source: Caselaw Access Project

author: KEjNjSTERLY, District Judge.

license: Public Domain

text:
    THE VELMA LYKES.
    No. 267.
    District Court, S. D. Texas, Houston Division.
    April 3, 1934.
    Fulbright, Crooker & Freeman, Carl G. Stearns, and T. S. Taliaferro, all of Houston, Tex., for libelant.
    Royston & Rayzor, of Houston, Tex., for respondents.
   KEjNjSTERLY, District Judge.

This is a suit in admiralty by libelant, in rem against the S. S. Velma Lykes, and in, personam against her owners Lykes Bros. Steamship Company, Inc., to recover for the loss in part and damage in part of 125 drums and 210 cases of salad oil, delivered by libelant to respondents on board the S. S. Velma Lykes on or about October 29,1932, at Houston, Tex., for transportation on such steamship, under bill of lading hereinafter set forth, to the port of Cristobal, Canal Zone.

(a) It is stipulated that libelant was the owner of the goods shipped, at the time of their loss or injury, and is the proper party to maintain this suit. Also that it has complied with the provisions of the bill of lading as to giving notice of its claim, and that: “if the libelant is entitled to recover herein, it is so entitled to recover the sum of Fifteen Hundred Seventy-nine and 60/100 Dollars ($1,579.60), together with any interest which the Court may see fit to allow.”

(b) The bill of lading, prepared by libelant on printed forms for that purpose, is a “Clean Bill of Lading” of the kind discussed in The Delaware, 14 Wall. (81 U. S.) 602, 20 L. Ed. 779, and by this court in The Southlands, 27 F.(2d) 1010. It contained certain exceptions hereinafter quoted and discussed.

(c) Libelant’s cargo was stowed by respondents in the bridge deck space (sometimes referred to by the witnesses as the shelter deck space) of the Velma Lykes. Such space is between the bridge deck and the main deck, and is a fully covered extension of the sides or walls of the ship above the center of her main deck, its width being approximately the same as that of the ship, and its length being approximately one-third of that of the ship. The construction of the four sides and top which inclose such space is substantially the same as the sides of the ship below the main deck, except that the plating is much thinner than the plating below the main deck. Such space has four doors, two fore and two aft. Along the ends of the doors are sets of “dogs” about four inches apart, with screws and knuckles so that, when the doors are closed, the “dogs” are automatically brought down and tightened up. Inside the doors are rubber gaskets. There are also three openings or hatches from this space up onto the bridge deck, one on the starboard side, one on the port side, and one forward. These openings or hatches are secured by waterproof tarpaulins and by wedges which are driven into cleats on the sides to prevent the tarpaulins from being blown or washed off.

Except that it perhaps requires more care in the stowage of cargo in this space, because more affected by the motion of the ship in storms than space below the main deck, I have been able to discover, from the evidence, no substantial or material difference between this space and the space under or below the main deck, and find that it was as safe place for the stowing and carriage of libelant’s cargo in hurricane or in ordinary weather as space under or below the main deck, and respondents were not negligent in stowing and carrying it there.

Further, the loss or injury to libelant’s cargo was not due to the fact that it was carried there instead of under or below the main deck.

(d) There was customarily carried by the Velma Lykes, and carried on this voyage, in. her bridge deck space some extra equipment (a winch and other equipment). The evidence does not show respondents to have been negligent in carrying this extra equipment in such space either in hurricane or ordinary weather.

(e) The evidence shows that, before sailing from Houston, this extra equipment, libelant’s cargo, and other cargo in the bridge deck space, were stowed, lashed, and secured therein in a careful and prudent manner, and I find respondents were not negligent in that respect. This was likewise true of cargo in other parts of the ship.

(f) Shortly before the steamship sailed from Houston, a warning from the United States Weather Bureau was received by respondents, indicating a storm at sea of no great intensity some 2,000 to 3,000 miles southeast of Houston, but with nothing to indicate its probable course. Had it, however, been definitely known at the time the steamship sailed that it would encounter (as it did) a hurricane, the extra equipment in the bridge deck space, libelant’s cargo, and the other cargo in such space, and elsewhere in the ship, could not, according to the evidence here, have reasonably been made more secure or safer than they were. I find respondents were not negligent in sailing when they did, nor in the manner of stowing and securing such extra equipment and all such cargo, either in contemplation of hurricane or ordinary weather.

(g) The steamship sailed from Houston, October 31, 1932, properly and efficiently manned, equipped, and appareled, her extra equipment and cargo carefully and securely stowed and safeguarded, and she was in seaworthy condition in every respect. She would doubtless have had g, safe voyage but for a hurricane. Without reviewing all the evidence, the story of the voyage is so well told by log of the steamship that I quote therefrom, calling attention to the record of the position of the ship, the wind velocity, the action of the ship, and injury thereto, and to its cargo, and particularly to the remarkable record of the action (italicized) of the ship’s barometer, showing the seriousness of the storm:

“Oct. 31, 3.10 PM left dock; .50 PM departure, NNE breeze and moderate easterly sea.

“Nov. 1, noon position 27.24 longitude 92.31, course 137, distance 151, average speed 11.2. Partly cloudy, moderate NE breeze and sea.

“Nov. 2, noon position 25.25, longitude 89.30 W. course 137, distance 245, cloudy fresh breeze and moderate easterly sea.

“Nov. 3, noon position 21.27 N. longitude 86. 21W. course 135, distance 251, barometer 30.01.

“Nov. 4, noon position 18.42 N. longitude 83.52 W. course 140, distance 231, barometer 30.00 partly cloudy moderate breeze and moderate easterly swell.

“Nov. 5th, noon position N. longitude 81.23 W. course 143’, distance 238, barometer 29.76, overcast, fresh breeze and rough northeasterly sea. At 4 PM moderate gale, heavy beam sea, overcast, vessel rolling badly, 4.15 PM reduced speed to 75 r.p.m. account vessel rolling and laboring heavily. 5 PM half speed, eastering hurricane, e/d course to 40, vessel hove to account rolling heavily. 5:15 PM slow speed barometer 29.53 8 PM overcast and squally, fresh gale, heavy sea, vessel laboring heavily, barometer 29.52. Midnight, weather overcast and squally wind of gale and storm foree, rain squalls, barometer 29.34.

“Nov. 6th, overcast squally, hurricane, vessel laboring hard. Cargo in shelter deck shifted and breaking up, 8 AM barometer 28.76 vessel laboring heavily, shipping water all over, overcast and misty, wind hurricane foree, squally mountainous seas, vessel hove to, shipping heavy spray over all. Noon lat. 15.47 N. D. R. longitude 80.55 W. D. R. overcast and misty, wind hurricane force, continuous rain, chickens all died from exposure. 4 PM barometer 28.40, wind hurricane foree, high mountainous seas. 4:30 PM engine oil on deck carried away, and smashed, vessel rolling and laboring heavily, shipping spray over all, rain squalls, 9 :PM wings, woodwork and side lights on bridge and compass blown away, midnight barometer 28.42 overcast and misty, wind hurricane foree, mountainous seas, vessel rolling and laboring heavily, shipping heavy spray over all.

“Nov. 7th. AM superstructure on boat deck blown away, starboard side gangway carried away, deck on starboard side of boat deck tom up badly. 4 AM barometer 28.44 wind hurricane force, overcast and rainy, vessel laboring and pitching hard. 8 AM vessel still hove to. 9 AM port boat deck superstructure blown away. 9:15 AM windows in main room blown out and mail soaked. Noon, assumed position, latitude 16.56 N. longitude 81.36 W. barometer 28.61 over east and misty, winds hurricane foree, damaging steam line and tore away port foremast stays, vessel rolling and laboring, taking seas over forward deck, overcast and hazy and mountainous seas. 8 PM barometer 28.75 vessel laboring heavily and mountainous ‘seas, wind hurricane force. Midnight, vessel rolling and laboring heavily, shipping! heavy sprays, overcast, and misty, winds hurricane foree and mountainous seas.

“Nov. 8th. 4 AM, barometer 28.54 wind hurricane force, vessel laboring badly shipping heavy spray fore and aft. 8 AM barometer 28.28 vessel rolling and laboring heavily, shipping heavy spray over all, overcast and misty, hurricane mountainous seas and rain. 8:20 AM engines full speed ahead, course 135-, vessel rolling and laboring heavily, shipping heavy spray over all, overcast and misty, hurricane, mountainous seas and rain. Noon, past through center of hurricane, approximate position, lat 16.29, N longitude 80.56 "W one half hour calm. 4 PM vessel laboring and taking seas fore and aft, overcast and misty wind hurricane foree. 5 PM wind commenced to moderate. 8 PM barometer 29.40 overcast and cloudy fresh gale and heavy rough seas. Midnite' barometer 29.52, overcast, moderate fresh gale and heavy rough seas.

“Nov. 9th. 4 AM barometer 29.64, fresh gale, seas still running high, wind abating, overcast. & AM overcast and cloudy, strong breeze, heavy sea, vessel laboring heavily. Noon, latitude 16.39 N longitude 79.30 W. Course various, average speed 6.1 knots, partly cloudy, moderate southerly breeze and sea.

