author: WYCHE, District Judge

text:
    FIRST NAT. BANK OF HOLDENVILLE, OKL., v. ICKES, Secretary of the Interior.
    Civil Action No. 26227.
    District Court of the United States for the District of Columbia.
    May 5, 1945.

      Paul M. Niebell, of Washington, D. C. (W. W. Pryor, of Wewoka, Okl., of counsel), for plaintiff.
    H. Edward Hyden, of Washington, D. C. (Fowler Harper and Gilbert F. Kloth, both of Washington, D. C., of counsel), for defendant.
   WYCHE, District Judge

(sitting by designation) .

Plaintiff, a banking corporation, brought this action as trustee under the last will and testament of Thomas Long, Sr., a deceased full-blood Creek Indian, to compel the Secretary of the Interior to relinquish to the plaintiff supervision and control over 80 acres of land and the profits accruing therefrom after the testator’s death.

In compliance with Rule 52(a) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, I find the facts specially as follows:

Findings of Fact.

Thomas Long, Sr., a full-blood Creek Indian died on March 13, 1932, seized of an estate consisting in part of 80 acres of land in Oklahoma which had been allotted to him as a member of the Creek Nation. During his lifetime the allotment was subject to restrictions against alienation imposed by sections 1 and 9 of the act of May 27, 1908, 35 Stat. 312, as amended by section 1 of the act of April 12, 1926, 44 Stat. 239, and the act of May 10, 1928, 45 Stat. 495. The land is covered by an oil and gas lease executed by the allottee in 1912 and approved by the Secretary of the Interior under authority of section 2 of the act of May 27, 1908, supra, which lease provides that the Secretary of the Interior shall have the exclusive power and duty to supervise the collection, care and disbursement of payments made thereunder by the lessee until such time as the restrictions against alienation are removed from the land.

Thomas Long, Sr., left a last will and testament executed under authority of section 23 of the act of April 26, 1906, 34 Stat. 137, as amended by section 8 of the act of May 27, 1908, supra, and as extended by the act of May 10, 1928, supra. By the seventh paragraph of the will the testator devised the aforesaid 80 acres of his allotment to his son, Thomas Long, Jr., a full-blood Creek Indian, as trustee, with the power to collect the income and make stipulated payments to the testator’s widow, children and grandchildren during the lifetime or widowhood of the former, and to convey the land thereafter to the said children and grandchildren. The tenth paragraph of the will provided that the property should vest in the beneficiaries even though the Secretary should refuse to relinquish supervision to the trustee. All of the beneficiaries named in the will are full-blood Creek Indians.

The allottee’s will was admitted to probate on April 6, 1932, by the County Court of Hughes County, Oklahoma, the county in which the testator was resident. The plaintiff herein was appointed successor trustee because Thomas Long, Jr., had predeceased his father. On July 13, 1932, after demand made by the plaintiff, the Secretary of the Interior refused to relinquish supervision over the property and directed the Superintendent for the Five Civilized Tribes to be governed by the tenth paragraph of the will and carry out the testator’s intention as expressed therein. The County Court entered its final order of distribution on September 6, 1939, which provided, among other things, that full and complete fee simple title to the lands be vested in the plaintiff, in trust, for the uses and purposes set forth in the will.

In an action instituted in this court by the administrator of the estate against the Secretary of the Interior for the purpose of obtaining possession of the property belonging to the estate over which the Secretary was exercising control, it was held that all of the funds in the Secretary’s custody were restricted and properly subject to his jurisdiction. That judgment was affirmed on appeal. Darks v. Ickes, 1934, 63 App.D.C. 56, 69 F.2d 230. Thereafter, in another action by the administrator in which the oil and gas lessee and the Superintendent for the Five Civilized Tribes were made parties defendant, it was held that the income accruing from the lease was restricted and properly subject to the jurisdiction of the Secretary of the Interior. No appeal was taken from that judgment. Darks v. Magnolia Petroleum Co., et al., No. 4595 Equity, in the United States District Court for the Eastern District of Oklahoma.

Opinion

The plaintiff rests its cause of action upon the contention that the effect of the will executed under section 23 of the 1906 act, supra, was to remove all restrictions and terminate the power of the Federal Government to continue the exercise of supervision and control over the property. The defendant contends that the property is restricted and properly subject to the jurisdiction of the Secretary of the Interior by virtue of the provisions of section 1 of the act of April 12, 1926, supra, and section 1 of the act of January 27, 1933, 47 Stat. 777, and that, as a consequence, the United States has such an interest in the property that it is an indispensable party to any suit granting the relief sought by the plaintiff. The defendant also contends that mandamus will not lie because the statutes involved do not clearly require the action demanded by the plaintiff. Further, the defendant asserts that the cases of Darks v. Ickes, and Darks v. Magnolia Petroleum Co., et al., mentioned above, are res judicata of the controversy.

Section 23 of the 1906 act, supra, upon which the plaintiff rests its case, provides as follows: “Every person of lawful age and sound mind may by last will and testament devise and bequeath all of his estate, real and personal, and all interest therein: Provided, That no will of a full-blood Indian devising real estate shall be valid, if such last will and testament disinherits the parent, wife, spouse, or children of such full-blood Indian, unless acknowledged before and approved by a judge of the United States Court for the Indian Territory, or a United States commissioner.” The foregoing action unquestionably conferred upon Indians of the Five Civilized Tribes the power to dispose of their restricted property by will, a power theretofore not given them. Taylor v. Parker, 1914, 235 U.S. 42, 35 S.Ct. 22, 59 L.Ed. 121; Blundell v. Wallace, 1925, 267 U.S. 373, 45 S.Ct. 247, 69 L.Ed. 664; Davis v. Williford, 1926, 271 U.S. 484, 487, 46 S.Ct. 547, 70 L.Ed. 1048. But the question of whether the property is restricted and subject to the Secretary’s jurisdiction finds its answer in the statutes dealing with the status of the property after the allottee’s death. Thus, section 9 of the act of May 27, 1908, supra, provided, in part, as follows : “ * * * That the death of any allottee of the Five Civilized Tribes shall operate to remove all restrictions upon the alienation of said allottee’s land: Provided, That no conveyance of any interest of any full-blood Indian heir in such land shall be valid unless approved by the court having jurisdiction of the settlement of the estate of said deceased allottee * *

There would be merit in the plaintiff’s contention if the foregoing section 9 were the only one to be considered. Grisso v. United States, 10 Cir., 1943, 138 F.2d 996, 1000; Burgess v. Nail, 10 Cir., 1939, 103 F.2d 37, 42; McKinney v. Bluford, 1921, 81 Okl. 166, 197 P. 430, 431. But the facts in this case call for the application of section 1 of the act of April 12, 1926, supra, and section 1 of the act of January 27, 1933, supra. The 1926 act amended section 9 of the 1908 act to read: “The death of any allottee of the Five Civilized Tribes shall operate to remove all restrictions upon the alienation of said allottee’s land: Provided, That hereafter no conveyance by any full-blood Indian of the Five Civilized Tribes of any interest in lands restricted by section 1 of this Act acquired by inheritance or devise from an allottee of such lands shall be valid unless approved by the county court having jurisdiction of the settlement of the estate of the deceased allottee or testator * * (Italics supplied.)

The plaintiff does not deny the power of Congress to impose restrictions upon Indian lands or to decide for itself when and in what manner Federal guardianship over the Indians shall attach. This power has long been recognized. Brader v. James, 1918, 246 U.S. 88, 38 S.Ct. 285, 62 L.Ed. 591; Tiger v. Western Investment Co., 1911, 221 U.S. 286, 31 S.Ct. 578, 55 L.Ed. 738; King v. Ickes, 1933, 62 App.D.C. 83, 64 F.2d 979. The plaintiff furthermore concedes that the 1926 amendment just quoted would impose restrictions in those instances where the devise was made directly to a full-blood Indian, but he asserts that the 1926 act is inapplicable here because the devise to plaintiff, as trustee, vests title to the property in a non-Indian. The question thus presented is one of statutory construction.

The obvious effect of the 1926 amendment was to enlarge the scope of section 9 of the 1908 act, supra, so as to place restrictions upon “any interest” in restricted lands acquired by a full-blood Indian by inheritance or devise from an allottee. Grisso v. United States, supra. The statute deals realistically with the fact that so long as restrictions are made to depend upon quantum of Indian blood there is no logical basis for disparity between full-blood heirs and full-blood devisees, because one needs the protection of the Federal Government as much as the other. See Whitchurch v. Burge, D.C.1936, 17 F.Supp. 234. The right to use and enjoy the property passes by the will to the full-blood Indians named, and they must be regarded as the real, substantial owners thereof. Cf. Blair v. Commissioner of Internal Revenue, 1937, 300 U.S. 5, 13, 57 S.Ct. 330, 81 L.Ed. 465. The Indians’ ownership is not to be denied by the plaintiff because the fiduciary capacity in which he asserts the right to supervise and control the property is in itself a recognition that the Indians own an interest in that property. Clearly, therefore, the Indians have an interest in these lands which is subject to the restrictions imposed by the 1926 act.

While the lands are restricted the Secretary of the Interior has the power and duty under the oil and gas lease to supervise the collection, care and disbursement of the income therefrom as trustee for the full-blood Indian owners. Parker v. Richard, 1919, 250 U.S. 235, 39 S.Ct. 442, 63 L.Ed. 954. If there were any doubt, however, as to the restricted character of the funds coming into the custody of the Secretary of the Interior, that doubt would be removed by section 1 of the act of January 27, 1933, supra, the material part of which reads: “That all funds and other securities now held by or which may hereafter come under the supervision of the Secretary of the Interior, belonging to and only so long as belonging to Indians of the Five ■Civilized Tribes in Oklahoma of one-half or more Indian blood, enrolled or unen•rolled, are hereby declared to be restricted mid shall remain subject to the jurisdiction ,of said Secretary until April 26, 1956, subject to expenditure in the meantime for the use and benefit of the individual Indians to whom such funds and securities belong, under such rules and regulations as said Secretary* may prescribe * * (Italics supplied.) These funds belong to Indians of the degree of blood prescribed by the statute. The conditions of the statute being met, it follows that the funds are restricted and subject to the jurisdiction of the Secretary of the Interior. The Court of Appeals of the District of Columbia has so held and the matter must be regarded as laid at rest. Darks v. Ickes, supra; King v. Ickes, supra; Ickes v. United States, 1933, 62 App.D.C. 86, 64 F.2d 982; see also, Darks v. Magnolia Petroleum Co., et al., supra. Since the Congress has in effect designated the Secretary of the Interior as trustee for the full-blood Indians, no right can exist in the plaintiff incompatible with the trust.

