author: WILSON, Circuit Judge. ANDERSON, Circuit Judge ANDERSON, Circuit Judge. WILSON, Circuit Judge

text:
    BRADFORD ELECTRIC LIGHT CO., Inc., v. CLAPPER.
    No. 2465.
    Circuit Court of Appeals, First Circuit.
    Jan. 8, 1931.
    On Rehearing June 29, 1931.

      WILSON, Circuit Judge, dissenting.
    Robert W. Upton, of Concord, N. H. (Joseph C. Donovan, of Concord, N. H., on the brief), for appellee.
    Stanley M. Burns, of Dover, N. H. (Hughes & Burns, of Dover, N. H., on the brief), for appellant.
    Before BINGHAM, ANDERSON, and WILSON, Circuit Judges.
   WILSON, Circuit Judge.

This is an action under the Lord Campbell Act of New Hampshire, sections 9-14, c. 302, Pub. Laws 1926, to recover for injuries resulting in the death of the plaintiff’s intestate and alleged to have occurred through the negligence of the defendant corporation.

The defendant in the action and appellant in this court is a publie utility corporation organized under the laws of Vermont, and having its principal place of business in the town of Bradford in Vermont. It is engaged in furnishing electric current for publie uses in both Vermont and New Hampshire. The plaintiff’s intestate was a resident of Bradford, but received his injuries in the course of his employment in the state of New Hampshire.

The contract of employment of the plaintiff’s intestate was entered into in Vermont. His work was that of a lineman, and at times he performed the duties of a “trouble shooter,” or an emergency man, who might be sent out at any time to repair sudden breaks in the lines.

In the evening of the day on which his injuries occurred, he was requested to go across the Connecticut river to restore bumed-out fuses at a substation in the town of Haver-hill, which lies on the east hank of the river in the state of New Hampshire, where in the course of his work he came in contact with high-tension wires and received the injuries which caused his death.

The action was originally brought in the New Hampshire superior court, and on petition of the defendant was removed to the federal District Court on the ground of diversity of citizenship; the plaintiff being a citizen and a resident of New Hampshire. On the third trial before a jury, it resulted in a verdict for the plaintiff for $4,000.

Vermont in 1915 (Pub. Laws 1915, No. 164) adopted what is known as a Workman’s Compensation Act of the elective type, common in most of the states, under which either the employer or employee could adopt its provisions or retain his rights at common law. To induce the employer to assent to be bound by its provisions, he was, in case of refusal, deprived of his common-law defenses of assumption of risk, negligence of a fellow servant, and contributory negligence; while the employee, in case he did not assent, must meet those defenses in addition to proving that his injuries were due to his employer’s negligence. In case both assented and the employee suffered injury arising out of, and in the course of, his employment, he received compensation based on his average weekly wage during his incapacity, whether his employer was negligent or not, and even though his injury was due entirely to his own negligence, or to that of a fellow servant, or was the result of pure accident.

Both employer and employee under the Vermont act, as in many of the compensation acts of other states, are presumed to have accepted the act unless notice is given to the contrary. As the court of one state has put it, the failure to give such notice creates an irrebuttable presumption of assent. American Radiator Co. v. Rogge, 86 N. J. Law, 436, 92 A. 85, 94 A. 85.

Such provisions for the acceptance of the act have always been held sufficient to hind the parties, and in no ease has any such statute been held invalid as against public policy, or in violation of any constitutional provision on this ground. Opinion of the Justices, 209 Mass. 607, 610, 611, 96 N. E. 308; Mackin v. Detroit-Timkin Axle Co., 187 Mich. 8, 153 N. W. 49; American Radiator Co. v. Rogge, supra; Johnston v. Kennecott Copper Corp. (C. C. A.) 248 F. 407; Hopkins v. Matchless Metal Polish Co., 99 Conn. 457, 460, 121 A. 828; Crane v. Leonard, Crossette & Riley, 214 Mich. 218, 183 N. W. 204, 18 A. L. R. 285; Industrial Commission v. Ins. Co., 64 Colo. 480, 174 P. 589, 3 A. L. R. 1336; Rounsaville v. Railroad Co., 87 N. J. Law, 371, 94 A. 392; Pierce v. Storage Co., 185 Iowa, 1346, 172 N. W. 191; Foughty v. Ott, 80 W. Va. 88, 92 S. E. 143; State ex rel. Chambers v. District Court, 139 Minn. 205, 166 N. W. 185, 3 A. L. R. 1347; Anderson v. Miller Scrap Iron Co., 169 Wis. 106, 170 N. W. 275, 171 N. W. 935; Post v. Burger & Gohlke, 216 N. Y. 544, 111 N. E. 351, Ann. Cas. 1916B, 158; Hospers v. J. Hungerford Smith Co., 230 N. Y. 616, 130 N. E. 916.

It is also generally held that such a statute on acceptance by both parties becomes a part of the contract of employment and is exclusive of all other remedies in ease of injuries. Kennerson v. Thames Towboat Co., 89 Conn. 367, 371, 94 A. 372, L. R. A. 1916A, 436; Powers v. Hotel Bond Co., 89 Conn. 143, 147, 93 A. 245; Hopkins v. Matchless Metal Polish Co., 99 Conn. 457, 460, 121 A. 828; Gooding v. Ott, 77 W. Va. 487, 87 S. E. 862, L. R. A. 1918D, 637; Hunter v. Coal Co., 175 Iowa, 245, 154 N. W. 1037, 157 N. W. 145, L. R. A. 1917D, 15, Ann. Cas. 1917E, 803; Deeny v. Wright & Cobb Lighterage Co., 36 N. J. Law J. 121; Industrial Commission v. Ins. Co., supra; Dettloff v. Hammond, Standish & Co., 195 Mich. 117, 161 N. W. 949; Grinnell v. Wilkinson, 39 R. I. 447, 98 A. 103, L. R. A. 1917B, 767, Ann. Cas. 1918B, 618; Barnhart v. American Concrete Steel Co., 227 N. Y. 531, 125 N. E. 675; Martin v. Kennecott Copper Corp. (D. C.) 252 F. 207.

In terms, the Vermont act, section 5770, G. L. 1917, covers injuries to employees who are hired in that state, but whose employment requires them to perform work in another state where they are injured. It is now held with but few, if any, exceptions, at least under elective acts, and whether in terms covering injuries in another state or not, that, when assented to by both parties, a compensation act of the state of employment, at least in so far as it is administered in that state, will cover injuries received in the course of the employment in another state. In this sense such acts are said to have an extraterritorial effect. See eases above cited.

Massachusetts, in construing its original act in an early decision, Gould’s Case, 215 Mass. 480, 102 N. E. 693, Ann. Cas. 1914D, 372, held the contrary, and this decision was followed in a few states; hut Massachusetts since its decision in the Gould Case has amended its act, and in a recent decision, Penderzoli’s Case, 169 N. E. 427, decided January 3, 1930, now holds its act under a contract of employment entered into in Massachusetts covers injuries received by the employee in another state. The great weight of authority now sustains this construction as the most practical. Otherwise great confusion would result as to the rights and obligations of employer and employee, where employees are sent out of the state to do work.

In this case, as neither the defendant corporation nor the plaintiff’s intestate gave notice of a refusal to assent to the Vermont act, both were bound by it, and its provisions became a part of the contract of employment and covered all injuries, whether received in Vermont or New Hampshire, and for which under the Vermont act no action at common law based on negligence would lie. See eases above cited.

There can be no doubt, therefore, if the proceedings had been brought under the Vermont statute, the plaintiff’s intestate could have recovered only the sum provided where there are no dependents; and herein lies the reason for this action. The deceased had no dependents, and, as is provided in all such acts, including that of New Hampshire, in such eases only a comparatively small sum to provide for burial expenses is allowed.

As the court said in Wasilewski v. Warner Sugar Refining Co., 87 Misc. Rep. 156, 149 N. Y. S. 1035, 1036: “The plaintiff, however, does not now wish to accept the payment to which he is entitled under the compensation plan. He is advised that his injuries were due to the employer’s negligence, and he wishes to take his chances on getting a larger amount through a suit at law.”

The comment of the court in the New York case aptly applies to the heirs of the deceased in this case, who probably suffered little financial loss, if any, by his death. Because the accident happened in New Hampshire, they seek to bring their action under its death statute and recover a larger sum than they could recover under the Vermont law.

At the opening of the trial in the federal court, the defendant filed its answer and a brief statement of defense in which it set up the provisions of the Vermont Compensation Act, and the fact that the defendant and the deceased were both residents of Vermont, that the deceased was hired in Vermont, and that both the defendant and deceased had accepted the Vermont act, all of which it claimed was a bar to the action, and moved for a dismissal of the action.

The plaintiff then moved that the brief statement be rejected on the following grounds:

(1) That the Workmen’s Compensation Law of Vermont has no extraterritorial force or effect and does not control the rights of the parties in this litigation.

(2) That the rights of the parties to this action are determinable solely by the laws of the state of New Hampshire.

(3) That the plaintiff’s cause of action accrued under and by virtue of the laws of New Hampshire, the injury causing the death of the plaintiff’s intestate occurring while he was employed within said state.

(4) That the matters set forth in the defendant’s brief statement do not constitute a valid and legal defense to the plaintiff’s cause of action.

This motion was in effect a demurrer to the brief statement and an admission of the facts stated therein.

The District Court we think misconceived the nature of the defense set up in the brief statement, probably due to the fact that the plea of the defendant ended with a motion to dismiss the action, and held that it was a plea to the jurisdiction and denied the motion to dismiss on the ground that the Vermont statute had no extraterritorial effect and that the action was under the Employers’ Liability Act, and was based on tort and not on contract.

Prom one viewpoint the court’s ruling may have been technically correct, but both parties apparently accepted it as a ruling that the facts set forth in the brief statement did not constitute a good defense to the action. The case was evidently tried upon the understanding that the court had ruled that the Vermont contract was without effect as a defense. Counsel so argued th'e ease before this court on appeal; the defendant having made the court’s ruling on these motions its first assignment of error.

The industrial policy embodied in these statutes was borrowed from England and Germany. The first act in this country was adopted in 1910 in the state of New York, which was declared unconstitutional by the state court. Ives v. South Buffalo R. Co., 201 N. Y. 271, 94 N. E. 431, 34 L. R. A. (N. S.) 162, Ann. Cas. 1912B, 156.

