text:
    WHEATLEY v. MARTIN.
    Civil Action No. 181.
    District Court, W. D. Arkansas, Hot Springs Division.
    Aug. 31, 1945.

      See also Martin v. Wheatley, 62 F. Supp. 104.
    Richard M. Ryan and James R. Campbell, both of Hot Springs, Ark., for plaintiff.
    C. Floyd Huff and Scott Wood, both of Hot Springs, Ark., for defendant.
   JOHN E. MILLER, District Judge.

On June 27, 1945, the plaintiff, Erb O. Wheatley, filed his complaint in the Garland Circuit Court at Hot Springs, Arkansas, against the defendant, Ora C. Martin, seeking a recovery of a judgment in the sum of $1500, with interest and costs.

The .plaintiff alleged that on June 9, 1945, he advanced to the defendant the sum of $1500 and the defendant gave him her check for said amount drawn on the Arkansas Trust Company, a banking corporation, located in Hot Springs, Arkansas; that prior to the presentation of the check by the plaintiff to the bank for payment, the defendant with intent to cheat and defraud the plaintiff, wrongfully withdrew her funds from said bank.

The plaintiff is a resident of the city of Hot Springs, Garland County, Arkansas, and the defendant is a nonresident of the State, being a citizen and resident of the State of Florida.'

A general attachment was issued and served upon the defendant in the city of Hot Springs on -the date the complaint was filed. Attachment was issued upon the affidavit of the plaintiff that the defendant is a nonresident of Arkansas and that she had sold, conveyed or otherwise disposed of her property within the State with the fraudulent intent to cheat, hinder and delay her creditors in collection of their debts.

Within the time permitted by law to plead. to the complaint, the defendant, on June 16, 1945, filed her answer and counterclaim. In the answer the defendant alleged that she had theretofore filed an action in the District Court of the United States for the Western District of Arkansas, Hot Springs Division, seeking a judgment against the plaintiff, Erb O. Wheat-ley, in the sum of $4300, which sum of money the defendant alleged had been lost by her and won by the plaintiff in a series of gambling transactions conducted by the plaintiff in the city of Hot Springs, Arkansas. She denied that plaintiff cashed her check on the 9th. of June 1945, but alleged that on June 8, 1945, the plaintiff did cash her check in the sum of $1500, and that subsequently thereto she withdrew her funds from the bank before the plaintiff, had presented the check for payment.

That the plaintiff was the owner and operator of a common gambling house known as the Reno Club, and at the time the check was cashed by the plaintiff for the defendant it vPas cashed in the plaintiff’s gambling house and the plaintiff well knew that the defendant was to use the said $1500 for the purpose of gambling therein; that the defendant lost the said $1500 to the plaintiff in a gambling game known as Twenty-one or Blackjack, and the plaintiff, his agents and employees, won said sum of money from the defendant in a game of chance; that the plaintiff prior to June 8, 1945, had cashed other checks for the defendant at his gambling house and the money obtained on said other checks was used by the defendant in gambling in the plaintiff’s gambling house.

That jurisdiction of the action heretofore filed by the defendant in the United States District Court rests on the ground of diversity of citizenship, and the defendant herein in said action seeks to recover from the plaintiff herein the sum of $4300; that the answer and counterclaim filed by the defendant herein are filed for the purpose of placing of record the jurisdictional allegations for removal of this cause to the United States District Court, as aforesaid, to the end that this suit may be consolidated with the cause of action then pending in the United States District Court.

In the counterclaim the defendant alleged that she is a resident of the State of Florida and that the plaintiff is a resident of the State of Arkansas, domiciled in the Western Division of the Western District of Arkansas.

That the counterclaim is brought under and by virtue of Section 6112 of Pope’s Digest of the Statutes of Arkansas and that between the dates of May 12, 1945, and June 9, 1945, the plaintiff herein won from the defendant and the defendant lost to the plaintiff, his agents and employees, by gambling in the gambling house known as Reno Club, owned and operated by the plaintiff, in the city of Hot Springs, Arkansas, the total sum of $5800; that on the night of June 8, 1945, at the plaintiff’s gambling house the plaintiff cashed for the defendant a check in the sum of $1500, drawn on the Arkansas Trust Company, as aforesaid, and that the plaintiff well knew at the time he cashed said check that the defendant was to use the money for the purpose of gambling at and in the plaintiff’s gambling house.

At the time the check was cashed by the plaintiff for the defendant there were ample funds on deposit in the bank on which the check was drawn to pay the same, but on the morning of June 9, 1945, following the night of June 8th, the defendant withdrew from said bank her funds, not leaving a sufficient amount therein with which to pay the said check; that excluding the check of $1500 the defendant lost a net total of $4300 to the plaintiff in the plaintiff’s gambling house in a game commonly referred to as Twenty-one or Blackjack.

The prayer of the answer and counterclaim is that the plaintiff take nothing by reason of his suit herein and that the defendant have and recover judgment against the plaintiff for the sum of $4300, with interest and costs.

Simultaneously with the filing of the answer and counterclaim, the defendant, in accordance with notice served upon the attorneys for the plaintiff on July 11, 1945, filed her petition and bond for removal of this cause to this court. Attached to the petition as an exhibit thereto is a copy of the complaint filed by the defendant here as plaintiff in this court against the plaintiff here as defendant seeking a recovery from the plaintiff here of a judgment of $4300.

In the petition for removal the defendant alleges that the time to plead, answer or demur to the complaint has not expired under the laws of the State of Arkansas; that the suit is one of a civil nature of which the United States District Court has jurisdiction and is for the recovery of money advanced by plaintiff to defendant upon defendant’s check drawn on the Arkansas Trust Company of Hot Springs, Arkansas, the payment of which check had been refused by the bank; that the defendant and petitioner herein has filed simultaneously with the petition for removal her answer and counterclaim seeking to recover from plaintiff herein a judgment for the sum of $4300; that the matter in dispute exceeds the sum of $3000, exclusive of interest and costs; that the plaintiff herein is a citizen and resident of the Hot Springs Division of the Western District of Arkansas and the defendant is a citizen and resident of the State of Florida.

The plaintiff filed a response to the answer and counterclaim on July 16, 1945, the date of the filing of -the answer and counterclaim and petition and bond for removal. In the response to the answer and counterclaim the plaintiff denies that he knew that the defendant would use the $1500 for the purpose of gambling, and denies that the plaintiff lost the sum of $1500 to the plaintiff in a gambling game known as Twenty-one or Blackjack on the night of June 8, 1945, or at any other time, and denies that he cashed checks for the defendant at his gambling house prior to that time for the purpose of permitting the plaintiff to gamble therein; denies that the defendant between May 12, 1945, and June 9, 1945, lost to the plaintiff, his agents and employees by gambling at a game known as Twenty-one or Blackjack the sum of $1500 or any other sum.

The prayer of the response of plaintiff to the answer and cross-complaint of the defendant is that the defendant recover nothing by reason of her answer and cross-complaint and that he have judgment for $1500, with interest and costs.

On the same day the various pleadings referred to herein were filed the Circuit Court entered an order approving the petition and bond and removed the case to this court.

A transcript of the proceedings was filed herein on July 24, 1945, and on the same date the plaintiff, Erb O. Wheatley, filed his motion to remand, in which he denies (1) that this is a suit of a civil nature either at law or in equity, (2) that the defendant has a counterclaim in the sum of $4300 against him or that the matter in dispute exceeds the sum of $3000, exclusive of interest and costs.