There is also merit in the defendant’s contention that the two cases decided adversely to the administrator are res judicata of this controversy. While the plaintiff herein instituted neither of those actions, yet one may be estopped by a judgment against his privies. Sunshine Anthracite Coal Co. v. Adkins, 1940, 310 U.S. 381, 402, 60 S.Ct. 907, 84 L.Ed. 1263. Under sections 251 and 252, Title 58, Oklahoma Statutes Annotated, the administrator is required to take into his possession all of the estate, both real and personal, and is authorized to bring any and all actions for the recovery or possession of real or personal property. Actions so instituted by an administrator are binding upon the heirs or devisees of the decedent. Jameson v. Goodwin, 1914, 43 Okl. 154, 141 P. 767; McClung v. Cullison, 1905, 15 Okl. 402, 82 P. 499. Assuming, however, that the decisions adverse to the administrator were not res judicata of the present controversy, those decisions nevertheless hold that the property is restricted and subject to the jurisdiction of the Secretary of the Interior.

Since the object of the present suit is to declare invalid the Government’s exercise of power under the acts of April 12, 1926, supra, and January 27, 1933, supra, the United States of America would be an indispensable party to the granting of the relief sought. It is firmly established that the United States has an interest in restricted Indian property, and that this interest of the sovereign may not be foreclosed by a judgment in proceedings in which the United States is not a party. United States v. Hellard, 1944, 322 U.S. 363, 64 S.Ct. 985, 88 L.Ed. 1326; Minnesota v. United States, 1939, 305 U.S. 382, 59 S.Ct. 292, 83 L.Ed. 235; Cf. Drummond v. United States, 1945, 65 S.Ct. 659; Bowling v. United States, 1914, 233 U.S. 528, 34 S.Ct. 659, 58 L.Ed. 1080. In the Hellard case, supra [322 U.S. 363, 64 S.Ct. 987, 88 L.Ed. 1326], the court said: “Restricted Indian land is property in which the United States has an interest. ‘This national interest is not to be expressed in terms of property, or to be limited to the assertion of rights incident to the ownership of a reversion or to the holding of a technical title in trust.’ Heckman v. United States, 224 U.S. 413, 437, 32 S.Ct. 424, 431, 56 L.Ed. 820.” Thus it is clear that the burden of a decree granting the relief sought by the plaintiff would fall upon the United States because a termination of restrictions would be a termination of the governmental interests of the United States. The interest of the United States is not distinct and severable from that of the Secretary, and no decree vitally affecting that interest could be entered unless the United States were present as a party with an opportunity to be heard. Osage Tribe of Indians v. Ickes, D.C.D.C., 45 F.Supp. 179, affirmed 77 U.S.App.D.C. 114, 133 F.2d 47, certiorari denied, 1942, 319 U.S. 750, 63 S.Ct. 1158, 87 L.Ed. 1704; Morrison v. Work, 1925, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394; Oregon v. Hitchcock, 1906, 202 U.S. 60, 26 S.Ct. 568, 50 L.Ed. 935.

There remains the question of the propriety of the remedy of mandamus. While an administrative officer may not avoid a plainly prescribed duty by relying upon the necessity of reading a particular statute and applying it to the facts at hand, yet if the statutes involved do not plainly prescribe the officer’s duty in language equivalent to a positive command the determination of his duty amounts to the exercise of judgment or discretion which cannot be controlled by mandamus. The statutes involved in the present case were enacted at various dates over a period of' years and must be read as a whole. So viewed, it cannot be said that those statutes plainly require the Secretary to take the action demanded by the plaintiff. The defendant had reasonable grounds for the interpretation he placed upon those statutes in 1932, and his refusal to relinquish the Indians’ property to the plaintiff at that time cannot be regarded as capricious. Wilbur v. United States ex rel. Kadrie, et al., 1930, 281 U.S. 206, 218, 50 S.Ct. 320, 74 L.Ed. 809; United States ex rel. McLennan v. Wilbur, 1931, 283 U.S. 414, 420, 51 S.Ct. 502, 75 L.Ed. 1148; United States ex rel. Kansas City Southern R. Co. v. Interstate Commerce Commission, 1938, 68 App.D.C. 396, 98 F.2d 268; United States ex rel. United States Borax Co. v. Ickes, 1938, 68 App.D.C. 399, 98 F.2d 271, 281; Calf Leather Tanners’ Ass’n v. Morgenthau, 1935, 65 App.D.C. 93, 80 F.2d 536, 541, 542.

For the foregoing reasons, and in further compliance with Rule 52(a) of the Rules of Civil Procedure, I state separately my conclusions of law as follows:

Conclusions of Law.

1. The lands and funds involved in this controversy are restricted under the acts of April 12, 1926, supra, and January 27, 1933, supra, and are properly subject to the jurisdiction of the Secretary of the Interior.

2. The cases of Darks v. Ickes, supra, and Darks v. Magnolia Petroleum Co. et al., supra, are res judicata of this controversy.

3. The United States of America would be an indispensable party to the granting of the relief sought by the plaintiff.

4. The statutes do not clearly require the Secretary of the Interior to take the action demanded by the plaintiff, and, as a consequence, the plaintiff is not entitled to a mandatory injunction against the defendant.

5. Judgment should be for the defendant, with costs assessed against the plaintiff.

The entry of appropriate judgment will be accordingly directed by proper order.

       No opinion for publication.


source: Caselaw Access Project

author: LEAHY, District Judge.

license: Public Domain

text:
    WALDNER v. EQUITABLE LOAN SOC.
    Civil Action No. 407.
    District Court, D. Delaware.
    May 9, 1945.
    John J. Morris, Jr., of Wilmington, Del. (of Hering, Morris, James & Hitchens, of Wilmington, Del.), and J. Channing Ellery, of Philadelphia, Pa., for the receivers.
   LEAHY, District Judge.

The sole question is whether the preferred stock is entitled to cumulative dividends. Par. 4 of the charter construed under the rules of Delaware law would make such stock carry the attribute of a cumulative dividend. See Garrett v. Edge Moor Iron Co., 22 Del.Ch. 142, 194 A. 15, affirmed sub nom. Pennsylvania Co. for Insurance on Lives, etc., v. Cox, 23 Del.Ch. 193, 199 A. 671, and cases therein cited. Further than that, the evidence at the hearing was abundant to show the acts of the officers, directors and stockholders over a long period of time disclose the construction they placed on the meaning of the contract, found in paragraph 4 of the charter, between the preferred and common stockholders inter sese. At the first meeting of, the incorporators on January 22, 1910 a resolution was passed approving the form of the preferred stock certificates. These certificates since then and up to the present have always borne the legend that the dividends on such shares were to be “cumulative.” Thereafter, the whole course of conduct demonstrates that when a dividend was declared for payment on the preferred stock it covered the period from the date of last payment to the preferred. For example, the dividend declared on December 30, 1922 and to be paid January 15, 1923, was, as the minutes disclose, “to be for the dividend as accrued for the six months beginning December 31, 1912 and June 30, 1913.” This system of dividend payment was followed throughout the history of the corporation from 1910 to the date of institution of suit.

Twenty-seven years accrued dividends, amounting to $2.16 a share, are now due the preferred after they receive their par. $33,734 will be allocable to the payment of the par. The balance will be insufficient to pay completely the back dividend charge. Nothing remains for distribution to the common stockholders.

Let the receivers make final distribution in accordance with the foregoing.

       Tie language appearing on the preferred stock certificate reads:
      “This stock shall bear dividends at the 8 per cent, per annum cumulatively and shall be preferred both as to dividends in any distribution of profits and as to principal and any accumulations of dividends in any distribution or division of the corporate property upon dissolution or liquidation. This stock shall further be entitled to participate in the distribution of 50 per cent, of the net profits of the company to the holders of all the preferred stock issued.”


author: JOHNSON, District Judge.

text:
    WILSON DISTILLING CO., Inc., v. FOUST DISTILLING CO.
    Civil Action No. 1163.
    District Court, M. D. Pennsylvania.
    April 30, 1945.
    Douglas D. Storey and Storey & Bailey, all of Harrisburg, Pa., and Tydings, Sauerwein, Levy & Archer, of Baltimore, Md., for plaintiff.
    William Hoffenberg, of Baltimore, Md., and Mark T. Milnor, of Harrisburg, Pa., for defendant.
   JOHNSON, District Judge.

This is a motion by plaintiff for leave to amend all its pleadings by substituting a different corporate title for the plaintiff and also motions for summary judgment filed by both parties.

This case has been before this court previously on a motion for summary judgment by plaintiff and judgment was then granted to plaintiff under the first count of the complaint. That part of these proceedings is reported in 51 F.Supp. 744.

The facts are as follows: The defendant sold to Wilson Distilling Co., Inc., certain barrels of whisky and as a warehouseman issued negotiable warehouse receipts therefor. The plaintiff was described in the complaint as a Maryland corporation. The affidavit of the president of plaintiff corporation attached to the original notice of plaintiff for summary judgment stated that plaintiff was a New York corporation. Plaintiff has filed a motion to amend all pleadings filed in this case. The motion to amend is accompanied by a new affidavit by the plaintiff’s president stating that plaintiff. at the time of filing the original motion for summary judgment, was a Maryland corporation but that by due corporate proceedings, on October 31, 1944, the plaintiff changed its corporate title to Hunter-Wilson Distilling Company, Inc. In the same motion to amend the pleadings the plaintiff also requests permission to substitute new affidavits for the original affidavits attached to the original motion for summary judgment in order to correct the corporate name of plaintiff.

The defendant opposes the amendments and contends that the motion to amend by substituting the new corporate title of plaintiff brings in a stranger to the transactions related in the pleadings. The defendant also contends that the new affidavits which plaintiff moves to have substituted vary materially in substance from the affidavits now on file and further that the Rules of Civil Procedure make no provision for the substitution of moving affidavits.

The contentions of the defendant on the motion to amend cannot be sustained. The motion to amend the pleadings insofar as the corporate title of the plaintiff is concerned is made for the purpose of correcting the record where reference to a New York corporation is erroneously made and for the purpose of reflecting in the pleadings the change in corporate name which has taken place during the pendency of this litigation. The new affidavits should be permitted to be filed. In such a matter as this a substitute is the equivalent of an amendment, and such an amendment is allowable at any stage of the proceedings. If there is any variation in the substance of the affidavits under consideration, advantage may be taken thereof at trial by the defendant or the plaintiff may later move for amendment to make the pleading conform to the proof adduced. Under Rule 15 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, amendments should be freely granted. The motion of the plaintiff for leave of court to amend the pleadings is granted and will so appear on the Order of Court attached to plaintiff’s motion.

The motion for summary judgment filed by plaintiff is based upon the fifth and sixth counts added to the complaint by amendments heretofore made.