New Hampshire in 1911 (Laws 1911, c. 163) adopted a modified form of a compensation law applicable only to certain hazardous employments, one of which was work on electric lines. Like the acts of most of the other states adopted about that time and since, it is elective, but differs in this respect, that the employee or his representative, in ease of his death from injuries received in the course of his employment, is not obliged to elect until after the injury occurs.

The defendant company accepted the New Hampshire act, but neither the deceased nor his representative ever did. While the defendant’s reasons for so doing were not disclosed by direct testimony, it appears in the record that its operations extended some distance into New Hampshire, and it perforce must at times, at least, have employed men in .that state as well as in Vermont. If it wished to retain its common-law defenses as to these men, it must accept the act.

The first and real question to be decided in this ease, the relations between the employer and employee being contractual, is whether the law of the lex loci contractus should govern under the well-recognized principles of comity, or the law of the state where the tort occurred.

Under the doctrines of conflict of laws, there are certain general rules which are well settled: (1) A tort action is governed by the law of the state where the injury occurred; (2) no state law has any extraterritorial effect in the sense that it becomes part of the statutory law of another state or controls the courts of any other state in administering justice; (3) on the principles of comity, however, a contract entered into in one state, if valid in that state, will be enforced in the courts of another state unless contrary to its laws or public policy.

These doctrines at the outset raised many new problems in connection with the administration of compensation acts, and there has been some conflict of decisions; but there is a clear tendency, we think, for the courts to settle down on the policy of enforcing contracts under them according to the law of the state in which they were made.

Connecticut at one time applied its own Compensation Law to a contract of employment entered into in New York to be performed in Connecticut, Banks v. Howlett Co., 92 Conn. 368, 102 A. 822; but it later limited the decision to the facts in that ease, Hopkins v. Matchless Metal Polish Co., 99 Conn. 457, 460, 121 A. 828; and finally overruled it in Pettiti v. Pardy Construction Co., 103 Conn. 101, 109, 130 A. 70.

New York has in one or more eases held that the recovery of compensation in the state of the injury will not prevent recovery in the state of employment, when both employer and employee have assented to the Compensation Act of each state. Jenkins v. Hogan & Sons, 177 App. Div. 36, 163 N. Y. S. 707; Gilbert v. Des Lauriers Column Mould Co., 180 App. Div. 59, 167 N. Y. S. 274.

These eases, however, granting compensation in New York when compensation was also allowed in New Jersey, have since been distinguished in Anderson v. Jarrett Chambers Co., 210 App. Div. 543, 206 N. Y. S. 458, where it' was held that, if the contract of employment was a New York contract, and the employment hazardous, the employee could not waive his rights under the New York compulsory statute by the acceptance of compensation under the New Jersey act; but, where the contract was a New Jersey contract and the accident occurred in New York, the New York courts follow Connecticut, in that they will not take jurisdiction, but leave the party to his remedy in New Jersey. Minto v. Hitchings & Co., 204 App. Div. 661, 198 N. Y. S. 610, 612; Schweitzer v. Hamburg-Amerikanische, 78 Misc. Rep. 448, 138 N. Y. S. 944; also, see Mosely v. Empire Gas & Fuel Co., 313 Mo. 225, 281 S. W. 762, 45 A. L. R. 1223; Pettiti v. Pardy Construction Co., 103 Conn. 101, 130 A. 70; Hopkins v. Matchless Metal Polish Co., 99 Conn. 457, 121 A. 828; Wasilewski v. Warner Sugar Refining Co., 87 Misc. Rep. 156, 149 N. Y. S. 1035; Barnhart v. Am. Concrete Steel Co., 227 N. Y. 531, 125 N. E. 675; Norman v. Hartman Furniture Co., 84 Ind. App. 173, 150 N. E. 416.

The New Jersey court, in Rounsaville v. Central R. Co., 87 N. J. Law, 371, 374, 94 A. 392, but in a dictum, also intimated that, even though compensation had been granted in another state because the accident occurred there, it would not prevent the New Jersey eourt from granting compensation, provided the contract was a New Jersey contract. The actual decision in this ease, however, is not of necessity out of harmony with those holding that it is the lex loci contractus which governs. Hopkins v. Matchless Metal Polish Co., supra; Norman v. Hartman Furniture Co., supra; Minto v. Hitchings & Co., supra; Schweitzer v. Hamburg-Amerikanische, supra. In the ease of Johns-Manville v. Thrane, 80 Ind. App. 432, 141 N. E. 229, cited by plaintiff to sustain the contention that it is the law of place of injury which governs, it will be found that the contract of hiring in that case was held to be an Indiana contract, while in Norman v. Hartman Furniture Co., supra, the Indiana eourt refused compensation, though the accident occurred in Indiana, on the ground that the contract was an Illinois contract and the law of that state controlled. Since the decision in the New Jersey case, we think there has been a change in the attitude of the courts toward these laws and their extraterritorial effect.

The New York court, in Minto v. Hitch-ings & Co., remarked with appropriateness, we think, that it would be “unseemly for a person to seek redress under the law of his own state, succeed, and afterwards institute the same proceedings in a different forum under the law of another state.” It would also appear that the converse should be equally unseemly, unless under the circumstances found in Anderson v. Jarrett Chambers Co., supra.

Bradbury in his third edition of his work on Compensation Law, page 88, after reviewing the result of the administration of the law for nearly two decades,- says: “It would seem that the application of the doctrine that the parties should be governed by the workmen’s compensation law of the state where the contract of employment was made, would settle very many of the difficulties which are bound to arise and any other doctrine would multiply these difficulties.”

Counsel for plaintiff contends that it is against the public policy of New Hampshire for an employee to enter into a contract relieving his employer of liability for injuries due to the employer’s negligence; but the rule against contracts relieving an employer of liability for bis own negligence is tbe law in practically every jurisdiction. It is now well settled that compensation acts are not contrary to public policy, but are everywhere recognized as humane, economic, ánd in the interest of the employee and the general welfare of the state; and nowhere is this more admirably stated than in Mulhall v. Nashua Mfg. Co., 80 N. H. 194, 115 A. 449.

When New Hampshire adopted its Compensation Act the constitutionality of such legislation was then being questioned in other states. Ives v. South Buffalo R. Co., supra. The New Hampshire Legislature, out of abundance of caution, not only limited its acts to hazardous employments, but, in order to avoid the possibility that it might be held to constitute an agreement to waive liability on account of an employer’s negligence, permitted acceptance of the compensation provided in the statute after the injury, upon the theory, it may have been, that it would then be held to be in the nature of a settlement of employee’s claim; but this fear, if such it was, has proved groundless, as the cases above cited hold. No other state has adopted such a similar provision for acceptance. That the New Hampshire Legislature adopted this peculiar provision in its act upon the ground that an acceptance of the act before injury would be injurious to the welfare of the people of New Hampshire is highly improbable.

As a rule, the federal courts will follow the decisions of the state courts in interpreting their statutes or in determining the public policy of the state; but the New Hampshire courts have not yet held any Compensation Act of a sister state contrary to its public policy, or passed on the question here involved. We must, therefore, decide the issues in the light of the decisions of other jurisdictions. In view of the declarations in Mulhall v. Nashua Mfg. Co., supra, however, we cannot conceive of the New Hampshire court of last resort holding as a general proposition that a statute, which has been adopted in so many states, and acclaimed far and wide as one of the most beneficent acts of recent years in promoting the general welfare of the working man, is contrary to the general welfare of the citizens of New Hampshire on the first grounds urged by counsel.

But it is also urged that the law of Vermont, inasmuch as it presumes the acceptance of its act from silence, is contrary to the public policy of New Hampshire, since the New Hamphire act permits acceptance after the injury and also requires a positive act.

If the Vermont act as a whole is not contrary to the public policy of New Hampshire, can it then be said that, merely because the provision: of the Vermont act as to the acceptance of the act differs from that of the New Hampshire act, it is contrary to the public policy of New Hampshire?

No brief all-inclusive definition of what is meant by public policy has yet been evolved. In general it is said that, to be contrary to the public policy of a state, a contract must be inconsistent with good morals, natural justice, or the public welfare or some positive law forbidding it. As to the nature of contracts held to be against public policy and its scope, see 6 R. C. L. 707 et seq. § 114-214; Williston’ on Contracts, vol. 3, c. XLIV-XLVIII.

The Washington state court said, in State ex rel. Baker, etc., R. Co. v. Nichols, 51 Wash. 619, 99 P. 876, 877: “Comity depends, not alone upon a disposition to favor the citizen of another state or country, but rests upon well-settled principles of practice, expediency, and convenience. It is a rule recognized by courts, and applied within bounds of discretion. It is based upon the statute law or decisions * * * of other states or countries rather than upon our own. These will be recognized and given force if it be found that they do not conflict with the local law, inflict an injustice on our own citizens, or violate the public policy of the state.”

The United States Supreme Court in Oscanyan v. Arms Co., 103 U. S. 261, 277, 26 L. Ed. 539, said, as a matter of comity: “The general rule undoubtedly is that the validity of a contract is to be decided by the law of the place where it is made, unless it is to be performed in another country; but to this, as to all general rules, there are exceptions, and among these Story mentions contracts made in a foreign country to promote or reward the commission of crime, to corrupt or evade the due administration of justice) to cheat public agents, or to affect the public rights, and other contracts which in their nature are founded in moral turpitude, and are inconsistent with the good order and solid interest of society. ‘All such contracts,’ he adds, ‘even although they might be held valid in a country where they are made, would be held void elsewhere, or at least ought to be, if the dictates of Christian morality, or even of natural justice, are allowed to have their due force and influence in the administration of international jurisprudence.’ Story, Conflict of Laws, see. 258.”

As to what acts are injurious to the welfare of the public, legislative bodies in enacting statutes may differ, it is true. Contracts may be valid in one state and be invalid by express prohibition in another. The adoption of a workmen’s compensation • act may properly be held to establish a public policy in a state, and any contract contrary to its general aim and purpose may be held contrary to its public' policy.

The Supreme Court of the state of Washington, however, in Reynolds v. Day, 79 Wash. 499, 140 P. 681, L. R. A. 1916A, 432, although it had, by a compulsory compensation act as to hazardous employments, and by voluntary assent as to nonhazardous, done away with the old common-law remedy for injury through negligence, which its Legislature declared to be “inconsistent with modem industrial conditions,” enforced a eommon-law remedy of a sister state on the ground of comity, and held it was not contrary to the publie policy of Washington, as it still retained the common-law remedy in certain eases.