“Nov. 10th, noon, latitude 12.48 N longitude 79.27 W. course 185, distance 235, total distance 1735, average speed 9.8, partly cloudy gentle breeze and small northerly seas.

Nov. 11th. 6.17 AM arrived off Colon. 6.23 past jetties, 6.26 AM pilot and doctors on board, 7.23 arrived off wharf. 7.31 vessel secured at dock 9; and finished with the engines.”

As further illustrative of conditions, Second Officer Berman says:

“There was a spare anchor securely lashed underneath the forecastlehead, due to the extensive rolling of the vessel cut adrift, mashing deck steam lines, ladder, and mast-stays in its path until it was caught by the crew and lashed to tiie side of the ship.

“The biggest portion of the bridge was blown away and all the windows in the pilot house were blown out; the porthole of the storeroom where ,we had some shrimp eases stowed was smashed in due to the heavy seas and there is a shed on either side of the boat deck and over the skipper’s quarters which was blown away and the railings on both sides of the boat deck were blown and washed away; the boats were piled up on top of the skylights.”

There is other evidence equally as impressive.

(h) The most reasonable conclusion as to the manner libelant’s cargo became lost and damaged is (and I so find) that some of the extra equipment, dunnage, or heavy cargo stowed in the bridge deck space with libel-ant’s cargo broke loose from its fastenings, and was thrown against a two-inch water pipe (used for fire protection and sanitary toilets) which ran through such bridge deck space, breaking such pipe and flooding the space with water. The water injured libel-ant’s cargo and set afloat portions of the dunnage and cargo in such space, which also injured libelant’s cargo.

(i) Libelant also claims that the pipes in the bridge deck space were not shown to be in good order and repair. The weight of the evidence is (and I find) to the contrary. It is clear, from the evidence, that the pipes would not have burst, and would have probably remained intact, but for the fact that they were broken by something coming loose and striking them.

Libelant also claims negligence upon the part of the master and crew in not sooner discovering the breaking of the pipes and the flooding of the bridge deck space, where libelant’s cargo was stowed. One cannot read this record without being impressed as to the very serious situation confronting the master and crew, and I find nothing in the record which convinces me that they were negligent either in this or other respects.

Libelant also claims that the master was inexperienced and inefficient, citing that, while he had experience at sea in other capacities, this was his first voyage as master, and that, after this voyage, he was demoted. The record here shows that the master was either efficient or unusually lucky, and I find that he was efficient, and that he was not negligent.

'Libelant also claims that there was negligence on the part of respondents in failing to provide, in good condition, proper scuppers for the draining of water from the bridge deck space. I find no negligence, and that ordinary prudence was used by respondents in that respect.

(j) Libelant says that the evidence here shows that the master and crew were informed of the proximity of the hurricane, both by weather reports and the reading of the barometer on their ship, and that they should have better secured and fastened the spare equipment, cargo, etc., in the bridge deck space, and that, had they done so, the injury and loss to libelant’s cargo would not have occurred. They also claim that the master and crew were negligent in not again securing whatever was loose after it became loose, and in not better protecting libelant’s cargo after encountering the hurricane. I think the evidence entirely sufficient to show the exercise by the master and crew and by respondents of the diligence required of them in this respect. In fact, I am able to find no acts of negligence upon the part of respondents in connection with this matter.

(k) It is stipulated as follows: “That Libellant took out certificates of insurance Nos. M. P. 25118 and M. P. 25119 under open cargo marine policy No. M.206725 of the Automobile Insurance Company of Hartford, Connecticut on the Two Hundred Ten (210) cases and One Hundred Twenty-five (125) drums of salad oil involved in the above suit; and that said certificates and policy of insurance may be offered in evidence without further proof or identification, subject, however, to such objections of materiality, competency and relevancy which the claimant may see fit to make to them.”

• Such poliey (dated early in 1933) and certificates (dated October 31, 1933) were offered in evidence, and, considered and construed together (as I think they must be), show that libelant’s cargo was insured, but that there was wording in the contract of insurance providing that libelant’s cargo should not be covered unless carried and transported “under main deck.* Respondents did not know of this requirement in the contract of insurance until after the loss and injury to libelant’s cargo had occurred. The insurance rates on cargo on the Velma Lykes stowed in the bridge deck space were the same as on cargo stowed under or below the main deck of such steamship.

(1) In 1928 or 1939, a controversy arose between libelant and respondents, with respect to a cargo which respondents then carried for libelant from Houston to Puerto Rico. This was carried, not (as here) in the bridge deck space, but on the open deck, respondents taking out for the benefit of libel-ant a special poliey of insurance thereon. Back in 1929, in the adjustment of that controversy, there was some conversation between libelant’s representatives and respondents’ representatives with respect to the manner in which libelant’s cargo should thereafter be carried. Libelant’s representatives recall such conversations to have been that respondents agreed that libelant’s cargoes would not be carried above the main deck. Respondents’ representatives recall such conversations to have been that libelant’s cargoes should not be carried out on the open deck. Respondents assert that there was no agreement such as is claimed by libelant, and testify that for the past several years libel-ant’s cargoes have been, from time to time, carried in the bridge deck space and the other similar space above the main deck. It is clear that there was no meeting of the minds of the parties and agreement that libelant’s cargoes should not be carried above the main deck,

1. Libelánt claims that respondents agreed in 1929 to thereafter carry libelant’s cargoes under and below the main deck, and that such agreement must be read into the bill of lading covering this cargo. As has been pointed out (subparagraph (1) hereof), the evidence shows there was no such agreement. Besides, such a previous agreement may not be received to vary the terms of the bill of lading. The Delaware, 14 Wall. (81 U. S.) 603, 20 L. Ed. 783; Grace v. American Central Ins. Co., 109 U. S. 282, 3 S. Ct. 207, 27 L. Ed. 934; Seitz v. Refrigerating Mach. Co., 141 U. S. 518, 13 S. Ct. 40, 35 L. Ed. 840; Second Nat. Bank v. Columbia Trust Co. (C. C. A.) 288 F. 25, 30 A. L. R. 1299.

2. The bill of lading must therefore be looked to to ascertain the obligations and duties of the parties. It is silent as to the place of stowing libelant’s cargo, but contains in paragraph 11 this language: “ * * * The carrier shall not be liable as

carrier or otherwise, for any loss, damage, delay or default, whether occurring during transit or before, or after, or during, or while awaiting loading, trans-shipment, discharge, delivery or other disposition of the goods, or on board, or in lighters or craft, or on wharf or in warehouse, at any port or place, occasioned by any of the following excepted causes, throughout this contract always excepted. By causes beyond the carrier’s reasonable control; by dangers or accidents of the sea or other waters and navigation or transportation of whatsoever nature or kind; by fire or explosion from any cause whatsoever occurring, by barratry, theft or embezzlement of master or crew; by act of God. * * * ”

And in paragraph 14 this language: « » j^is shipment js subject to all the terms and provisions of the act of Congress of the United States, approved February 13, 1893, entitled ‘An Act Relating to the Navigation of Vessels’, etc. and of Sections 4282 to 4287, each inclusive, of the United States Revised Statutes. * * * ”

Under the eases, The Delaware, supra; St. Johns N. F. Shipping Corp. v. Companhia Geral, 263 U. S. 123, 44 S. Ct. 30, 68 L. Ed. 202; The St. Johns N. F. (C. C. A.) 272 F. 674; The Gualala (C. C. A.) 178 F. 402; The Southlands, 27 F.(2d) 1010; The Freda (D. C.) 266 F. 552; Davidson v. Flood Bros. (C. C. A.) 30 F.(2d) 280; Walker-Ross v. Dodwell (D. C.) 297 F. 259; Lawrence v. Mintum, 58 U. S. (17 How.) 112, 15 L. Ed. 58. Respondents were obligated to carry libelant’s cargo, to use the language found in the opinion in The Delaware, “under deck,” and not to do so would amount to a deviation. Respondents, however, press the point that they complied with their obligation by stowing and carrying libelant’s cargo in the bridge deck space of the Velma Lykes. This libelant strongly combats, and insists that stowing and carrying such cargo in the bridge deck space was not “under deck.” As has been pointed out, the construction of the sides and top of the bridge deck-space was substantially the same as that of the sides of the ship under and below the main deck, and the openings (doors and hatches) were weather proof and secure. It was shown that such space, and similar space on other vessels, had long been used by respondents for stowing similar cargoes, including those of libelant, without loss or damage to cargo, and that, but for the breaking of the water pipes in the manner described, causing the flooding of such space, the cargo therein would most likely have gone through the hurricane as well, or better, than cargo stowed below the main deck. The evidence show's more or less injury to the cargo under and below the main deck. It is also shown that other steamship lines customarily used bridge deck space, or similar space, for the stowing of cargo-. Also that stowing of cargo in such space was generally, and in this instance, approved by insurance underwriters.