The fifth count alleges that plaintiff’s corporate predecessor acquired certain barrels of whiskey from defendant “in respect of which defendant agreed to indemnify and save harmless plaintiff’s said predecessor from any damage suffered as a result of the loss of whiskey * * * while in storage in defendant’s warehouse in excess of the outages allowed by the United States Government for purposes of taxation, and said whiskey, together with said rights of indemnity, were subsequently acquired by plaintiff.” The remainder of the fifth count alleges a loss of 438.3 proof gallons of whiskey in excess of the outage allowed by the government. The word “outage” means loss by evaporation or leakage.

The agreement of indemnity mentioned in the fifth count is set forth in a photostatic copy of a letter attached to plaintiff’s motion for summary judgment as Exhibit No. 2. The letter is from the defendant and is addressed to Mr. Joseph H. Reinfeld, Wilson Distilling Co., Inc., 630 Fifth Avenue, New York City, and is dated February 20, 1940. The pertinent part is as follows: “We also wish to advise that we will guarantee any excess outage on the above lot in accordance with the statutory allowance given by the government. It is further understood that when the allowance is to be allowed, it will be determined on a regauge basis as of the time tax payment or shipments are made. * * In answer to the fifth count defendant alleged no knowledge by answer filed on May 28, 1943. The substance of the ■“agreement of indemnity” appears in the pleadings for the first time as an exhibit attached to the affidavits accompanying plaintiff’s motion for summary judgment and filed on August 3, 1944. To that motion there was filed on September 16, 1944, defendant’s affidavit of defense wherein it is alleged that the defendant is not liable to the present plaintiff under the so-called agreement of indemnity by reason that the agreement was not legally assignable to the present plaintiff. * »

The defendant’s position is well taken. The warehouse receipts covering the whiskey in question contain a provision on the face thereof expressly absolving the defendant from any liability for damage by reason of loss or damage due to evaporation or leakage. That provision is not mentioned by either of the parties hereto, but it is to be noted that the negotiable receipt, which serves to notify a subsequent holder of his rights contains, as part of the express contract, a provision against any claim for damages due to evaporation or leakage. The letter of February 20, 1940, contains a warranty which is in direct opposition to the terms of the warehouse receipts. The letter of warranty was given to plaintiff’s predecessor and rights thereunder were not assignable. Under the Pennsylvania Act of Assembly of March 11, 1909, P.L. 19, Sec. 41, 6 P.S. § 161, “A person, to whom a negotiable receipt has been duly negotiated, acquires thereby, — a. Such title to the goods as the person negotiating the receipt to him had, or had ability to convey * * That the plaintiff’s predecessor had no ability to convey the warranty rights contained in the letter of warranty because no privity of contract existed between the defendant and the present plaintiff is held by the following cases: Chanin v. Chevrolet Motor Co. et al., D.C., 15 F.Supp. 57; Rachlin v. Libby-Owens-Ford Glass Co., 2 Cir., 96 F.2d 597, and Timberland Lumber Co., Limited, v. Climax Mfg. Co., 3 Cir., 61 F.2d 391. The plaintiff cites the case of Conestoga Cigar Co. v. Finke et al., 144 Pa. 159, 22 A. 868, 869, 13 L.R.A. 438, but in that case where it was held that the -warranty ran in favor of a subsequent purchaser, the goods warranted were sold by samples bearing labels or tags descriptive of quality, relied upon by subsequent as well as original purchasers. Mr. Chief Justice Parson in his opinion stated that that case was one of first impression, that the court had decided only what was before it, and did “not anticipate cases which might arise in the future under other circumstances.”

Privity of contract cannot be obtained by a mere assignment of a contract. The consent of the parties to the contract must be shown in some manner. Where a mortgage conveys, in addition to the described real estate, the rents, issues and profits thereof, no privity of contract is created thereby between the mortgagee and a tenant of the mortgagor. See the opinion of this court in the case of Malamut v. Haines, reported in, D.C., 51 F.Supp. 837. See also Peoples-Pittsburgh Trust Co. v. Henshaw, et al., 141 Pa.Super. 585, and the. reference therein on pages 588 and 589 to the Statute of Anne, 15 A.2d 711, Ch. 16 Secs. 9 and 10, whereby a non-existent privity between the tenant and his landlord’s alienee was supplied by statute due to the necessity to create more easy redemption and foreclosure of mortgages.

• The law pertaining to privity of estate must not be confused with the privity between individuals conveying or succeeding to the estate. In that case the privity attaches to the real estate itself and binds those in successive possession. Such is not the law with regard to personal property.

The defendant also contends in relation to plaintiff’s motion for summary judgment on count five of the complaint that the supporting affidavit of Klein stating the custom of the whiskey trade as applied to warranties against outage is an expression of the affiant’s opinion and does not meet the requirements of evidence. This point is also well taken. The existence of a usage or custom can only be proven by instances of actual practice; a succession of individual facts; and cannot be proven by the opinion of a witness. Ames Mercantile Co. v. Kimball S. S. Co., D.C., 125 F. 332, 336. The rule of law that custom or usage may not be shown to vary the terms of a written contract unless the custom or usage is so well established, general and uniform that the parties are presumed to act and contract with reference to it. Makranski et al. v. Weston et al., 304 Pa. 383, 387, 155 A. 741, is not disturbed by the ruling in the Ames’ case, supra, as the court held that the terms of the contract therein were unintelligible and required clarification. In the instant case if the custom or usage of passing on to subsequent title holders such a special warranty as is under consideration here the measure of proof thereof must be adequately met. Here the custom is not pleaded and the supporting affidavit is insufficient. The plaintiff contends that the present plaintiff is a corporate successor to the original holder of the warranty rather than a buyer on resale. That no merit can attach to such a contention is illustrated by the fact that plaintiff has pleaded his instruments of title wherein his plaintiff acquired title by bargain and sale.

In the sixth count, also added to the complaint by amendment, the plaintiff alleges a duplicate payment to defendant for storage charges in the amount of $146.00. In answer thereto the defendant admits receipt of the double payment but avers that plaintiff is indebted to defendant for storage charges in the amount of $705.20 and admits a set-off of the $146.00 against the $705.20. The plaintiff thereupon filed a reply to defendant’s answer denying indebtedness for any storage charges.

Examination of the numerous pleadings filed reveals that in addition to the controversy mentioned in the above paragraph a controversy still exists as to the measure of damages, the amount of outage loss, claim for tax refund, transfer of title, duplication of assignments and denial of facts contained in the supporting affidavits. These are triable issues and a summary judgment will not lie thereon.

The defendant has also filed a motion for summary judgment based on the fifth count of the complaint alleging that the plaintiff has no rights under the letter of warranty of February 20, 1940. The defendant’s motion must be denied. The matter of custom and usage may be later raised by the plaintiff in a proper manner and that proof may affect these proceedings materially. That point cannot be decided here and the issues raised must proceed to trial.

The motion of the plaintiff to amend the pleadings by substituting the name of Hunter-Wilson Distilling Company, Inc., as plaintiffs, is hereby granted, and the Clerk of the Court is hereby directed to mark the docket accordingly; the motion of the plaintiff for leave to amend plaintiff’s motion for summary judgment by substituting the new affidavits of Frank Desmond and H. C. Levin as exhibits A and B, respectively, in said motion, is granted, and the motions for summary judgment by plaintiff and by defendant are hereby denied.


author: J. F. T. O’CONNOR, District Judge.

text:
    TIDEWATER ASSOCIATED OIL CO. v. UNITED STATES.
    No. 2628 Civil.
    District Court, S. D. California, Central Division.
    March 20, 1945.

      McCutchen, Thomas, Matthew, Griffiths . & Greene, Farnham P. Griffiths, Harold A. Black, Charles E. Finney, and Russell A. Mackey, all of Los Angeles, Cal., for libellant and cross-respondent.
    Arnold W. Knauth, Atty., Claims Division, Department • of Justice, of Washington, D. C., and Charles H. Carr, U. S. Atty., and Robert E. Wright, Asst. U. S. Atty., both of Los Angeles, Cal., for respondent and cross-libellant.
   J. F. T. O’CONNOR, District Judge.

Statutes under which the libel was brought:

This suit in admiralty was instituted by the filing of a libel on December 14, 1942, by the libellant, Tidewater Associated Oil Company, a corporation, as owner of the American tank steamship, hereinafter referred to for military security as libellant’s vessel “A”, against the respondent, United States of America, as owner and operator of the steamship, hereinafter referred to for like military security, as respondent’s vessel “B”, in a cause of collision, civil and maritime, pursuant to and by virtue of the authority given in the Suits in Admiralty (Public Vessels) Act of March 3, 1925, c. 428, 43 Statutes at Large 1112, 46 U.S.C.A. §§ 781-790, as well as pursuant to, and by virtue of, the authority given in the Suits in Admiralty (Merchants Vessels) Act of March 9, 1920, c. 95, 41 Statutes at Large, 525, 46 U.S.C.A. §§ 741-752, as a result of a collision between these two vessels which occurred in the early morning hours of December 5th, 1942, on the Pacific Ocean off Point Conception, California, in which, according to the libellant’s pleading, the libellant claims damages amounting to approximately $125,000. Respondent, in addition to its answer, has filed a cross-libel for damages approximating $56,767.72 to respondent’s vessel “B”, alleging negligence on the part of the libellant. Hereafter, for brevity, the libellant and cross-respondent will be referred to as the libellant, and the respondent and cross-libellant will be referred to as the respondent.

At this point, in order to more clearly elucidate the court’s opinion, there is inserted herewith a short sketch which, although it has no military value because it is not drawn to scale, very clearly and quickly illustrates the points of origin and the designated courses the two vessels were instructed to take to reach their destinations safely, and the approximate point of contact between the two vessels. It will be seen from an examination thereof that the libellant’s vessel “A” was en route from Ventura to San Francisco, Calif., and the respondent’s vessel “B” was en route from San Francisco to Hueneme.

As to the facts of the collision itself, both sides have stipulated that the collision occurred in the early morning hours of December 5th, 1942, off Point Conception on the California coast, at about 4:37 A. M., and that both vessels were sailing blacked-out under instructions from the Navy Department. Necessarily their sailing blacked-out cannot be imputed as an act of negligence on the part of either vessel. The respondent admits that the United States Navy was and is a competent military authority to issue such instructions under war conditions and admits that the libellant’s vessel “A”, at the time of the said collision and prior thereto, proceeded in conformity with said instructions, and upon the routes and courses designated for her by the said instructions.

Knowledge of instructions of Port Director’s Office at San Francisco, by respondent:

Prior to departure of respondent’s vessel “B” from San Francisco to Hueneme, the Court finds that respondent’s vessel “B” was given a certain designated course to follow at the Port Director’s Office in San Francisco; and, as to these instructions, the master in charge of respondent’s vessel “B” stated in his deposition, as follows :

“Q. By Mr. Mackey (proctor for the libellant) : Captain, you received instructions at San Francisco concerning your navigation from San Francisco to Hueneme, didn’t you? A. Yes.