If it should be held, however, that every provision of these compensation acts established a definite publie policy for the state adopting it, then it would follow that a state which required a positive act of acceptance by the employer would be against the public policy of a state which presumed his acceptance, unless he gave notice, and vice versa; or a state having an act applying to hazardous employments, such as New York, would hold an act covering also nonhazardous occupations, as New Jersey or Connecticut, was contrary to its publie policy; or an act granting fixed weekly sums for certain injuries is contrary to the law of state basing compensation for all injuries on a percentage of the average weekly wage. But details of this nature have never been -regarded as establishing a definite publie policy as to each detail. Otherwise we should have the confusion which the courts have been seeking to avoid by holding that the law of the lex loci contractus should govern where the injury occurred in another state, since few of these acts are an exact counterpart of any other.

The numerous decisions of the courts giving these acts extraterritorial effect would then be of little value, as an injured employee, whenever his contract of employment was in one state where he had accepted a compensation act, and he was injured in another, might in every sueh case, if to his advantage, bring a common-law action in the state where injured, provided the act of the. state of employment differed in any important provision from the act of the state where the injury occurred; but no court has yet so held. See decisions cited above.

The state courts have repeatedly held that, because a statute of one state differs in some of its provisions from that of the state of the forum, it does not follow'that the courts of the state of the forum would not enforce contracts entered into in the other state and valid under its law, though not in compliance with the lex fori, especially where both statutes were enacted with the same purpose in view.

The Minnesota court, in Herrick v. Minneapolis & St. Louis Ry. Co., 31 Minn. 11, 16 N. W. 413, 47 Am. Rep. 771, which is quoted with approval by the United States Supreme Court in Northern Pac. R. Co. v. Babcock, 154 U. S. 190, 14 S. Ct. 978, 981, 38 L. Ed. 958, says: “It by no means follows that, because the statute of one state differs from the law of another state, therefore it would be held contrary to the policy of the laws of the latter state. Every day our courts are enforcing rights under foreign contracts where the lex loci contractus and the lex fori are altogether different, and yet we eonstrue these contracts and enforce rights under them according to .their force and effect under the laws of the state where made. To justify a court in refusing to enforce a right of action which accrued under the law of another state because against the policy of our laws, it must appear that it is against good morals or natural justice, or that, for some other such reason, the enforcement of it would be prejudicial to the general interests of our own citizens.”

To the same effect is Chicago & E. I. R. Co. v. Rouse, 178 Ill. 132, 52 N. E. 951, 44 L. R. A. 410; Stewart v. Balt. & Ohio R. Co., 168 U. S. 445, 18 S. Ct. 105, 42 L. Ed. 537; Higgins v. Central N. E. & W. R. Co., 155 Mass. 176, 29 N. E. 534, 31 Am. St. Rep. 544; Morris v. Chicago, R. I. & P. R. Co., 65 Iowa, 727, 23 N. W. 143, 54 Am. Rep. 39.

The New York court, in Leonard v. Columbia Steam Nav. Co., 84 N. Y. 48, 38 Am. Rep. 491, in enforcing a contract entered into in another state, held: “The rule here laid down is just and reasonable, and it is not essential that the statutes should be precisely the same as that of the state where the action is given by law or where it is brought, but merely requires that it should be similar in import and character.”

A case analogous to, if not on all fours, with the instant ease, is that of Barnhart v. Am. Concrete Steel Co., 227 N. Y. 531, 125 N. E. 675, where the parties were residents of New Jersey and assented to its act, but the deceased was killed in the course of his employment in New York and sought to recover in a common-law action in that state under the statutes of which it was provided that the right to recover damages for death should never be abrogated. The New York court held there was no recovery and that the New Jersey Compensation Act, though optional and differing from its own and providing for a contractual compensation in case of death, was not against the public policy of New York. Also see Schweitzer v. Hamburg-Amerikanische, supra; Ora Scott v. White Eagle Oil & Ref. Co., 47 F.(2d) 615, decided in federal District Court of Kansas, February 3, 1930.

Nor is it clear that the part of the New Hampshire act as to acceptance was intended to be mandatory, and, if held to be for the benefit of the employee, could not be waived by the employee and employer, and that an agreement to accept prior to the injury would not be enforced. Mulhall v. Nashua Mfg. Co., supra; Kelsea v. Ins. Co., 78 N. H. 422, 425, 101 A. 362.

It has been suggested that it has been held in two jurisdictions that, when compensation allowed in one state was not sufficient, additional compensation might be recovered in another state, citing Farr v. Babcock Lumber Co., 182 N. C. 725, 109 S. E. 833, and Rorvik v. North Pac. Lumber Co., 99 Or. 58, 190 P. 331, 195 P. 163. But on careful examination of the facts it will be found that the first, if it has any application, is contra; and the second was for the recovery of damages for injuries caused by a third party other than the employer; and provision is usually made in compensation acts .whereby, if the injury was due to the negligence of a third party, the employer, having paid compensation under the act, is subrogated to the rights of the employee against the third party, and, if an employer fails to sue, the employee may.

We are of the opinion that there is nothing in the contract entered into between these parties in Vermont that is contrary to the main purpose of the New Hampshire act, or inimical to the welfare of its citizens, and, according to the trend of recent decisions in other jurisdictions, the contract of hire under the Vermont act, upon the principles of comity, constitutes a good defense to an action under the New Hampshire death statute, there having been no contract of hire in New Hampshire.

The judgment of the District Court is vacated, the verdict is set aside, and the case i's remanded to that court for further proceedings not inconsistent with this opinion; the appellant recovers costs of appeal.

ANDERSON, Circuit Judge

(dissenting).

The gist of the opinion is that a contract made in Vermont bars the action for negligence in New Hampshire. This amounts to saying that a Vermont contract may change the public policy of New Hampshire. New Hampshire is a sovereign state. Except as limited by the Federal Constitution, Knickerbocker Ice Co. v. Stewart, 253 U. S. 149, 40 S. Ct. 438, 64 L. Ed. 834, 11 A. L. R. 1145, and eases cited, its public policy is completely within the control of its own Legislature and its own courts. No other state can change it, either directly or indirectly by implying contracts. In New Hampshire, at common law, contracts relieving employers from liability for future negligence are void. Piper v. Railroad, 75 N. H. 228, 72 A. 1024. This is the universal rule.

The New Hampshire Compensation Act (Pub. Laws 1926, c. 178, §§ 11, 12) reasserts the common-law rule. The Legislature has thus clearly and recently indicated its adherence to the common-law rule as to contracts against negligence. The public policy of New Hampshire is not subject to determination by this court “in the light of the decisions of other jurisdictions.” Plaintiff’s rights rest solely under the law of New Hampshire, where the accident occurred and the suit was brought. This court has no right to change that law. The ruling now made is equivalent to assuming legislative power in New Hamphire. New York Central R. Co. v. Chisholm, 268 U. S. 29, 31, 32, 45 S. Ct. 402, 69 L. Ed. 828, 38 A. L. R. 1048; Union Trust Co. v. Grosman, 245 U. S. 412, 38 S. Ct. 147, 62 L. Ed. 368, and authorities cited; Dicey Conflict of Laws, Notes of American Cases, p. 669, and eases cited; 3 Williston Contracts, § 1792.

On Rehearing.

ANDERSON, Circuit Judge.

On rehearing, the attention of the court is sharply directed to the fact that the defendant expressly accepted the New Hampshire Workmen’s Compensation Act (Pub. Laws N. H. 1926, c. 178). This aet reserves, in section 11, to the employee or his legal representative, an action at law for damages or death caused by negligence. It is clear that this aet applies to actions for negligence occurring in New Hampshire, and that its acceptance binds the defendant in this action of tort. We are also satisfied that we were in error in our previous holding, and that no contract maje in Vermont purporting to release an employer from liability for future negligence can bar an action brought in New Hampshire for an injury there sustained, and thus change the public policy of New Hampshire. See Saloshin, Adm’x, v. Houle (N. H.) 155 A. 47, decided May 5, 1931. It follows that on both grounds the former decision of this court must be reversed.

This disposes of the defendant’s main reliance.

The other assignments of error call for but brief discussion. There was evidence tending to show that at the time of his death on July 30, 1926, the decedent, 21 years old, had been employed for about two years by the defendant as a lineman; that he had had no technical training in electricity; that in the early summer of 1926 the defendant extended its lines in New Hampshire and made material alterations in the Haverhill substation where Clapper was electrocuted; that these changes left that substation as the only one of seven in which there was no switch which would “kill” or make the entire station safe for employees to work thereon; that, as the result of a thunder shower on the night of July 30, Clapper went to this substation to replace an apparently blown-out fuse; that he threw the old switch, with which he was familiar, apparently assuming that he would thus make the station safe for his work; that shortly thereafter he was heard to groan, and that his body was found electrocuted; that, in order to make that substation entirely safe, it was necessary to use a disconnecting switch at Newbury, on the Vermont side.

While the evidence was somewhat conflicting, the crucial questions of defendant’s negligence in exercising reasonable care to provide a sufficient disconnecting switch at the Haverhill substation, and/or to give to the decedent adequate warning of the danger of reliance on the old switch, were plainly questions of fact for the jury.

The charge to the jury was accurate and adequate. The defendant pleaded the decedent’s contributory negligence and assumption of risk as affirmative defenses; on elementary principles, the burden was on it to sustain these pleas. Lake Shore, etc., Ry. v. Felton (C. C. A.) 103 F. 227, 230; McCoy v. Rhodes, 11 How. 131, 136, 13 L. Ed. 634; Jefferson Hotel Co. v. Warren (C. C. A.) 128 F. 565, 567; Inland, etc., Co. v. Tolson, 139 U. S. 551, 557, 558, 11 S. Ct. 653, 35 L. Ed. 270. Compare also Kanawha Co. v. Kerse, 239 U. S. 576, 580 et seq., 36 S. Ct. 174, 60 L. Ed. 448; Severn v. Philadelphia Co. (C. C. A.) 281 F. 784, 786; Jacobs v. Southern Ry. Co., 241 U. S. 229, 235, 36 S. Ct. 588, 60 L. Ed. 970; Seaboard Air Line v. Horton, 233 U. S. 492, 503, 34 S. Ct. 635, 58 L. Ed. 1062, L. R. A. 1915C, 1, Ann. Cas. 1915B, 475; 45 USCA § 54 and eases cited. See also B. & O. R. R. v. Baugh, 149 U. S. 368, 13 S. Ct. 914, 37 L. Ed. 772; McPeck v. Cen. Vermont R. R. (C. C. A.) 79 F. 590, and eases cited; Hawkins v. Bleakley (D. C.) 220 F. 378, 381.