The plaintiff admits that he is a citizen and resident of Hot Springs, Arkansas, but states in his motion that he is not possessed of sufficient information as to whether the defendant at the time of the commencement of this action or now is a resident and citizen of the State of Florida; admits that the defendant, Ora C. Martin, had theretofore filed in this court a suit to recover from him the sum of $4300, alleged to be (due for money lost by the defendant and won by him in a gambling game known as Twenty-one or Blackjack.

The plaintiff further alleges that this court has no jurisdiction of the cause of action stated in the complaint filed by him in the Garland Circuit Court; that the counterclaim set forth by the defendant in the Garland Circuit Court is not a suit of a civil nature either at common law or in equity and does not give this court jurisdiction; that the defendant is now barred from removing this cause from the Garland Circuit Court because of the filing by her in the Garland Circuit Court of her answer and counterclaim.

The attorneys for the respective parties have filed written briefs in support of their contentions herein, which briefs have been carefully considered by the court, along with the record in this case as well as the record in the original suit filed by the defendant herein as plaintiff against the plaintiff herein as defendant.

The learned attorneys for the plaintiff, in their argument in support of the motion to remand, state:

“The only questions before the court are whether or not the defendant by answering in said court (the Garland Circuit Court) and filing a setoff or counterclaim would be entitled to remove this cause to the United States District Court; and the further question as to whether or not this court has jurisdiction over the cause of action filed in the Garland Circuit Court and the action which was filed by Mrs. Martin in the United States District Court.”

As stated in Footnote 1, the court has already determined that it has jurisdiction of the parties and the subject matter of the original action filed in this court by the defendant herein, Mrs. Martin, as plaintiff, and no further reference need be made to that contention of the plaintiff herein.

In the motion to remand the plaintiff apparently tries to raise the question as to whether the defendant is a nonresident of Arkansas, but in the complaint filed in the Garland Circuit Court the plaintiff swore that the defendant was a nonresident of the State and that she was about to remove or had removed her property or a material part thereof from the State with the fraudulent intent to cheat, hinder and delay her creditors in the collection of their debts. Therefore the plaintiff cannot now be heard to say that defendant is not in fact a nonresident of Arkansas.

The right of removal from a State court to a United States District Court exists only in certain enumerated classes of cases. The statute, Section 28 of the Judicial Code, as amended, 28 U.S.C.A. § 71, confines this right to “the defendant or defendants therein, being nonresidents of the State.” Shamrock Oil & Gas Corporation v. Sheets et al., 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214.

In Heer Dry Goods Co. v. Shaffer, 51 Ark. 368, 11 S.W. 517, the Supreme Court of Arkansas held that where a counterclaim or setoff is filed by a defendant, the relation of the parties in the action is reversed and the defendant is plaintiff and vice versa. The plaintiff contends that when the defendant filed, her answer and counterclaim in the Garland Circuit Court that she thus became the plaintiff in so far as her counterclaim against the plaintiff herein is concerned, and that the right of removal does not extend to a party who thus becomes a plaintiff.

In the Shamrock Oil & Gas Corporation case, supra [313 U.S. 100, 61 S.Ct. 870], the court said:

“But at the outset it is to be noted that decision turns on the meaning of the removal statute and not upon the characterization of the suit or the parties to it by state statutes or decisions.”

The defendant in her answer and counterclaim stated:

“The answer and counterclaim are filed herein for the purpose of placing of record the jurisdictional requirements for removal of this cause to the United States District Court, as aforesaid, to the end that it may be consolidated with the cause of action now pending in the aforesaid United States District Court.”

Under the provisions of Section 1416 of Pope’s Digest of the Statutes of Arkansas, enacted February 19, 1935, the defendant was required to assert her counterclaim, or be barred from litigating all questions raised in her original suit in this court. The Supreme Court of Arkansas in construing this statute in the case of Morgan v. Rankin, 197 Ark. 119, 124, 122 S.W.2d 555, 558, 119 A.L.R. 1466, said:

“The statute (section 1416, Pope’s Digest) provides that, ‘in addition to the general denial above provided for, the defendant must set out in his answer as many grounds of defense, counterclaim, or set-off, whether legal or equitable, as he shall have. Each shall be distinctly stated in a separate paragraph, and numbered. The several defense (s) must refer to the causes of action which they are intended to answer in a manner by which they may be intelligibly distinguished.’
“The widow, as administratrix of her husband’s estate, had the right, and we think was under the duty, of litigating, in the suit against her as administratrix, all the questions which she raised in the suit later brought for her personal benefit.
“If one participant in an automobile collision may, when sued by the other, waive the right to assert his own damages as a result of the collision and later sue for such damages in a separate suit, we may reasonably expect two suits in many of such cases, and a more prolific and profitable field of litigation will be opened up than existed in the case of suits by guests against their hosts, before the passage of our Guest Statute on that subject.
“We think the present cause of action was barred by the former suit, and the judgment here appealed from awarding damages to appellee will be reversed and the cause dismissed.”

In Adams & Rusher v. Henderson, 197 Ark. 907, 910, 125 S.W.2d 472, 473, the same court said:

“The statute relied on is section 1416 of Pope’s Digest which provides what ‘the answer shall contain’ in four paragraphs, the first and second not being applicable here. The third and fourth paragraphs are as follows: ‘Third: A statement of any new matter constituting a defense, counter-claim or set-off, in ordinary and concise language, without repetition.
“ ‘Fourth: In addition to the general denial above provided for, the defendant must set out in his answer as many grounds of defense, counter-claim or set-off, whether legal or equitable, as he shall have. Each shall be distinctly stated in a separate paragraph, and numbered. The several defense^) must refer to the causes of action which they are intended to answer in a manner by which they may be intelligibly distinguished.’
“It is insisted that, since the passage of act 54 page 124 of 1935 in which the word ‘must’ as used in paragraph four above was substituted for the word ‘may’ as used in the prior statute, it is imperative that a ‘defendant must set out in his answ'er as many grounds of defense, counter-claim or set-off, whether legal or equitable, as he shall have.’ If appellee had gone to trial in the Crawford Circuit Court, without pleading his cross-action by way of counter-claim or set-off, he would have undoubtedly been thereafter barred of his right to maintain his action in the Sebastian Circuit Court, if pleaded, as it would have been res adjudi-cata, as held in the recent case of Morgan v. Rankin [197 Ark. at page 119], 122 S.W. 2d 555, 558, 119 A.L.R. 1466, relied on by appellants.”

The defendant did not voluntarily submit herself or her claim to the jurisdiction of the Garland Circuit Court as a defendant therein. She was required to set forth her counter-claim, which reveals an alleged sum of $4300 due her, a non-resident, by the defendant, a resident, growing out of and a part of the transactions upon which the plaintiff based his suit. Arkansas had the right under the power reserved to the States under the constitution to enact Section 1416, supra, and to require residents and nonresidents alike, when sued in her courts to make full disclosure of all defenses, counterclaims and set-offs, but by so doing the right of a nonresident defendant to removal and trial of the case in a Federal Court .is not abridged. The nonresident defendant remains a defendant with the right of removal as provided in the Federal Removal Statute. The Supreme Court of the United States in the Shamrock Oil & Gas Corporation case, supra, said:

“The removal statute which is nationwide in its operation, was intended to be uniform in its application, unaffected by local law definition or characterization of, the subject matter to which it is to be applied. Hence the Act of Congress must be construed as setting up its own criteria, irrespective of local law, for determining in what instances suits are to be removed from the state to the federal courts. Cf. Burnet v. Harmel, 287 U.S. 103, 110, 53 S.Ct. 74, 77, 77 L.Ed. 199.”

