime.

Judgment reversed and cause remanded.


text:
    E. GERLI & CO., Inc., v. CUNARD S. S. CO. Limited.
    No. 263.
    Circuit Court of Appeals, Second Circuit.
    March 3, 1931.
    Bigham, Englar, Jones & Houston, of New York City (Oscar R. Houston and Ezra G. Benedict Fox, both of New York City, of counsel), for appellant.
    Lord, Day & Lord, of New York City (George De Forest Lord, of New York City, of counsel), for appellee.
    Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
   L. HAND, Circuit Judge.

An Italian exporter delivered to the respondent ninety-two bales of silk at Milan for shipment to New York, and took a bill of lading which contained the following clause: “The carrier is not to be liable * * * for any claim for short delivery of, or damage to, the property hereby receipted for, unless notice of such claim is given in writing before the removal of the Goods or such part of the Goods as are discharged from the vessel at the port of discharge.” The goods went by land to Havre, thence by water to Southampton, where the respondent laded them on the “Berengaria,” bound for New York. The exporter endorsed and posted the bill to the libellant, who called for the goods which had been discharged on the wharf. Thirty-eight bales were delivered to him on December sixteenth; fifty-one on December seventeenth; one on December twenty-second; ninety in all. Nothing certain appears in the record as to his knowledge on or before December twenty-second that the other two bales had been lost; but on December twenty-fourth he made written claim for them, which the respondent later recognized as valid to the extent of the value agreed in the bill of lading. In January and February it was still searching for missing goods, and suggested that they might-have been reshipped on the Berengaria in the confusion, or sent by mistake to the Government Stores.

The libellant sued for the loss, and the respondent pleaded the clause as a defense; also a clause in limitation of liability which it is unnecessary to set forth at length. The District Judge thought that the libellant had failed to give seasonable notice, and dismissed the libel.

The language applicable to the loss of part of a consignment is this: “Before the removal of * * * such part of the Goods as are discharged from the vessel at the port of discharge.” Taken literally, this would mean, in case all the goods were discharged from the vessel, and some were later lost on the pier, that the notice need never be given, because all those discharged were never removed; and the clause would then cover only the ease of goods lost on board. Since it is ordinarily impossible to prove in the ease of lost goods, whether they were lost on board or after discharge, the clause would in practice usually be brutum fulmen. It is indeed true that the language of a bill of lading must be taken against the carrier, but it appears to us that the interpretation suggested would too plainly contradict its purpose. Therefore, we read the phrase, “discharged from the vessel,” as meaning, not that the goods have merely gone over the ship’s side to the wharf, but that they have beemdelivered to the shipper. Anything else, for the reasons just given, would upon most occasions delete it from the contract, and cannot be thought to be its meaning.

However, while the clause is valid [Anchor Line, Ltd., v. Jackson, 9 F.(2d) 543 (C. C. A. 2); The Texas Maru, 13 F.(2d) 538 (C. C. A. 2) ], it must give the shipper a reasonable opportunity' to make his claim. In the ease of damage he has such an opportunity before removal, at least if the damage be apparent on inspection; but when there is a shortage he cannot reasonably be asked to act until he knows that he is not to get his whole parcel. If the goods are delivered in installments, he may be told of the shortage when he receives the first; we need not say whether in that ease he must make claim before he removes that. But it would seem to be the only fair meaning of the clause that if he knows of the shortage, he must give notice at least before taking that which he understands to be the last installment. Then at any rate he has ample opportunity, and the purpose is certainly to give the carrier notice as soon as that can conveniently be done.

Upon the issue as to whether timely notice has been given, the shipper has the burden of proof. Whatever may be thought of this as res integra, we at least are now too definitely committed to change. The General Geo. W. Goethals (C. C. A.) 298 F. 935; Cudahy v. Munson Line (C. C. A.) 22 F.(2d) 898. In the case at bar the question comes to this: Did the libellant definitively know that the two bales were lost before December twenty-second? He must show that he did not, and the proof is somewhat equivocal. He first made his claim on the twenty-fourth' by letter dated the day before; it merely stated that he meant to hold the respondent responsible and would give the details of his claim when they were determined. On the twenty-eighth he wrote again, repeating the claim and speaking of the goods as “missing” and “not yet received.” The claim, qua claim, would normally presuppose an existing loss, but that is not inevitable. Although, if the goods had not been abandoned, the time had not yet come to claim, it was at least prudent to put it in, as soon as possible, for carriers' are sensitive in such matters. The reference in the second letter certainly implied that the disappearance might not be final, and presupposed that something more would be done to find them. The respondent’s letters in January and February prove the correctness of this surmise. They show that the carrier was still in hopes, was still searching, and proposed to continue. Just when it did give up and declared further efforts fruitless, does not appear, but it was certainly long after the claim was made.

When one says that there is a “shortage” in delivery, one means that some of the goods are lost, not merely mislaid. True, one may speak of something as lost which is merely missing at the moment, but actual loss is only when the search is given up, and the thing is accepted as gone. This seems to us the proper interpretation to put upon the clause in question. It would indeed be an unreasonable requirement that a shipper may not take the last of those things found, because he is told that so far, the remainder is not at hand. The time to make claim is only when the shortage has been ascertained; when the carrier admits that he cannot deliver. Not only does it not appear that this was not true on December twenty-second, but it affirmatively appears that the carrier had said nothing of the kind before December twenty-fourth, when the claim was made. Though, strictly, the claim was premature, that does not mar its effect. It seems to us that the libellant has borne the burden.