Finding no prejudicial error, the judgment below must be affirmed.

The judgment of the District Court is affirmed, with interest and costs.

WILSON, Circuit Judge

(dissenting).

I cannot agree to the majority opinion that a Vermont contract of employment, both parties to which were domiciled in Vermont and accepted its Workmen’s Compensation Act, will not be recognized as valid by this court, because it is against the public policy of New Hampshire where an injury occurred, on the ground that, it undertakes to relieve an employer from liability for future negligence. The case is one of new impression, and, owing to the peculiar nature of the New Hampshire Employers’ Liability and Compensation Act, is unique in the issues it presents, and of importance to employers, especially in adjoining states; otherwise I should not deem it necessary to present my views at length.

The only doubtful question, as I view the ease, is the issue presented by the fact that the defendant had also accepted the New Hampshire Compensation Aet, chapter 178, Pub. Laws 1926, and complied with section 4. It is not really contended, however, that this was done because of the fact that some of its workmen living and employed in Vermont were also sent into New Hampshire to do service work, as it also appears that, by reason of the extension of its lines into New Hampshire, it was at times, if not continually, obliged to employ residents of that state..

Unless the fact that the defendant invoked and defended under the New Hampshire Employers’ Liability and Compensation Act, after the trial judge ruled that the Vermont contract would not be recognized in New Hampshire, must be construed as an assent that the New Hampshire statutes should alone govern the rights of the plaintiff’s intestate in this ease, the parties stand as though the Employers’ Liability and Compensation Act of New Hampshire did not exist. The plaintiff brings its action under New Hampshire’s Lord Campbell Act, and the defendant retains all its defenses at common law.

There was no new employment in New Hampshire of the deceased. There was no acceptance of the New Hampshire act by the deceased or his representative. By commencing an action under New Hampshire’s death statute (Pub. Laws 1926, e. 302, §§ 9-14), his administratrix is by section 12 of its Compensation Act expressly barred from all benefits under the act.

If the defendant, by accepting the act, assented to the deceased, under the circumstances of this case, taking advantage of any benefits of compensation the act gives, did not the representative of the deceased by rejecting it and bringing her action under another statute consent to be subject to all defenses the act gives the defendant, and also to any defense the defendant had under the principles of comity?

The acceptance of the Compensation Act of New Hampshire does not confer on an employee injured in that state the right to sue at common law or on his representative in case of death to bring an action under its death statute; it merely does not take it away, unless it is voluntarily surrendered up by the acceptance of the Act after the injury. As the plaintiff saw fit to institute a suit under another New Hampshire statute, the acceptance of the New Hampshire Compensation Act by the defendant should not be construed as a waiver of any legitimate defense to the suit the defendant might have under the established rules of comity by virtue of a valid contract it had with the deceased.

However, I desire particularly to go on record as opposed to the ruling of the majority opinion that New Hampshire will not recognize a contract of employment under a Workmen’s Compensation Act of another state that requires the assent of the workman before an injury to entitle him to its benefits, on the ground that it is contrary to the pub-lie policy of New Hampshire. The New Hampshire court has never so declared, and we cannot conceive of any court holding that a statute so generally held to be conceived in the interest of the workingman was inconsistent with the welfare of the citizens of New Hampshire. See Mulhall v. Mfg. Co., 80 N. H. 194, 115 A. 449.

The case of Saloshin, Adm’x, v. Houle, recently decided by the New Hampshire Supreme Court, does not so hold. That was a case where the injury occurred through the negligence of a third party in .New Hampshire, and the deceased, a resident of New York, had accepted the New York Compensation Act (Consol. Laws c. 67), and his representative and widow was receiving compensation under it. She brought an action against the third party in New Hampshire.

By the provisions of the New York act, however, the claim of an employee against a third party, in case he accepts compensation, is assigned to the insurer, or the party paying the compensation. The insurer asked to be joined in the action in New Hampshire. There seems to have been some question as to whether the decedent had received or would receive, if allowed to prosecute the action for her own benefit, damages that might belong to other beneficiaries under the provisions of the New Hampshire death statute. The New Hampshire court merely held that, in an action in New Hampshire, a New York statute that differed from its own did not control as to damages. It is significant, however, so far as it has any bearing on the case now at bar, that the New Hampshire court, upon the principles of comity, did recognize the provision of the New York statute that assigned the employee’s rights against the third party to the insurer and held the action was maintainable in the administratrix’ name for the benefit of the insured, notwithstanding the right arose under a compensation act of another state, which leaves no option on the part of the employee to reject it after the injury occurred.

Whether a contract similar to that of Vermont would be valid if entered into in New Hampshire under its present statutes is not material, as appears from Smith v. Godfrey, infra, 28 N. H. 379, 61 Am. Dec. 617, and the eases hereinafter cited. It is conceded that it is a valid contract in Vermont, and by its terms the deceased agreed that his remedy under the Compensation Act of Vermont, in case of injury either in Vermont or New Hampshire, was an exclusive remedy.

It is true that contracts for relief against future negligence in this country are held void as against public policy; but a contract for adequate compensation in ease of injury by accident, whether due to negligence of either employer or employee, or occurring without the negligence of either, is quite dif - ferent from a contract under which an employee receives no benefit, but relieves the employer from all liability for future negligence. In the one case, 'it is held to be a contract in the interest of the workman, and, in the other, that it is so hostile to his interest and so conducive to neglect on the part of the employer to provide the ordinary provisions of safety for its employees, that it is, so far as we know, upheld by no court in this country.

The Massachusetts court, however, has repeatedly held that a contract exempting one party from liability from future negligence, if valid where made, as in England, though contrary to the publie policy of Massachusetts and would be void if made there, is not immoral or illegal, and will be enforced in that commonwealth. Fonseca v. Cunard Steamship Line, 153 Mass. 553, 557, 27 N. E. 665, 12 L. R. A. 340, 25 Am. St. Rep. 660 ; O’Regan v. Cunard Steamship Line, 160 Mass. 356, 361, 35 N. E. 1070, 1071, 39 Am. St. Rep. 484; Stone v. Old Colony St. Railway, 212 Mass. 459, 464, 99 N. E. 218; Mittenthal v. Mascagni, 183 Mass. 19, 66 N. E. 425, 60 L. R. A. 812, 97 Am. St. Rep. 404. The word “illegal” is evidently here used in the sense of prohibited by express statute.

The limits of the concept “public policy,” is not easily defined. Mr. G-reenhood in his work on Publie Policy gives this brief summary of the law, which is well supported by the authorities: “When a contract is valid under the publie policy of the state where made, it will be enforced in another state, although the same would by the statute laws of the latter state be void, unless its enforcement would exhibit to the citizens of the state ■an example pernicious and detestable.”

Again: “The law of one state having ex proprio vigore no validity in another state, the enforcement of a foreign contract which would not be valid by the law of the forum where its enforcement is judicially attempted, depends upon comity which is extended for that purpose, unless the agreement is contrary to the publie policy of the state of the forum in that it is contrary to good morals, or the state or its citizens would be injured by its enforcement or it perniciously violates positive, written or unwritten prohibitory law.” (Italics supplied.)

In other words, every contract, unless held to be contrary to good morals, and the welfare of its citizens, should be enforced in another state than the state of its inception, under the well-established principles of comity, even though prohibited by the law of the forum.

This rule is recognized in New Hampshire in Smith v. Godfrey, 28 N. H. 379, 61 Am. Dec. 617, the leading New Hampshire ease, in which “A sol(l and delivered spirituous liquors to B in Massachusetts, and such sale was there legal. Upon -an action brought for the price in New Hampshire, where such sales are illegal, it was held that the bare knowledge on the part of the vendor that the purchaser intended to sell them in New Hampshire contrary to law, was not a defence to the action and the plaintiff could recover the price.” This case was followed in Hill v. Spear, 50 N. H. 253, 9 Am. Rep. 205; MacDonald v. Railway, 71 N. H. 448, 450, 52 A. 982, 59 L. R. A. 448, 93 Am. St. Rep. 550.

The court held further in Smith v. God-frey, that, while no state or nation is bound to recognize or enforce any contracts which are injurious to its own interests or to those of its citizens, “it is a well established general principle that the validity of a contract is to be determined by the law of the place where the contract is made.”

In Milliken v. Pratt, 125 Mass. 374, 375, 28 Am. Rep. 241, the Massachusetts court said: “The general rule is that the validity of a contract is to be determined by the law of the state in which it is made; if it is valid there, it is deemed valid everywhere, and will sustain an action in the courts of a' state whose laws do not permit such a contract. Scudder v. Union National Bank, 91 U. S. 406 [23 L. Ed. 245]. Even a contract expressly prohibited by the statutes of the state in which the suit is brought, if not in itself immoral, is not necessarily nor usually deemed so invalid that the comity of the state, as administered by its courts, will refuse to entertain an action on such-a contract made by one of its own citizens abroad in a state the laws of which permit it. Greenwood v. Curtis, 6 Mass. 358 [4 Am. Dec. 145]; McIntyre v. Parks, 3 Metc. 207.” (Italics supplied.)

In O’Regan v. Cunard Steamship Line, supra, the same court said: “Although the stipulation relieving the defendant from liability for injuries resulting from the negligence of its servants is against the policy of our law, it is not immoral or illegal; and, it being valid in Great Britain, where it was made, it will be enforced on principles of comity by our courts.”

The mere fact that statutes of different states, of the same general character, differ in some feature, does not render a contract entered into in one state and valid under its statute, unenforceable in another state because it does not conform to its statute. Swann v. Swann (C. C.) 21 F. 299, 306; Reynolds v. Day, 79 Wash. 499, 502, 140 P. 681, L. R. A. 1916A, 432; Herrick v. Minneapolis & St. L. R. Co., 31 Minn. 11, 16 N. W. 413, 47 Am. Rep. 771; Northern Pac. v. Babcock, 154 U. S. 190, 14 S. Ct. 978, 38 L. Ed. 958; Chicago & E. I. R. Co. v. Rouse, 178 Ill. 132, 52 N. E. 951, 44 L. R. A. 410; Higgins v. Central N. E. & W. R. Co., 155 Mass. 176, 180, 29 N. E. 534, 31 Am. St. Rep. 544; Dennick v. R. R. Co., 103 U. S. 11, 26 L. Ed. 439; Barnhart v. Am. Concrete Steel Co., 227 N. Y. 531, 125 N. E. 675 ; Schweitzer v. Hamburg-Amerikanische Line, 78 Misc. Rep. 448, 138 N. Y. S. 944; Howard v. Howard, 200 N. C. 574, 158 S. E. 101, decided April 1, 1931; Bliss v. Houghton, 16 N. H. 90, 91, 92; Adams v. Gay, 19 Vt. 358, 367 ; 2 Kent, 117, 118.