The facts in The Delaware, supra, were that the cargo (70 tons of pig iron) was stowed on the open deck. In Lawrence v. Mintum, supra, the cargo (two steam boilers and chimneys) was likewise stowed on the open deck. This is likewise true in Davidson v. Flood Bros., supra; The Freda, supra; The Southlands, supra; and The Gualala, supra.

In The Kirkhill (C. C. A.) 99 F. 575, 576, relied upon by libelant, the space in which the cargo was loaded was referred to as the “alleyway spaces on -deck.” The description of this space appears in the note. The inelosure of the cargo was stated to be temporary, and that it could not be permanently closed in, made watertight, nor fully covered. Here the space in which libelant’s cargo was stowed was fully inclosed, had secure doors and protected hatches, and, even in the hurricane which the Velma Lykes went through, no sea water entered such space; the water in the space being, as stated, from the breaking of the pipes.

In The Sarnia (C. C. A.) 278 F. 460, the cargo was two automobiles and a case of advertising matter, which were stowed on the open deck, and not in an inclosed space'as here.

_In St. Johns Corp. v. Companhia, supra, the cargo was 800 barrels of rosin which was stowed on the open deck, “boxed down and planked,” and which, before arrival at port, broke adrift in a hurricane, etc.

In Williams v. Mora, Fed. Cas. No. 17,730, the cargo of sugar and molasses was stowed in the poop deck space. This space is described in the note. It is quite similar to the bridge deck space under consideration here, and stowing there was held not to be a deviation.

In The William Crane (D. C.) 50 F. 444, the facts are quite similar to the ease here. The description of the space in which the cargo of cotton was stowed is shown in the note. It is said that the question is not whether the cotton was carried under the main deck, but whether it was carried in a protected place under cover and where experience had demonstrated it would be safe. It was held not to be a deviation.

in Lagerloef Trading Company v. United States (D. C.) 43 F.(2d) 871, 872, the cargó (matches) was stowed in the lazaret, which upon the ship’s plan was designated, not for stowing of cargo, but for ship’s stores. The description of the lazaret is contained in the note. It was held that such stowage in the lazaret would not be regarded as a deviation.

In The Neptune, Fed Cas. No. 10,118, the cargo was casks of oil. The place where it was carried is described in the note. The facts there are quite” similar to the facts here, in that the stowage was between decks, i. e., a covered space between the main deek and an upper deek, and it was held not to be al deviation.

I think respondents fully complied with their obligation in stowing libelant’s cargo- in the bridge deck space, and that stowing there did not amount to- a deviation.

3. Other deviation claimed is not shown nor supported by the evidence. Nor does the evidence show other acts of negligence upon the part of respondents. And this is true notwithstanding presumptions that may be indulged because of the failure of respondents to produce the master. I think the almost unprecedented hurricane which the Velma Lykes passed through was the sole and only cause of the loss and damage to libel-ant’s cargo, and that under the provisions of the bill of lading and the law applicable, respondents are not liable. Section 192, title 46, USCA; The Warren Adams (C. C. A.) 74 F. 414; Id., 163 U. S. 679, 16 S. Ct. 1199, 41 L. Ed. 316; The Giulia (C. C. A.) 218 F. 746; The Rosalia (C. C. A.) 264 F. 288; The Folminia, 212 U. S. 361, 29 S. Ct. 363, 53 L. Ed. 546, 15 Ann. Cas. 748; The Frey (C. C. A.) 106 F. 320; The Josephine (C. C. A.) 49 F.(2d) 207.

4. Libelant claims that, because its insurance policy required stowage “under main deck,” respondents are liable for the loss and damage to libelant’s cargo-. The evidence shows beyond question that respondents had no notice nor knowledge of this requirement of libelant’s policy of insurance. If I be correct in the above conclusion that respondents were within their rights in stowing libelant’s cargo in the bridge deck space, and that they are not liable to libelant, I think no liability can arise by reason of libelant relying upon a policy of insurance so limited in its scope and about which respondents knew nothing.

Decree for respondents.

       See three photographs and “Stowage Plan” in evidence.

       The controversy between libelant and respondents in 1928 and 1929 (subparagraph (1), arose over a cargo of libelant’s stowed by respondents on the open deck and not in the bridge deck space.

       “The record does not contain a precise description of the steamship Kirkhill, but the alleyways spaces were described in the argument before us by the proctor for appellee, and the description was accepted as substantially correct, and is about as follows: For a distance amidships, and extending from side to side, is an upper deck house which supports the officers’ bridge. There are gaps in this deck erection forward and aft of the bridge, where the main deck is left quite open. The covering over the midship part of such deck space is for the protection of the engine room and the quarters for the men, with fore and aft passages on each side leading out. These are the alleyways. At the front end of such a passage or alleyway is a door of wood or iron opening out upon the open main deck, and, when cotton is stowed there,-bales are placed as dose as possible in the outboard side of such passage, so as to leave a narrow gangway alongside the cotton for the passage of the crew and engineers. Such spaces are'covered over, but cannot be permanently closed in, as the doors at the end have to be opened by the crew in passing in and out. They cannot be made watertight, because they cannot be covered, as are the hatches, by tarpaulin covers, which prevent possibility of leakage. These vertical doors at the front of the alleyways have to stand the full impact of the seas which may sweep over the deck.”

       “Whether the goods were shipped on or under deck depended upon the question whether or not the poop deck upon the vessel, under which a portion of the cargo was stored, afforded a compliance with the bill of lading. The bark Abeona was originally a single-decked vessel. Subsequently a poop deck was built across her from near the after hatch back, a length of some forty feet; and as it respects the stowage, the principal objection was that some of the hogsheads of sugar and concentrated molasses were stowed upon their heads.

        “We have looked carefully into the evidence in the case, which is very contradictory and conflicting upon the questions as to the condition and sufflciency of the poop deck, and have arrived at the conclusion that the fair weight of it supports the position of the libelants that the stowing of the goods under it satisfied the bill of 'lading requiring them to be shipped under deck. The question is not whether this deck was built when .the ship was originally constructed, but whether it afforded security and protection to the goods within the meaning of the bill of lading, as under deck; and, upon the evidence, we are bound to say it did. The conflict of testimony in the case shows a very unsettled and unreliable state of opinion among the most intelligent persons engaged in the shipping business of this port, upon a question with which they ought to have been familiar. The endurance of this deck, in the several voyages the bark has performed since it was built, strengthens very much the testimony of the witnesses who have maintained its sufficiency to protect the cargo, the same as under deck.- In respect to the stowage of the hogsheads on the head, the evidence is full in support of the usage.”

       “This is a libel to recover for damage by sea water to 80 bales of cotton shipped on the steamer William Crane, to be carried from Savannah to Baltimore. The decision of this case depends upon whether the cotton was stowed in a place on the steamer where, under the bill of lading, it might rightly be placed. The William Crane is a large iron steam propeller, intended for the coastwise trade, and above her main, deck has an upper deck, on the top of which are structures containing pilot house, officers’ quarters, and staterooms for passengers. Along the sides of the ship this upper deck is not altogether permanently inclosed, but may be inclosed when required for carrying cargo. The space between the main and upper decks is seven feet in height. Four feet of this height is permanently defended by the iron bulwarks and rail of the ship, and the remaining three feet between the rail and the upper deck has wooden shutters, which can be tightly fitted in, and made fast between the permanent uprights which support the upper deck, thus inclosing the entire space. The middle of the ship between the main and the upper deck is occupied by permanent structures containing the engine room and quarters for the engineers and others, leaving an alleyway on each side. The forward end of each alleyway is closed by a heavy bulkhead with doors. It was in these alleyways that the cotton involved in this controversy was stowed. It was raised somewhat from the deck by dunnage, and was kept in place by uprights, which left a narrow gangway alongside the engine room house.”

       “The matches were stowed in the lazaret over the after peak tank, which upon the ship’s capacity plan posted on the Bird • City was not designated for the stowage of cargo, but for ship’s stores. However, the testimony is that both before and after this voyage this space had, on occasions, been used for the stowage of cargo, and such stowage had been approved by the New York Board of Underwriters. The testimony of an experienced marine surveyor is that the pintle on which the rudder moves was riveted to the after end of the lazaret with a large number of rivets, and that this, with the curved plates rounding out the contour of the stem, tended to produce a certain amount of leakage, and to cause the lazaret to be damp and wet. This seems probable, and I accept it as true. It also appears that subsequently the bulkhead between the lazaret and the hold was removed, and, for the purpose of providing better drainage for this space, two scuppers were added. On the voyage, the Bird City met some heavy seas, and, although she carried a full cargo, the only damage to cargo by sea water was that sustained by this particular shipment in the lazaret.”