The bill of lading limited the recovery to £20 on each package, unless some greater value was declared and the extra freight paid; it also contained a clause that the contract should be “governed by English law.” The British Carriage of Goods Act, § 6, art. Ill, provides that no clause in a bill of lading shall “lessen” the “liability” of the carrier except as the act allows, and section 5 of article IV may, arguendo, be assumed to forbid any limitation below £100 a package. As matter of interpretation of the document as a whole, we are to take the specific as prevailing over the general, and the £20 clause as paramount to these sections of the act. Had the bill been drawn in England this would not be enough; the validity of the clause would depend upon British law. In fact, it was drawn and delivered in Italy, and it is the law of that kingdom by which alone the question is to be decided ; that is, how far the agreement raised an obligation. Cuba R. R. Co. v. Crosby, 222 U. S. 473, 32 S. Ct. 132, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40. People cannot by agreement substitute the law of another place; they may of course incorporate any provisions they wish into their agreements — a statute like anything else — and when they do, courts will try to make sense out of the whole, so far as they can. But an agreement is not a contract, except as the law says it shall be, and to try to make it one is to pull on one’s bootstraps. Some law must impose the obligation, and the parties have nothing whatever to do with that; no more than with whether their acts are torts or crimes.

The difficulty here is that nobody has proved what was the law of Italy. Strictly, that might cut the whole ground from under the libellant’s feet; he must maintain that such a document raises some obligations; if not, he is forced back upon what can be implied from loading the goods on the “Berengaria” at Southampton. However, even though Italy is a country where we know the civil law to obtain, we are not bound to complete agnosticism. Compagnie, etc., v. Rivers, 211 F. 294 (C. C. A. 2); The Hanna Nielsen (D. C.) 25 F.(2d) 984. The extent of our right to make any assumptions about the law of another country depends upon the country and the question involved; in common-law countries we may go further than in eivil law; in civilized, than in backward or barbarous. We can say more in the ease of France or Italy, than of Abyssinia, or Afghanistan (Aslanian v. Dostumian, 174 Mass. 328, 54 N. E. 845, 47 L. R. A. 495, 75 Am. St. Hep. 348); less, than in the ease of England or Australia. No doubt, when there is no evidence, we are always much limited in cases where the common-law does not prevail; but we are not quite without power in commercial matters arising in one of the great commercial countries of Western Europe. Kales, 19 Harv. L. R. 401, 409. We can assume that in Italy an agreement of carriage creates obligations, generally measured by the language used. Mittenthal v. Mascagni, 183 Mass. 19, 66 N. E. 425, 60 L. R. A. 812, 97 Am. St. Rep. 404; Parrot v. Mexican Central Ry., 207 Mass. 184, 93 N. E. 590, 34 L. R. A. (N. S.) 261; Sliosberg v. N. Y. Life Ins., 125 Misc. Rep. 417, 211 N. Y. S. 270, affirmed 217 App. Div. 685, 217 N. Y. S. 226. We may not, however, assume anything as to how far a carrier by contract is allowed to set a value upon the goods he carries; as to that we know nothing. Prima facie, the agreement is a contract; he who maintains that in a given situation it is not, must prove the law of Italy. Sokel v. People, 212 Ill. 238, 72 N. E. 382. The libellant has not proved it, and he must lose.

We might indeed have to refuse to give effect to the clause, whatever the Italian law,, if we disapproved the result too much, but that question does not arise. The limitation, if made here, would have been valid. Lawrence Leather Co. v. Compagnie Generale Transatlantique, 18 F.(2d) 930 (C. C. A. 2).

Decree reversed and decree directed for the libellant for the equivalent of ¿40.


text:
    CALLAN v. ANDREWS.
    No. 242.

    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.
    David L. Podell, of New York City (Herman Shulman, Mortimer Hays, and Joseph Lotterman, all of New York City, of counsel), for appellant.
    Weill, Wolff & Satterlee, of New York City (Lloyd P. Stryker, Henry P. Wolff, and William Gilligan, all of New York City, of counsel), for appellee.
    Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
   L. HAND, Circuit Judge.

The plaintiff, Callan, was a tax expert, who had been continuously employed for some two years before the events in question by the defendant, Andrews, a promoter. Andrews was interested in securing the “listing” on the Chicago Stock Exchange of an issue of bonds of the General Vending Corporation, which the Exchange refused to admit while Andrews remained trustee of a voting trust of the company’s stock. Unless the bonds were “listed” by January twentieth, he stood to take $1,500,000 of them from Lisman, a banker; if they were, he was relieved. In December at New York at an interview at the office of his attorneys, Andrews asked Callan to go to Chicago that day and try to get the bonds “listed.” Callan agreed to do so, except that he could not leave that day. They had another interview on the next day, when, according to Andrews, he told Callan that if he went, he, Andrews, would try to get Lisman, who was present, to give him a thousand shares of General Vending stock. Callan’s story was that Andrews promised to give him the shares himself. It was then also agreed that if the exchange would not accept Andrews as voting trustee, Callan might be substituted.

Callan went to Chicago, failed to get the bonds “listed” so long as Andrews was a trustee, but succeeded, when he, Callan, was put in his place. On his return he wrote, asking for the shares, and Andrews replied that he would try to get them from certain shares reserved for émployees, or from Lisman’s shares. Andrews had himself a large number of shares, all held in eserow, under a contract not necessary to describe. Lisman had other shares; there were still others in the hands of third persons, and, as above mentioned, there were some reserved by the company for employees, over which Andrews had some control. How far Callan knew, when he went to Chicago, that Andrews’ own shares were all deposited in eserow, was in dispute. At the second interview Andrews had made him a director of the company and had given him an option to buy certain of the shares. These were in the form of voting trust certificates, but Callan denied that he knew that they were in eserow. In May Callan demanded the shares, Andrews refused to recognize any liability, and Callan brought suit.