The eases cited by counsel for appellee of Am. Mut. Liability Co. v. McCaffrey et al. (C. C. A.) 37 F.(2d) 870, Johns-Manville Inc., v. Thrane, 80 Ind. App. 432, 141 N. E. 229, and Carl Hagenback & Wallace Show Co. v. Randall, 75 Ind. App. 417, 126 N. E. 501, have no bearing on this case. In the first two the employee was employed solely to do work in the state where the accident occurred, and it was held that he was subject to the Compensation Law of that state. In the last case the appellant was an Indiana corporation. The appellee was employed to work in any state. He made a contract in Ohio by which he agreed that, if injured, his rights were to be controlled by the laws of the District of Columbia. At the time of his injury he was being employed in Indiana, the domicle and place of business of the appellant, and the rights of the parties under these conditions were held to be governed by the law of Indiana.

Here the deceased was employed to work in Vermont where the domicile and main business of his company was, and incidentally in New Hampshire. In such ease the rule has now become generally established to hold the employee subject to the law of the state where his employment was entered into. Pettiti v. Pardy Cons. Co., 103 Conn. 101, 109, 130 A. 70 ; Minto v. Hitchings, 204 App. Div. 661, 198 N. Y. S. 610; Schweitzer v. Hamburg-Amerikanische Line, supra; Norman v. Hartman Furniture Co., 84 Ind. App. 173, 150 N. E. 416.

I am firmly of the opinion that there is nothing in the contract entered into between these parties in Vermont that is contrary to the purpose of the New Hampshire Compensation Act as defined by the court of that state in Mulhall v. Nashua Mfg. Co., 80 N. H. 194, 115 A. 449, or inimical to the welfare of its citizens and the public policy of that state; and, according to the trend of decisions in other jurisdictions, the rights of the parties should have been held to be governed by the Vermont contract, which provided for the plaintiff’s only and exclusive relief for the death of her intestate.

If the employee or his representative had also accepted the New Hampshire act and sought to enforce his rights under that act, the New Hampshire courts, in accordance with the most recent decisions, would have refused to award compensation under the New Hampshire act and referred her back to Vermont where his contract of employment was made. Pettiti v. Pardy Construction Co., 103 Conn. 101, 109, 130 A. 70; Minto v. Hitchings, 204 App. Div. 661, 198 N. Y. S. 610; Schweitzer v. Hamburg-Amerikanische Line, 78 Misc. Rep. 448, 138 N. Y. S. 944; Barnhart v. Am. Concrete Steel Co., 227 N. Y. 531, 125 N. E. 675; Norman v. Hartman Furniture Co., 84 Ind. App. 173, 150 N. E. 416.

Bradbury in the third edition of his work on Compensation Law, page 88, after reviewing the results of the administration of the law for two decades, says: “It would seem that the application of the doctrine that the parties should be governed by the Workmen’s Compensation Law of the state where the contract of employment was made, would settle very many of the difficulties which are bound to arise, and any other doctrine would multiply these difficulties.”

The recognition of the Vermont contract in this case does not interfere with the sovereign powers of New Hampshire, or extend the laws of Vermont into New Hampshire, any more than does the recognition and enforcement in New Hampshire of a contract entered into in another state and valid there, though not valid under the laws of New Hampshire. See Smith v. Godfrey, supra; Hill v. Spear, supra.

Neither does the clause in a majority of the Compensation Acts in the different states expressly giving the law extraterritorial effect project the law of the enacting state into another state in defiance of its laws or its sovereignty. It merely provides that, in ease of injury in another state, íh-e state where the contract was entered into will allow compensation, though the accident occurred beyond its jurisdiction. In other words, the contract for compensation is as broad as the contract of employment.


source: Caselaw Access Project

author:
L. HAND, Circuit Judge.
      CHASE, Circuit Judge

license: Public Domain

text:
    WILLIAMS v. SAWYER BROS, Inc.
    No. 416.
    Circuit Court of Appeals, Second Circuit.
    July 17, 1931.
    CHASE, Circuit Judge, dissenting.
    Blackman, Pratt & King, of New York City (Addison S. Pratt and Wilmurt B. Linker, both of New York City, of counsel), for appellant.
    Milbank, Tweed, Hope & Webb, of New York City (John A. Kelly, of Buffalo, N. Y., of counsel), for appellees.
    Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   L. HAND, Circuit Judge.

The plaintiffs sued the defendant, a Massachusetts corporation, at law in the state court, serving it personally and attaching its bank account- in a New York bank. The defendant released the attachment by giving a surety company bond, and later removed the cause to the District Court for diversity of citizenship. Judgment originally went for the plaintiff, which we reversed [Williams v. Sawyer, 45 F.(2d) 700], and, the plaintiffs consenting to a dismissal, judgment was entered for the defendant. Upon the taxation of costs the clerk refused to allow the premiums paid to release the attachment, and the judge affirmed his ruling upon motion to re-tax. The defendant then appealed. Two questions arise: Whether the judgment is appealable; whether the item was taxable.

We have recently held in a suit in the admiralty [New Jersey Shipbuilding Co. v. James McWilliams Blue Line, 49 F.(2d) 1026], that there can be no appeal whose only purpose is to challenge the propriety of an award of costs at least unless the power of the court be at issue. The abuse of the court’s discretion was in that ease clear, but the appeal involved no question as to the legality of any of the items taxed. The contrary is true here; nobody disputes the defendant’s right to costs, but the question arises as to what items can lawfully be included. Upon that question an appeal lies to this court. Newton v. Consolidated Gas Co., 265 U. S. 78, 83, 84, 44 S. Ct. 481, 68 L. Ed. 909.

Upon the merits the New York decisions are against the defendant (Bick v. Reese, 52 Hun, 125, 5 N. Y. S. 121; Louisville Lumber Co. v. Smith, 154 App. Div. 386, 139 N. Y. S. 357; Greenbaum v. Berenson, 217 App. Div. 774, 217 N. Y. S. 116; Regan v. Dillon, 126 Misc. Rep. 37, 212 N. Y. S. 376); and if the state law governs, the appeal must fail. Before the act of 1853 (section 830, tit. 28, U. S. C. [28 USCA § 830], Rev. St. § 983), it was held that though the federal statutes impliedly recognized the right to costs, yet, as Congress had not directly dealt with the subject, their amounts and award should follow the state law (Hathaway v. Roach, 2 Woodb. & M. 63, Fed. Cas. No. 6213; Costs in Civil Cases, 1 Blatchf. 652, Fed. Cas. No. 18284). After 1853 the same has been repeatedly decided. Ethridge v. Jackson, 2 Sawy. 598, Fed. Cas. No. 4541; Huntress v. Epsom (C. C.) 15 F. 732; Shreve v. Cheesman, 69 F. 785 (C. C. A. 8); Primrose v. Fenno (C. C.) 113 F. 375; Scatcherd v. Love, 166 F. 53 (C. C. A. 6); Ex parte Peterson, 253 U. S. 300, 316, 317, 40 S. Ct. 543, 64 L. Ed. 919. However, the District Court has power by rule of court to declare what disbursements shall be taxed. The Texas, 226 F. 897, 905 (C. C. A. 1); Parkerson v. Borst, 256 F. 827 (C. C. A. 5); The Governor Ames, 187 F. 40, 41, 48 (C. C. A. 1). And a proved usage would probably have had the same force as a rule before this was authoritatively decided in Newton Consolidated Gas Co., 265 U. S. 78, 85, 44 S. Ct. 481, 68 L. Ed. 909.

In the Southern District of New York it has been the practice to tax premiums paid to secure supersedeas bonds (Edison v. Mutoscope Co. [C. C.] 117 F. 192); stipulations of a libelant for costs (The Volund, 181 F. 643, 669 (C. C. A. 2); stipulations for value on the arrest of a vessel (The Hurstdale [D. C.] 171 F. 607); bonds to withdraw a deposit in equity (Consolidated Gas Co. v. Newton [D. C.] 291 F. 704). Apparently the practice is the same in the Eastern District. The John D. Dailey (D. C.) 158 F. 642. It is quite true that no such usage has been proved as to bonds to lift an attachment, hut the language of the decisions was general, and not confined to the facts at bar. An inquiry of the retired clerk, Mr. Gilchrist, whose experience goes back more than fifty years, discloses that the taxation of premiums upon an attachment bond has not, to his knowledge, ever before arisen. Thus apparently whenever such items have come before the court, they have been allowed, but this precise situation has never come.

The critical question is therefore what one means by a usage in such eases. If the earlier instances we have cited ean be regarded as examples of a general usage to tax premiums whenever a bond becomes necessary, the plaintiffs at bar should lose. If, on the other hand, the usage must be shown to exist in each new situation as it arises, and there can be no inference from one instance to another, they must win. In that case it will be necessary for the party wishing to tax the item to prove that the circumstances then at bar had arisen before and that his side had prevailed. Plainly this was not true in Consolidated Gas Co. v. Newton (D. C.) 291 F. 704. The suit was in equity, and the plaintiff had been obliged to deposit m the registry of the court very large sums of money as security for an injunction against the enforcement of a rate fixed by a public utility commission. It wished to draw down these deposits, and asked leave to post surety company bonds as substitutes. Certainly, this was quite a new state of facts, as to which there could be no usage, except as the earlier decisions could he treated as species of a genus. Yet the Supreme Court affirmed the decree. So it appears to us that what is meant is that there need only be evidence of the allowance of the item, when the prevailing party has been for any reason forced to incur the expense, and not that it must have been allowed in exactly the circumstances in which it now comes up. We cannot suppose that the word is used in the more limited sense.