“Q. And those instructions came from the Port Director’s Office at San Francisco? A. Yes.

“Q. That is .the Port Director’s Office of the Navy, isn’t it? A. Yes.

“Q. And were those instructions written or verbal? A. Well, they were written.

“Q. And you were given three points to pass through from the point of departure at the Farallones to your arrival at Hueneme? A. Yes.

“Q. And those points you say were designated ‘B’, ‘C’ and ‘D’, that is correct, isn’t it? A. Yes.

“Court’s note: Points ‘B’ and ‘C’ are not designated on the sketch (supra) [post] because these points were to be passed pri- or to point ‘D’.

“Q. Were you told or informed in writing or otherwise when you left San Francisco that the ‘A’ would be coming up northbound? A. No, sir.

“Q. Isn’t it a fact that the instructions given to ship masters navigating coastwise, are designed so as to provide a lane of traffic going north and a lane of traffic going south so as to keep the two lanes separate ? A. Yes.

“Q. And that is the purpose' of giving you points to pass through? A. Yes, sir.

“Q. And your instructions called for you to proceed directly from point ‘B’ to point ‘C’ and then from point ‘C’ to point ‘D’? A. Yes, sir.

“Q. That is correct? A. Yes, sir.

“Q. You are supposed to make the transit between those points in the shortest and straightest line, aren’t you? A. Well, they do say that you can go to either side of them.

“Q. But the idea is to have you go directly from one point to another in a straight line, isn’t it? A. Yes.

“Q. And upon leaving point ‘C’ your instructions would call for your going in the nearest straight line from point ‘C’ to Hueneme. A. Yes.

“Q. Weren’t you supposed to head from that point ‘C’ for Hueneme ?

“Miss Phillips (proctor for the respondent) : Point ‘D’.

“Mr. Mackey: I beg your pardon, I mean point ‘D’.

“Q. By Mr. Mackey: Supposed to head from point ‘D’ to Hueneme? A. Yes, sir.” (Resp. Ex. No. “A”, pp. 75-77.)

Instructions of the Navy Department had the effect of a statute:

The primar}' legal question for the court to determine is this: Did these instructions received from the Port Director’s office at San Francisco by the captain of respondent’s vessel “B”, prior to his departure from San Francisco for Port Hueneme, have the force and effect of a statute; and, if the court so decides, can a violation thereof be construed fo be the proximate cause of the accident, or a statutory fault, and prohibit the respondent vessel “B” from availing itself of the doctrine of in extremis. The court sequentially will take up at this point the construction to be placed upon these instructions of the Navy Department.

In accordance with the powers granted by the First War Powers Act, December 18, 1941, c. 593, 55 Stat 838, 50 U.S.C.A. Appendix, § 601 et seq., the President, by Executive Order No. 9083, on February 28, 1942, 7 Fed.Reg. 1609, 50 U.S.C.A.Appendix, § 601 note, made the commandant of the Coast Guard, under the Supervision of the Secretary of the Navy, supreme in the matter of the regulation of the navigation of vessels. Under the Second War Powers Act, 1942, 50 U.S.C.A.Appendix, § 631 et seq., the heads of each department responsible for the administration of the navigation laws were directed to waive compliance therewith upon request of the Secretary of the Navy. The Secretary of the Navy took over the full responsibility for the administration of the navigation laws.

Did these instructions which respondent’s vessel “B” was instructed to follow have the force and effect of a statute, and what are the necessary implications in admiralty law from a violation thereof?

In The H. F. Dimock, 1 Cir., 77 F. 226, 229 (decided 1896), which was a collision case, the court states the law where a statutory rule has been violated as follows:

“We are aware that the master of the Dimock (the vessel held solely at fault) appears to have been competent for his position, and to have exercised an honest judgment, and, indeed, to have proceeded even more carefully than other steamers navigating practically in company with him. Where the questions are merely those of prudential rules of navigation and of maritime usages, a vessel should not ordinarily be held in fault simply because the courts, with cool deliberation, after all the facts, determine that what was done was mistaken.’ * * * but here we are dealing with an injunction of the statute, from which the court cannot excuse the Dimock. In Belden v. Chase, 150 U.S. 674, 698, 14 S.Ct. 264, 272 [37 L.Ed. 1218], it is said that the statutory rules, and also those made by the supervising inspectors by authority of the statute, are not merely prudential regulations, but are obligatory. To such an extent is this enforced that the supreme court, in The Pennsylvania, 19 Wall. 125, 136 [22 L.Ed. 148], apparently adopted the English rule, that the burden rests on a ship to show, whenever she disregards the statutory regulations, not merely that such disregard might not have been one of the causes of the collision, or even that it probably was not, but that ‘it could not have been.’ This was apparently restated in Belden v. Chase, at page 699, 150 U.S., and page 272, 14 S.Ct. [37 L.Ed. 1218], in The Martello, 153 U.S. 64, 74, 14 S.Ct. 723, 726 [38 L.Ed. 637], and in The Britannia, 153 U.S. 130, 143, 14 S.Ct. 795, 799 [38 L.Ed. 660.] To understand this strictness, it is necessary to observe that, where it appears that a vessel has only neglected the usual and proper measures of precaution, but has not violated any statutory regulation, the burden resting on her to show that the collision was not owing to her neglect as the efficient cause is only the ordinary one. The Great Republic, 23 Wall. 20, 34 [23 L.Ed. 55.] If there were any doubt that the^ fault of the Dimock led to the collision, the authorities to which we have referred would probably hold her; but we have cited them, not on that account, as there can be no question here on the matter of proximate cause, but to show the stringency of the rule which prevents us from excusing her merely for the reason that the master acted with an honest judgment under the circumstances of the case.” (Italics supplied.)

See also The Suffolk, 2 Cir., 258 F. 219, 169 C.C.A. 287, in support of the doctrine that a vessel which violates a statutory rule must be held in fault for a following collision, in the absence of proof that such violation did not contribute thereto. As to the binding force of the rules of navigation prescribed by the Acts of Congress upon vessels of the United States, see The Scotia, Fed.Cas.No.12,513, 7 Blatchf. 308, 3 Chi.Leg.N. 10, 2 Am. Law T.Rep.U.S.Cts. 60, 3 Am.Law Rev. 582, 5 Am.Law Rev. 382, affirmed 81 U.S. 170, 14 Wall. 170, 20 L.Ed. 822. The doctrine that a violation of a statutory rule or regulation renders a vessel liable for a collision unless it appears that the violation thereof did not cause or contribute to the collision (in other words, unless there has been a novus actus interveniens, or a direct break in the proximate cause of the collision, which will be referred to later) is further exemplified in 15 C.J.S., Collision, § 34, p. 33, where the topical heading states the rule as follows:

“§ 34. A vessel which has violated a statutory rule of navigation, or some other pertinent law, rule or regulation, is liable for a collision unless it appears that the violation did not cause or contribute to the disaster and could not have done so.”

It is quite clear from the foregoing authorities that these instructions received by the captain of respondent’s vessel “B” at the Port Director’s Office in San Francisco, prior to his departure for Hueneme, had the force and effect of a statute throwing the tremendous burden upon him of showing not merely that such disregard might not have been one of the causes of the collision, or even that it probably mas not, but that it could not have been. The H. F. Dimock, supra.

Violation of the Port Director's instructions at San Francisco by respondents vessel “B”.

At the time of the collision, the evidence is clear beyond the peradventure of a doubt that the respondent’s vessel “B” was off its course, in disregard of the Port Director’s orders at San Francisco, and for the reason, as the evidence shows and as the court believes, the captain of respondent’s vessel “B” had gone to sleep after leaving San Francisco and had not given the first mate in charge of respondent’s vessel “B” the prescribed course to follow. In this connection the respondent, in its pleadings, admits that the master of the respondent’s vessel “B” fell asleep after departure of the vessel from a point near the Farallone Islands and left no instructions for his officers with respect to said designated course or courses to follow, or the points to pass through, with the result that said vessel did not change her course when she reached the first of said designated points and proceeded thereafter out to sea in a different direction and away from'the designated course prescribed for her, and, at the time of the collision, the respondent admits that its vessel “B” was slightly north of the course designated by the Navy from the third point to Hueneme.

This fact is borne out also by the deposition of the captain of respondent’s vessel “B” as follows:

“Q. Now, how far past point ‘B’ did you proceed before turning south? A. Thirty one and a half miles.

“Q. Why did you not turn at point ‘B’ and head for point ‘C’? A. Well, I had been up so long and I had about — now, I stayed up too — I was down at Redwood City before and we had so much trouble there and I was up all night and I never slept at all there. Otherwise I would have been—

“Q. Were you turned in when you went past point ‘B’ ? A. What ?

“Q. Were you turned in when you passed point ‘B’ ? A. Yes.

“Q. You were asleep? A. Yes.

“Q. And had you left any — A. I did not intend to go to sleep but I did.

“Q. What officer was on watch when point ‘B’ was passed? A. It was the first mate.

“Q. Had you given him any instructions? A. No.

“Q. How did you happen to turn south when you did turn south? A. Well, it was breakfast time and I really woke up before that though, but I didn’t think it made any difference because they could go out and go for the next point, I would only have had to haul in and go in this way to make point ‘C’. That is the reason I passed that one up and went the other way.”

The respondent’s vessel “B” finally arrived in the vicinity of point “D” (see sketch supra) and the testimony shows that instead of following a straight course to Port Hueneme, she changed her course at various times and places; and, at the time of the collision, instead of being headed for Port Hueneme she was heading inshore across the course of the libellant’s vessel “A” north of Santa Barbara.

The captain of the respondent’s vessel “B” virtually conceded that if he had followed the instructions of the Navy Department at San Francisco, and had followed a straight line from the vicinity of point ‘D’ to Port Hueneme he at no place would have crossed the path of libellant’s vessel “A”, and, on their passing routes, they would at all times have been at least two miles apart. (Respondent’s Ex. “A” pp. 94, 95.) There is no dispute in the evidence about the libellant’s vessel “A” being on her proper course from Ventura to San Francisco, and, in view of the fact that both vessels were sailing blacked-out under the instructions of the Navy, no imputation of negligence can be charged to either vessel in this respect.

Facts of the collision:

This narration of facts brings us to the collision itself; and, at the point of physical contact, both captains place their respective position at slightly different places on the sketch, but it is of no particular consequence, the question for consideration being what actually happened when the vessels first sighted each other and what precautions were taken to avoid the accident. Some of these happenings are in dispute, although this is more or less to be naturally expected in view of the fact that the angle of vision of those viewing the collision on the moving vessels was different at every moment from the time the vessels first came in sight of each other until the time of their physical contact.