On the main issue the judge left to the jury only the question whether Andrews had promised to give Callan the shares himself, or had said no more than that he would try to get them from Lisman. He refused to charge that they might find Andrews’ promise to have been no more than a gift. As to damages he also refused to charge that the jury might find that Callan knew that Andrews’ shares were in escrow, and that the time of delivery might therefore be that of their release. He left it to them to find the value of the shares within a reasonable time after Andrews’ refusal in May. As the release of Andrews’ shares from the eserow took place some time later, and aftér they had fallen in value, this made a substantial difference. The jury found a verdict, based upon the value at the time of the repudiation, on which judgment was entered.

The appeal raises two main questions; first, whether the evidence was such as required a dismissal, because the promise was gratuitous, or at least a submission of that question to the jury; second, whether the measure of damages was wrong. The appellant also raises the question whether the jury might have found that Callan’s promise was in consideration of his election as director, and the concomitant option. We can, however, find no exception which raises this, and in any ease, in the view we take, it becomes immaterial upon this record.

Andrews’ theory is that, Callan having at the first interview already agreed to go to Chicago, his own promise on the next day to give him one thousand shares of stock eould not have been the inducement for the services rendered, and was therefore without consideration. This, because the consideration for a promise must be a quid pro quo, something given in exchange; else it is merely for a gift and nudum pactum. We are not disposed to enter into a discussion of the question so sought to be raised, or to consider how far the general rule has now been modified. Restatement of Contracts, § 90 Amer. L. I. In the case at bar the evidence did not justify a dismissal, and the requests to charge did not raise the question. It was eertainly permissible from the earlier relations of the parties, for a jury to infer that there was an implied promise to pay a reasonable price for the services to be rendered. If so, nothing was left but to settle the amount, and this might be later agreed upon. On the following day, when Andrews said, as we must assume he did, that he would give Callan one thousand shares of the stock, and when Callan assented, the price became fixed which had before been uncertain. Put into paradigm, Callan agreed to release his unliquidated claim and to substitute the shares; Andrews agreed to give the shares in consideration of the release of the unliquidated claim. The evidence admitted of only this interpretation, provided that Callan’s first promise had not been an office of friendship. It would certainly have been improper to direct a verdict for the defendant.

The requests to charge did not raise any question as to the character of Callan’s original promise. We may take the third as the least imperative, and that to which the defendant was best entitled. This in substance was that if Callan agreed to go, and went, to Chicago as the result of the first interview, and if the promise to give him the shares was not an inducement, but was treated as a gratuity, the jury might find it a gift. Thus, the request was consistent with the assumption, which the evidence justified, that there had originally been an implied promise of payment. If so, the only possible interpretation was that Andrews’ promise intended to fix the consideration, and it could not have been a gratuity. Callan was concluded by his acquiescence from asking more; Andrews, by his offer from giving less. Had he wished to raise the question whether Callan’s original promise was gratuitous, this was not the way to do it. We do not say that he might not have been entitled to go to the jury on that question. On another trial the record may be different, and we defer any conclusion; the trial judge may then prefer to take a verdict on that issue as well, but we cannot anticipate' his decision on another state of facts.

We should affirm the judgment had it not been for the rule of damages adopted. The learned judge apparently supposed either that, in cases of anticipatory breach damages were to be reckoned as though the time of delivery was accelerated, or that there was no evidence from which the jury might conclude that the promised shares were those in escrow. Neither conclusion was in our judgment correct. While a jury might well have found that Andrews meant to get the shares at large, since twenty per cent, of the stock was neither in escrow, in Lisman’s control, nor allocated to the employees, that was by no means an inevitable conclusion. It is true that if Callan knew nothing as to how Andrews stood in the stock, Andrews’ actual position would be irrelevant. Callan was entitled to suppose that a promise to give him the shares, meant a promise to get them on his demand. In that event the time chosen to fix their value was the right one. If, on the other hand, he knew that Andrews had no free shares available, and a large number in escrow, even though it was possible to get them .elsewhere, a jury might conclude that the shares in mind were those in escrow.

The evidence as to Callan’s knowledge is in much uncertainty. Andrews swore expressly that he had told him in the preceding August that his shares would all be “tied up” until the company “made good,” and that Lisman’s would he the only “free stock.” Callan at least knew that there had been some sort of contract affecting the stock; and in the following May he spoke of Andrews’ having much earlier “turned the stock over to other people, or agreed to do so.” On the other hand, in January Andrews in a telegram asked a subordinate to give Callan the shares due himself on the employees’ contract, so as to make up the thousand shares. As to the shares in which Callan got the option when he became a director, the testimony was also at variance. These were in fact in escrow, but it is impossible to say with certainty whether Callan had been so informed. We need not decide how much he did know, but it seems to us apparent that we cannot say that the ease was too clear for submission to the jury. They should have determined what shares the parties contemplated.