The right of the nonresident defendant to removal and to maintain her action in this court is not derived from the constitution. The right exists solely by virtue of the Act of Congress. Kline et al. v. Burke Construction Co., 260 U.S. 226, 227, 43 S.Ct. 79, 67 L.Ed. 226, 24 A.L.R. 1077. The court in discussing the question further on page 234 of 260 U.S., on page 83 of 43 S.Ct., 67 L.Ed. 226, 24 A.L.R. 1077, said:

“The Construction Company, however, had the undoubted right under the statute to invoke the jurisdiction of the federal court and that court was bound to take the case and proceed to judgment. It could not abdicate its authority or duty in favor of the state jurisdiction.”

This court is required to recognize the State statute and leaves the court free to protect the right of a nonresident defendant to a removal of the suit to a Federal court. In the case of Guaranty Trust Co. of New York v. York, 65 S.Ct. 1464, 1469, the Supreme Court of the United States, in discussing the duty of Federal courts to recognize and enforce state law in diversity of citizenship cases, said:

“Here we are dealing with a right to recover derived not from the United States but from one of the States. When, because the plaintiff happens to be a nonresident, such a right is enforceable in a federal as well as in a State court, the forms and mode of enforcing the right may at times, naturally enough, vary because the two judicial systems are not identic. But since a federal court adjudicating a state-created right solely because of the diversity of citizenship of the parties is for that purpose, in effect, only another court of t£ie State, it cannot afford recovery if the right to recover is made unavailable by the State nor can it substantially affect the enforcement of the right as given by the State.
“And so the • question is not whether a statute of limitations is deemed a matter of ‘procedure’ in some sense. The question is whether such a statute concerns merely the manner and the means by which a right to recover, as recognized by the State, is enforced, or whether such statutory limitation is a matter of substance in the aspect that alone is relevant to our problem, namely, does it significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in a State court?
“It is therefore immaterial whether statutes of limitations are characterized either as ‘substantive’ or ‘procedural’ in State court opinions in any use of those terms unrelated to the specific issue before us. Erie R. Co. v. Tompkins [304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487] was not an endeavor to formulate scientific legal terminology. It expressed a policy that touches vitally the proper distribution of judicial power between State and federal courts. In essence, the intent of that decision was to insure that, in all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court. The nub of the policy that underlies Erie R. Co. v. Tompkins is that for the same transaction the accident of a suit by a non-resident litigant in a federal court instead of in a State court a block away, should not lead to a substantially different result. And so, putting to one side abstractions regarding ‘substance’ and ‘procedure’, we have held that in diversity cases the federal courts must follow the law of the State as to burden of proof, Cities Service Co. v. Dunlap, 308 U.S. 208, 60 S.Ct. 201, 84 L.Ed. 196, as to conflict of laws, Klaxon Co. v. Stentor Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477, as to contributory negligence, Palmer v. Hoffman, 318 U.S. 109, 117, 63 S. Ct. 477, 482, 87 L.Ed. 645, 144 A.L.R. 719. * * * Erie R. Co. v. Tompkins has been applied with an eye alert to essentials in avoiding disregard of State law in diversity cases in. the federal courts. • A policy so important to our federalism must be kept free from entanglements with analytical or terminological niceties.”

The court is not unaware of the well established general rule that jurisdiction depends on the amount in controversy, as stated in the original complaint filed in the State court and not the counterclaim of the defendant, nor by any contingent loss which either party may sustain through the indirect or collateral effect of the judgment. See. Enger v. Northern Finance Corporation, D.C. Minn., 31 F.2d 136, and authorities cited therein by Judge Sanborn, now a Circuit Judge of the Eighth Circuit.

The rule that a nonresident defendant by voluntarily setting up a counterclaim when sued in a State court submits to the jurisdiction of the court, is likewise well established. See, Haney v. Wilcheck et al., D.C.W.D. Va., 38 F.Supp. 345, 354, for a collection of authorities.

Without doubt, the purpose of the removal statute is to give a nonresident defendant, who has, against his will, been brought in a State court, the right to remove to the supposed unprejudiced forum of the Federal court, but to deny that right to a plaintiff or any party of like status, who has voluntarily invoked or willingly submitted to the jurisdiction of the State court.

In Lee v. Continental Ins. Co., C.C.D. Utah, 74 F. 424, 425, Judge Adams, said:

“However, my inclination is to adopt the conclusion that the amount involved in a counterclaim is a part of the subject-matter in dispute, within the meaning of the act of congress conferring jurisdiction upon the federal court, and that inclination is strongly fortified in the case at bar by the terms of the Utah statute, supra. This requires the defendant, in a case like that at bar, to present his counterclaim in the suit in which the original action is brought, or be forever barred from doing so. ‘The matter in dispute,’ to use the phraseology of the act of congress in question, is not only the $1,000 which the plaintiff sues for, but it is that which, of necessity, under the statute in question, must be litigated in connection with it. Especially is this so in a case like that at bar, where the defendant has exercised his option to assert his counterclaim prior to the transfer of this suit to this court. The motion to remand must therefore be denied.”

In McKown v. Kansas & T. Coal Co., C.C.W.D.Ark., 105 F. 657, 658, Judge Rogers on January 3, 1901, long prior to the enactment of Section 1416 of Pope’s Digest of the Statutes of Arkansas, held that a case similar to the one now under consideration should be remanded, but stated:

“In states where the defendant, if he had a counterclaim, is compelled, under the state code, to plead the same, a contrary rule may be essential to the ends of justice; but in this state a defendant is not compelled to plead his counterclaim. He may or may not do so, at his election.”

The defendant had no alternative but to include in her answer in the State court her counterclaim, and included therein and in the petition for removal, seasonably filed are statements of every fact requisite to the jurisdiction of this court. The statute, Section 1416, supra, does not indirectly or collaterally affect her rights and liabilities but directly and positively precludes her from litigating her alleged claim against the plaintiff unless she asserts in the State court her counterclaim.

It is essential to the ends of justice and the protection of her rights as a nonresident that she be permitted as such nonresident defendant to remove the cause to this court.

Therefore an order is this day being entered denying the motion to remand. The exceptions of plaintiff are noted in the order.

       The original suit was filed July 6,1945, by Ora O. Martin as plaintiff, a resident and citizen of Florida against the defendant, Erb O. Wheatley, a resident and citizen of Arkansas, seeking to recover the total sum of $4300 alleged to be the net amount of the plaintiff’s losses in games of chance conducted by the defendant at a common gambling house owned and operated by the defendant in the city of Hot Springs, Arkansas. The defendant therein filed a motion to dismiss the complaint and alleged: (1) The pendency of the instant suit between the same parties involving the same controversy in the Garland Circuit Court; (2) that the defendant in that suit had filed an answer and counterclaim in the Garland Circuit Court as required by Section 1416 of Pope’s Digest of the Statutes of Arkansas; (3) that the complaint is not based upon any alleged breach of common law duty and that the court is without jurisdiction to hear and determine the same.
      The motion was duly argued upon written briefs and the court has on this date entered an order overruling the motion to dismiss and holding that the complaint states a cause of action and that this court has jurisdiction of the parties and the subject matter.


source: Caselaw Access Project

author: BRIGHT, District Judge.

license: Public Domain

text:
    UNITED STATES v. 10,620 SQUARE FEET, ETC., IN CANADIAN PACIFIC BLDG., CITY OF NEW YORK, et al.
    District Court, S. D. New York.
    Aug. 28, 1945.