The libellant alleges that at the time of the collision it was dark but the visibility good; that libellant’s vessel “A” was on the starboard bow of the respondent’s vessel “B”; that said vessels were on crossing courses and that libellant’s vessel “A” was on the starboard bow of respondent’s vessel “B”; that the respondent’s vessel “B” was sighted by those in charge of the navigation of libellant’s vessel “A” off her port bow on a course crossing that of the libellant’s vessel “A”, so as to involve risk of collision; that said respondent’s vessel “B” sighted libellant’s vessel “A” off her starboard bow and proceeded across her path; and that, in an attempt to avoid the threatened collision, the rudder of libellant’s vessel “A” was put hard to starboard, her engines were put full astern and signals of four blasts, one blast and three blasts sounded on her whistle, but that the stem of the libellant’s vessel “A” struck the starboard side of respondent’s vessel “B” somewhat forward of the latter’s bridge. As an act of negligence the libellant further alleges that, after sighting libellant’s vessel “A”, respondent’s vessel “B" negligently directed her course to port instead of to starboard.

The respondent alleges that at the time of the accident the general visibility was poor and dark, and that it was impossible for those in charge of respondent’s vessel “B” to determine whether or not the vessels were on crossing courses; that the respondent’s vessel “B”, when sighted by the officer in charge of the navigation of the libellant’s vessel “A”, was approximately two points on the port bow of libellant’s vessel “A”, with her (respondent vessel “B’s”) green running light showing, and that libellant’s vessel “A”, when sighted by the navigating officer of the respondent’s vessel “B”, was between one and two points on the respondent vessel “B’s” starboard bow. The respondent further alleges that, immediately upon sighting the libellant’s vessel “A”, the navigating officer of respondent’s vessel “B” showed the running lights of his vessel and stopped his engines, reversed his engines promptly and put the vessel’s rudder hard to the port and blew a danger signal almost simultaneously with the stopping of his engines. According to the testimony of respondent's mate, respondent vessel “B” sighted libellant’s vessel “A” first, and was the first to turn on her lights and when both vessels were a distance of about five hundred yards from each other, each travelling about ten knots an hour. Respondent vessel “B” sighted libellant’s vessel “A” on “B’s” starboard bow (respondent’s Ex. A. p. 113), The testimony of the libellant is to the effect that at the time both vessels first came into sight of each other they were two hundred and fifty to three hundred yards apart.

It is clear from the evidence that neither vessel expected to meet the other, the Navy instructions having been silent on this point; and further, that immediately upon the respondent’s vessel “B” seeing the libellant’s vessel “A”, she swung to port because libellant’s vessel “A” first appeared as a “dark object”. At the time of the collision the libellant’s vessel “A” had a lookout on the bow, about seventy-five yards closer to respondent’s vessel “B’f than the navigator on the bridge of libellant’s vessel “A”; but, as a charge of negligence on the part of libellant’s vessel “A”, the respondent further alleges that several minutes preceding the moment when the lights of respondent’s vessel “B” were sighted by the helmsman of the libellant’s vessel “A”, and notice given by him to the officer in charge of the navigation of the libellant’s vessel “A”, said officer left the navigating bridge and went into the chart room, and that, during his absence, the management of said vessel was left in the care and charge of seamen who were not licensed officers, and that during the absence of the navigating officer, no licensed officer was on the bridge to assist in maintaining the attentive lookout required of a vessel. This phase of the case will be taken up later by the court in determining what effect this charge will have as affecting the libellant’s responsibility for the accident.

Vessels were on crossing courses:

In view of the stipulations and admissions of proctors for the respondent vessel “B”, there are probably not more than two or three questions of fact to be decided by the court, namely, was this a crossing course and did the libellant lack a competent lookout.

The court finds from the evidence that, in addition to being off her course, and therefore, charged with all of the consequences attaching thereto, respondent’s vessel “B” was on a crossing course directly in the path of libellant’s vessel “A”, with libellant’s vessel “A” on her starboard bow, in direct violation of the starboard side rule, and that, at the time of the collision, libellant’s vessel “A” was the privileged vessel and respondent’s vessel “B” the burdened vessel. The navigator of the respondent’s vessel “B” in his deposition testified as follows (Resp. Ex. A pp. ISO-152) :

“Q. And when you saw the (“B’s”) red light on your starboard bow you knew that the courses were crossing. A. That is right. * * *

“Q. And if the vessels were crossing, on crossing courses and the rules apply, your duty would be to go to the right — to pass under the (“A’s”) stern? A. Yes, sir.

“Q. And if the vessels had been on a parallel, opposite course, and she was ahead of you, your duty would be to go to the right? A. Yes. >

“Q. The only situation in which it would be your duty to go to the left, under the rules, would be in the event you saw the green light on your starboard side— showing green to green. A. Yes, if his green light shows to my green light.

“Q. Yes. A. That is right.

“Q. And that situation never existed, did it? A. No, you couldn’t see no lights at all on it.

“Q. When you did see any light you know it was never green to green. A. No.

“Q. But the actual effect on your left rudder, as we now know it, was to present your broadside to the (‘A’). A. Yes, sir.

“Q. That is correct, isn’t it? A. That is right.

“Q. Had you known at the time the report was given which you now know, you would have given a hard right rudder, wouldn’t you? A. That is right.”

The court is satisfied from a preponderance of the evidence, that there was never a green to green passing situation; that the libellant’s vessel “A” saw respondent’s vessel “B” on her (libellant vessel “A’s”) port side, and that the respondent’s vessel “B” saw the libellant’s vessel “A” on her (respondent vessel “B’s”) starboard side; in other words, that respondent vessel “B” was to the left of libellant’s vessel “A”, and libellant’s vessel “A” was to the right of respondent’s vessel “B”; and, under Article 21 of the International Rules, 28 Stat. 83, Title 33 U.S.C.A. § 106, upon coming in sight of respondent’s vessel “B”, that libellant’s vessel “A” should have gone to the right which she did. The respondent admits in its answer that respondent’s vessel “B” directed her course to the left, and it was this fact that threw her broadsides to libellant’s vessel “A”.

The starboard side rule:

Under the starboard side rule, when two vessels are crossing so as to involve risk of collision, the vessel which has the other vessel on her own starboard side is the burdened vessel (respondent’s vessel “B” in this case) and must keep out of the way of the other vessel, as is required by the rules of navigation. 15 C.J.S., Collision, § 48, pp. 40, 41, and cases cited.

The rule adopted by Congress that if two ships under steam are crossing so as to involve risk of collision, the ship which has the other on her starboard side shall keep out of the way of the other, by implication, made it the duty of a vessel which was on the starboard side of another vessel to keep on its course. 13 Stat. 60, 33 U.S.C.A. § 344; The Corsica, 76 U. S. 630, 9 Wall. 630, 19 L.Ed. 804, affirming Fed.Cas.No.3,256, 6 Blatchf. 190, which affirmed Fed.Cas.No.12,495, 37 How.Prac. 262.

“If the steamer which is to keep out of the day of the other wishes to pass to the left she must first obtain the consent of the other (cases cited) and in executing the manceuver she proceeds at her own risk.” (Cases cited.) 11 C.J. 1057, n. 12.

“Vessels are approaching on crossing courses, * * * where the red light of the privileged vessel is showing on the starboard hand of the burdened vessel.” Note 5[f], P- 1057 and cases cited in 11 C.J. 1057. See, also, 15 C.J.S., Collision, § 48..

The vessel is on a crossing course where the vessel approaching on the starboard side would not actually cross but would strike the other amidships. The Oceanic, D.C., 61 F. 338, affirmed, 9 Cir., 74 F. 261, 20 C.C.A. 419.

The respondent admits the international rules of the road at sea were applicable to both vessels and imposed on the privileged and burdened vessels the correlative duty on the privileged vessel to maintain her course and speed, and on the burdened vessel to keep out of the way of the privileged vessel. The court is satisfied from the evidence that the libellant’s vessel “A” scrupulously lived up to this requirement.

Where a collision occurs on the high seas where the International Rules for navigation at sea are applicable, Article 19 of these rules, 26 Stat. 327, Title 33 U.S. C.A. § 104, reads as follows:

“Sec. 104. Steam vessels crossing. * * When two steam vessels are crossing, so as to involve risk of collision, the vessel which has the other on her own starboard side shall keep out of the way of the other.”

Article 22 of the rules provides, 30 Stat. 101, Title 33 U.S.C.A. § 207:

“Art. 22. Every vessel which is directed by these rules to keep out of the way of another vessel shall, if the circumstances of the case admit, avoid crossing ahead of the other.”

The court is quite satisfied from the evidence that this was a crossing course, and that the respondent’s vessel “B” was at fault in its violation. After the collision, the evidence shows that everything was done to mitigate the damages, as was possible under the circumstances, and that both vessels proceeded from the scene of the accident under their own power.

Proximate cause:

The proximate cause of any collision must necessarily be determined upon the facts in each case; and, actually and in point of time, the cause of the damage to the two vessels in this case was the collision itself or “the causa sine qua non”, which, in turn, resulted from a violation on the part of the respondent’s vessel “B” of the starboard side rule, and which in turn resulted from a violation' on the part of respondent’s vessel “B” of the Port Director’s orders at San Francisco. This latter statutory fault, in the court’s opinion, was the causa causans (the cause of causes), which set into operation and in a direct line of causation, without a novus actus interveniens, the subsequent causes of the accident, making it the direct and proximate cause thereof, for it is patent that, if there had been no violation of the Port Director’s orders at San Francisco by respondent’s vessel “B”, she would have been on her course to Hueneme and there could not have been any violation of the starboard side rule resulting in the collision. On the other hand, if respondent’s vessel “B” had not received any instructions at San Francisco, and had violated the starboard side rule, this violation would have been the causa causans, or the direct and proximate cause of the accident; and, likewise, the violation of the starboard side rule would have been the direct and proximate cause of the accident if there had been a novus actus interveniens (a direct break in the line of causation) between the time the instructions of the Port Director’s office at San Francisco had been received and the violation of the starboard side rule, but the court likewise does not believe that there was a direct break in the causal connection or a novus actus interveniens at these points. However, be that as it may, either one of these statutory violations is sufficient to hold the respondent liable for the accident. Certain it is that it was a violation of these instructions that caused the respondent’s vessel “B” to go off her course and cross the path of libellant’s vessel “A”, and the two vessels never would have come into collision with each other if respondent’s vessel “B” had kept her course.