If the contract was for shares in escrow, the time for delivery was when they became free, and the anticipatory breach did not change it. It is the promise which fixes performance; nothing can alter it except a new agreement. This, so far as we can find, is the uniform rule in the United States with an exception to be noted in a moment. Skeele Coal Co. v. Arnold, 200 F. 393 (C. C. A. 2); Second National Bank v. Columbia Trust Co., 288 F. 17, 26, 30 A. L. R. 1299 (C. C. A. 3); Missouri Furnace Co. v. Cochran (C. C.) 8 F. 463; Edelstone v. Schimmel, 233 Mass. 45, 123 N. E. 333; York-Draper Co. v. Lusk, 6 Kan. App. 629, 49 P. 788; Williston, Contracts § 1397; Sedgwick on Damages, § 636-d. As to the -sale of goods, the Uniform Sales Act, §§ 64(3), 67 (3), has now codified the same rule. Segall v. Finlay, 245 N. Y. 61, 156 N. E. 97; Dimon Corp. v. Federal Sugar Ref. Co., 215 App. Div. 140, 213 N. Y. S. 106. In England apparently the rule is the same (Roper v. Johnson, L. R. 8 C. P. 167; Melachrino v. Nickoll, [1920] 1 K. B. 693), unless the market be obviously changing (Nickoll v. Ashton, [1900] 2 Q. B. 298; Roth v. Taysen, 8 Asp. Mar. C. 120), or unless the promisee covers (Melachrino v. Nickoll, supra [semble]). That there may be circumstances which will impose upon the promisee a duty to cover, We need not deny, though they must be indeed rare. Ordinarily we cannot agree that it is reasonable to require him to divine the course of an “obviously” changing market, about which no one’s judgment is of any value. At least there is no such situation here; Callan was under no such duty. His loss was the same as though he had waited till the time of performance arrived. Some of our language in Skeele Coal Co. v. Arnold, supra, which was not necessary to the result, appears to have been inadvertent.

The exception we spoke of is not relevant here, and we need only allude to it. It concerns those cases in which a contract for future delivery is treated as a commodity, like “futures” in grain, cotton or the like, dealt in on exchanges. When the parties understand that the contract is itself property, the promisee may be entitled to replace it, since it has a present sale value in his hands. Samuels v. E. F. Drew & Co. (D. C.) 286 F. 278, affirmed 292 F. 734 (C. C. A. 2); Cox v. Crane Iron Works, 5 F.(2d) 314 (C. C. A 3); Williston, § 1397.

Judgment reversed; new trial ordered.


author: AUGUSTUS N. HAND, Circuit Judge.

text:
    In re DOOLEY et al.
    No. 195.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.
    J. Edward Lumbard, Jr., of New York City (Seymour B. Quel, of New York City, of counsel), for appellants.
    Robert E. Manley, Acting U. S. Atty., of New York City (Arthur H. Schwartz, Asst. U. S. Atty., of New York City, of counsel), for the United States.
    Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   AUGUSTUS N. HAND, Circuit Judge.

This appeal involves the proper scope of the order of the District Court to be entered ■on a motion for the return of articles seized by prohibition agents at the premises of J. M. Dooley Fireproof Warehouse Corporation in the course of an illegal seareh. The illegality of the seareh and seizure is not questioned. The order directed the return of the articles seized and enjoined their use in any prosecution of J. M. Dooley Fireproof Warehouse Corporation, Joseph M. Dooley, its president, and Joseph M. Dooley, Jr., Frederick Dooley, and William M. Dooley, the three sons of the president of the corporation, who, with him, were at the premises at the time of the unlawful raid.

The petitioners by this appeal seek to have the order of the District Court so modified as to provide that the property seized be suppressed as evidence not merely as against themselves but as against all persons. ^ Their contention is that the policy of the Fourth and Fifth Amendments to the Constitution precludes the use of illegally seized property as evidence against anyone whatever. But ii has been held by an impressive weight of authority that the objection to an unlawful search and seizure is personal and cannot be successfully raised bv third parties. Rouda v. United States (C.C. A.) 10 F.(2d) 916; Lusco v. United States (C. C. A.) 287 F. 69; Ganci v. United States (C. C. A.) 287 F. 60; Morris v. United States (C. C. A.) 26 F.(2d) 444; Graham v. United States (C. C. A.) 15 F.(2d) 740; Cantrell v. United States (C. C. A.) 15 F.(2d) 953; Lewis v. United States (C. C. A.) 6 F. (2d) 222; Remus v. United States (C. C. A.) 291 F. 501; Chicco v. United States (C. C. A.) 284 F. 434; Tsuie Shee v. Backus (C. C. A.) 243 F. 551; May Wing Sun v. Prentis (C. C. A.) 234 F. 24.

It is argued that the reasoning of the Supreme Court in Silverthorne Lumber Company v. United States, 251 U. S. 385, 40 S. Ct. 182, 64 L. Ed. 319, 24 A. L. R. 1426, goes so far as to preclude evidence obtained through an unlawful seareh even as against persons whose rights have not been invaded. We cannot concur in such an interpretation of that decision. There the premises of the Silverthorne Lumber Company were unlawfully searched and property of the corporation and its officers was seized. The papers were returned pursuant to a court order, and thereafter the corporation and two of the Silverthornes were indicted with others for conspiring to defraud the United States. The two Silverthornes, who were officers of the company, had their offices on the premises of the Silverthorne Lumber Company and one of them, Frederick Silverthome, was served with a subpoena duces tecum directed to him individually and as president of the corporation requiring the production upon the trial of corporate papers found during the illegal search. Because the corporation and its officers could not claim immunity under the Fifth Amendment from the production of corporate papers, it was contended in the Silverthorne Case that the Fourth Amendment likewise did not protect them from an unlawful search for corporate papers and so would not prevent the United States from requiring the production of the corporate papers at the trial. The Supreme Court held that a corporation enjoys the immunities granted by the Fourth Amendment to the same extent as an individual, and that the subpoena did not lie because the papers unlawfully seized could not be used as evidence against the corporation or its officers. Such a decision was necessary in order to afford adequate protection to the corporation against an unlawful search and seizure. If corporate property illegally seized could be used in evidence against the officers, there would be little inducement offered to government agents to abstain from raids, seeing that the only real detriment the prosecution would suffer in such circumstances for its unlawful conduct would be the inability to have fines imposed upon a corporate defendant. The court did no more than hold that, where the search had invaded the rights of all the defendants, the papers seized could not be used against any of them, even though the papers .called for by the subpoena were only corporate papers.