      Harry T. Dolan, Sp. Asst, to Atty. Gen., for petitioner-plaintiff.
    Delafield, Marsh, Porter & Hope, of New York City (Wilmurt B. Linker, of New York City, and James Harper, Jr., of Mount Vernon, N. Y., of counsel), for defendant Fifth Madison Corporation.
    Ten Eyck R. Beardsley, of New York City, for defendant Newsprint Service Bureau.
    Dammann, Roche & Goldberg, of New York City (Alex Edelman, of New York City, of counsel), for claimants Stravon Publishers and Ward Green Co.
    Debevoise, Stevenson, Plimpton & Page, of New York City (Edward C. McLean and Theodore F. Fenstermacher, both of New York City, of counsel), for defendant Previews, Inc.
   BRIGHT, District Judge.

In this proceeding, the petitioner-plaintiff has condemned the immediate possession and exclusive use and occupancy of 10,620 square feet space, being rooms 602 to 615, inclusive, and rooms 624 to 626 inclusive, on the sixth floor of the Canadian Pacific Building, at 342 Madison Avenue, New York City, for a term of years ending June 30, 1945. Possession was taken on January 1, 1945.

The owner of the building, Fifth Madison Corporation, and the petitioner-plaintiff have agreed that the fair rental value of the premises taken is at the rate of $20,-660 per annum, or at the rate of $2 per square foot, and the owner claims the entire amount as against any claims of its tenants.

Seven tenant defendants, who have been ousted by the taking, present claims in the proceeding, basing them under the recent decision in United States v. General Motors Corporation, 323 U.S. 373, 65 S.Ct. 357.

They are as follows:

1. News Print Service Bureau

This claimant was a tenant of room 605 and part of room 606, under a lease dated February 15, 1944, which was to expire April 30, 1945, and under which it paid an annual rental of $3400, or $283.33 per month. It moved out on December 13 or 14, 1944, and paid for the expense of moving

For lettering door in the new quarters $41. Changing telephone from room 605 to

room 918 in the same building...... 20.

Tips to porters..................... 12.

Total ......................... $73.

It paid rent for the month of December 1944, but has not paid any rent for any of the subsequent months. No other proof of damages was offered by it.

2. M. D. Lundin Co., Inc.

This tenant had a lease for room 605, ■for which it paid $30. a month. It moved out on January 2 or 3, 1945, and paid the following amounts for moving expenses:

Moving bill...................... $30.90

Installation of new telephone...... 5.00

Lettering on the door of the new office ......................... 6.75

Total ....................... $42.65

It is now paying $45 a month for its present quarters. It has paid no rent for its former quarters since December, 1944. No other proof of damage was offered. This claimant promised to submit its lease, but has not done so. It is presumed that it leased under the same terms as the other claimants in the same building.

3. Stravon Publishers

This claimant was a tenant of room 613 under a written lease dated January 1, 1944, which was to expire on April 30, 1945, and provided for the payment of $900 per year or $75 per month. It occupied 650 square feet of space. It moved from the premises on January 3, 1945, and paid for moving expenses $188.41. No rent has been paid to the defendant owner since December 1944; claimant has not been billed for any rent, nor has it tendered any since it moved out. No other proof of damage was offered.

4. Ward Green Co., Inc.

This claimant occupied rooms 614 and 615 under a written lease dated January 1, 1944, which was to expire on April 30, 1945, and provided for the payment of rent at $1200. per annum. It occupied approximately 850 square feet of space, which made its rental approximately $1.40 per square foot. Claimant removed January 3, 1945, and paid for moving $230.29. It has not paid any rent since December 1944, has never been billed for any, and has not tendered any. No other proof of damage was offered. It is stated that it was not offering any proof of value, no opinion evidence, but that it more or less rested upon the stipulation made between counsel for the owner and the Government setting the value at $2.

5. Previews, Inc.

This claimant occupied rooms 602, 603, 604, part of 606, 607 and 608, under a written lease, dated April 30, 1945. Its rental was $6,000 per annum, and it occupied approximately 3600 square feet, for which it paid on the basis of $1.66 per square foot. Claimant had been a tenant in the building since May 1, 1934. It moved out of the premises on January 3, 1945, and went to 49 East 43rd Street, at which place it was required to pay $2.08 per square foot, and in which it was required to make alterations consisting of partitions, etc., which consumed about ten weeks time. When it moved out it had 37 or 38 employees. Some of them went to the new space at the end of December, and its accounting and production departments were housed in temporary space in the Canadian Pacific Building until the end of January 1945, when they were moved to the new space. It claimed to have paid the following expenses :

Central Moving & Storage Co.

for moving.................. $1,007.64

Rental of temporary space and

electricity .................. 365.17

Time of its vice president searching for new quarters and in the

moving ..................... 300.00

Time of salesmen searching for new quarters and supervising . alterations for three months... 900.00

Loss of time of clerical staff of 11

persons for one month........ 1,570.00

Paid for alterations as amortized at 10% ..................... 811.98

Total..................... $4,954.79

It paid no rent after December 1944, was not asked for any, and tendered none. No other proof of damage was offered. Its counsel stated: “I understand Mr. Do-lan’s concession made at the opening to be that the fair rental value of these premises as bare space is $2. a foot. The various items of damage which I have offered proof of are offered as additional elements of damage tending to prove the total compensation which we conceive we are entitled to in this proceeding.”

6. Harold B. Karp

This tenant was originally in another suite until December 1943. The Navy Department requested his office, this claimant acquiesced, and moved into the suite on the sixth floor involved in this proceeding. He signed a lease which was to expire April 30, 1945. The lease which he submitted was for the original suite, hut he testified that the lease for the new quarters, which he had signed but did not produce, embodied the same terms as the old, to the best of his recollection. The expenses which he claims to have paid are

Aiello, Jr., moving............... $115.00

Removing and relaying linoleum.. 71.00

New linoleum .................. 81.00

Installing telephones ............ 45.45

Lettering on glass............... 26.50

Loss of stationery............... 60.00

Total ...................... $398.95

Claimant moved out about December 30, 1944, and paid no rent thereafter, received no bill for rent and tendered none. His counsel stated, “We are not claiming any damage at all for the difference in the space or for the unexpired leasehold.”

7. Joseph Epstein

This tenant occupied room 609 under a written lease dated March 24, 1944, which was to expire April 30, 1945, and provided for a rental of $720 per annum. He does not make any claim for difference in rentals, or loss of rentals, or for alleged unexpired leasehold estate, just for exact damages caused by the removal, which, he contends, were as follows:

Aiello, Jr., for moving............ $ 41.46

New electric motor (He said that in the new space they had A.C. current and in the old space it was D.C., so he-had to buy a new

motor, for which he paid)...... 50.00

Removal and installation of telephone ........................ 5.00

New stationery ................. 15.00

Loss of Carpet................. 40.00

Total ...................... $151.46

No other proof of damages was' offered.

All of these claims have certain things in common. In every instance, all of their leasehold rights have been taken, and by the terms of their leases, their terms expired prior to the term condemned. All of them held under leases which contained the following clause:

“12. If the whole or any part of the demised premises shall be taken or condemned by any competent authority for any public or quasi public use or purpose, then, and in that event, the term of this lease shall cease and terminate from the date when the possession of the part so taken shall be required for such use or purpose, and without apportionment of the award. The current rental, however, shall in such case be apportioned.”