       “As appears from the proofs, a large portion of the hold of such a propeller as this one was, is used for her engines, water, boilers, coal, etc., although there is some space left for freight; but much the greater part of the freight is carried between decks, or on the main deck, as it is called. This deck is constructed specially for the purpose of carrying freight. It is bulwarked entirely around, and covered by the upper deck, and is as completely protected from the weather and from storms, as if it were the hold; and freight can he stowed in it as securely as in the hold. It may, perhaps require more care in the stowage of casks, and of packages of that description, to prevent their rolling in stormy weather, than if they were in the hold, the tendency to disturb the cargo upon this deck being greater than when it is below. I concur, therefore, with the court below, that no fault is chargeable to the vessel, in stowing the oil in the between decks.”


author: McDERMOTT, Circuit Judge. PER CURIAM.

text:
    OKLAHOMA GAS & ELECTRIC CO. et al. v. OKLAHOMA PACKING CO. et al.
    No. 1357.
    District Court, W. D. Oklahoma.
    Sept. 22, 1933.
    Rehearing Denied Oct. 12, 1933.

      R. M. Rainey and Streeter B. Flynn, both of Oklahoma City, Okl., I. J. Underwood, of Tulsa, Okl., Calvin Jones, of Oklahoma City, Okl., R. M. Campbell, of Chicago, Ill., F. G. Anderson and Geo. M. Green, both of Oklahoma City, Okl., and Allen, Underwood & Canterbury, of Tulsa, Okl., for complainants.
    C. D. Bennett, of Oklahoma City, Okl., and W. R. Brown, of Chicago, Ill., for defendants.
    Before McDERMOTT, Circuit Judge, and KENNAMER and VAUGHT, District Judges.
   McDERMOTT, Circuit Judge.

At the bottom of this controversy is the question of whether an order made by the Corporation Commission of Oklahoma in 1926, requiring the Oklahoma Natural Gas Company to serve Wilson & Company, Inc., with gas, is valid. The validity of the order, in turn, depends upon the question of whether the Oklahoma Natural Gas Company had professed or undertaken to serve Wilson & Company, Inc., or others similarly situated. The parties agree, and the law undoubtedly is, that no power resides in the state to compel a utility to furnish service to that part of the public which it has not professed or undertaken to serve. The controversy narrows to the question of whether the Oklahoma Natural Gas Company had undertaken to serve others of the public situated similarly to Wilson & Company, Inc. While the order of the Commission, sustained by the Supreme Court of Oklahoma acting in its legislative capacity (Oklahoma Gas & Electric Co. v. Wilson, 146 Okl. 272, 288 P. 316), is presumptively correct, the plaintiffs are entitled to a judicial review of both the facts and the law on this constitutional question.

The defendants contend that we are precluded from a review of that order because the question has become moot. We do not agree. It is true that the order has been displaced by other rate orders, and is not presently effective. It is likewise true that the order was displaced prior to the affirmance thereof by the Supreme Court of Oklahoma, and that it was lawfully superseded pending such review. The plaintiffs are therefore not subject to any of the penal provisions of the Oklahoma statutes for violating a valid order, and there is no threat by the state officials of any effort to impose such penalties. There is, therefore, no basis for any injunctive relief against the state officials. Ex parte La Prade, 289 U. S. 444, 458, 53 S. Ct. 682, 77 L. Ed. 1311. However, one of the defendants, Wilson & Company, Ine., is vigorously asserting rights predicated upon the validity of such order. While this is the only spark of life left in the order, the controversy cannot be said to be moot as long as it remains unextinguished. Oklahoma Operating Company v. Love, 252 U. S. 331, 40 S. Ct. 338, 64 L. Ed. 596.

But this action in equity cannot be maintained if there is an adequate remedy at law. Section 267, Jud. Code, 28 USCA § 384; Matthews v. Rodgers, 284 U. S. 521, 52 S. Ct. 217, 76 L. Ed. 447.

It seems apparent that the plaintiffs herein are afforded complete protection by the defense in the action at law. It was suggested, upon argument, that the legal defense was not adequate because under the constitution of Oklahoma, the state district court had no jurisdiction judicially to determine the validity of the order. The state district court has ruled otherwise, and has judicially deter- . mined the validity of the order. The plaintiffs are entitled, in some court, to a judicial determination of the validity of the order. It has had that determination, and there is no reason to believe that it will be denied a judicial review by the Supreme Court of Oklahoma. The Oklahoma Gas and Electric Company, being entitled to and having interposed the invalidity of the order in defense of the action at law, has no ground for ask-, ing equity again to pass upon its validity. While the Oklahoma Natural Gas Company is a party plaintiff in this ease, and is not a party defendant in the state court suit, the record conclusively demonstrates that it has no substantial interest in the controversy.

It is said that equity may proceed, even if an order has been vacated, if it appears that its vacation was to avoid a judicial determination of its validity; or if a multiplicity of suits by consumers may follow notwithstanding its vacation. This may be conceded; but no such situation is present here. To enjoin the continuance of a single action at law is the only thing sought to be accomplished by this equitable action. We are reminded that equity may proceed to adjudicate a controversy, notwithstanding that the specific relief sought has been frustrated by the acts of the parties pendente lite. True enough, but here the defendant took no step to frustrate the action of this court; having first commenced an action at law to recover excess payments made to the Oklahoma Gas and Electric Company, and this court having declined to enjoin the prosecution of that suit, it proceeded to judgment in an orderly way. The force of that judgment cannot be impaired by the mere pend-ency of an action to enjoin the prosecution.

Considerations of comity support the conclusion reached. The action in the state court to enforce the order was brought prior to the present action in this court to enjoin its enforcement. Both actions were in personam, and could and did proceed concurrently. In due course, the action in the state court proceeded to a trial lasting for several days. It has rendered its considered judgment, and the matter is now pending before the Supreme Court of Oklahoma. The evidentiary facts, as found by that court, are substantially as stipulated by counsel herein. The question will ultimately be decided by the Supreme Court of the United States, either on appeal from this court or from the Supreme Court of Oklahoma. Since the state court ease has gone to judgment, the only effective order which this court could make if it reached a conclusion contrary to that court, would be to enjoin the enforcement of that judgment and any further proceedings in that court. The more orderly procedure is for the plaintiffs to review the correctness of that judgment in the Supreme Court of Oklahoma, and if then dissatisfied, to invoke the jurisdiction of the Supreme Court of the United States.

The bill will be dismissed at the cost of the plaintiffs.

On Petition for Rehearing.

PER CURIAM.

The petition for rehearing presents the proposition that since the plaintiff herein could not remove the action at law in the state court, Great Northern R. Co. v. Alexander, 246 U. S. 276, 38 S. Ct. 237, 62 L. Ed. 713, the federal courts should enjoin its prosecution, since, as defendant therein, it raised a federal question by its answer. This is a startling suggestion to which we cannot accede. Since the decision in Tennessee v. Union & Planters’ Bank, 152 U. S. 454, 14 S. Ct. 654, 38 L. Ed. 511, construing the Removal Act of August 13, 1888 (25 Stat. 433), it has been uniformly held that a cause may not be removed because a defendant pleads a federal question in its answer. Plaintiff now says that while such a suit may not be removed to the federal court, a federal court should enjoin its prosecution. That is to circumvent the law as to removal, to deny the plaintiff in the state court action his right to proceed in the state courts, and is not supported by any authority cited. It would increase immeasurably the jurisdiction of the federal courts if every defendant asserting a federal question by way of defense in a state court might, in the federal courts, enjoin proceedings in the state court.

The claim is predicated upon a statement in Risty v. Chicago, R. I. & P. R. Co., 270 U. S. 378, 46 S. Ct. 236, 70 L. Ed. 641, that equity has jurisdiction unless there is an adequate remedy at law in the federal courts. That such statement was not intended to have such far-reaching consequences as contended for is made clear by the recent statement of the Supreme Court in Matthews v. Rodgers, 284 U. S. 521, 526, 52 S. Ct. 217, 220, 76 L. Ed. 447, that, “If the remedy at law is plain, adequate, and complete, the aggrieved party is left to that remedy in the state courts, from which the cause may be brought to this Court for review if any federal question be involved, Jud. Code § 237 (28 USCA § 344), or to his suit at law in the federal courts if the essential elements of federal jurisdiction are present.”

Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764, and eases which follow it, are bottomed upon the proposition that, because of the severity of the penalties or the multiplicity of threatened actions, the remedy by way of a defense in the state court is not adequate. No such situation is here presented.

The petition for rehearing is denied.


author: O’BRIEN, District Judge.

text:
    In re EMERY.
    No. 16268.
    District Court, E. D. Michigan, S. D.
    March 6, 1934.
    George E. Brand, of Detroit, Mich., for petitioner.
    Stevenson, Butzel, Eaman & Long, of Detroit, Mich., for bankrupt.
   O’BRIEN, District Judge.

Petition for order staying bankrupt’s pending application for discharge as to, or excepting, bankrupt’s debts existing on May 7, 1932, when bankrupt was adjudicated on former voluntary bankruptcy petition No. 13657 in this court, in which proceeding bankrupt failed to apply for a discharge.

The present voluntary bankruptcy proceeding, No. 16268, was filed October 4,1933. Bankrupt schedules about forty creditors all but five of which were scheduled in the former proceeding. Order to show cause on bankrupt’s application for discharge in the pending proceeding is returnable March 10', 1934.