Here the District Court has granted the identical relief which the Supreme Court granted in the Silverthome Case and has refused relief only in respect to persons who were hot before the court and whose rights, so far as the record shows, were not invaded at all.

In Remus v. United States, 291 F. 501, 511, the Court of Appeals of the Sixth Circuit said that an unlawful seizure of the property of one defendant did not prevent its use on the trial as against other defendants who were neither “interested * * * in the premises searched .or the property seized.”

The rule of the common law that an illegal search does not affect the rules of evidence ivas modified for the courts of the United States by the decision of the Supreme Court in Weeks v. United States, 232 U. S. 383, 34 S. Ct. 341, 58 L. Ed. 652, L. R. A. 1915B, 834, Ann. Cas. 1915C, 1177. This was apparently because the protection of individuals from unlawful searches and seizures was regarded as more important than conviction of the guilty. Gouled v. United States, 255 U. S. 298, 41 S. Ct. 261, 65 L. Ed. 547; Byars v. United States, 273 U. S. 28, 47 S. Ct. 248, 71 L. Ed. 520; Go-Bart Importing Co. v. United States, 51 S. Ct. 153, 75 L. Ed. decided by Supreme Court January 5, 1931. But taking the step involved in the Weeks Case was a far different matter from going so far as to protect by injunctive order individuals who are not before the court and whose rights, so far as appears, have not been invqded at all. If property of persons other than the Dooleys and their corpóration was seized on the unlawful search of the Dooley premises, the rights,- if any, which such persons may have, can be tested by a motion to quash any subpoena duces tecum hereafter issued for the production of the property. We can see no propriety in anticipating future contingencies by enlarging the injunction granted by the court below. At best the only object of the appellants is to protect other persons from troubles with which they have no concern.

Order affirmed.


text:
    THE P. R. R. NO. 35. THE EUGENIA MORAN.
    No. 280.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.

      Burlingham Veeder, Fearey, Clark & Hupper, of New York City (Chauncey I. Clark and Stanley R. Wright, both of New York City, of counsel), for appellant.
    Alexander, Ash & Jones, of New York City (Edward Ash and Lawson R. Jones, both of New York City, of counsel), for appellee.
    Before L. HAND, CHASE, and MACK, Circuit Judges.
   L. HAND, Circuit Judge.

On August 28,1930, the libellant, the owner of a scow, filed its libel in rem against the tug “Number 35,” which had the scow in- tow, and against the tug, “Moran,” of another company, to recover for injuries resulting from a collision in the Kill van Kull. The “Number 35” answered on September twenty-ninth, the “Moran” on October seventh, and the cause stood upon the docket awaiting trial. Thereupon on December second, over the protest of the claimants, the court directed that the cause be referred to a commissioner “to hear the testimony offered by the parties hereto and to report his conclusions on the issues of law and fact to this court on or before the second day of January, 1931.” This order merely recited that the cause had appeared on a “special” docket, called to determine whether the cases there listed should be referred. The libellant brought on the issues before the commissioner on December twenty-third, when the claimants again protested and refused to take part in the proceedings, which thereupon went along to a conclusion. The commissioner exonerated the “Moran,” found the “Number 35” at fault, liquidated the damages, and recommended a decree for the libellant. The “Number 35” excepted to the report on the ground that the court was without jurisdiction to refer the issues without consent, and that the proceedings before him were for this reason non eoram judiee. The court overruled the exceptions and entered a final decree from which the “Number 35” has now appealed.

The case is pressed to test the power of the district court to refer the issues generally in an admiralty cause to a commissioner to hear the proofs and to file an advisory report with his conclusions, for final disposition by the court. The occasion does not appear in the record, but we may take notice of some of the facts. The admiralty docket in the Southern District of New York has been much in arrears for many years, and the judges have been unable with the time available to bring to trial causes upon it without great delay. This has been to the advantage of respondents and claimants, who thus obtain a moratorium of over a year if the claims against them prove to be valid. Judge Woolsey, conceiving that some advance might be made in the disposition of the court's business, called a list of five hundred cases from the foot of the docket, and passed orders of general reference in a certain number, how many does not appear. His power to do so depends upon the meaning to be given the Admiralty Rides 43 and 46 (28 USCA § 723).