All of the claimants surrendered possession of their respective space at or about January 1, 1945, have recognized that all of their interest in the premises was at an end as of that date, and have since neither paid nor tendered rent, nor been billed for it by their former landlord. None of them, has offered any proof of rental value.. They have not alleged or claimed or' proved any value for the unexpired leasehold interest. The proof offered by each, of them was of alleged additional elements, of damage, consisting mainly of expenses' incident and related solely to their moving from the condemned space to new quarters.

In the General Motors case, the Supreme Court had its first opportunity to-rule upon an award made in a condemnation proceeding where only temporary use and occupancy was taken. It recognized as valid the rule, in cases where a fee was taken, prohibiting an award for “consequential damages.” This decision, therefore, it seems to me, must be confined to. cases where a partial taking occurs; that is, where only a part of a tenancy is condemned. I am reenforced in this thought by the statement in the prevailing opinion 323 U.S. at page 380, 65 S.Ct. at page 360,. where it was said:

“The question posed in this case then is, shall a different measure of compensation apply where that which is taken is a right of temporary occupancy of a building equipped for the condemnee’s business, filled with his commodities, and presumably to be reoccupied and used, as before, to the end of the lease term on the termination of the Government’s use ?”

And by the further statement at page 382 of 323 U.S., at page 361 of 65 S.Ct.:

“When it takes the property, that is, the fee, the lease, whatever he may own, terminating altogether his interest, under the established law it must pay him for what is taken, not more; and he must stand whatever indirect or remote injuries are properly comprehended within the meaning of ‘consequential damage’ as that conception has been defined in such cases. Even so the consequences often are harsh. For these whatever remedy may exist lies with Congress.
“It is altogether another matter when the Government does not take his entire Interest, but by the form of its proceeding chops it into bits, of which it takes only what it wants, however few or minute, and leaves him holding the remainder, which may then be altogether useless to him, refusing to pay more than the ‘market rental value’ for the use of the chips so cut off.”

There obviously were but three questions •decided in that case. They are: 1. Is the long-term rental value the sole measure of the value of such short-term occupancy carved out of the long term? 2. If the taking necessitates the removal of personal property stored in the building in conformity to the normal use of such a building, is the necessary expense of the removal to be considered in computing compensation? 3. If a tenant’s equipment and fixtures are taken or destroyed, or reduced in value, by the Government’s action, must it compensate for the value thus taken or destroyed in addition to paying the rental value of the occupancy?

In that case, the General Motors Corporation procured a lease in 1928 for a warehouse, the term of which was to run for twenty years, or, in other words, until 1948. In 1942, the Government became a •subtenant of a portion of the space. On June 8, 1942, condemnation proceedings for the occupancy of the remaining portion for a term ending June 3, 1943, and for additional yearly periods, was begun and immediate possession granted. The •General Motors Corporation offered proof of the expenses of removal, which was rejected. The expenses which it claimed, among others, were salaries of employees engaged in the work, compensation of employees put out of work by the removal, wages of janitor and watchman during removal, cost of shipping contents to other points, compensation to executives and employees in moving freight, and haulage charges, rental of storage for moved articles, bin equipment destroyed, and estimated original cost of installation of fixed equipment completely lost by dismantling. The expenses shown by this proffered proof aggregated $117,000. The award was $38,597.86, which was less than the amount of rent which the General Motors Corporation was required to continue to pay for the space taken. The proof of rental value offered was for bare floor space, and the award was limited to the market value of occupancy of a vacant building. The court held that under the circumstances appearing in that case, proof of the cost of moving out and preparing space for occupancy, which would include labor, materials and transportation, storage of goods, and possible return to the premises, was proper “not as independent items of damage but to aid in the determination of what would be the usual — the market — price which would be asked and paid for such temporary occupancy of the building then in use under a long term lease.” It also held that the respondent was entitled to compensation for fixtures and permanent equipment destroyed or depreciated in value by the taking in addition to the value of occupancy. Mr. Justices Douglas and Black concurred in that part of the opinion granting compensation for fixtures and permanent equipment destroyed or depreciated in value, and also that the respondent was entitled to a further increase in the award upon the theory that just compensation to which the respondent would be entitled would at least be the full rental it was required to pay. They dissented, however, from any allowance for the cost of removing personal property from the premises, contending that such consequential losses had been denied where a fee interest was being condemned, and should not then be allowed unless expressly authorized by Congress.

The obvious differences between the General Motors case and the present one are: (a) Here the entire leasehold of the defendants is taken and terminated; (b) there is here no proof of rental value based on or claimed to reflect the expense of removal, merely proof of the bare items of expense; (c) no fixtures or permanent equipment were destroyed or depreciated in value; (d) the defendants’ tenancy here was subject to the condemnation clause quoted, which expressly provides that their tenancy shall cease and terminate “without the apportionment of the award”; and (e) all of the defendants have obviously acquiesced in such termination of their leasehold.

The claims presented by each of the seven defendants must be disallowed for three reasons: (1) They are clearly consequential; (2) there is a failure of proof to sustain them; and (3) the condemnation clause precludes any such recovery.

1. The taking here was of all of the interest of the claimants. The Supreme Court in the General Motors case clearly adhered to the rule that where the taking would terminate altogether the interest of the defendant, “consequential damages” could not be awarded; that he must stand whatever indirect or remote injuries are properly comprehended within that term, which is defined in the same opinion, 323 U.S. at page 379, 65 S.Ct. at page 360:

“The sovereign ordinarily takes the fee. The rule in such a case is that compensation for that interest does not include future loss of profits, the expense of moving removable fixtures and personal property from the premises, the loss of goodwill which inheres in the location of the land, or other like consequential losses which would ensue upon the sale of the property to someone other than the sovereign.”

2. It was further stated in the General Motors case, referring to the reasonable cost of moving, that “such items may be proved, not as independent items of damage but to aid in the determination of what would be the usual — the market— price which would be asked and paid for such temporary occupancy of the building.” Here no proof of market or rental value of the leasehold was offered taking into consideration the items proved, nor any proof of what effect the removal expenses would have upon such value if taken into consideration. The burden of making such proof was upon the claimants. Westchester County Park Commission v. United States, 2 Cir., 143 F.2d 688, 692.

3. The condemnation clause quoted expressly stipulates that upon the taking the term of the lease shall cease and there shall be no apportionment of any award. I have examined the record in the General Motors' case, and it does not appear that there was any such clause in the lease involved there. I have already written upon this subject. United States v. Improved Premises on McLean Avenue, D.C., 54 F. Supp. 469-472, and that ruling has been followed by Judge Abruzzo in United States v. 21815 Square Feet of Land in Brooklyn, D.C., 59 F.Supp. 219.

Claimants urge (1) that the condemnation clause in the leases established only the rights of the owners and the tenants as between themselves, and is not available to the Government as any answer to their claim; (2) that the words “taken or condemned” refer only to a taking of the fee and nothing more, and never contemplated the condemnation of a leasehold interest; (3) that the only taking is of property of the tenant, nothing is condemned belonging to the landlord except the landlord’s possession, after the expiration of the tenants’ lease, to the expiration of the Government’s occupancy. And they cite in support of their view the cases of United States v. Petty Motor Co., 10 Cir., 147 F. 2d 912, certiorari granted June 18, 1945, and United States v. 194,717 Square Feet Occupied by Brewster, D.C., 60 F.Supp. 314.