For this reason we feel free to say that the learned District Judge was in error, notwithstanding his declaration that there was no “custom or practice to tax such premiums.” This was indeed true if what he meant, as probably he did, was that there was no such practice as to attachment bonds. He could scarcely have meant that there was no such practice in other settings, for the decisions were to the contrary. If he did, it was certainly a mistake; if he did not, we think that he was wrong in his understanding of what was necessary to establish a practice. Nor should we forget the approval of such bonds in Newton v. Consolidated Gas Co., 265 U. S. 78, 86, 44 S. Ct. 481, 484, 68 L. Ed. 909, where they were spoken of as “a most convenient and stable means of obtaining indemnity against the default of parties” and “much to be preferred to individual sureties.” In the Southern and Eastern districts of New York they have come into substantially universal use, and are as much a part of the expected expenses of an action or suit, as the fees paid the clerk. No reason ean be given why the defeated party should be allowed to impose their cost upon his adversary; and while it is indeed true that the books are by no means harmonious, some of the contrary decisions are in places where we may fairly suppose that the custom has not become so universal as it is in these two districts. It is with one of these that we are concerned; as to it we think that there is a general usage which comprehends all eases where surety company bonds are required, either to release property, or as to any other kind of security.

The argument that the release of the attachment was voluntary does not seem to us to require more than this allusion.

Judgment reversed; cause remanded with instructions to include the disputed item in the bill of costs.

CHASE, Circuit Judge

(dissenting).

We recently held in New Jersey Shipbuilding Co. v. The James McWilliams, 49 F.(2d) 1026 that no appeal will lie from an allowance of costs in admiralty made by the trial court in the exercise of its discretion, and dismissed the appeal, since we could not review such a discretionary ruling. This appeal presents an entirely different question. It is not whether the exercise of discretion as to costs is reviewable, but whether the court had the power to allow as costs, in an action at law, the premiums paid on the bond. An appeal such as this, which involves the power of, the court and not merely the propriety of the manner in which the court has exercised its discretion, will lie. Newton v. Consolidated Gas Co. of New York, 265 U. S. 78, 44 S. Ct. 481, 68 L. Ed. 909.

28 USC A § 830, provides for the taxation of costs. It does not mention such premiums as these. Before this law was enacted, the taxation of costs in federal courts was made to conform to the practice in the state in which the district was situated, and that has continued to be so except as to the specific items mentioned in the above section. Primrose v. Fenno (C. C.) 113 F. 375; National Surety Co. v. Lyons (C. C. A.) 16 F.(2d) 688. But the right to recover such costs as are allowed in the New York Courts rests on 28 USC A § 725, which reads: “The laws of the several States, except where the Constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in eases where they apply.” Ethridge v. Jackson, 8 Fed. Cas. page 801, No. 4,541; Shreve v. Cheesman (C. C. A.) 69 F. 785. Then, too, the taxation of costs, where Congress has not enacted to the contrary, is to be governed by usage. Primrose v. Fenno, supra; Consolidated Gas Co. of New York v. Newton (D. C.) 291 F. 704. And the local practice in this circuit, in accordance, of course, with the statute, is the test of the right to costs rather than the state law. Chadbourne v. German-American Insurance Co. (C. C.) 31 F. 625; Clare v. National City Bank, 14 Blatchf. 445, Fed. Cas. No. 2,793. See, also, Henning v. Western Union Tel. Co. (C. C.) 40 F. 658. It is true that in removed eases contrary views have prevailed elsewhere. Trinidad Asphalt Paving Co. v. Robinson (C. C.) 52 F. 347; Cleaver v. Traders’ Ins. Co. (C. C.) 40 F. 863. Sawyer et al. v. Williams et al. (C. C.) 72 F. 296.

The opinion of the District Judge shows that counsel conceded that such premiums as these were not taxable under the state law; ánd, in the absence of any controlling rule or usage in the District Court, the Judge felt constrained to disallow them, although his disposition to have some provision made for the allowance of such costs is revealed.

There is nothing in the record to indicate any usage in the District Court as to taxing premiums on bonds given in discharge of attachments in actions at law, and the District Judge said there was none, but the books do sh.ow what has been the practice regarding analogous bonds, and it appears from the opinion in Consolidated Gas Co. of New York v. Newton, supra, that the custom has been the same in law, equity, or admiralty. In The Volund (C. C. A.) 181 F. 643, it was held that premiums paid to provide security for costs were taxable. And so it was as to premiums on a supersedeas bond in Edison v. American Mutoscope Co. (C. C.) 117 F. 192. Indeed, such a custom in the Second circuit was recognized and approved in Newton v. Consolidated Gas Co. of New York, 265 U. S. 78, 44 S. Ct. 481, 68 L. Ed. 909, and it should include premiums on a bond given in a removed suit at law to discharge an attachment of property, for the expense incurred for that purpose is quite as necessary as it is in respect to the other bonds mentioned. It can hardly be said that the giving of such a bond is, in a real sense, optional rather than necessary, when if it is not given it is necessary to let the property remain subject to the attachment. In Crowe v. Peaslee-Gaulbert Co. (C. C. A.) 37 F.(2d) 216, 217, premiums paid on a replevin bond were allowed as costs and The Governor Ames (C. C. A.) 187 F. 40, where premiums on a bond in discharge of an arrested vessel had been disallowed was distinguished on the theory that the replevin bond was necessary in that it was required by law, while the discharge bond was optional. I do not fhink however, that such premiums need be paid under circumstances making them indispensably necessary before they should be taxable as costs. If they are necessary in that they are reasonably required and paid to relieve property from attachment, they come within the reason for the custom which has grown up in the Second circuit as to taxing the premiums on other bonds necessarily given by parties to litigation to preserve their rights and comply with the requirements of law. The District Court might well let the taxation of such premiums become the usual practice or provide for it by rule. See The Texas (C. C. A.) 226 F. 897, 905.

But we are about to go far beyond this and declare to be already established as a custom in the Southern district something at least so nebulous that an experienced District Judge says his own court has no such usage; and to do so simply because it is thought that there is no good reason why a custom should not include such premiums as these. When we are dealing with the existence of a custom we are talking, not about what ought to be, but about what is or is not. To be sure, it is customary to tax some expenses as costs, but not all; it is customary to tax some premiums paid on bonds, but it does by no means follow that, because some premiums are taxed, it is actually the custom to tax all. Warrant for the taxation of costs must be found in the law, and, when the law is amplified by custom, the custom cannot be created for others by mere desire to have them have one. To do that puts the cart before the horse, no matter how plausibly it may be done, and fails to give effect to the force of facts. In this case there is evidence conclusive upon us that there is at present no custom in the District Court to permit the taxation of these premiums, and we would do better, in my opinion, to be content to let that court control its own practice in this regard.

I would affirm the order.


author: SWAN, Circuit Judge.

text:
    CANADA MALTING CO., Limited, v. PATERSON STEAMSHIPS, Limited. BRITISH EMPIRE GRAIN COMPANY, Limited, v. SAME. STARNES v. SAME.
    Nos. 433-435.
    Circuit Court of Appeals, Second Circuit.
    July 21, 1931.
    Bigham, Englar, Jones & Houston, of New York City (Leonard J. Matteson, of New York City, Laurence E. Coffey, of Buffalo, N. Y., and Andrew J. McElhinney, of New York City, of counsel), for appellants.
    Stanley & Gidley, of Buffalo, N. Y., for appellee.
    Before MANTON, SWAN, and CHASE, Circuit Judges.
   SWAN, Circuit Judge.

These cases come before us upon the allegations of the libels, admitted by respondent’s exceptions, and upon the facts stated in supporting and opposing affidavits filed on the motion to decline jurisdiction and dismiss the libels. The three suits are alike. Each libelant was an owner of cargo shipped under a Canadian bill of lading for transportation on the steamer Yorkton from one Canadian port to another, and lost in consequence of a collision between the carrying vessel and the respondent’s steamer Manta-doe. The collision was alleged to have been caused by faults of the Mantadoe. It occurred in Lake Superior on the American side of the international boundary, and the Yorkton was so badly damaged that she sank; her cargo becoming a total loss. Both vessels were of Canadian registry, and each was owned by a Canadian corporation. An investigation conducted at Toronto by the Dominion Wreck Commissioner resulted in a finding that the masters of both vessels were at fault. Immediately after the libels were filed in the court below, the respondent began a suit, which is still pending, in a Canadian admiralty court against the owner of the Yorkton, to recover collision damages suffered by the Mantadoe.

Upon the filing of the libels and the seizure under writ of foreign attachment of the respondent’s vessel Laehinedoc at the port of Buffalo, the respondent appeared generally and filed stipulations for release of its vessel. Before the return day it excepted to the libels and moved for a dismissal of the suits. After hearing upon libels, exceptions, and affidavits, the motion was granted.

Not only are the libelants and the respondent Canadian subjects, but the officers and most, if not all, the members of the crew of each vessel are residents of Canada and so not available for compulsory attendance as witnesses in the District Court. This was considered an important consideration by-the court below, as was also the fact that under our law an innocent cargo owner can recover full damages from the noncarrying vessel, if both the colliding vessels were at fault (The New York, 175 U. S. 187, 209, 20 S. Ct. 67, 44 L. Ed. 126), while, under the Canadian law, it is asserted, only half damages would be recoverable from the respondent. The Yorkton has been salvaged, and it is contended by libelants that under the rule of The Chattahooche, 173 U. S. 540, 19 S. Ct. 491, 43 L. Ed. 801, the respondent could implead the owner of the Yorkton and recoup one-half of its liability to cargo owners, but there is a dispute whether the salved value of the Yorkton would afford the respondent adequate protection so that the maintenance of the libels here would be no more disadvantage financially than suits by the cargo owners in Canada. The respondent offered, if the libelants were remitted to their home forum, to appear and give adequate security in any suits they might there bring upon their cargo claims, and the decrees below directed the respondent to perform this offer. No one has questioned this feature of the decrees, and we say nothing as to it.

The appellants advance two propositions as reasons for reversal of the decrees of dismissal : First, that the District Court had no discretion to decline jurisdiction; and, second, that, even if it hád, dismissal of the suits was an abuse of discretion.

The argument in support of the first proposition is grounded upon the assertion that, since the collision occurred within territorial waters of the United States, the rights and obligations of the parties are to he determined by the law of the place where the tort was committed. Smith v. Condry, 1 How. 28, 32, 11 L. Ed. 35; Slater v. Mexican National R. R. Co., 194 U. S. 120, 126, 24 S. Ct. 581, 48 L. Ed. 900; New York Central v. Chisholm, 268 U. S. 29, 32, 45 S. Ct. 402, 69 L. Ed. 828, 38 A. L. R. 1048. It is conceded that in suits between foreigners a court of admiralty may for good cause decline to retain jurisdiction provided the law to be applied is foreign law, but it is contended that, when a maritime tort is governed by the law of the forum, retention of jurisdiction is mandatory.