The first provides that, “where the court shall deem it expedient or necessary for the purposes of justice, it may refer any matters arising in the progress of the suit to one or two commissioners or assessors, to be appointed by the court, to hear the parties and make a report therein.” The second, that “in all trials in admiralty the testimony of witnesses shall be taken orally in open court, except as otherwise provided by statute, or agreement of parties.” If read literally the exception in Rule 46 would forbid any reference whatever under Rule 43, except when the parties agree; so understood, it would differ from Equity Rule 46 (28 USCA § 723), which is the same, ipsissimis verbis, save that it concludes, “except as otherwise provided by statute or these rules.” It is quite true that hitherto the practice has been not to refer the “merits” of an admiralty cause without consent, though that was apparently not the case in all other districts before 1921. The Guy C. Goss (D. C.) 53 F. 826. On the other hand the liquidation of damages before a commissioner has long been as Of course here as elsewhere, and the consent of the parties has been as little required since 1921 as before. Unless we have been wrong in this, Rule 46 is to be read with Rule 43 as an implied exception. We understand the law to be that while for a reference there must be some special circumstances which make it “expedient or necessary for the purposes of justice,” if the parties do not consent, the exception in Rule 46 is not literally absolute. We have to decide whether the size of the dockets, and the occupation of the judges otherwise, make an excuse within the extremely general words of Rule 43.

It must be owned that there are expressions in our opinions which countenance the claimants’ position, though we have never decided the point. Thus in The Bronx, 246 F. 809, 810, we said that the court may not send “the merits of a cause for trial before a commissioner,” citing in support Kimberly v. Arms, 129 U. S. 512, 9 S. Ct. 355, 32 L. Ed. 764, a suit in equity. But in Kimberly v. Arms, the Supreme Court was discussing a reference to hear the evidence and determine the cause, quite another proceeding from the advisory report here at bar. Again in The Spiea, 289 F. 436, a cause in which the procedure in the District Court was so amorphous that nobody has ever been able to learn just what did happen, we said-the same thing, once more basing our decision on Kimberly v. Arms. However, both these eases were decided before the Supreme Court passed upon Equity Rules 46 and 59, in Los Angeles Brush Corp. v. James, 272 U. S. 701, 47 S. Ct. 286, 71 L. Ed. 481; and the Ninth Circuit, in Neale, Inc., v. McCormick, 19 F. (2d) 320. Though in each of these the situation confronting the District Court was spread in the recitals of the order of reference, the absence of such an explanation at bar is no reason for inferring that no ground existed, at least if the matter lies in discretion, which we must assume to have been properly exercised until the contrary appears. While the Supreme Court unequivocally announced its determination to enforce the observance of Equity Rule 46, it said that the press' of judicial business might result in a miscarriage of justice, if the judges’ time were absorbed in hearing testimony in patent causes. It refused therefore to intervene, contenting itself with the eaution that the discretion granted by Equity Rule 59 (28 USCA § 723), must not be abused, but leaving the District Judges free, until they should betray some disposition to evade the rule. Equity Rule 46 is, as we have said, to be read like Admiralty Rule 46, but Equity Rule 59, under which alone any reference can be allowed, is somewhat more circumscribed than Admiralty Rule 43. Instead of leaving the matter broadly to the court, “save in matters of account,” it expressly forbids refer-, enees except under “exceptional conditions.” The subject-matter of the Admiralty Rule— maritime litigation — can scarcely contract its scope, in the face of such language.

The procedure in the admiralty was taken from the civil law, and, as in equity, in early days evidence was by deposition. The original Judiciary Act (section 30 of the Act of September 24, 1789 [1 Stat. 88]), changed this as to both, and while the ancient practice became optional in equity after 1802 (section . 25, Act of April 29, 1802 [2 Sta(. 166]), the statute remained unchanged as to admiralty until the whole procedure was put into the hands of the Supreme Court in 1842. The rules of 1844 — in which Rule 43 appears as Rule 44 — do not seem to have expressly provided for trials, probably assuming that the original practice prescribed by the act of 1789 was to continue. Although therefore the procedure of equity and the admiralty differed between 1802 and 1913 (when the new equity rules went into effect), since 1913 they have again become the same. There is no reason any longer to impute a higher sanction to trials in open court on one side of the court than on the other, and the same discretion would seem to exist in each.

The appellant indeed concedes that there may be issues such that because of their intricacy the court may refer them for report. Its position is that it is the nature of the inquiry alone which justifies that course, and that in an ordinary cause, involving questions with which the judges are-familiar, delay in coming to trial will not serve. Yet, except when he calls assessors to help him— a practice substantially unknown — the judge must in the end decide the dispute on the evidence taken, as much when it is hard as when it is easy. His power to refer troublesome issues depends, not upon his escape from the difficulties they raise, but because their trial will take a long time. If so, we cannot see why crowded dockets do not come within the same excuse. Suits must somehow be decided, and delay may be nearly as bad as no decision at all. A court, finding itself' permanently in arrears and unable to gain upon its work, staffed as it is, is forced to-select the most available means at hand. Whether it is more “expedient or necessary for the purposes of justice” to deny seasonable access to suitors, or to impose upon-them the expense of a reference, appears to-us a matter exclusively for their determination.

We agree of course that if it appeared' that they used the practice merely as a fetch to evade the rule, we should be called upon to-intervene. Against that possibility we need do no more than recur to the caution of the-Supreme Court. That is beside the point here. We cannot close our eyes to the situation as it exists, or deny that it may be an occasion for action out of the common. Obviously we cannot now say what circumstances might induce us to interpose. The matter is primarily one for the District Judges; and we must assume that they feel themselves as mueh bound by the law' as we. All we need now decide is that on the showing before us it does not appear that the order was improper.

As the appellant does not dispute the propriety of the decision upon the merits, but merely wishes to raise the point of jurisdiction, we affirm the decree without more.