Petitioner asserts that it is a “party in interest”; that its claim or cause of action against bankrupt arose June 6, 1930’; that bankrupt failed to schedule petitioner as a creditor in the former proceeding of which petitioner had no notice or knowledge and in which it filed no claim; that petitioner’s claim or cause of action arose under circumstances set forth in a declaration, dated May 24, 1933, in a state court suit against bankrupt and another for damages by reason of bankrupt’s claimed false and fraudulent misrepresentations in the sale to petitioner of certain stock.

Petitioner was not scheduled as a creditor in the original schedules filed in this proceeding No. 16268, but on November 23, 1933, bankrupt petitioned for and later obtained leave to amend his schedules so as to> include petitioner as a creditor, notwithstanding petitioner’s objections that the proposed amendment did not correctly schedule petitioner’s claim and that said claim woidd not be barred by a discharge. The amendment was made. On argument it was conceded that bankrupt had notice of petitioner’s claim within eighteen months after May 7, 1982.

Counsel for bankrupt does not deny that petitioner is a “party in interest,” competent to oppose bankrupt’s discharge, but contends that because petitioner was not scheduled in the prior proceeding and did not file claim therein petitioner is not entitled to the relief prayed. Bankrupt’s counsel relies upon In re Lyons (D. C. N. Y.) 287 F. 602, 2 A. B. R. (R. S.) 552. In that case application for discharge was not prosecuted in the first bankruptcy and because thereof the court held that there had been no adjudication granting or refusing a discharge and therefore the bankrupt was free to file a second petition and to obtain a discharge therein from all former debts, including those of a creditor who was not scheduled and who did not know of the first proceedings.

That petitioner is a “party in interest” and competent to object to bankrupt’s discharge under section 14 of the Bankruptcy Act (11 USCA § 32) and local rule 28-b is well established. It is true that in 1 Collier (13 Ed.), p. 495, it is stated that a creditor having a claim which is not dischargeable may not be heard in opposition to a discharge, yet in the 1934 Supplement to that work it is said*.

“A creditor whose claim will not be affected by discharge may nevertheless oppose the discharge. Matter of Feuer (C. C. A. 2d Cir.) 5 A. B. R. (R. S.) 718, 4 F.(2d) 892; Royal Indemnity Co. v. Cooper (C. C. A. 4th Cir.) 12 A. B. R. (R. S.) 178, 26 F.(2d) 585.

“Creditor holding a non-disehargeable claim, being a party in interest may oppose bankrupt’s discharge. Meyer v. Price (N. Y. Ct. of App.) 13 A. B. R. (R. S.) 485, 250 R. Y. 370, 165 N. E. 814.”

In 7 Remington (4th Ed.) §§ 3207 and 3208, it is stated:

“It has been held that a nondisehargeable claim is not sufficient.

“But such cannot be the right holding, since the Amendments of 1903, 1910 and 1926 have made the obtaining of property on credit on a materially false statement in writing a ground itself of opposition to discharge. So that a creditor from whom goods have been obtained on credit by a false written statement is not estopped from opposing the discharge on that ground, even if he proves his claim for sharing in dividends, or is maintaining a suit in the state court in tort for the false representations.” (Page 437.)

“But the party in interest need not have actually proved his claim, and perhaps he need not even have a ‘provable’ claim, or his claim may be no longer ‘provable,’ provided he has interest otherwise. Thus, the holder of a contingent claim may be a ‘party in interest,’ likewise, a creditor who has not proved his claim within the year and consequently cannot share in the dividends, or who has not proved his claim at all. And a creditor whose claim may be barred by * * * limitations is, nevertheless, clearly competent.

“Indeed, one who is at the time prosecuting a reclamation proceedings to -recover property alleged to have been obtained from him by the bankrupt’s fraudulent misrepresentations is an interested party competent to oppose the discharge, even though the gist of his reclamation is that he is not a creditor but an owner.” (Pages 438, 439.)

The above author quotes extensively from In re Feuer (C. C. A.) 4 F.(2d) 892, 5 A. B. R. (R. S.) 718, and In re Perelstine (D. C.) 15 F.(2d) 64, 7 A. B. R. (R. S.) 447. See, also, In re Reed (D. C.) 191 F. 920, Royal Indemnity Co. v. Cooper (C. C. A.) 26 F.(2d) 585, 12 A. B. R. (R. S.) 178, and In re Armstrong (D. C.) 248 F. 292, 40 A. B. R. 770.

For holdings that bankrupt’s schedules containing the name of a creditor are prima facie evidence that such creditor is entitled to oppose bankrupt’s discharge, see In re Barrager (D. C.) 191 F. 247, and cases therein cited.

Whether the petition should be granted would seem to turn on the effect of bankrupt’s failure to apply for a discharge in the former proeeeding-rather than on whether petitioner’s claim is dischargeable.

In principle, In re Lyons, supra, is opposed to the decisions of other courts.

Section 3183 Remington (4th Ed.), p. 397:

“The dismissal of the petition for discharge for want of prosecution, and also the failure to file a petition for discharge, are in substance and effect judgments denying discharge.” (Quoting at length from Freshman v. Atkins, 269 U. S. 121, 46 S. Ct. 41, 70 L. Ed. 193, 6 A. B. R. (N. S.) 744, affirming In re Freshman (C. C. A.) 294 F. 867, 3 A. B. R. (N. S.) 454, affirming in turn (D. C.) 290 F. 609, 1 A. B. R. (N. S.) 167; Kuntz v. Young (C. C. A.) 131 F. 719, 12 A. B. R. 505; Horner v. Hamner (C. C. A.) 249 F. 134, 40 A. B. R. 817, L. R. A. 1918E, 465; Sicbert v. Dahlberg (C. C. A.) 218 F. 793, 33 A. B. R. 272; In re Semons (C. C. A.) 140 F. 989, 15 A. B. R. 822; and In re Silverman (C. C. A. 2) 157 F. 675, 19 A. B. R. 460.

Section'3184 Remington, p. 399:

“A second petition for discharge may not be maintained in the same proceedings, nor in a new proceedings where the debts are identical, after the first petition has been denied, or not filed at all. The first denial is res adjudicata and binding on both parties, and a second petition is vexatious and useless repetition.” Quoting In re Loughran (C. C. A. 3) 218 F. 619; 33 A. B. R. 352, affirming (D. C.) 215 F. 271, 32 A. B. R. 330.

That periodical bankruptcy is not to be encouraged is evident from section 14 of the Bankruptcy Act making discharge in bankruptcy within six years a ground for opposing a discharge.

The authorities cited by Remington, particularly in the eases of Freshman v. Atkins, Siebert v. Dahlberg, and In re Loughran, support the view that it is a condition precedent to the granting of a discharge from debts provable in a bankruptcy proceeding that application be made in that proceeding within the time limited by law. That being so, the question does not turn on whether a debt is provable, dischargeable, or discharged and where both bankruptcies are in the same court it is the duty of the court to take judicial notice of the prior proceedings and even on its own motion to prevent the prosecution of the application for discharge as to debts provable in the former proceeding.

The order of the District Court in Re Loughran, supra, was that 'the bankrupt’s application for discharge be denied. In affirmance the Circuit Court of Appeals, however, indicated that in strictness the application for discharge should have been dismissed.

Remington, § 3185, page 404, suggests that where both new and old debts are involved, the order of discharge in the second bankruptcy “might expressly except all debts provable in the first bankruptcy.” See, also, In re Mayer (D. C. N. Y.) 4 F. Supp. 203, and In re McMorrow (D. C.) 52 F.(2d) 643, where a petition for stay and/or exception from discharge was filed and the court ordered that all debts proved or provable in the first proceeding be excepted from any discharge granted in the second.

Bankrupt’s counsel requests that if stay be granted or exception made, it be limited to the claim of petitioner and not include all creditors in the former proceeding. This seems to ignore that it is a condition precedent to the right to a discharge that application therefor be made within the time limited by law, that the effect of a failure to apply for a discharge is the same as the effect of a refusal thereof, and that it is the duty of the court to take notice of the former proceeding and act ex mero motu.'

The practice of seeking, by second bankruptey, to obtain a discharge of debts not discharged by former bankruptcy has been aptly characterized by the Supréme Court in Freshman v. Atkins, supra, as “* * * an imposition upon and an abuse of the process of the court, if not a clear effort to circumvent the statute by enlarging the statutory -limitation of time within which an application for a discharge must be made. In such a situation the court may well act of its own motion to suppress an attempt to overreach the due and orderly administration of justice.”

. In these circumstances the stay or exception should not be limited to petitioner’s claim.

An order may be entered that no discharge granted in the pending proceeding shall affect or discharge any debts or liabilities of bankrupt existing at the time of the filing of bankruptcy proceeding No. 13657 in this court. The request in bankrupt’s response that the former proceeding be withdrawn is not before the court. '


author: BONDY, District Judge.

text:
    In re BERGMAN.
    District Court, S. D. New York.
    April 12, 1934.

      Emerson & Sperling, of New York City, for bankrupt.
    Louis E. Stumpf, of New York City, for opposing creditor.
   BONDY, District Judge.