The most recent statements of the Supreme Court upon the subject do not assert the limitation for which the appellants contend. In Charter Shipping Co. v. Bowring, 281 U. S. 515, 517, 50 S. Ct. 400, 401, 74 L. Ed. 1008, it is said: “The retention of jurisdiction of a suit in admiralty between foreigners is within the discretion of the District Court. The exercise of its discretion may not be disturbed unless abused. The Belgenland, 114 U. S. 355, 368, 5 S. Ct. 860, 29 L. Ed. 152; The Maggie Hammond, 9 Wall. 435, 457, 19 L. Ed. 772.”

A similarly broad dictum is repeated in Langnes v. Green, 282 U. S. 531, 544, 51 S. Ct. 243, 248, 75 L. Ed. 520, where it is said that, although admiralty courts have complete jurisdiction over suits of a maritime nature between foreigners, “nevertheless, ‘the question is one of discretion in every ease, and the court will not take cognizance of the ease if justice would be as well done by remitting the parties to their home forum.’ ”

But the appellants contend that these statements should not be given so broad a scope as they bear on their face. In the Bowring Case foreign law was involved, as the court noticed in a paragraph of its opinion which appears on page 518 of 281 U. S., 50 S. Ct. 400, 401: “Both the parties being British subjects and the present litigation, as well as the suit pending abroad, apparently involving the application of English law to the fund located there, it was for the District Court to say, as it did, upon a consideration of all the circumstances, whether it should decline ‘to take cognizance of the ease if justice would be done as well by remitting the parties to the home forum.’ See The Maggie Hammond, supra, page 457 of 9 Wall., 19 L. Ed. 772.”

Similarly, the dictum quoted from Lang-nes v. Green, supra, is followed by the statement: “So, while the courts of this country have and may entertain jurisdiction of actions between nonresident foreigners for torts committed in a foreign country, they will exercise such jurisdiction in their discretion and only in special cases.”

And it must be admitted that earlier opinions of the Supreme Court left open the question whether discretion to decline jurisdiction would exist if the tort was committed within the United States. In the Belgenland, 114 U. S. 355, at 363, 5 S. Ct, 860, 864, 29 L. Ed. 152, it is said that circumstances often exist which render it inexpedient for the court to take jurisdiction of “controversies between foreigners in eases not arising in the country of the forum”; and, again, at page 365 of 114 U. S., 5 S. Ct. 860, 865, that courts will use a discretion about assuming jurisdiction of “controversies between foreigners in eases arising beyond the territorial jurisdiction of the country to' which the courts belong.” See, also, The Maggie Hammond, 9 Wall. 435, 457, 19 L. Ed. 772.

The appellants have cited but one ease which has applied the limitation on discretionary jurisdiction for which they contend. In The Apurimac, 7 F.(2d) 741 (D. C. E. D. Va.), Judge Groner seems to have held that jurisdiction was mandatory in a libel for negligent injury to a foreign seaman on a foreign vessel within an American port and so governed by local law. On appeal, however, the decree was affirmed on the ground that jurisdiction was discretionary, but discretion was not abused in retaining the suit. Heredia v. Davies, 12 F.(2d) 500 (C. C. A. 4). Whether we should feel at liberty, despite the language used in the recent Supreme Court decisions, to adopt the appellants’ contention, we need not say. Concededly, the limitation exists only if the law of the forum is the law determining the rights and obligations of the parties.

If the collision had occurred on the high seas, there can be no doubt that the retention • of jurisdiction would be a matter of discretion. When two vessels of the same nationality collide upon the high seas, the law enforced by the forum will be the law of the flag. The Scotland, 105 U. S. 24, 29, 26 L. Ed. 1001; The Eagle Point, 142 F. 453 (C. C. A. 3), cert. denied 201 U. S. 644, 26 S. Ct. 760, 50 L. Ed. 902. Under the terms of the Treaty between Great Britain and the United States Jan. 11, 1909 (36 Stat. 2448), the waters of the Great Lakes are equally free to citizens of either Canada or the United States, and we think collisions in those waters are to be dealt with as though on the high seas. The Eagle, 8 Wall. 15, 19 L. Ed. 365. That was a suit in rem for a collision between American vessels on the Canadian side of the international boundary. It was urged that Canadian law which gave no lien should apply, but the court held the suit should be tried according to the practice and principles of admiralty in this country irrespective of Canadian law. Mr. Justice Nelson, who wrote the opinion, distinguished a collision on the Great Lakes from a collision within a port. In the latter ease there are loeal rules and usages which should be observed by all who enter the port. He called such cases “exceptional,” and applied the admiralty law of the United States to a collision on the Canadian side of the waterway, as would have been done if the collision had been on the high seas. This case was carefully considered in The Avon, Fed. Cas. No. 680 (N. D. Ohio). That was an action in rem by an American ship against a British ship owned and registered in Ontario, for a collision on the Welland Canal, which is within Canadian territory and connects Lakes Erie and Ontario. The contention of the claimant was that the libel must be dismissed because Ontario law governed, being the lex loci delicti, and Ontario law did not give an action in rem. The court held to the contrary, and, in speaking of the ease of The Eagle, supra, said: “It occurred in boundary waters, the vessels were all American, exercising an international right in circumstances where, without exception, it has ever been held the loeal laws were inapplicable.” See, also, Thompson Towing & Wrecking Ass’n v. McGregor, 207 F. 209, 217 (C. C. A. 6); cf. The Kaiser Wilhelm der Grosse, 175 F. 215 (D. C. S. D. N. Y.); The West Cherow, 276 F. 585 (D. C. E. D. Va.). Consequently we think the rights and obligations of the litigants should be determined as though the collision had occurred on the high seas; that is, by the law of their common flag.

If, as we hold, the court had discretion whether or not to entertain jurisdiction, we cannot find any abuse of it in remitting the parties to their home forum. See The New Texas, 1926 A. M. C. 1514 (E. D. N. Y.); Goldman v. Furness Withy & Co., 101 F. 467 (D. C. S. D. N. Y.); The Iquitos, 286 F. 383 (D. C. W. D. Wash.); Charter Shipping Co. v. Bowring, supra.

Accordingly the decrees are affirmed.


text:
    CORY BROS. & CO., Limited, v. UNITED STATES.
    No. 430.
    Circuit Court of Appeals, Second Circuit.
    July 21, 1931.

      Choate, Larocque & Mitchell, of New York City (Joseph Larocque, of New York City, of counsel), for appellant.
    George Z. Medalie, U. S. Atty., of New York City (William E. Collins, Sp. Asst. U. S. Atty., of New York City, of counsel), for the United States.
    Before L. HAND, SWAN, and CHASE, Circuit Judges.
   SWAN, Circuit Judge.

Proceeding under the Suits in Admiralty Act (41 Stat. 525 [46 USCA §§ 741-752]). Cory Bros. & Co., Limited, a corporation organized under the laws of Great Britain, filed its libel against the United States to recover the amount of disbursements incurred by it in defending a suit for cargo damage brought by a shipper against'the steamship Milwaukee Bridge, in which suit Cory Bros. & Co., as ship’s agent to attend to discharge of the cargo at Pernambuco, Brazil, had been impleaded upon the petition of the United States, claimant of the vessel. That litigation, the details of which need not now be stated, is reported in The Milwaukee Bridge (D. C.) 15 F.(2d) 249, affirmed 26 F.(2d) 327 (C. C. A. 2), certiorari denied Moore v. U. S., 278 U. S. 632, 49 S. Ct. 31, 73 L. Ed. 550. It resulted in exoneration of the impleaded respondent from fault in respect to discharge of the cargo. Thereupon Cory Bros. & Co. filed the present libel “in a cause of contract, civil and maritime” upon the theory that by reason of its employment as agent to attend to discharge of the cargo, the United States became obligated to reimburse it for expenses incidental to such employment, including the attorneys’ fees and disbursements it had incurred as a respondent impleaded in the aforesaid suit. Exceptions to the libel were filed on the ground, first, of lack of jurisdiction in admiralty; and, second, that no cause of action was alleged in admiralty or otherwise. The opinion below, sustaining the exceptions and dismissing the libel with leave to amend, may be found in 43 F.(2d) 589. A premature appeal from that order was dismissed in Cory Bros. & Co. v. U. S. (C. C. A.) 47 F.(2d) 607. The present appeal is from a later order which dismissed the libel finally.

Assuming that the United States was under an obligation to reimburse Cory Bros. & Co. for the expenses in question, the first problem presented by this appeal is whether a suit to enforce such obligation is within the jurisdiction of the District Court.