“ ‘Proximate cause’ has been defined as that which, in a natural and continuous sequence, unbroken by any new cause, produces an event, and without which the event would not have occurred; the efficient cause; the cause that sets another or other causes in operation; the one that necessarily sets the other cause or causes in operation; the efficient cause — the one that necessarily sets the other causes in operation (the causes that are merely in~ cidental or instruments of a superior or controlling agency are not the proximate causes and the responsible ones, although they may be nearer in time to the result) that which stands next in causation to the effect — not necessarily in time or space, but in causal relation. The term has also been defined as the active and efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source; that which originates and sets in motion the dominating agency that necessarily proceeds through other causes as mere instruments or vehicles in a natural line of causation to a result; that cause which naturally lead to and which might have been expected to produce the result.” (Italics supplied.) 50 C.J. 837 et seq.

This violation of two statutory rules by the respondent has thrown upon the respondent the burden of proving “not merely that such disregard might not have been one of the causes of the collision, or even that it probably was not, but that ‘it could not have been.’ ” The H. F. Dimock, supra. And admittedly respondent has not sustained this heavy burden. The wrongful position of the respondent’s vessel “B” was not merely a condition of the accident, but a cause, i. e., her statutory violation.

The only way in which this respondent could have shown the inapplicability of the law relative to the violation of these two statutory faults would be to prove that between the times of the violations thereof and the collision, there came into play another novus actus interveniens, so as to break the line of causation therein, and this the respondent has been unable to do; and, in the absence of a novus actus interveniens, or a direct break in the line of causation, as aforesaid, the court must hold that these statutory faults, both or either, were proximately the cause of the accident and that, therefore, the doctrine of in ex-tremis is not available to this respondent.

Doctrine of in extremis not applicable to respondent:

It is perfectly obvious by now that the respondent vessel "B" in this case cannot avail herself of the doctrine of in extremis, she having brought about the collision by her statutory faults in that she disregarded the instructions given to her at the Port Director’s office in San Francisco, and the Starboard side rule as well. This doctrine of in extremis excuses a vessel for errors in last minute manoeuvers only where she is free from any prior fault. The doctrine of in extremis is lucidly stated in 15 C.J.S., Collision, § 155, p. 173, as follows:

“Cause of emergency. Mistakes made by navigators of vessels in imminent peril of collision will ordinarily be attributed to the prior fault which was the proximate cause of the collision. (Italics supplied.) The Steel Inventor, C.C.A.N.Y., 43 F.2d 958, certiorari denied Bell v. U. S. Steel Products Co., 51 S.Ct. 344, 283 U.S. 819, 75 L.Ed. 1435—The Clara Mattheu, D.C.Mass., 25 F.2d 123. Hence if a vessel is to be allowed the defense of in extremis for its errors she must herself be without prior contributing fault. The M. P. Howlett, C.C.A.Pa., 58 F.2d 923—Royal Mail Steam Packet Co. v. Companhia De Navegacao Lloyd Brasileiro, D.C.N.Y., 50 F.2d 207, affirmed, C.C.A., 55 F.2d 1082, certiorari denied Companhia De Navegacao Lloyd Brasileiro v. Royal Mail Steam Packet Co., 53 S.Ct. 11, 287 U.S. 607, 77 L.Ed. 528—The William A. Paine, C.C.A.Ohio, 39 F.2d 586. 11 C.J. p. 1164, note 34. And it must appear that the situation was induced by the fault of the other vessel. The Manchioneal, N.Y., 243 F. 801, 156 C.C.A. 313. 11 C.J. p. 1164, note 35. Therefore if the imminence of the peril or the dangerous contiguity of the two vessels is occasioned by the lack of caution or mismanagement of the vessel committing the error in extremis she will be held responsible for it. [U. S.] Royal Mail Steam Packet Co. v. Companhia De Navegacao Lloyd Brasileiro, D.C.N.Y., 50 F.2d 207, affirmed, C.C.A., 55 F.2d 1082, certiorari denied Companhia De Navegacao Lloyd Brasileiro v. Royal Mail Steam Packet Co., 53 S.Ct. 11, 287 U.S. 607; 77 L.Ed. 528—The William A. Paine, C.C.A.Ohio, 39 F.2d 586. * * * In the absence of clear proof that the privileged vessel, then acting in peril of collision, was at fault in failing to avert the collision in spite of the conduct of the wrongdoer, the vessel which took the chance, violated the rule, and created the danger is wholly responsible for the result. The Fred B. Dalzell, Jr., C.C.A.N.Y. 45 F.2d 580. Moreover any reasonable doubt as to the propriety of a maneuver in an emergency caused by another vessel should be resolved in favor of its propriety. The Hans Maersk, D.C.N.Y., 39 F.2d 98.” (Italics supplied.)

Clearly the doctrine of in extremis is not applicable to this respondent.

Allegation of libellant’s negligence:

Adverting now to the act of negligence charged by the respondent against the libellant’s vessel “A” in not having a proper lookout at the time of the collision, respondent alleges in its answer “that several minutes preceding the moment when the respondent’s vessel “B’s” lights were sighted by the helmsman of the libellant’s vessel “A”, and notice given by him to the officer in charge of the navigation of the libellant’s vessel “A”, said officer left the navigating bridge, and went into the chart room. During his absence, the management of said vessel was left in the care and charge of seamen who were not licensed officers. During the absence of the navigating officer, no licensed officer was on the bridge to assist in maintaining the attentive lookout required of a vessel in the situation of the libellant’s vessel “A”. This alleged act of negligence is denied by the libellant, and the court finds from the evidence that the navigating officer of libellant’s vessel “A” did not leave the bridge and that the chart room of libellant’s vessel “A” was immediately back of the wheel and a part of the bridge; furthermore, the evidence shows that the lookout, admittedly on duty at the time of the accident, had been on fishing boats for ten years and a regular seaman on large merchant vessels for five months preceding the collision. During the five hundred yards when the two vessels first became seeable by each other the libellant’s vessel “A” had a lookout on the bow, about seventy-five yards closer to respondent’s vessel “B” than the navigator on the bridge of the libellant.

According to the libellant’s testimony, when the respondent’s vessel “B” was first sighted by libellant’s vessel “A”, both vessels were about two hundred and fifty to three hundred yards apart; and, according to the respondent’s testimony, both vessels were about five hundred yards apart when the respondent’s vessel “B” first sighted libellant’s vessel “A”. The testimony is clear that they were travelling about ten knots an hour. Giving the respondent’s version of the testimony the benefit of the doubt, the vessels were seen or seeable at five hundred yards distance from each other, or fifteen hundred feet, each travelling at about ten knots or 60,800 feet per hour or 1013 feet per minute, and the combined approach being at the rate of 2026 feet per minute. Therefore, there was an interval of only forty-five seconds between the moment of discovery of libellant’s vessel “A” by respondent’s vessel “B” at the time of collision; and, if the libellant’s version of the accident is correct that both vessels were two hundred and fifty to three hundred yards apart when first seen, the libellant would have had about thirty seconds to avoid the collision. Having in mind the length of these two vessels, the libellant’s vessel “A” being 435 feet in length, and the respondent’s vessel “B” being 441 feet in length, the court is inclined to the opinion that physical contact between the two vessels during the last forty-five seconds was unavoidable, regardless of what manceuvers could have or actually did take place. This is also the position of the respondent, for it states on page 23 of its opening brief:

“Thus, as the two vessels approached each other, pretty much head and head, it was essential that they should see each other and commence to turn at more than twice 258 yards, or a minimum of 516 yards between their bows. If they didn’t see each other at a greater distance than 516 yards, and one of them at least began to turn at a greater distance than a minimum of 516 yards between their bows, it was simply a mathematical impossibility to move the mass of either ship out of the lines of approach, and collision was bound to happen.”

Of course, in unavoidable accidents, where each vessel is without prior fault, the court would conclude that the accident was inevitable and exculpate both vessels applying the doctrine of in extremis to each vessel, when each vessel would bear its own damage (The H. Herberman, D.C.N.Y., 33 F.2d 332; The Mary T. Tracy, 2 Cir., 8 F.2d 591, reversing, D.C., 298 F. 528; The Anna C. Minch, 2 Cir., 271 F. 192, affirming, D.C., 260 F. 522; The Djerissa, D.C.Va., 258 F. 949, affirmed The Newa, 4 Cir., 267 F. 115; 11 C.J. p. 1200, notes 5-7; 15 C.J.S., Collision, § 184); but, while the doctrine of in extremis is not applicable to the respondent in this case, it is applicable to the libellant by reason of the fact that there are no prior faults attaching thereto.

Even assuming that the libellant’s vessel “A” did lack a competent lookout at the time of the collision, this fact could not possibly be held to be a contributing factor in this case in view of the admission of proctors for the respondent that the accident was unavoidable when the vessels were five hundred yards apart and the maximum time for maneeuvering them out of danger amounted to not over forty-five seconds.

In The Norfolk, D.C.D.Md., March 14, 1924, 297 F. 251, the summary of this principle of law is as follows:

“Failure of a steamship to keep a careful lookout, or to hear and answer signals from a vessel on a crossing course, held not a contributing cause to a collision between them, where she was the privileged vessel and required by the rules, in the absence of agreement to the contrary, to keep her course and speed, which she did. * * *

“Violation of a statutory rule is such a fault as to throw upon the offending vessel the burden of proving, not merely that it might not have been one of the causes of collision, or that it probably was not, but that it could not have been.” 297 F. at pages 251, 252.

There are also cases holding that the absence of a lookout will not be held a contributing factor to the accident where he could not have prevented the accident.

The absence of a proper lookout on a boat, is unimportant, when it has nothing to do with causing the collision. The Farragut, 77 U.S. 334, 10 Wall. 334, 19 L.Ed. 946.

The owners of a vessel whose lookout was known to be negligent are not liable for the consequences of collision to which neglect in maintaining lookout did not contribute — The Annie Lindsley, 104 U.S. 185, 26 L.Ed. 716, affirming, 1873, Fed.Cas.No. 422, 6 Ben. 290.

“A vessel cannot be held in fault for failure to maintain a lookout, where the absence of a lookout in no way contributed to the collision.” The George W. Elder, 9 Cir., 1918, 249 F. 956, 162 C.C.A. 154.

“A tug cannot be held liable to contribute to the damages caused by a collision in which her tow was injured, because of her failure to keep a proper lookout, where she was not otherwise in fault, and from the facts shown it appears that the omission in no manner contributed to the collision.” The Elk, 3 Cir., 1900, 102 F. 697, 42 C.C.A. 598.

“Fact that lookout is improperly stationed, engaged in other duties, or entirely absent, is not a fault where other vessel is seen or reported as soon as possible and where a proper lookout would not have availed to prevent collision.” The Catalina, D.C., 18 F.Supp. 461, affirmed, 2 Cir., 97 F.2d 283. (Italics supplied.)