Ordered, adjudged and decreed that the report of the Hon. Peter B. Olney, Jr., Referee in Bankruptcy, sitting as special master, dated March 13, 1934, be and the same hereby is in all respects confirmed.


author: MOSCOWITZ, District Judge.

text:
    PRUDENTIAL INS. CO. OF AMERICA v. LIBERDAR HOLDING CORPORATION.
    No. 7058.
    District Court, E. D. New York.
    March 28, 1934.
    Greenbaum, Wolff & Ernst and Stephen Callaghan, all of New York City (Stephen Callaghan, of New York City, and Thomas A. Gaffney, of Brooklyn, N. Y., of counsel), for ancillary receivers.
   MOSCOWITZ, District Judge.

The ancillary receivers in equity of the defendant herein have petitioned this court for an order (1) modifying the injunction made herein on September 6, 1933, restraining the defendant from conveying any of its property, (2) authorizing the defendant to convey the property described as and by the street No. 1059 New Lots road, in the borough of Brooklyn, county of Kings, city and state of New York, to the mortgagee, John C. Von Glahn, as executor under the last will and testament of Henry Von Glahn, or his nominee, subject to all liens and incumbrances in lieu of foreclosure in consideration of paying ts the defendant and its ancillary receivers the sum of $250 and releasing the defendant and its ancillary receivers from any and all obligations, and (3) authorizing the ancillary receivers to consent to such a conveyance. The complainant and defendant herein have consented to the granting of the order as prayed for in the petition herein.

From said petition it appears that the above-described premises are incumbered by a mortgage in the sum of $15,000. Interest in the sum of $1,275 and taxes in the sum of $1,549.85 are unpaid, and by reason thereof the mortgagee has threatened to commence foreclosure proceedings which will forever bar the defendant from any right, title, or interest in the property. In lieu of foreclosure, however, the mortgagee has offered the defendant and its ancillary receivers the sum of $250, and has offered to release the defendant from its obligations on the bond given to secure the payment of the mortgage, and from any and all other claims in consideration of a conveyance to him of title to the above-described property subject to all liens and incumbrances.

In order to determine whether the acceptance of the proposed offer would be of benefit to the .estate of the defendant herein, the ancillary receivers have caused the property to be'appraised by a competent real estate expert and attached to the petition is an affidavit of the appraiser, which states that in his opinion the property is worth $15,000, but that due to present real estate conditions it would be difficult to procure this sum upon a sale.

The mortgage being in the sum of $15,-000 and the property being appraised at $15,-000, it is apparent that there is no equity in the same. .When there is taken into consideration the fact that interest and taxes are in arrears to the extent of $2,824.85> there can be no doubt but that the offer made by the mortgagee should be accepted as being beneficial to the estate herein. By accepting the offer the estate will be enriched to the extent of the offer and its liabilities will be decreased to the extent of the defendant’s obligations on the bond given to secure the payment of the mortgage. From all practical considerations it therefore appears to be for the best interests of the estate herein to authorize the defendant and its ancillary receivers to accept the offer and approve the conveyance in accordance therewith.

The only question is, whether this proposed sale is a judicial sale under order or decree of the United States court, within the purview of the Act of March 3, 1893, c. 225, §§ 1, 3, 27 Stat. 751, title 28, U. S. C., §§ 847, 849 (28 USCA §§ 847, 849), which reads as follows:

“§ 847. Sales; real property under order or decree. All real estate or any interest in land sold under any order or decree of any United States court shall be sold at public sale at the courthouse of the county, parish, or city in which the property, or the greater part thereof, is located, or upon the premises, as the court rendering such order or decree of sale may direct.”

“§ 849. Same; necessity of notice. No sale of real estate under any order, judgment, or decree of any United States court shall be had without previous publication of notices of such proposed sale being ordered and had once a week for at least four weeks prior to such sale in at least one newspaper printed, regularly issued and having a general circulation in the county and State where the real estate proposed to be sold is situated, if such there be. If said property shall be situated in more than one «ranty or State, such notice shall be published in such of the counties where said property is situated, as the court may direct. Said notice shall, among other things, describe the real estate to be sold. The court may, in its discretion, direct the publication of the notice of sale herein provided for to be made in such other papers as may seem proper.”

In Yazoo & Mississippi Valley Railroad Company et al. v. City of Clarksdale, 257 U. S. 10, 42 S. Ct. 27, 29, 66 L. Ed. 104, 109, this act was held to be limited to judicial sales. Chief Justice Taft, writing for the unanimous court, stated: ‘We think that the language of this act limits its application to judicial sales made under order or decree of the court and requiring confirmation by the court for their validity, and that it does not extend to sales under common-law executions. * * *" ‘

A “judicial sale” is defined in Black’s Dictionary as: “One made under the permission of a Court having competent authority to order it, by an officer duly appointed and commissioned to sell, as distinguished from a sale by an order in virtue of his right of property.”

The proposed conveyance or sale has none of the elements of a judicial sale. It. is a voluntary private sale made by the lawful owner of the property in the usual course of its business for a sufficient consideration. The permission of this court is sought solely for the purpose of complying with the decree of this court which enjoined the defendant from conveying any of its property. The court, by its order, has enjoined the defendant from the exercise of the jus disponendi. The permission now sought is to modify the injunction restraining the exercise of this right. Such permission would add nothing to the validity of the title to be conveyed. The ancillary receivers have no title, but merely the custody, of the defendant’s property. The appointment of the ancillary receivers merely placed the defendant’s property in their care and custody as officers of the court pending the settlement of the estate. In Union National Bank of Chicago et al. v. Bank of Kansas City et al., 136 U. S. 223, 16 S. Ct. 1013, 1017, 34 L. Ed. 341, 346, the court stated: “A receiver derives his authority from the act of the court appointing him, and not from the act of the parties at whose suggestion or by whose consent he is appointed; and the utmost effect of his appointment is to put the property from that time into his custody, as an officer of the court, for the benefit of the party ultimately proved to be entitled, but not to change the title, or even the right of possession, in the property.” See, also, Quincy, Missouri & Pacific Railroad Company et al. v. Solon Humphreys et al., 145 U. S. 82, 12 S. Ct. 787, 36 L. Ed. 632.

In American Brake Shoe & Foundry Co. v. New York Rys. Co. (C. C. A. 2) 282 F. 523, 528, the court held: “The receiver, it is to be noted, was appointed under a creditors’ bill, and was a mere chancery receiver or arm of the court, extended about the assets of an insolvent. corporation for their preservation, and for their ultimate sale and distribution among the insolvent Company’s creditors. Such a receiver takes no title to the property * *

In Durand & Co. et al. v. Howard & Co. et al. (C. C. A. 2) 216 F. 585, 589, 596, 591, L. R. A. 1915B, 898, the court stated:

“The chancery receivers are not assignees of the lease. By their appointment they acquired no title. They only obtained a right to the possession of the property as the officers of the court. Keeney v. Home Ins. Co., 71 N. Y. 396, 27 Am. Rep. 66; Stokes v. Hoffman House, 167 N. Y. 554, 559, 60 N. E. 667, 53 L. R. A. 876. * * *

“The rules which govern an assignee are not necessarily applicable to a chancery receiver who holds ho title, is an officer of the court and derives his powers from the court, and is simply holding possession for the court pending a settlement of the estate. *' * *

“A chancery receiver takes no title to the leasehold estate, but has mere possession as an officer of the court. * * * ”

A “judicial sale” is one made pursuant to some order or decree creating or declaring a right to sell and which right would not be exercised but for the order or decree. In Re La Prance Copper Co. (D. C.) 205 P. 207. However, the order sought herein does not create or declare any right to sell, but merely modifies the injunction- preventing the defendant from exercising the jus disponendi in order to carry out a private contract which would be. valid even without this court’s sanction, although the failure to obtain such sanction would be an act in contempt of this court. The granting of the order sought would merely be authority to the defendant to complete its voluntary undertaking. In the case of Christie v. Gage, 71 N. Y. 189, a religious corporation having a limited right to' convey applied to the court for permission to convey. The court there held: “There is no ground for the contention that the conveyance, having been made by the church in pursuance of the order of the court, obtained on its application, made the transaction a judicial sale, and, therefore, not within the statute. The church, as a religious corporation, organized under the act of 1813, had only a limited capacity to convey. It could convey only under the sanction of the court, and the order obtained in this ease was simply the authority for completing its voluntary undertaking to sell the lands in question.”

It appears that the granting of the order sought herein without the necessity of complying with the Act of March 3, 1893, supra, has ample precedent. The solicitors for the ancillary receivers herein, in their brief in support of the petition, have advised this court that, in the case of Olin J. Stephens et al. v. American Realty Estate Company, United States District Court, Southern District of New York, No. E 13-239, and in the ancillary proceedings in this court, No. E 3-76, the property of the defendant was in the possession of equity receivers appointed by the court, and pursuant- to order made therein the defendant was restrained from conveying any of its property. During the course of the administration of that receivership, many orders similar to that .sought herein were granted by many judges modifying the injunction and authorizing the defendant to convey its property with the consent of its receivers without the necessity of complying with the Act of March 3,1893, supra.