It is well settled that the jurisdiction of admiralty in matters of contract depends upon the subject-matter of the contract. North Pac. S. S. Co. v. Hall Bros. Co., 249 U. S. 119, 125, 39 S. Ct. 221, 63 L. Ed. 510 ; New England M. Insurance Co. v. Dunham, 11 Wall. 4, 26, 20 L. Ed. 90. While this test is not always easy of application, it seems' obvious that the work of lading or discharging a ship’s cargo is a maritime service, and that a contract engaging stevedores to' do such work is of admiralty cognizance. The Hattie M. Bain, 20 F. 389 (D. C. S. D. N.. Y.); Florez v. The Scotia, 35 F. 916 (D. C. S. D. N. Y.); The Gilbert Knapp, 37 F. 209 (D. C. E. D. Wis.). The libelant assumes its contract to be of this character (see The Milwaukee Bridge [D. C.] 291 F. 711), and argues that the implied obligation to reimburse the agent for expenses in defending a suit arising out of performance of the principal’s business should likewise be held maritime. Cf. The Electron, 48 F. 689 (D. C. S. D. N. Y.); Linen Thread Co. v. Shaw, 9 F.(2d) 17 (C. C. A. 1). But it is by no means clear that lihelant’s assumption is correct. The contract employed Cory Bros. & Co. to act as shipfe agent at Pernambuco, and the agent was instructed not only to attend to the discharge of cargo at that port, but also to book cargo for ports beyond. Whether it' was contemplated that the libelant should itself perform stevedoring services or should engage others to do so is not clear from the letter which constitutes the contract, nor is it made clear by the allegations of the libel. The libel alleges merely that the libelant “properly attended to the discharge of said cargo and duly and properly made delivery thereof.” If the contract merely employed libelant to procure maritime services instead of obligating it to perform them itself, it may well be that a suit to recover compensation and disbursements would be not of maritime cognizance. Such a distinction has been frequently observed. Thus, while a contract for the charter of a ship is clearly maritime in nature, a contract creating an agency to obtain charterings has been held nonmaritime. The Thames, 10 F. 848 (D. C. S. D. N. Y.); Taylor v. Weir, 110 F. 1005 (D. C. N. J.); Rhederei A. Gesellschaft Oceana v. Clutha Shipping Co., 226 F. 339 (D. C. Md.). Cf. Adler v. Galbraith, Bacon & Co., 156 F. 259 (D. C. W. D. Wash.); Brown v. West Hartlepool Steam Nav. Co., 112 F. 1018 (C. C. A. 5). The same has been held as to a contract with an agent to procure crews, The Retriever, 93 F. 480 (D. C. W. D. Wash.); insurance on a ship; Marquardt v. French, 53 F. 603 (D. C. S. D. N. Y.); freight and passengers, The City of Clarksville, 94 F. 201 (D. C. Ind.); The Humboldt, 86 F. 351 (D. C. Wash.); Richard v. Hogarth, 94 F. 684 (D. C. N. J.); The Crystal Stream, 25 F. 575 (D. C. S. D. N. Y.). The rationale has been thus stated: “The distinction between preliminary services leading to a maritime contract and such contracts themselves has been affirmed in this country from the first, and not yet departed from. It furnishes a distinction capable of somewhat easy application. If it be broken down, I do not perceive any other dividing line for excluding from the admiralty many other sorts of claims which have a reference, more or less near or remote, to navigation and commerce. If the broker of a charter-party be admitted, the insurance broker must follow, — the dray-man, the expressman, and all others who perform services having reference to a voyage either in contemplation or executed.” Brown, J., in The Thames (D. C.) 10 F. 848. See, also, The Harvey and Henry, 86 F. 656 (C. C. A. 2); 1 Benedict, Admiralty (5th Ed.) § 62. Apparently the same ground explains the decision in Minturn v. Maynard, 17 How. 477, 15 L. Ed. 235, where the libelant had been employed by the shipowner as general agent and had expended money for supplies, repairs, and advertising of the ship. The suit was for disbursements and commissions, and it was held that the agent’s remedy was not a libel in admiralty, but a suit in assumpsit. See, also, St. Paul Fire & Marine Ins. Co. v. Birrell, 164 F. 104, 106 (D. C. Or.); The Esteban de Antunano, 31 F. 920, 923 (C. C. E. D. La.).

It is difficult, if not impossible, to distinguish Minturn v. Maynard from the ease at bar, and that decision would seem to’ be a controlling authority against admiralty jurisdiction of the present suit. Moreover, the appellee invokes the principle that, even if the contract was maritime in so far as it related to attending to discharge of cargo, admiralty will not take jurisdiction of nonmaritime transactions arising subsequent to the execution of a maritime contract. Cf. Home Ins. Co. v. Merchants’ Transp. Co., 16 F.(2d) 372, 373 (C. C. A. 9); United Transp. & L. Co. v. New York & Baltimore T. Line Co., 185 F. 386, 390 (C. C. A. 2). But we do not find it necessary to determine definitely these troublesome questions of admiralty jurisdiction, because, if the District Court lacked jurisdiction in admiralty, it possessed jurisdiction under the Tucker Act, 28 USCA § 41 (20). Hence on one ground or the other it had power to entertain the suit.

The Tucker Act confers upon the District Courts jurisdiction of suits against the United States for “all claims not exceeding $10,000 founded upon * * * any contract, express or implied, with the Government of the United States. * * * ” The theory of the present libel.is that the contract of agency contained the usual implied obligation of a principal to reimburse the agent for expenses incurred in the course of the agency, and that this obligation has been broken.

“ * * * The United States, when they contract with their citizens, are controlled by the same laws that govern the citizen in that behalf. All obligations which would be implied against citizens under the same circumstances will be implied against them.” United States v. Bostwick, 94 U. S. 53, 66, 24 L. Ed. 65; cf. Clark v. United States, 95 U. S. 539, 542, 24 L. Ed. 518.

It is apparent that the present action is “founded upon” a contract, partly written and partly implied from prior dealings entered into with duly authorized representatives of the United States, and brought to enforce alleged obligations of that contract. Such a claim is clearly included within the spirit and language of the Tucker Act. Cf. Heil v. United States, 273 F. 729, 731 (D. C. S. D. N. Y.); Crouch v. United States, 31 F.(2d) 211 (D. C. E. D. S. C.).

In United States v. James W. Elwell & Co., 250 F. 939, we held that a libel in admiralty might be converted into an action qui tarn when the defendant by answering had waived a jury. In Owens v. Breitung (C. C. A.) 270 F. 190; 193, and Louis-Dreyfus v. Paterson Steamships (C. C. A.) 43 F.(2d) 824, 828, 72 A. L. R. 242, it is intimated that jurisdiction might be supported on diverse citizenship, although the pleadings were drawn on the erroneous assumption of jurisdiction in admiralty. In the ease at bar, we see no difficulty in sustaining the suit as one upon a contract with the United States over which the District Court is given jurisdiction concurrent with the Court of Claims by the Tucker Act. Such a suit is not tried to a jury, and the libel will serve as a petition. It is true that, if a suit will lie under the Suits in Admiralty Act (46 USCA §§ 741— 752), it cannot be brought under the Tucker Act, for the remedy given by the former is exclusive. Johnson v. Fleet Corporation, 280 U. S. 320, 50 S. Ct. 118, 74 L. Ed. 451. But it by no means follows that a suit erroneously assumed to be under the Suits in Admiralty Act cannot be treated as one under the Tucker Act. The mistake results only in formal differences. The pleading has been called a libel instead of a petition, and contains allegations of admiralty jurisdiction, which are surplusage. So we hold that, if the court did not have jurisdiction in admiralty, jurisdiction existed under the Tucker Act, and we pass to a consideration of the merits, namely, whether the libel states facts sufficient to constitute a good cause of action.

The appellant invokes the principle that, when an agent is sued by a third party on account of acts done in the course of the agency and pursuant to authority, his employer must reimburse him for expenses incurred in successfully defending such a suit. See Bibb v. Allen, 149 U. S. 481, 13 S. Ct. 950, 37 L. Ed. 819; Powell v. Trustees of the Village of Newburgh, 19 Johns (N. Y.) 284; Stocking v. Sage, 1 Conn. 519; First Nat. Bank v. Tenney, 43 Ill. App. 544; The James Seddon, L. R. 1 Adm. & Ecc. 62; In re Famatina Development Corp. (1914), 2 Ch. 271; Mechem, Agency (2d Ed.) § 1600 et seq. It then argues that this principle is applicable to the situation created by petitioning in appellant as a respondent impleaded in the cargo owner’s suit, because upon the bringing in of a respondent under the fifty-sixth Admiralty Rule (28 USCA § 723) “the cause is to be treated as if the libel had originally been filed against both” the respondent and ■.the respondent-impleaded. See Cuneo Importing Co. v. Am. Importing & Transp. Co., 247 F. 413, 414 (C. C. A. 2).

The principle of agency relied upon may be assumed to be sound; and we may further assume that this principle would apply to a suit brought by a third party against the principal and into which the agent was impleaded, provided a direct cause of action against the impleaded agent could be asserted by the third party. The fifty-sixth rule, however, permits the impleading of a new party in two different situations: one, where the impleaded respondent is directly liable to the libelant, either jointly or alternately with the original respondent or claimant; and the other, where the impleaded respondent is liable only to the original respondent or claimant and is brought in because the latter seeks a remedy over in ease the libelant shall succeed against him. See The Sarnia, 261 F. 900, 901 (C. C. A. 2); The Lysefjord, 263 F. 623 (D. C. S. D. N. Y.); The Providence, 293 F. 595, 599 (D. C. R. I.). The allegations of the libel in the case at bar leave it very doubtful whether the Milwaukee Bridge litigation was not a situation of the latter kind; and, if it were, Cory Bros. & Co. would have no right to recover its expenses. A principal’s obligation to reimburse his agent for expenses of litigation arising out of the agency should not be extended to include the defense of a suit brought by the ■principal himself for nonperformance or misperformanee by the agent of his duties. However, we do not wish to dispose of the appeal on. the vagueness of the pleading, since there is a more substantial reason for holding that the libel sets forth no cause of action.

The fifth article of the libel incorporates the letter which constitutes the contract between appellant and appellee. 'This letter requests appellant to attend to the discharge of the cargo and to book cargo for points beyond. Whether it be interpreted as employing appellant to engage others to do the stevedoring in discharging the flour or to perform the stevedoring service itself makes no difference; in either case appellant is an independent contractor. The Satilla, 235 F. 58 (C. C. A. 2); The Robert R., 255 F. 37 (C. C. A. 2); Soderberg v. Atlantic Lighterage Corp., 19 F.(2d) 286, 288 (C. C. A. 2). The principle that an agent is entitled to reimbursement in successfully defending a suit brought by a third party on the charge that he has negligently performed his agency to the injury of the plaintiff should have no application to an independent contractor. The risks of the independent contractor’s business are bis own. If he loses ,such a suit, he must not only pay the expense of his defense, but must also indemnify his employer against the breach of contract which the latter may have committed by reason of the independent contractor’s tort to the plaintiff. If he wins such a suit, it is true that he has benefited his employer by proving that the latter performed his contract with the plaintiff. But does that benefit justify an implication that the employer agreed to reimburse him for the expenses of such litigation? We think not. The independent contractor, unlike the agent who acts under the instructions of his principal, is engaged in his own business, and the risks of having to defend suits brought by third persons who allege that the business has been so conducted as to damage them should be his. Hence we think the principle of agency relied upon was not applicable to the relationship existing between appellant and appellee.

It is true that the libel alleges that the appellant co-operated with the United States at its request in defending the cargo owner’s suit, and that its expenses were for the benefit of the United States. But these allegations are to be interpreted in the light of the other facts disclosed. It is clear that the appellant was brought into the proceedings in invitan, and that it is not claiming reimbursement under any new contract relating to the defense of the suit, but is relying on the implied obligation supposed to be contained in its original employment as ship’s agent. For the reasons we have stated, there was no such implied obligation.

Accordingly the libel stated no cause of action, and the decree of dismissal must be affirmed.