“It is well settled that the absence of a lookout, or the fact that he was not properly stationed or vigilant, is hot material where a proper lookout would not have availed to prevent the collision or minimize the effect.” 11 C.J. p. 1124, and cases cited; 15 C.J.S., Collision, § 110.

The court is citing these cases for the purpose of showing that there is a principle of law running through these collision cases that only where a lookout could have prevented a collision will his absence be charged as a fault, and that his absence will not be charged as a fault where his absence did not contribute to the accident.

At the time of this collision the lookout in charge of the libellant’s vessel “A” was on the job, he had been on fishing boats for ten years and had been a regular seaman on large merchant vessels for five months (libellant’s Ex. 2, p. 3) and the court concludes as a matter of law that he was competent; but, in view of the contention of proctor for the respondent that this accident was unavoidable during the last forty-five seconds when the vessels were not more than five hundred yards apart, it is all the more apparent to the court that his presence was in fact unimportant, and his presence or absence, competency or incompetency, could not, because of that fact, have been a contributing factor in the accident and charged as a prior fault. It should be realized that libellant’s vessel “A” was the privileged vessel, on her course and without prior fault up to the very moment of collision, and the doctrine of in extremis is necessarily applicable to her and will exonerate her for any damages suffered by the respondent.

Doctrine of in extremis as applicable to the libellant:

“Where a navigator, suddenly realizing that a collision is imminent by no fault of his own, in the confusion and excitement of the moment does something which contributes to the collision or omits to do something by which the collision might be avoided, such act or omission is ordinarily considered to be in extremis and the ordinary rules or strict accountability do not apply.” 15 C.J.S., Collision, § 155, p. 172, and cases cited.

There is no charge by either side that after the collision the other side was in any way negligent in not minimizing the damages or in offering to render any assistance that might have been necessary to the other vessel.

Summary and conclusions of the court:

In conclusion, the court finds as follows: (1) That respondent’s vessel “B” was guilty of a statutory fault in violating the instructions of the Port Director’s Office in San Francisco to take a certain course to Port Hueneme; (2) that said instructions had the force and effect of a statute; (3) that said vessel was on a crossing course crossing the bow of the libellant’s vessel “A” at the time of the collision; (4) that said vessel violated the starboard side rule, which two violations or either of them were the proximate cause of the collision; (5) that the libellant’s vessel “A” was the privileged vessel on her course at all times and cannot be charged with any fault statutory or otherwise; (6) that the libellant’s vessel “A” had a competent lookout; (7) that at all times the respondent’s vessel “B” was the burdened vessel; (8) that the doctrine of in extremis is not applicable to the respondent’s vessel “B” by reason of her prior faults and (9) that the doctrine of in extremis is applicable to libellant’s vessel “A” by reason of the fact that she was without fault at the time of the collision.

It is the judgment of this court that the respondent and cross libellant bear the damages sustained to vessel “B”, and that the libellant and cross respondent recover from the respondent and cross libellant the full amount of the damages suffered by libellant’s vessel “A” as a result of this collision, with costs of suit. This case will be referred to a Commissioner, preferably one who is agreeable to, and recommended by, both sides, for ascertaining the amount of damages to libellant’s vessel “A”, pursuant to the admiralty rules of this court, and that libellant recover from the respondent the amount of such damages, and costs of suit.

Proctors for the libellant will prepare Findings of Fact and Conclusions of Law and an Interlocutory Decree, in accordance with the Opinion of this court for the signature of the court after having presented same to proctors for the respondent for approval as to form, and within ten days after notice of the court’s ruling.


author: HULEN, District Judge.

text:
    UNITED STATES v. 1364.76875 WINE GALLONS, MORE OR LESS, OF SPIRITUOUS LIQUORS.
    No. 2646.
    District Court, E. D. Missouri, E. D.
    April 28, 1945.

      Harry C. Blanton, U. S. Dist. Atty., of Sikeston, Mo., and Arthur A. Hapke, Asst. U. S. Atty., of St. Louis, Mo., for libelant.
    Louis B. Sher, of St. Louis, Mo., for Paramount Liquor Co., interpleader.
    John C. Vogel, of St. Louis, Mo., for St. Louis Terminal Warehouse Co.
   HULEN, District Judge.

This is a proceeding by libel in rem wherein the following spirituous liquors were seized: 4800 pints Westerfield Whiskey; 8399 half pints Westerfield Whiskey; 1199 fifths Rocking Chair Whiskey. The seizure was to enforce a forfeiture of the liquors alleged to have been incurred under the laws of the United States on the assumption that the liquors at the time and place of seizure were owned by one Austin Seib. The libel petition is in two counts. The first count alleges that at the time of the seizure Austin Seib was unlawfully carrying on the business of a wholesale liquor dealer at 111 Commercial Street in the town of Charleston, in Mississippi County, Missouri, without first having paid the special tax of such wholes sale liquor dealer. Forfeiture is claimed under Section 3253, Title 26 U.S.C.A.Int. Rev.Code. Count Two alleges as a basis for the seizure, in addition to the charge contained in Count One, that Austin Seib failed to keep daily, at his place of business, a record of distilled spirits received and disposed of by him; failed to render correct transcripts or summaries of such records; and further that Austin Seib violated Section 203 of Title 27 U.S.C.A. by being without a basic permit to engage in the business of purchasing for resale at wholesale distilled spirits and did unlawfully purchase large quantities of distilled spirits and thereafter sell them at wholesale. Both counts of the libel petition allege the law violations by Austin Seib took place at the Commercial Street address in the town of Charleston. The distilled spirits in question were seized while in possession of the St. Louis Terminal Warehouse, No. 1, located at 1000 Spruce Street, St. Louis, Missouri.

The St. Louis Terminal Warehouse Company has filed an intervening petition alleging that it received the whiskey in question on the 13th day of December, 1943, for the account of Austin Seib, delivered its warehouse receipts therefor in the name of Austin Seib to the Paramount Liquor Company, St. Louis, Missouri. This intervener denies any violations of the Internal Revenue laws and it is the Court’s understanding that none is charged against it by the plaintiff.

A further bill of interpleader is filed by the Paramount Liquor Company. The pleading of the liquor company is to the effect that at the time of the seizure it was the owner of the liquor and held the warehouse receipts therefor.

There is little or no dispute as to the facts of this case. On December 10, 1943, Austin Seib went to the place of business of the Paramount Liquor Company and purchased the liquor afterward seized. He was unable to pay for it, and Paramount Liquor Company would not give him credit for the purchase price of some $13,000. It was then agreed between Paramount Liquor Company and Austin Seib that the whiskey would be delivered to the St. Louis Terminal Warehouse Company and warehouse receipts obtained therefor and that Paramount Liquor Company would retain the warehouse receipts until Austin Seib paid them for the whiskey. For the purpose of handling the transaction, should Austin Seib be unable to pay for and take out all the whiskey at one time, nineteen warehouse receipts were issued each for twenty-five cases of whiskey. The seized liquor comprised 475 cases. Pursuant to the agreement between Paramount Liquor Company and Austin Seib, the Paramount Liquor Company, on or about the 10th day of December, 1943, delivered the 475 cases of whiskey to the St. Louis Terminal Warehouse Company at its warehouse No. 1, located at 1000 Spruce Street, St. Louis, Missouri, and on or about December 13, 1943, the St. Louis Terminal Warehouse Company issued its negotiable warehouse receipts Nos. 330 to 348, in the name of Austin Seib. These receipts were mailed by the warehouse company to the Paramount Liquor Company and received by them, and have been in possession of the Paramount Liquor Company ever since. Austin Seib has paid nothing on account for the 475 cases of whiskey.

The whiskey was insured in the name of Austin Seib. Warehouse storage charges were paid by Austin Seib. Paramount Liquor Company, on the 10th day of December, 1943, made out an invoice showing the liquor “Sold to” Austin Seib. Records of Paramount Liquor Company show they paid an agent’s commission for sale of the liquor to Austin Seib. On Form 52B of the Internal Revenue Department, filed by the Paramount Liquor Company, showing sales for December, 1943, a record was made of the sale of the 475 cases of whiskey to Austin Seib. Austin Seib made a floor tax return on April 1, 1944, of the 475 cases of whiskey. The Paramount Liquor Company made two floor tax returns as of April, 1944, one apparently for their regular stock of whiskey, and the other a “supplemental” return, referring to the 475 cases of whiskey in storage with the St. Louis Terminal Warehouse Company. The whiskey was seized on the 11th day of January, 1944.

At the time of the seizure Austin Seib was violating the Internal Revenue laws in the conduct of his regular business at 111 Commercial Street in the town of Charleston, Mississippi County, in the particulars charged. Undisputed evidence of such violations, including conviction, was offered in the hearing of these proceedings. The question before the Court is not as to the guilt of Austin Seib as alleged in the libel petition, but as to the ownership of the seized whiskey at the time of the seizure and the effect of the outstanding warehouse receipts on the right of the plaintiff to forfeit the liquor as the property of Austin Seib.

Plaintiffs are proceeding under Section 3253, Title 26 U.S.C.A.Int.Rev.Code. This section provides for forfeiture (1) of “all distilled spirits * * * owned by such person, wherever found, and (2) all distilled spirits * * * found in the distillery or rectifying, establishment * * * shall be forfeited to the United States.” We are here concerned only with the first provision of the forfeiture statute. This statute refers to spirits which are owned by the wrongdoer at the time found or seized.

Under the evidence, there was a sale of the 475 cases of whiskey by Paramount Liquor Company to Austin Seib. Whether delivery by the St. Louis Terminal Warehouse Company of unendorsed warehouse receipts covering the 475 cases of liquor to the Paramount Liquor Company transferred legal title back to the Paramount Liquor Company for security purposes is rot necessary to decide under the view we take of the law. There are authorities both ways. Hale v. Milwaukee Dock Company, 29 Wis. 482, 9 Am.Rep. 603; Easton v. Hodges, 7 Cir., 18 F. 677.

A case not unlike the one at bar is Pattison v. Dale, 6 Cir., 196 F. 5. In that case Pattison claimed that possession of warehouse receipts created an equitable lien in his favor with regard to certain whiskey in storage. In sustaining this position, the court said, 196 F. loc.cit. 14, “We are constrained to hold that, as between Rohrer and Pattison (pledgor and pledgee, respectively), the effect of the delivery of the warehouse documents was to invest Pattison with constructive possession of the barrels of whisky described in the receipts. The warehouse documents contain the substantial elements of well-understood warehouse receipts, and no question is made as to their form. It is clear that Rohrer intended to deliver, and Pattison understood he was to acquire, constructive possession of the barrels of whisky. This mutual purpose ought to be carried out if it can be. * * * We conclude on this record that the action of Rohrer was an appropriation of these barrels of whisky to the purpose of securing Pattison and Pattison alone in respect of moneys then advanced by him. It results that if we are in error in our belief that constructive possession was given, at least an equitable lien on the whisky zvas created(Emphasis added.)

