Opinion
No. 119.
January 6, 1930.
Appeal from the District Court of the United States for the Southern District of New York.
Action by Charles E. Mather and others against the Clyde Steamship Company. From a judgment dismissing the complaint on motion, plaintiffs appeal. Reversed.
This suit was originally brought in the Supreme Court of the state of New York, and was removed on the ground of diversity of citizenship. The complaint shows that the plaintiffs are Mather Co., insurance brokers and general average adjusters, with an office and place of business in New York City, and Bartram Bros., Inc., a New York corporation. The defendant is a corporation organized and existing under the laws of the state of Maine. On or about June 16, 1918, the steamship Inca, owned by the defendant, sailed from the port of Macoris, Santo Domingo, bound for New York, laden with a cargo of sugar owned by the plaintiff, Bartram Bros., Inc., and consigned to said plaintiff at New York. On this voyage the vessel stranded near Cape Hatteras, off the coast of North Carolina, on or about June 27, 1918, and both the vessel and cargo were placed in extreme peril. To avert a more serious loss, a considerable part of the cargo was jettisoned and sacrificed and other losses incurred and expenditures made whereby the vessel was enabled eventually to proceed to New York, where the remaining portion of the cargo was delivered to Bartram Bros., Inc., who then claimed to have a maritime lien upon the vessel as security for the payment of the proportion of the general average losses and expenditures to which they should be entitled upon an adjustment of the general average. Shortly thereafter, and before August 22, 1918, the complaint further shows that —
"The defendant designated and employed the plaintiffs Mather Company to ascertain the amount of the sacrifices and expenditures above mentioned, and the values of the property saved, and to adjust and apportion the general average, and to prepare a statement thereof, and, in accordance with the recognized practice of average adjusters, to receive and pay over, as trustee, the amounts due from the persons shown to be debtors in the general average to the persons shown to be creditors therein.
"14. On or about August 22, 1918, under the circumstances and for the purposes therein described, the defendant executed and delivered to the plaintiffs Mather Company, as trustees for the cargo owners, a general average bond, under seal, in the following form:
"`Whereas, it is alleged that the steamship Inca, having on board a cargo of sugar, laden at Santo Domingo, and bound for the port of New York, stranded near Cape Hatteras on or about the 27th day of June, 1918, and that a portion of the said sugar was jettisoned, and that the remainder, or a part thereof, was damaged; and
"`Whereas, the owners of said sugar claim a lien on said vessel for such portion of such loss and damage as said vessel may be liable for in general average, but the amount of said lien cannot be determined at present; and
"`Whereas, the said vessel is now in the port of New York and security has been demanded by or on behalf of said cargo owners for the amount of their said claim; and said cargo owners, only in consideration of the execution of these presents and of the giving of the security hereinafter provided for, have consented not to libel or detain said steamer at the said port of New York pending the completion of the adjustment of the general average now in process of being made by Mather Company, of 49 Wall Street, in the City of New York;
"`Now Therefore, in consideration of the premises and of the sum of One Dollar to us in hand paid by the said Mather Company, as Trustees for the above mentioned cargo owners, the receipt of which is hereby acknowledged, and in order that the said vessel be not libelled or detained at New York pending such adjustment of general average, we hereby covenant and agree to and with said Mather Company, as such Trustees, to pay to them, as such Trustees, but upon completion of the adjustment so being made by them, according to the laws and usages in similar cases, and upon notice to us thereof, the share of the said vessel in general average of the loss and damage aforesaid, for which said vessel may be found to be liable upon such adjustment;
"`And in case of legal proceedings to enforce such lien or determine any or all of the amounts so payable, or to collect the same, we further engage to cause due appearance, claim and stipulations for costs and value to be made in like manner and with like effect as if said vessel were actually libelled and seized and claimed and stipulated for in regular course of admiralty proceedings.
"`And we further agree to furnish herewith security in the sum of $60,000 with sureties satisfactory to said cargo owners, for the faithful performance of this agreement, and for the punctual payment to Mather Company, as such Trustees, of all such amounts as may be payable by or on behalf of said vessel and/or her owners by reason of the loss and damage aforesaid.
"`In Witness Whereof, the undersigned, Clyde Steamship Company, has caused this agreement to be signed by its vice president and its corporate seal to be affixed hereunto this 22nd day of August, in the year One thousand nine hundred and eighteen.
"`Clyde Steamship Co.,
"`By J.B. Denison (s) Vice President.