This court being satisfied that the proposed sale is not a judicial sale within the purview of the Act of March 3, 1893, supra, and that the proposed sale appears to be for the best interests of the estate of the defendant herein, the petition will be granted, and the order submitted therewith signed.


author: BYERS, District Judge.

text:
    THE ALGIC. BLOOM v. UNITED STATES.
    District Court, S. D. New York.
    March 16, 1934.
    Lucien V. Axtell, of New York City (Silas B. Axtell, of New York City, of counsel), for libelant.
    Martin Conboy, U. S. Atty., and Tompkins, Boal & Tompkins, all of New York City (Arthur M. Boal, of New York City, of counsel), for respondent.
   BYERS, District Judge.

The libelant sues to recover for personal injuries suffered by him when he was about to go on duty as ^n able-bodied seaman on the steamship Algic when lying at her berth in Montevideo, on November 10, 1920. Three causes of action are pleaded in the libel:

(1) Negligence on the part of the defendant in failing to provide a safe place in which the libelant could work; in permitting oil to accumulate on the deck which he was required to use; in failing to keep the said deck tíleafi’ and free from a slippery condition.

(2) Failing to put the libelant in the hospital; “in having a physician of the respondent advise the Captain and other officers on board, and the libelant that he was in a fit and physical condition to remain on board the vessel, and denying the libelant proper treatment, where he could receive physical therapy treatment;” in failing to furnish or cause to be furnished prompt, proper and medical care and attention to the libelant. (3) Maintenance and cure and hospital bills for a reasonable period of disability.

The testimony makes it quite clear that the libelant did suffer a physical injury; namely, he struck the top of his head, in the right frontal area, against the steering gear on the Algic on the day in question.

■ In order to understand how the.accident happened, it is necessary to explain that the libelant’s sleeping quarters were in the fantail at the stern of the ship on the main deck, which contained the emergency hand wheel and the steering gear; he occupied a cabin with five other members of the crew on the starboard side of the ship, and was called to turn to at about 1:30' in the afternoon. The emergency wheel and the steering gear occupied that portion of the ship between the sleeping quarters on the starboard and port sides to such an extent that there was a passageway on each side, 4 feet in width, between the sleeping quarters and the gear; the emergency hand wheel constituted the forward element and occupied a platform which extended the entire width of the assembly. This wheel was connected with the steering mechanism itself by two rods of substantial construction which cleared the deck at a height of 4 feet 3 inches, and it was possible for men desiring to pass from one side of the ship to the other to do so under these rods. The dimensions of this opening are not stated but a photograph in evidence suggests that this space was not less than 6 feet, measured in a fore-and-aft direction.

The steering machinery is the aft part of the assembly, and was protected on all sides by a railing supported by stanchions at a height of about 3 feet from the deck. Passage around, i. e. forward of, the entire assembly was available to any member of the crew wishing to go from one side of the ship to the other. The distance across the steering mechanism from bulkhead to bulkhead was about 14 feet.

At the time in question, the libelant emerged from his quarters on the starboard side of the ship and, having occasion to use the toilet immediately aft, proceeded to that place but, because it was not available, he decided to use the opposite firemen’s toilet oú the port side of the ship. He testified that, while he was in the act of proceeding from the port side toilet, and was still in the passageway, his foot was caused to slip by an accumulation of oil on the deck, and he fell .forward, striking his head as stated.

On conflicting evidence, it is found that this is not what occurred; that is to say, he chose to cross under the steering rods, when he found the starboard toilet unavailable, rather than to go around the entire assembly, which would have taken him a second or two longer. He is 5 feet 3 inches in height and did not stoop sufficiently to avoid striking the steering rods as he sought to pass under them, or he miscalculated, and raised his head too soon; he suffered the injury in this way. It is assumed 'that there was some oil and water on the deck under the steering rods, which may have contributed to the result, but it is not found that, in the deck space to which reference has been made, between the quarters and the steering mechanism, there was any accumulation 'of oil, grease, water, etc., because there is no necessity for passing upon that subject specifically.

As to the effect of the libelant’s choice of route, see Holm v. Cities Service Transp. Co. (C. C. A.) 60 F.(2d) 721.

Without recapitulating the testimony which is thought to justify this finding, the following incidents may be referred to as pointing to the reason for not accepting the libelant’s version of the accident:

The libelant cannot be regarded as a reliable witness on this or other matters; there is a difference between his testimony on the trial and a statement which he signed on November 13th, two days after the accident; he admitted that the signature appearing on the statement was his, but denied that he had signed his name to any such paper. The recital therein is consistent with the testimony of the then chief officer concerning what the libelant reported on the afternoon of the accident, which testimony is:

“A. * * * and then he went to the firemen’s toilet; he told me he went underneath the steering engine — he bumped his head on some parts of the engine.'

“Q. Was it necessary for him to go under the steering engine to cross?

“A. No, sir.

“Q. How else could he have gone, Captain?

“A. Walked around the forward end of the steering engine.”

The material portion of the statement bearing the libelant’s signature and dated November 13, 1928, is:

“I then proceed to go to the fireman toilet. When I got about two feet from the steering engine I slipped and hit my head on some part of the steering engine.”

Some of the reasons for not accepting thelibelant’s testimony as to the precise nature of the happening will appear in a later discussion of the testimony.

Immediately upon being assisted to his feet, the libelant went to the sailors’ cabin and Edwards, a mess boy, helped him into the room; that is to say, he helped to raise him from his hands and knees, in which po- • sition he was underneath “that tiller” (i. e., the connecting rod between the hand wheel and the steering engine); Edwards’ statement made to the ship’s officer on November 13, 1929, is quite consistent with his deposition as to the place from which Bloom was 'assisted; he said:

“I saw Bloom laying on the deck under the steering engine on starboard side. I did not know that he was injured, as he was getting up. He came into day men room on starboard side of chip (sic) and I washed the cut on his head.”

, The first mate was called at once and the man received attention and about 5:00 o’clock, the matter having been reported to the master, the libelant was sent ashore to a doctor in Montevideo, who applied an antiseptic and a bandage.

That doctor testified by deposition, and stated, among other things, that he would not have permitted the libelant to return to the ship if he had deemed hospital treatment requisite; but that he discovered no signs of cerebral deficiency.

The ship sailed late in the day for Buenos Aires, where docking was completed at about 11:00 a. m. on the following day. The libelant was sent to Dr. Herzfeld by the first officer, but did not receive treatment on that day, because it was a holiday; on the following day he was again sent to the same physician, who cut away hair in the vicinity of the wound, applied an antiseptic, bandaged his head, and told the libelant to do no work but to drink plenty of water; the latter reported back to the ship and told the first officer what the doctor had said. He spent most of the next ten days in his bunk, doing no hard work. He testified that Dr. Herzfeld examined his ear, but whether it was on the occasion of the first, second or third visit, is not clear. The dates of those visits were November 12th, 14th and 20th, which means that the ship stayed in port for that time; on one of these occasions, the Captain sent the witness to a Dr. Hensa, to make an X-ray, at the recommendation of Dr. Herzfeld, and the libelant says that Dr. Hensa told him that he ought to go to a hospital for further ob-serration, and that he was to drink plenty of water and rest up.

Dr. Hensa has not been examined, although attempts have been made to take his deposition, and apparently up to the time of trial this was impossible. In any event, the witness did not enter any hospital.

, The ship sailed from Buenos Aires on ‘ November 27, 1929, and on the voyage north the libelant was not put in the sick bay but was left in his own quarters; on this voyage he stood his regular watches.

On arrival in Philadelphia on December 29, 1929, the libelant was paid off and came at once to New York. He does not remember how long it was before he went to a hospital in this city, and the transcript of the hospital record does not indicate the necessity for hospitalization at that time.

The libelant rested in New York for the ensuing two months and a half, and he did not seek any treatment at the hospital or elsewhere, and on March 16,1939, he shipped as an able-bodied seaman on a Tracy oil tanker, and he took other employment of the same nature down through the month of November, 1939, on other ships; during 1931, he was on the Zarembo from October 22nd to November 20th. This last voyage was preceded by a medical examination for Shipping Board service on October 5, 1931, which was the seventh similar examination taken and passed by the libelant between April 21, 1927, and October 5,1931,.and the records in- . dicate that there was no difference in the physical condition of the libelant on any of these dates as compared with any other. The first examination above referred to indicated a certain impairment of vision in the right eye, which was not as good as the left.

These circumstances have been set forth because of the injuries claimed by the libel-ant, as the result of the happening in question, as -stated by his counsel at the trial, namely:

(1) Defective vision right eye.

(2) Defective hearing right ear.

(3) Partial paralysis right side of face— improving.

(4) General neurasthenia.