There has been no insinuation in this case that the sale of the whiskey by Paramount Liquor Company to Seib and placing the whiskey in the St. Louis Terminal Warehouse was a sham or sale in fraud of the law. No question is raised as to the form of the warehouse receipts. Under the evidence we find that it was a bona fide transaction. Such procedure is not unusual. Seib has never paid a penny of the purchase price of the liquor seized. He is the wrongdoer. There is no charge that the Paramount Liquor Company was guilty of any violation of the law or had knowledge that Seib was engaged in violating the law in operating a liquor business in Charleston, Missouri. Under these circumstances, to sustain the forfeiture would result in penalizing only the Paramount Liquor Company, an innocent party, and not Austin Seib, the guilty party, and this notwithstanding the property seized was in no way used in connection with a law violation. Austin Seib had never had actual possession of the property, and at the time of the seizure he was not in a position to obtain possession or control of the property. To hold that the property, under the circumstances, was subject to seizure because of the violation of law by Austin Seib would be harsh and oppressive, restrictive of commerce, and foreign to this Court’s idea of justice. We do not believe that the statute under which the Government is proceeding is subject to such an interpretation. It is a penal statute. It must be, therefore, strictly construed, and all doubt resolved in favor of those against whom it is invoked. See Shawnee National Bank v. United States, 8 Cir., 249 F. 583, loc.cit. 586.

We do not think the lien of the Paramount Liquor Company in the seized property fails because the warehouse receipts were made out in the name of Austin Seib and had never by him been endorsed. See 67 C.J. page 474, Section 53 and cases there cited. See also St. Louis National Bank v. Ross, 9 Mo.App. 399; loc.cit. 411, Millhiser Mfg. Co. v. Gallego Mills Co., 101 Va. 579, 44 S.E. 760, and Bush v. Export Storage Company, 6 Cir., 136 F. 918. They were held by the Paramount Liquor Company as collateral security for the amount due it on the sale of the liquor to Seib. Counsel for the Government, in arguing this case, conceded that Paramount Liquor Company held the warehouse receipts to protect it “in collecting the money due it.”

A lien has been defined as “ ‘a claim which one person has upon the property of another as security for some debt or charge, a tie that binds property to a debt or claim for its satisfaction.’ * * * ‘In fact if a transaction resolve itself into a security, whatever may be its form, and whatever name the parties may choose to give it, it is in equity a lien.’ * * * An equitable ‘lien arises either from a written contract which shows an intention to charge some particular property with a debt or obligation, or is implied and declared by a court of equity out of general considerations of right and justice as applied to the relations of the parties and the circumstances of their dealings.’” See Baranofsky v. Weiss, 1935, 120 Pa.Super. 126, 182 A. 47, 48. The arrangement between Seib, Paramount Liquor Company, and the St. Louis Terminal Warehouse Company created a lien on the seized property in favor of the Paramount Liquor Company to the amount of the unpaid purchase price. For cases sustaining the rights of a lienholder under circumstances such as the case now before the Court, see United States v. Three Hundred and Seventy Two Pipes Distilled Spirits, Fed.Cas.No.16,505; Shawnee National Bank v. United States, 8 Cir., supra; United States v. 396 Barrels Distilled Spirits, Fed.Cas.No.16,504; United States v. Stowell, 133 U.S. 1, 10 S.Ct. 244, 33 L.Ed. 555; Glenn v. Winstead, 116 N.C. 451, 21 S.E. 393; United States v. Two Barrels of Whiskey, 4 Cir., 96 F. 479.

We are unable to find any authorities to support the Government’s claim in this case. There are cases where forfeiture has been decreed even though the property seized belonged 'o an innocent party or was encumbered by a lien held by one who was guilty of no wrongdoing and was without knowledge of the law violation, but it will be found in cases where forfeiture is upheld under such circumstances that a further element is involved such as the property seized being at the time of seizure actually used in the violation (See Osborne v. State, 77 Ark. 439, 92 S.W. 406) or where the owner places the wrongdoer in possession of the property. Commissioner v. Intoxicating Liquors, 163 Mass. 42, 39 N.E. 348. In many cases the controlling principle is, the proceeding being in rem, the liquor or other property seized is the offender so to speak — the property is contraband, and the property is subject to seizure and destruction when it is being used contrary to the law, regardess of ownership.

Having reached the conclusion that the interest of the Paramount Liquor Company in the seized whiskey, by virtue of its holding negotiable warehouse receipts therefor, creates a lien on the property in the nature of a mortgage and that it at least had a security interest in the property at the time of its seizure, it is our opinion that the bill of interpleader of the Paramount Liquor Company should be sustained, and the liquor delivered to it on surrender of the warehouse receipts to the St. Louis Terminal Warehouse Company, and in all respects complying with the terms of the warehouse receipt agreement. We do not deem it necessary to pass here on liability for floor taxes which may be unpaid on the whiskey. That is. a matter for settlement, for amount due, between the Government and intervener.

Findings of fact, conclusions of law, and decree in accordance herewith will be submitted.


author: MOSCOWITZ, District Judge.

text:
    OIL SPECIALTIES & REFINING CO., Inc., v. TWIN CITY SHELLAC CO., Inc., et al.
    Civil Action No. 4738.
    District Court, E. D. New York.
    April 21, 1945.
    Whitehorn & Whitehorn, of Brooklyn,, N. Y., for plaintiff.
    Cousins & Cousins, of New York City, for defendant Twin City Shellac Co., Inc.
   MOSCOWITZ, District Judge.

■ This is a motion made by the plaintiff for the following relief:

“1. Striking from the answer the ‘separate and independent defense’ entitled ‘res judicata’ on the ground that it is immaterial and presents no defense to the complaint herein.

“2. Striking from the answer the defense entitled ‘estoppel’ on the ground that it is immaterial apd presents no defense to the complaint herein.

“3. Striking from the answer the counterclaim on- the ground that it fails to state a claim upon which relief can be granted or, in the alternative, directing the defendant to state its said counter-claim more definitely.

“4. Granting to the plaintiff such other and further relief as to the court may seem just and proper.”

In this action the plaintiff is seeking to revoke the cancellation of plaintiff’s trade-mark “Dandy-Dun” which was registered on June 21, 1938. In connection with defendant’s application for registration of its trade-mark “Dan-Dee”, an interference was declared with plaintiff’s trade-mark “Dandy-Dun” and the trademark “Dan-D-Shyne”, registered by G. C. Danielson. During the pendency of the interference proceeding, the defendant obtained an assignment of the trade-mark “Dan-D-Shyne” from G. C. Danielson. The Examiner of Interferences decided that the defendant was entitled to registration of its trade-mark “Dan-Dee”. The defendant instituted a proceeding for the cancellation of plaintiff’s trade-mark. The Examiner of Interferences rendered a decision cancelling plaintiff’s registration; such determination was affirmed by the Commissioner of Patents. It is plaintiff’s claim that the Commissioner of Patents’’ determination was erroneous.

This action is brought under 35 U.S.C.A. § 63, based upon three grounds: “(1) plaintiff’s user was prior to that of the defendant, (2) there is no conflict or confusion between the trade marks, and (3) the markets in which the parties sell their merchandise are separate and distinct.”

The motion herein relates to the insufficiency of the two separate defenses and the counterclaim. The first defense is that of res judicata. It is as follows:

“Thirtieth: That the issue of priority between the Plaintiff and this Corporate Defendant was definitely settled by the decision of the Examiner of Interferences in the interference proceeding alleged by the Bill of Complaint, and no appeal was taken therefrom, and as consequence, the property rights in the trade-mark involved have been judicially determined as being in the Corporate Defendant.”

The second defense is estoppel. It is as follows:

“Thirty-First: The Corporate Defendant alleges that the plaintiff is estopped from denying the exclusive property right of Defendant in the trade-mark involved by reason of the record in the interference proceeding alleged in the Bill of Complaint.”

These two defenses may be considered together, as they are in effect the same.

United States Code Annotated Title 35, Section 63 in part provides:

“In all suits brought hereunder where there are adverse parties the record in the Patent Office shall be admitted in whole or in part, on motion of either party, subject to such terms and conditions as to costs, expenses, and the further cross-examination of the witneses as the court may impose, without prejudice, however, to the right of the parties to take further testimony.”

This section provides for a trial de novo of all of the issues. Upon such trial there shall be admitted in evidence the record of the Patent Office and the parties may offer further testimony and may further cross-examine any witnesses that appeared before the Patent Office. The court may indulge the presumption that the decision reached by the Patent Office was correct. However, that is not an irrebuttable presumption. Evidence may be offered to overcome such presumption. Decision of the Patent Office is not res judicata nor is the unsuccessful party estopped by the-Patent Office decision. See United Shoe Machinery Corporation v. Muther, 1 Cir., 1923, 288 F. 283; John Morrell & Co. v. Doyle, 7 Cir., 1938, 97 F.2d 232; General Talking Pictures Corporation v. American Tri-Ergon Corporation, 3 Cir., 1938, 96 F.2d 800.

The counterclaim is very brief. It is as follows:

“Thirty-Second: The Corporate Defendant alleges that the Plaintiff has wilfully and flagrantly violated the trade-mark rights of the Defendant, and that the Defendant is entitled to treble damages by réason of the wilfull and flagrant and illegal infringement of its trade-mark by the Plaintiff.

“Thirty-Third: Defendant denies that this Court has jurisdiction over the Commissioner of Patents and particularly in a prayer for relief such as contained in the Bill of Complaint, and that the corporate defendant, the real party in interest, has been damaged by the filing of this Complaint.

“Thirty-Fourth: Defendant alleges that in the course of the interference proceeding set up by the Bill of Complaint, plaintiff, through its attorneys, offered to sell to defendant certain rights to the mark ‘Dan-Dee’, and that the defendant herein through other sources did acquire the same identical rights, setting back the date of adoption many years before the date of adoption alleged by plaintiff, and that plaintiff is estopped from denying the validity of said rights.”

The counterclaim is insufficient. It does not sufficiently set forth a claim upon which relief can be granted. See Dioguardi v. Durning, 2 Cir., 1944, 139 F.2d 774. Paragraph 34 sets forth that in the course of the interference proceeding plaintiff offered to sell its trade-mark and that therefore the plaintiff is estopped from denying the validity of said rights. This can hardly be called a counterclaim as there is no allegation that the offer was accepted. Apparently the purpose of the counterclaim is to recover damages from the plaintiff for plaintiff’s infringement of defendant’s trade-mark.

The motion to strike the first and second defenses is granted. The counterclaim is insufficient; the defendant will be given an opportunity to amend its answer by setting up a proper counterclaim.

Settle order on notice.