1. The agreement is undoubtedly between and referable to the status of the landlord with the tenant. Here the landlord claims the whole award and insists that the clause quoted conclusively determines that question. I cannot see, therefore, where this argument leads to or what it avails claimants. If they have no claim as between themselves and the landlord, who is to get the award, I fail to see where they have any claim. The Government is only required to pay just compensation for the use and occupancy taken. The fair rental value of that use, which is what the General Motors case decides should be paid, has been stipulated at $2 per square foot, and none of the defendants question it. Most of them actually accept, and none offers any evidence upon the subject. Plaintiff-petitioner cannot, ' therefore, he required to pay more. Whatever claims the tenants might have are encompassed within that amount. The question really is, how shall the amount be distributed as between landlord and tenants. As between them the condemnation clause terminates the tenancies as of January 1, 1945, and there shall be no apportionment. The tenancies were thus terminated as of that date and there was nothing belonging to claimants for the Government to take. The expenses of moving were proven as separate items of damage. The General Motors case decided they could not be recovered as such; proof thereof was “to aid in the determination of what would be the usual —the market — price which would be asked and paid.” It seems to me, whichever the viewpoint, the result is the same.

2. The condemnation clause cannot be limited to a taking of the fee. It specifically refers to a taking of the whole or part of “demised premises.'

3. The property taken was that of the landlord’s. By the agreement the claimants’ interest ceased on the taking— January 1, 1945. Whether the clause can be availed of by the Government or not, the market value to be paid goes to the landlord by virtue of its agreement with its tenants. The amount to be paid for rental value is established without dispute. The owner and the claimants rest on the stipulated amount.

The Petty Motor case and the Brewster decision, in my judgment, are not controlling. In the Petty Motor case all of leasehold rights of month to month tenants and of the Petty Company and a portion of the Independent .Company leasehold, were taken. The owner of the fee was eliminated from the case by motion because he had leased the entire building to the Government. The court there construed the General Motors case as holding that where less than a fee was taken, the rule against consequential damages did not apply; and applied the same doctrine to monthly tenants as well as to those whose term extended beyond the taking. The General Motors case, as I read it, justifies no such construction; in words it is directly opposed to such a holding, except where a portion of a leasehold term only is condemned. As quoted above, where the taking terminates -altogether defendant’s interest, whether fee, lease or otherwise, the latter must stand “whatever indirect or remote injuries are properly comprehended within the meaning of ‘consequential damage.’ ” 323 U.S. at page 382, 65 S.Ct. at page 361. The lease to the Independent Company, containing a condemnation clause had not become effective when the proceeding there was commenced and possession taken; and the court did not discuss, or apparently consider, the effect of such a clause.

In the Brewster case, Brewster’s lease did not expire until March 1, 1948, and the use condemned was for a term ending June 30, 1945, extendible for yearly periods during the national emergency. The condemnation clause there involved became effective and terminated the tenancy “as of the date title shall vest in the con-demnor.” [60 F.Supp. 315] It was held the clause did not contemplate the condemnation and acquisition of a leasehold. Here the reverse is true; the clause here expressly mentions a taking of the whole or part of the “demised premises.” Here, too, the tenants expressly stipulated that the award should not be apportioned, and such an agreement is absent in the Brewster lease. I have previously discussed the contention that the clause determined only the rights and liabilities of the parties to the lease. It is also to be noted that the owner, the City of Newark, had leased the airport to the Government subject to existing leases. The owner obviously had no interest in any award.

For the reasons given, the claims of the tenants are denied, and the award on the basis stipulated will be made to the owner.


text:
    UNITED STATES v. 45,000 SQUARE FEET, ETC., AT 605-615 WEST 42ND STREET, CITY OF NEW YORK et al.
    District Court, S. D. New York.
    Aug. 28, 1945.

      Harry T. Dolan, Sp. Asst, to Atty. Gen., for petitioner-plaintiff.
    Henry G. Friedlander, of New York City, for defendant Netherland Cab Co.
   BRIGHT, District Judge.

The only contested matter in this proceeding is the claim of the defendant Neth-erland Cab Company.

Petitioner-plaintiff has condemned the exclusive use, occupancy and possession of 45,000 square feet in the premises located at No. 605-615 West 42nd Street, New York City, for a term of years ending June 30, 1945, together with the right to said term for additional yearly periods during the existence of the national emergency. On August 23, 1944, an order of possession was entered and possession was taken. On October 20, 1944, the said Netherland Cab Company was made a party defendant. On December 4, 1944, petitioner plaintiff deposited in the registry of this court $18,644.35, representing the rental value for the period taken to June 30, 1945, based upon an annual rental of $24,000. On December 19, 1944, upon a stipulation signed by the plaintiff and Annuta Maidman, the owner of the premises, and on notice to the said Netherland Cab Company and others, an order was made fixing the fair rental value of the premises taken on the basis of $24,000 per annum, and that order directed the clerk of this court to pay from the funds on deposit to said Annuta Maidman, the owner, $4,644.35 representing rental to and including November 30, 1944. That order also provided that the said Annuta Maidman, or those entitled thereto, upon proper notice to all parties in interest and defendants, might make application for payment from the deposited funds, of the sum of $2,000 per month during the period of the Government’s use and occupancy.

On March 8, 1945, said owner, upon notice to the Netherland Cab Company, claimant, and other defendants, moved for an order directing the clerk of the court to pay to her from the funds on deposit, $6,000 as and for rent for the months of December 1944 and January and February 1945. No opposition was made to that motion by any defendant, and on March 16, 1945, an order was made directing the payment of said sum to said owner as rental for the months specified.

On May 2, 1945, again on notice to the claimant, Netherland Cab Company and other defendants, the owner made application for an order directing payment to her of the sum of $4,000 claimed as rent for the months of March and April 1945. No opposition appearing, an order was made on May 11, 1945, directing the clerk of this court to pay to such owner $4,000 representing rental for the two months mentioned.

At the beginning of the hearing upon the claim of the Netherland Cab Company, its counsel stated that there was no claim for loss of rental value or for the value of the unexpired leasehold estate; that the claim was based upon the expense of moving.

Proof was then offered by the claimant of payments made for the following purposes in the following amounts:

Metropolitan Distributors, expenses in moving............ $ 59.95

Metropolitan Distributors, expenses in moving............ 34.26

W. K. Trucking Company, moving machinery and equipment.. 231.75

Joseph McCormack Company, expenses in moving............ 30.00

Benjamin Grossman, for electrical installations in the new premises .................... 1,556.00

Installation of blower in the new premises for the purpose of taking fumes out of garage shop.. 154.30

Extra flourescent lights installed 45.00

F. J. Mersf elder, new heater.... 26.00

New ash hoist installed in new premises .................... 31.25

Installation of toilet in new premises ........................ 100.00

Meals for men during moving... 18.00

Outside labor'employed in moving 16.00

Reimbursement to employee for cash expense incurred........ 42.00

Loss of income of 40 cars on September 17, 18, 19, 26 and 27, 1944, at $160. a day........... 800.00

Total ..................... $3,144.51

It appears that the claimant paid the rent of the premises vacated for the month of September 1944, to the New York Transfer Company and Terminal System, Inc., of which it was a subtenant, and moved out about the 25th of that month. It has paid no rent for the old premises since September 1944, has not been billed for any, nor has it tendered any rent. Its comptroller testified that when it moved out, it considered its lease terminated, and what is sought to be recovered here is the expense of moving out, re-equipping and furnishing the new quarters.