Decree affirmed.


author: WOOLLEY, Circuit Judge.

text:
    In re EASTMAN KODAK CO.
    No. 4551.
    Circuit Court of Appeals, Third Circuit.
    Feb. 16, 1931.
    Pennie, Davis, Marvin & Edmonds, of New York City, and Ballard, Spahr, Andrews & Ingersoll, of Philadelphia, Pa. (Charles W. Riley, of New York City, Boyd Lee Spahr, of Philadelphia, Pa., and George E. Middleton, of New York City, of counsel), for petitioners.
    Thomas Raeburn White, of Philadelphia, Pa., for respondent.
    Before BUFFINGTON and WOOLLEY, Circuit Judges, and THOMPSON, District Judge.
   WOOLLEY, Circuit Judge.

This is a motion for leave to file a petition for a writ of prohibition or mandamus to restrain the District Court from exercising jurisdiction over the petitioner whieh it assumed on service of a writ of summons and continues to hold after dismissing a rule to set aside the service. The petitioner finds authority for its motion in section 377 of title 28 of the United States Code Annotated, whieh provides that, “ the circuit courts of appeals * ‘4 5 ” shall have power to issue all writs not specifically provided for by statute, which may be necessary for the” exercise of their respective jurisdictions, and agreeable to the usages and principles of law.”

Although the jurisdiction of the circuit courts of appeals is exclusively appellate, the petitioner resorts to this statute and prays for what in law is an original writ whieh all the cases hold those courts can issue when necessary for the protection and strictly in aid of their appellate jurisdiction when it is involved. United States v. Mayer, 235 U. S. 55, 35 S. Ct. 16, 59 L. Ed. 129; In re Massachusetts, 197 U. S. 482, 25 S. Ct. 512, 49 L. Ed. 845; Hammond Lumber Co. v. United States District Court (C. C. A.) 240 F. 924. , But courts differ as to what constitutes involvement of appellate jurisdiction, In re Babcock (C. C. A.) 26 F.(2d) 153; Grable v. Killits (C. C. A.) 282 E. 185, and as to whether the power to issue such writs exists not only when the appellate jurisdiction would otherwise be defeated but in other cases where necessary to render the appellate jurisdiction more efficient and effectual. As we are not inclined to enter'this field of conflicting views voluntarily, we shall assume without deciding that this court has jurisdiction to issue the writ within the first principle stated and shall dispose of the motion on its legal merits.

The whole case as it comes here is contained in the petition which accompanied the motion. The petitioner avers that Charles B. Gray commenced an action at law in the District Court against it, the Eastman Kodak Company, a New Jersey corporation, Eastman Kodak Company of New York, a New York corporation, and Eastman Kodak Stores, Inc., a New Jersey corporation, to recover damages for alleged infringement of a patent. What purports to be service upon the petitioning New Jersey corporation was made by serving “a writ of summons together with a copy of the plaintiff’s statement of claim and notice to file an affidavit of defense upon one Mary E. Kirkpatrick, as agent of the petitioner in said district.” Asserting that it did not at the time of service have a regular and established place of business in the district, it entered a special appearance and moved to set aside the service. After a rule to show cause, the matter came before the District Court on motion, answer and proofs. The evidence is not produced in this court. The petitioner, however, stating its own conclusions from the evidence, which are diametrically opposed to the conclusions of the learned trial judge, avers, because not contradicted by other evidence, that the petitioner (the New Jersey Company) is merely a holding corporation, owner, except for qualifying shares, of all the capital stock of the New York Company, and is not engaged in business anywhere; that the New York Company, owner, except for qualifying shares, of all the capital stock of the Kodak Stores Company, is engaged exclusively in the manufacture and sale of photographic equipment and materials in the State of New York; that its business transactions in the Eastern District of Pennsylvania are those of interstate trade only, among which is the delivery of materials to the Kodak Stores Company, which it admits maintains a regular place qf business in Philadelphia, Pennsylvania. The learned district judge discharged the rule on an ultimate finding of fact that the petitioner did at the time of service maintain a regular and established place of business in the district, accompanied with an opinion finding preliminary facts. These are as follows:

The judge frontally met the question essential to a valid service, whether the petitioner had “a regular and established place of business in the district” first by recognizing the originally distinct corporate entities of the three defendants. He then stated that the form or plan of these several corporations is a common one (Cannon Mfg. Co. v. Cudahy Packing Co., 267 U. S. 334, 45 S. Ct. 250, 69 L. Ed. 634) and that it was legally possible for them to do what was intended by their organizers, namely; for one to act solely as a holding company, another as a manufacturing company, and the third as a sales company, and that there should be no relation between the first and second except that of stock ownership and none between the second and third except that of stock ownership and vendor and vendee, and none whatever between the third and first. The court, however, found, as against what the three companies were intended to do and what they might have done, the things they actually did, which were to ignore these legal forms and distinctions and treat the activities of each company as a part or branch of one business, having with few or no exceptions the same general officers and together producing and marketing the products, and that there was in this situation a local business of the petitioner holding company with an agent at its place of business on whom service could validly be made. In other words, the court’s final finding of fact was that the petitioner maintained a regular and established place of business in the district and that one of the reasons for the finding was that the petitioner itself had declared it to be such a place of business.

So, confronted with a finding of fact by the trial judge which is essential to the jurisdiction of his court over this defendant, the petitioner avers the judge erred m continuing to exercise the jurisdiction so assumed and, without showing the. evidence on which the trial judge made the findings, prays for a rule upon him to show cause why he should not set aside the service, vacate his order and relinquish jurisdiction.