The history of the libelant shows that during the latter months of 1928 he was employed on the steamship D. M. Philbin of the Duluth Steamship Company, and claimed to have been injured in that employment, in a letter which <• he wrote to the agents of the company under date of October 16, 1928, which is in evidence. He stated in that communication that he had been struck by a sledge-hammer while in the act of breaking coal, and said that the hammer rebounded, striking him on the forehead. He said he was stunned by this heavy blow and, upon recovering his senses, was given first aid treatment by the first assistant engineer and the chief engineer. His letter continues:

“Since leaving the D. M. Philbin, I have undergone a medical examination of my head.
“This blow on the forehead has resulted, up to the present time, in violent head pains, especially at the base of my skull. Also a severe permanent injury and disfiguration of the right side of my face. This has been diagnosed as a partial paralysis of the seventh nerve. My right eye is losing its strength of vision also.
“Due to these injuries with which I am at present afflicted, and which may be followed by mental and physical aggravations of various sorts, it becomes impossible for me to continue at any employment until I have had proper medical treatment and a sufficient convalescent period afterwards.
“An operation on my skull has been suggested as a means of effecting a cure. Also electrical treatment for my face. As the skull operation may result in a cure, and then again it may bring no positive results in that regard, I do not feel that such a radical course should be undertaken, without plenty of time to deliberate on it.
“The accident occurred to me Wednesday, Oct. 3, 1928, at two o’clock in the afternoon.
“As the paralysis seems to be a permanent injury, also the resulting disfiguration, to say nothing of my failing eyesight and what may happen to my body in the future, I feel that I am entitled to a substantial com.pensation. Therefore this letter. * * *
“As a result of this accident, which befell me while in your employ, and through no wilful action on my part, I am doomed to go through life with a paralyzed face and in probability with but one eye.
“This letter is an explanation of the accident and an account of the medical diagnosis. It is written in a friendly spirit.
“I am asking for compensation as the injuries are very serious. Let us hope that an ambicie (sic) settlement will be reached in this matter.
“If you wish to have me undergo another medical examination, kindly arrange for my railroad fare to Cleveland and return to Chicago.
“Also accommodations for board and lodging while enronte and in Cleveland. An X-ray will disclose the exactness of my injuries. I hope that you will give the contents of this letter serious consideration. I shall he expecting a reply from you in the near future.
“Yours truly, Harry Bloom.”

On May 31, 1829, the respondent executed, acknowledged and delivered a general release to the Duluth Steamship Company for the consideration of $50.00 for damages arising out of “being struck on the head by coal or by a hammer on board said steamer D. M. Philbin on or about October 3, 1928.”

The libelant was examined by Dr. Prank W. Milward, of Cleveland, Ohio, on Novem•ber 5, 1928, at the request of the insurer of the Duluth Steamship Company whose claim adjuster sent the libelant to the doctor, who was a witness on this trial. • The libelant told him that he had been swinging a sledge which struck him and made a cut on the forehead. The doctor made an extended examination and reported a partial facial paralysis on the right side; that the patient could not close the right eye as completely as the left.

The libelant made a number of interesting statements to the physician; among others, that he was then on his way to South America where he expected to prospect for diamonds, and he explained to the doctor how he could avoid dividing the results of his expected search, if successful, with various government officials from whom permits would be required.

The foregoing testimony is persuasive that, if the libelant was suffering at the time that he filed the libel from a condition of facial paralysis and impaired vision in the right eye, those conditions antedated his voyage on the Algic. The same remark applies to the neurasthenia, if any.

That the libelant is not without well-developed powers of imagination otherwise appears from the testimony of John T. Edwards, who was the second officer of the Algie, in whose watch the libelant served both on the southbound and northbound voyages; during the former the libelant told Edwards that he had made many thousands of dollars trading in buffalo skins.

That witness observed the libelant on the northbound voyage, when he stood his trick at the wheel as related, and said that there was no incoherent speech on the part of the latter after the accident, or any other difference between his condition on the outbound trip, and on the homeward passage.

That the libelant is suffering at the present time from impaired hearing in the right ear is probably true, although a hospital examination given on April 29, 1932, by the Veterans Administration indicates that, so far as the right ear is concerned, the witness can hear a whisper at a distance of seven feet and a conversation at-fifteen feet.

It is not felt that such impairment of hearing as exists has been traced by the libelant to this particular fall.

The result of a consideration of the testimony is that the libelant has failed to sustain his burden of proof as to the negligence charged in the libel, as previously stated.

The utmost that the evidence would warrant is a finding that there was a certain disability under which he suffered following the accident, and his arrival in this country, which continued until he shipped as an able-bodied seaman for the various voyages during the year 1930 to which reference has been made; that is, a period of 2y2 months or 76 days, for which he could be allowed maintenance at $3.00 a day, making $228.00 in all. The libelant has offered no proof of disbursements for medical care or hospitalization during that period.

The libelant may take a decree for that sum for maintenance and cure, with costs.

Settle decree on notice.

If findings are desired, they may be settled at the same time, and are to embody appropriate recitals as to ownership.


text:
    In re FLATBUSH GUM CO., Inc.
    No. 25427.
    District Court, E. D. New York.
    March 29, 1934.

      Harold H. Levin, of New York City, for trustee Louis W. Arnold, Jr.
    John J. Bennett, Jr., Atty. Gen. (John Ludden, Asst. Atty. Gen., of counsel), opposed.
   MOSCOWITZ, District Judge.

This is a motion made by the trustee in bankruptcy for an order barring the claim of the department of taxation and finance of the state of New York and its sales tax bureau for taxes claimed by the said department and bureau by virtue of the New York state sales tax law on the sums realized upon the receiver in bankruptcy’s auction sale of the personal property and effects of the bankrupt herein.

The receiver in bankruptcy sold certain property consisting of machinery, equipment, furnishings, and other personal property belonging to the bankrupt at an auction sale conducted by an auctioneer designated in said order of sale. The receiver was not authorized to nor did he conduct the business of the bankrupt company, and the auction sale was a final liquidation of the assets of the bankrupt estate.

On or about December 14,1933, the assistant tax supervisor for the Long Island tax district of the department of taxation and finance of the state of New York notified the said receiver and the said auctioneer that there was due to the state of New York sales taxes on the said sale by virtue of the provisions of the New York sales tax law and demanded that a return be made and the payment of tax be remitte'd. .

Upon receipt of such notice the receiver communicated with.the department of taxation and finance of the state of New York, sales tax bureau, and was informed by the deputy commissioner in charge of that department that it had ruled that auction sales such as the one conducted herein were subject to liability under the New York sales tax law.

This proceeding was instituted by the trustee to bar the imposition of the said tax and the collection thereof. On the argument of this motion no objection was made by the Attorney General of the state of New York with the manner in which this question was raised.

The pertinent part of section 391 of the Tax Law of the state of New York (Consol. Laws, c. 60), is as follows:

“§ 391. Imposition of tax. For the privilege- of selling tangible personal property at retail in this state during the period commencing May first, nineteen hundred thirty-' three, and ending June thirtieth, nineteen hundred thirty-four, every person shall pay a tax of one per centum upon the receipts therefrom. The burden of proving that a sale of tangible personal property was not a sale at retail shall be upon the person who made it, unless such person shall have taken from the purchaser a certificate signed by and bearing the name and address of the purchaser to the effect that the property was purchased for resale. For the purpose of the proper administration of this article and to prevent evasion of the tax hereby imposed it shall be presumed that all receipts are subject to the tax until the contrary is established. The tax shall be paid at the time and in the manner hereinafter provided and shall be in addition to any and all other taxes. In any case where tangible personal property is sold at retail under a contract made prior to May first, nineteen hundred thirty-three, which specifies and fixes the sale price and such sale is taxable under this article, the seller may add the tax imposed by this article to the sale price and collect it from the vendee. No person engaged in the business of selling tangible personal property at retail shall advertise or hold out to the public, in any manner directly or indirectly, that the tax imposed by this article is not considered as an element in the price to the consumer. * *

Section 391 provides that “every person shall pay a tax of one per centum upon the receipts” of sales. The word “person” is defined in section 390, as follows:

“§ 390. * * * (a) The word 'person’ includes an individual, copartnership, society, association, joint stock company, corporation and any combination of individuals.”

By defining the word “person” as it did, the Legislature evidently intended to exclude receivers and trustees in bankruptcy. In re Mason Tire & Rubber Co. (D. C.) 39 F.(2d) 462, 465. The court in that ease, in dealing with an Ohio statute (Gen. Code, § 5372-1), which provided that “personal property * * * in the possession or control of a person as parent, guardian, trustee, executor, administrator, assignee, receiver, official custodian, factor, agent, attorney, or otherwise,” was required to pay the tax, decided: “If the trustee in bankruptcy is'required to list for current taxation money in his hands for distribution under the express provisions of the Bankruptcy Act [11 USCA], I see no reason why the clerks of the United States courts and United States marshals and judges in whose name composition funds are deposited may not be required to list money held by them and not belonging to the United States. However, the question is not free from doubt, but it is thought that, since the Legislature of the state has seen fit to specifically name those required to list moneys, the trustee in bankruptcy, not being named, should not be included by implication.”

A receiver in bankruptcy is the .arm of the court. The sale conducted by the receiver was a necessary step in the proper administration of the bankrupt estate.

The tax in question is not a tax upon the property of the bankrupt estate, and will therefore be barred.

Motion granted. Settle order on notice.