"`In presence of: N.W. Schaack (s) Assistant Secretary. [Seal.]'"
Mather Co., then performed the duties of their employment as general average adjusters, and a copy of their apportionment, together with a statement of the general average, was delivered to the defendant and to the cargo owner on or about December 20, 1920, showing that there was a balance due to the cargo owner from the owner of the vessel amounting to $41,348.40. Repeated demands for payment having been made to no effect, judgment for this sum, with interest from December 20, 1920, and costs, is now demanded.
The defendant answered that the steamship Inca, during the entire time involved, was in the possession and control of the Director General of Railroads, pursuant to the Proclamation of the President of the United States, dated December 26, 1917, and the laws of the United States applicable thereto; that the bond was executed solely for and in behalf of the Director General of Railroads as his representative and agent, and that the defendant itself was not liable thereon.
Barry, Wainwright, Thacher Symmers, of New York City (Herbert Barry and John C. Crawley, both of New York City, of counsel), for appellants.
Evan Shelby, of New York City (John E. Walker, of New York City, of counsel), for appellee.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
In dealing with the motion to dismiss, we shall look only to the complaint, accepting its allegations as true, Felt v. Germania Life Ins. Co., 149 App. Div. 14, 133 N.Y.S. 519, as there has been no admission by the plaintiffs of any part of the answer, and, without such admission, under the New York Civil Practice Act, § 243, allegations of new matter in the answer are "deemed controverted by the adverse party, by traverse or avoidance, as the case requires." Accordingly, the motion to dismiss can have no aid from the answer in its attack upon the complaint. Town of Potsdam v. Aetna Casualty Surety Co., 218 App. Div. 27, 217 N.Y.S. 641.
We shall, of course, take judicial notice of the Proclamation of the President and of the laws of the United States. Assuming, then, that the Inca was at all the times mentioned under government operation and control, the defendant from whom she had been requisitioned had at least a reversionary interest in the vessel. Standard Oil Company v. Southern Pacific Company, 268 U.S. 146, 45 S. Ct. 465, 69 L. Ed. 890. If she had been lost, the loss, to be measured by her then market value, would have been the owner's in the first instance, The Cushing (C.C.A.) 292 F. 560-566, subject to diminution or extinguishment, to be sure, by the enforcement of whatever right to compensation the owner may have had.
When the vessel was unladen at New York, the cargo owner claimed the right to security for the payment of whatever the ship should be found liable to contribute toward the loss occasioned by the stranding, and consented not to libel or detain her in consideration of the execution by the defendant of the general average bond. Whether the cargo owner had an enforceable lien on the vessel or not may have been doubtful at the time, and, in the light of later interpretative decision, we may now believe that the Federal Control Act (40 Stat. at L. 451, 456), providing in section 10 that "no process, mesne or final, shall be levied against any property under such Federal control," would have made fruitless an attempted arrest of the vessel. The Western Maid, 257 U.S. 419, 42 S. Ct. 159, 66 L. Ed. 299; Missouri Pacific Railroad Company v. Ault, 256 U.S. 554, 41 S. Ct. 593, 65 L. Ed. 1087. But certainly the rights of the parties were not so well settled at that time and the cargo owner would have been justified when the bond was given in taking action to determine its right to have the security of the vessel for the payment of its claim. With the cargo owner making such a claim to security, the defendant, by assuming the obligation of its bond, freed the vessel from danger of arrest and detention.
We do not, in reviewing the action taken on the motion to dismiss the complaint, go further than to assure ourselves that the defendant had a sufficient interest in the vessel to have had an incentive to execute the bond as principal, as the document itself would indicate it did, rather than as the agent for the Director General, as the defendant now claims. Such an interest to protect is enough in the present state of this case to negative the bare claim of the defendant that the bond must be construed, despite its express terms, to have been executed by it only as such agent. We do not know what authority the defendant had to execute a bond as agent for the Director General, and for the purposes of this appeal the allegations of the complaint, which are to the effect that the defendant acted as principal, must control. The defendant, notwithstanding the Proclamation of the President and the acts of Congress under which its vessel was requisitioned, still was in existence as a corporate entity with power to act for itself, if it saw fit, in matters not exclusively within the control of the Director General. Postal Telegraph-Cable Co. v. Call (C.C.A.) 255 F. 850; Hines v. Dahn (C.C.A.) 267 F. 105.
Judgment reversed.