The claimant was in possession under a lease dated December 31, 1943, from the Terminal System, Inc. That lease was from month to month, commencing January 1, 1944, and was made subject to all the terms, conditions and covenants of a lease dated February 17, 1941, between the New York Transfer Company Incorporated, as landlord, and Terminal System, Inc., as tenant.

The last lease mentioned, dated February 17, 1944, was made by the New York Transfer Company Incorporated, landlord, to Terminal System, Inc., as tenant, for a term of five years, one and a fraction months, from the date of the lease to March 31, 1946. Among its other provisions, it contained the following clause :

“13. If the whole or any part of demised premises shall be taken or condemned by any competent authority for any public or quasi public use or purpose, then, and in that event, the term of this lease shall cease and terminate from the date when the possession of the part so taken shall be required for such use or purpose, and without apportionment of the award. The current rental, however, shall in any such case be apportioned.”

The tenant claims that it is entitled to recover the items above set forth under the cases of United States v. General Motors Corporation, 323 U.S. 373, 65 S.Ct. 357, and United States v. Petty Motor Company, 10 Cir., 147 F.2d 912.

The facts in this claim are almost identical with those considered in the case of United States of America v. 10,620 Square Feet in Canadian Pacific Building, 62 F. Supp. 115, just decided, and my decision in that case would seem to govern this. The identical condemnation clause which was contained in the leases of the Madison Avenue property was contained in the lease under which the present claimant was in possession. Here, the term taken by petitioner plaintiff was all of the term of the claimant. And it expressly appears that the claimant considered its leasehold at an end at the end of September 1944.

In addition to what was said in the Madison Avenue case, it seems very doubtful if the claimant here had any unexpired term. United States v. Certain Land in Borough of Brooklyn, D.C., 39 F.Supp. 91-99.

The claim of the Netherland Cab Company, is, accordingly, dismissed.


author: GODDARD, District Judge.

text:
    THE COROZAL. THE DANIEL PIERCE.
    District Court, S. D. New York.
    May 15, 1944.

      Maclay, Lyeth & Williams, of New York City (Mark W. Maclay, of New York City, Adelbert G. Straub, Jr., of Jackson Heights, L. I., N. Y., of counsel), for Sinclair Refining Co.
    Burlingham, Veeder, Clark & Hupper, of New York City (Chauncey I. Clark and Eugene Underwood, both of New York City, of counsel), for steamship Corozal.
   GODDARD, District Judge.

These are cross suits to recover damages resulting from the collision between the Corozal owned by the Agwilines, Inc., and the Daniel Pierce, owned by the Sinclair Refining Company.

The collision occurred on the evening of August 29, 1942, in the Gulf of Mexico, about twenty miles west of Panama City and some three to five miles off shore. Both vessels were, pursuant to Navy orders, proceeding without lights and under telegraph full speed of approximately 9 to 9Yz knots. The Corozal, a single right-handed screw steel cargo vessel, 348 feet long, 47 feet beam, with a full cargo including a deck load, was bound in an easterly direction from Mobile, Alabama, to Port of Spain, Trinidad, on a course 117 degrees true. The Daniel Pierce, a single right-handed screw tanker, 375 feet long, 53 feet beam, was bound generally in a westerly direction from the west coast of Florida to Houston, Texas, with a cargo of oil, and was on a course 285 degrees true.

The night was dark and a rain squall made the visibility poor; wind moderate S.E., sea moderate. At 8:35 p. m. the Cor-ozal time, and 8:31 Pierce time, the two vessels collided. The Corozal’s starboard bow collided with the Pierce’s starboard side aft of the bridge structure.

The testimony of the Corozal’s witnesses is that the master was on the bridge in charge of navigation; a licensed officer was on watch on the bridge; a lookout was stationed on the port and starboard wings of the bridge respectively, and a seaman at the wheel steering; that the master left the bridge shortly after 8:30 o’clock; that when he arrived at the bottom of the stairs, the watch officer and one of the lookouts, both on the port wing of the bridge, observed about the same time a dark object which proved to be the Pierce about three-quarters of a point on the port bow, estimated at one-third of a mile distant; that the Corozal’s rudder was immediately ordered hard right, but before the order was fully executed a two blast signal was heard from the Pierce; that the Corozal immediately put her rudder hard left and sounded a two blast signal followed by a danger signal and stopped her engines. Shortly afterwards the outline of the Pierce could be seen and she appeared to be crossing the Corozal’s bow from port to starboard; that the Pierce continued on at the same undiminished speed, and that although the Corozal swung to the left under a hard left rudder, the starboard side of the Pierce, about amidships, struck the Corozal’s starboard bow.

The testimony of the Pierce’s witnesses is that just before the collision her master was in the chart room immediately abaft of the wheel house; that the third mate Raulerson was on watch on the outside bridge; that the lookout Schwar was in his quarters aft having obtained leave from the mate to get his oil skins as it had started to rain, and that the standby man had not been summoned to take his place in his absence; that when the Corozal was first sighted she was bearing about three points on the starboard bow and at about nine hundred feet away; that although the course of the Corozal could not be definitely made out when first sighted, her bearing was observed to be increasing and the third officer concluded she was on a parallel and opposite course in a position to pass safely starboard to starboard, but as an added measure of precaution ordered 5 degrees left rudder. After she had steadied on that course, he ordered “more left”. Upon hearing the third officer’s order to the helmsman, the master came out on the bridge and after looking, blew two blasts to which the Corozal immediately replied with two blasts and both officers observed that the bearing of the Corozal was not increasing and that she seemed to be coming directly toward the bridge of the Daniel Pierce, and when they were twenty to twenty-five feet apart the Pierce’s engines were put full speed astern, but the starboard bow of the Corozal struck the starboard side of the Daniel Pierce about one hundred feet from her bow.

Immediately after the collision the engines of both vessels were stopped and they drifted apart, and after some five or ten minutes, each proceeded on her course. At no time before the collision did either vessel turn on her lights. The angle of the collision between the starboard sides of the two vessels as they came in contact was variously estimated by the witnessees of the Pierce from twenty to forty-five degrees, and by the witnesses of the Corozal from twenty-nine to forty degrees.

As the Corozal was on a course 117 degrees true, and the Pierce was on a course 285 degrees true, it is apparent that they were on courses which diverged by 12 degrees — a little over a point, and were therefore on crossing, not on opposite parallel courses.

The Pierce urges that the collision occurred substantially west of the point where the original courses intersected and that the collision was caused by the Coro-zal turning to the right directly across the course of the Pierce. The Corozal contends that the collision occurred about at the point where the original courses intersected. Each endeavors to prove their respective conclusions by mathematical computation. But each adopts their own version of the testimony as to the bearings when the other vessel was sighted. If the testimony of the Corozal’s watch officer and port bridge lookout that the Pierce bore from three-quarters to a point on the Cor-ozal’s port bow is accepted, then this contention of the Pierce is clearly wrong. If the testimony of the Pierce’s watch officer that the Corozal’s bearing was broadening is to be accepted, then Pierce’s conclusion might be correct. However, I think there is no need to resort to mathematical speculations founded upon uncertain facts. There are sufficient positive facts upon which to determine the causes of the collision.