We can act only on the petitioner’s own showing and in so acting we shall apply and very briefly refer to the law of the case as made by the petitioner. The plaintiff, seemingly in doubt as to which of the three related corporations he had sued was the actual tortfeasor and being willing to be relieved of possible embarrassment at the trial by a decision on- the petition, interposed no objection and left his case with the court.

There is no doubt that a circuit court of appeals can and will issue a writ of prohibition in aid of its appellate jurisdiction when there is a showing of law or fact that jurisdiction has been assumed by a district court within the circuit which is beyond its legal cognizance, Smith v. Whitney, 116 U. S. 167, 6 S. Ct. 570, 29 L. Ed. 601; Petition of United States, 263 U. S. 389, 44 S. Ct. 130, 68 L. Ed. 351, as, for exaggerated examples, in a suit on a contract when the pleadings show it is between citizens of the same state and in a suit on a contract or in tort for damages less than $3000; and for better examples, to require a district court to set aside an ultra vires order suspending a criminal sentence, Ex parte United States, 242 U. S. 27, 37 S. Ct. 72, 61 L. Ed. 129, L. R. A. 1917E, 1178, Ann. Cas. 1917B, 355; in an admiralty suit in rem against a vessel owned by the United States and employed in the public service, The Western Maid, 257 U. S. 419, 42 S. Ct. 159, 66 L. Ed. 299; and in suits for marine torts against a sovereign state which had not consented to be sued, Ex parte State of New York, 256 U. S. 490, 41 S. Ct. 588, 65 L. Ed. 1057, and Id., 256 U. S. 503, 41 S. Ct. 592, 65 L. Ed. 1063. These eases, indeed all the many cases cited by the petitioner which we have examined, turn on matters pf law involving no disputed facts and no findings of fact with respeet to which men and, accordingly, courts might differ. In such instances the appellate court, having before it all that was before the offending trial court, is in position to decide the question of jurisdiction and to decide it fully and finally.

But evidently the question when a circuit court of appeals should and should not issue a writ of prohibition turns in some eases, as in the instant case, on facts open to different inferences and in others on a doubt as to the law or the facts. So, in this confusion of eases, the Supreme Court has repeatedly made pronouncements, as to the issuance of a writ of prohibition, so similar in form as to suggest a rule for itself or for the guidance of other courts. It last appears in Ex parte Chicago, R. I., etc., 255 U. S. 273, 275, 276, 41 S. Ct. 288, 289, 65 L. Ed. 631, in these words:

“If the lower court is clearly without jurisdiction, the writ will ordinarily be granted to one who at the outset objected to the jurisdiction, has preserved his rights by appropriate procedure and has no other remedy. In re Rice, 155 U. S. 396, 15 S. a. 149, 39 L. Ed. 198. If, however, the jurisdiction of the lower court is doubtful (Ex parte Muir, 254 U. S. 522, 41 S. Ct. 185, 65 L. Ed. 383); or if the jurisdiction depends upon a finding of faet made upon evidence which is not in the record (In re Cooper, 143 U. S. 472, 506, 509, 12 S. Ct. 453, 36 L. Ed. 232), or if the complaining party has an adequate remedy by appeal or otherwise (Ex parte Tiffany, 252 U. S. 32, 37, 40 S. Ct. 239, 64 L. Ed. 443; Ex parte Harding, 219 U. S. 363, 31 S. Ct. 324, 55 L. Ed. 252, 37 L. R. A. [N. S.] 392), the writ will ordinarily be denied.”

Reading this rule on the averments of the petition without accepting its conclusions from the evidence, it can hardly be said that the lower court is “clearly” without jurisdiction or that the petitioner has no other remedy. The most one can say is that its jurisdiction is “doubtful” in view of the opposite conclusions which the petitioner and the judge reached from the same evidence. As shown by the-petition itself, it is certain that the jurisdiction of the trial court “depends upon a finding of fact” and on a finding of ■ fact made on evidence which is not before us. It will not do to say in reply that the evidence might be brought up on a rule against the district judge prayed for in the petition, for it is not disclosed whether the evidence has been preserved by stenographic Or typewritten notes. But whether preserved or not, it might later be brought up equally well by appeal after trial.

And, finally, it is clear that the complaining party “has an adequate remedy by appeal” to be based on the court’s ruling on some appropriate motion to be made at the trial when, it is conceivable, on the facts as they may develop at the trial, the judge might reverse his present. position and set aside the service or dismiss the statement of claim against the. petitioning defendant.

The motion for writ of prohibition is denied.


author: PER CURIAM.

text:
    In the Matter of the Application of EASTMAN KODAK COMPANY, a New York Corporation, for a Writ of Prohibition against and/or a Writ of Mandamus to the Honorable Oliver B. Dickinson, District Judge of the United States for the Eastern District of Pennsylvania, and the District Court of the United States for the Eastern District of Pennsylvania.
    No. 4565.
    Circuit Court of Appeals, Third Circuit.
    Feb. 16, 1931.
    Charles W. Riley, of New York City, for petitioner.
    Thomas Raeburn White, of Philadelphia, Pa., for United States District Court.
    Before BUFFINGTON and WOOLLEY, Circuit Judges, and THOMPSON, District Judge.
   PER CURIAM.

The questions raised on this motion are substantially the same as those raised on a like motion of the Eastman Kodak Company, a New Jersey Corporation, 48 F.(2d) 125, which we have just considered and decided.

The motion of this petitioner for a writ of prohibition is denied.