One of the main causes of the collision was the action of the Corozal in putting her rudder “hard right” upon sighting the Pierce without knowing the Pierce’s course and without blowing any signal, with the result that she headed toward the Pierce instead of away from her.

After examining the deposition of Mac-Geachie, third officer of the Corozal, his testimony before the Marine Board, his entry in Corozal’s log, and other circumstances, my conclusion is that upon sighting the Pierce he ordered “hard right rudder”, but did not sound the one blast signal called for under Article 28 of the International Rules, 33 U.S.C.A. § 113, in a port to port passing. It further appears that his two blast signal was not sounded, nor the Corozal’s wheel put hard left until he received the two blast signal from the Pierce and while the Corozal was under the impetus of the hard right rudder, and judging from the angle of collision the Coro-zal had substantially altered her course to starboard. Moreover, this change of course was made before those in charge of her navigation ascertained the Pierce’s course.

The Pierce was also at fault for violation of Article 28 in failing to sound promptly a two blast signal upon altering her course to port. When Raulerson, the watch officer on the Pierce’s bridge, first sighted the Corozal about three points on the starboard bow about nine hundred feet away, he was uncertain of her heading as her outline was indistinct in the darkness, but thought she was running parallel with the Pierce in the opposite direction. He ordered a 5 degree left rudder; then after she had steadied on that course, he ordered “more left”. However, it was not until the master, who had been lying down in the chart room, heard this order, came on the bridge and observed the Corozal, then estimated by him to be five hundred feet away, that the two blast signal was sounded. It was blown by him forty-five seconds, according to his estimate, after he heard the third officer’s order “more left”. Exactly how much time elapsed between the original change of course and the sounding of any signal, it is impossible to say, but enough time elapsed for the Pierce to have steadied on the 5 degree change of course plus the forty-five seconds interval between the “more left” order and the sounding of the signal. Such a delayed warning is not adequate notice of change of course and is not a compliance with the Rule. The Cushing, D.C., 266 F. 570, affirmed, 2 Cir., 292 F. 560.

In view of the position of the two vessels, Pierce’s failure to immediately signal her change of course may well have been a contributory cause of the collision. But at least the Pierce has not shown that it could not have contributed to the collision as she must do to be excused under the rule of The Pennsylvania, 19 Wall. 425, 22 L.Ed. 148.

I think both the Pierce and the Corozal were seriously at fault in failing to switch on their lights when they sighted the other in the dark distance. All that those on either vessel could see was a dark dim object. Neither could make out the heading of the other; yet they continued on under full speed, attempting to maneuver with reference to the other vessel.

Counsel for the Pierce urge that the Corozal “misjudged the bearing” of the Pierce, and Pierce’s watch officer testified that the course of the Corozal could not be definitely made out when first sighted, but he concluded that she was on a parallel and opposite course. Had the red and green lights been switched on promptly the navigators of the two vessels would have been warned of the position and course of the other vessel, and more than likely could have navigated so as to pass safely or reversed their engines and avoided a collision. No adequate reason, such for instance as the immediate danger from submarine, is given by either vessel for not switching on her lights. The watch officer of the Pierce did not think of it and her master testified that he understood that no lights were’ to be used at all; but he produced no order of the Navy to that effect. The third officer of the Corozal said that he did not turn on her lights because to do so he would have had to go inside and he would have lost sight of the other ship. This latter reason is not a valid excuse, for her running lights should have been so located that they could be turned on immediately if necessary to avoid collision. Indemnity Mutual Marine Assur. Co. v. United States, 1931 A.M.C. 1987.

When confronted with a situation of special circumstance, such as the imminent danger of collision, it is the duty of a vessel, even when proceeding without lights pursuant to orders of the Navy, to promptly turn on her running lights to warn the other vessel of her position and heading. The Cushing, D.C., 266 F. 570, affirmed 2 Cir., 292 F. 560; Indemnity Mutual Marine Assur. Co. v. United States, 1931 A.M.C. 1987. The authorities in England are to the same effect. The Dominion Monarch, 71 Lloyd’s List L.R. 110, on appeal, 73 Lloyd’s List L.R. 229; The Jernland, 71 Lloyd’s List L.R. 151; The Testbank, 70 Lloyd’s List L.R. 270, on appeal Lloyd’s List L.R. 6 [1942],

The Pierce was negligent in failing to have any lookout at the time. Previous to the collision the third officer, the wheelsman and her one lookout were on the bridge of the Pierce, but shortly before the Corozal was sighted the lookout had been given permission by the officer to go to his quarters for his oil skins. No one was called to relieve him, and he was in his quarters putting on his oil skins when the Corozal was sighted by the third officer looking through a small slit in the wheelhouse window. A deck officer in charge of the navigation of the vessel is not a proper lookout. The Ottawa, 3 Wall. 268, 18 L.Ed. 165. Proper lookouts are persons other than officers of the deck or the wheelsman. The Arthur M. Palmer, D.C., 115 F. 417. “The want of a competent lookout properly stationed and vigilant is a fault in a vessel as a result of which she assumes the consequential risk of a collision to which the fault contributed.” The Buenos Aires, 2 Cir., 5 F.2d 425, 432, and the burden is on that vessel to show that this fault was not a contributing cause. The Ariadne, 13 Wall. 475, 20 L.Ed. 542; The Madison, 2 Cir., 250 F. 850; The Pilot Boy, 4 Cir., 115 F. 873.

The master of the Pierce admitted that ordinarily she had a lookout on the forecastle head except when the sea was too rough, which it was not on this night.

Counsel for Pierce urges that the absence of a lookout was immaterial as the third officer sighted the Corozal as soon as it was possible for anyone to see her and that the sole cause of the collision was the Corozal’s change of course. Whether a lookout would have sighted the Corozal sooner is speculative; but Schmidt. Pierce’s engineer who was on deck getting some fresh air — not on watch — said that he saw the Corozal when about two thousand feet away. Had the officer in charge of Pierce’s navigation been informed earlier of the approaching Corozal, he would have had more time to meet the situation; at least, it would have tended to avoid his confusion and haste when he saw her only nine hundred feet away.

The Corozal had two lookouts — one on each wing of the bridge, but none in the bow. The failure to have a lookout in the forward part of the vessel is inexcusable when, as here, she was proceeding “blacked out”, at full speed in misty weather, and the safety of other vessels, as well as her own, depended largely upon the vigilance of proper lookouts. Several excuses were given for not having such a lookout, but these fail to justify a departure from this requirement insisted upon by Judge Addison Brown in the Patria, D.C., 92 F. 411. See also New England Maritime Co. v. United States, D.C., 55 F.2d 674, affirmed United States v. Gould, 1 Cir., 73 F.2d 1016; Dahlmer v. Bay State Dredging & Contracting Co., 1 Cir., 26 F.2d 603, 605; Watts v. United States, D.C., 123 F. 105.

In The Vedamore, 4 Cir., 137 F. 844, it was held that a lookout should be placed in the bow of a ship; that this is the best position to hear and observe and that it will not avail a ship, which is bound to properly place her lookout, to show that its deck was so crowded that proper room could not be reserved for stationing a lookout.

The above findings of fault are sufficient to account for the collision, and it seems unnecessary to further consider the charges made by each vessel that the other was at fault for failing to stop and reverse her engines until in the jaws of the collision.

Both vessels were guilty of faults which resulted in the collision. It is a case of divided damages. A decree may be entered accordingly with a reference to a Commissioner as to the amount of damages. Proposed findings of fact and conclusions of law may be presented on ten days’ notice.