United States v. Freights/Opinion of the Court

This is a libel in admiralty against sub-freight alleged to be in the hands of the Palmer & Parker Company of Boston in the District of Massachusetts. It was dismissed by the District Court for lack of jurisdiction, 291 F. 92, and the decree having been entered on March 17, 1925, before the Act of February 13, 1925, c. 229, §§ 1, 14, 43 Stat. 936, 938, 942, went into effect, a direct appeal was taken to this Court under section 238 of the Judicial Code (Comp. St. § 1215). The Ira M. Hedges, 218 U.S. 264, 270, 31 S.C.t. 17, 54 L. Ed. 1039, 20 Ann. Cas. 1235.

The United States, owner of the Steamship Mount Shasta, in May, 1920, made a bare boat charter of the vessel to the Mount Shasta Steamship Company through Victor S. Fox and Company, Inc., an agent of that Company, stipulating for a lien upon all cargoes and all sub-freights for any amounts due under the charter party. Victor S. Fox & Company in July, 1920, made a subcharter to Palmer & Parker Company for a voyage to bring a cargo of mahogany logs from the Gold Coast, Africa, to Boston. The vessel arrived in Boston with its cargo on February 19, 1921. There is due to the libellant $289,680 for the hire of the steamship, and the libel alleges that there is due and unpaid freight on the cargo of logs, $100,000, more or less, in the hands of Palmer & Parker Company, on which this libel seeks to establish a lien. It prays a monition against Palmer & Parker Company and all persons interested, commanding payment of the freight money into Court, etc. Palmer & Parker Company was served. That Company filed exceptions to the libel, denied the jurisdiction of the Court and answered alleging ignorance of the original charter party and of the relations of the United States and the Mount Shasta S. S.C.ompany to the vessel, and setting up counterclaims more than sufficient to exhaust the freight. The cargo had been delivered. The District Court assumed that a libel in rem could be maintained against freight money admitted to be due and payable, but was of opinion that the fund must exist when the suit is begun, or that the jurisdiction fails. The Court held that where, as here, the liability was denied in good faith, it did not appear that there was any res to be proceeded against and that the suit must be dismissed. The counsel for Palmer & Parker Company pressed the same considerations here in a somewhat more extreme form.

By the general logic of the law a debt may be treated as a res as easily as a ship. It is true that it is not tangible, but it is a right of the creditor's, capable of being attached and appropriated by the law to the creditor's duties. The ship is a res not because it is tangible but because it is a focus of rights that in like manner may be dealt with by the law. It is no more a res than a copyright. How far in fact the admiralty has carried its proceeding in rem is a question of tradition. We are not disposed to disturb what we take to have been the understanding of the Circuit Courts for a good many years, and what the District court assumed. American Steel Barge Co. v. Chesapeake & Ohio Coal Agency Co. (C. C. A.) 115 F. 669; Bank of British North America v. Freights of the Hutton (C. C. A.) 137 F. 534, 538; Larsen v. 150 Bales of Sisal Grass (D. C.) 147 F. 783, 785; Freights of the Kate (D. C.) 63 F. 707.

But if it be conceded that the Admiralty Court has jurisdiction to enforce a lien on sub-freights by a proceeding in rem, and a libel is filed alleging such sub-freights to be outstanding, we do not perceive how the Court can be deprived of jurisdiction merely by an answer denying that such freights are due. The jurisdiction is determined by the allegations of the libel. Louisville & Nashville R. Co. v. Rice, 247 U.S. 201, 203, 38 S.C.t. 429, 62 L. Ed. 1071. It may be defeated upon the trial by proof that the res does not exist. But the allegation of facts that if true make out a case entitles the party making them to have the acts tried. It is said that the Court derives its jurisdiction from its power, and no doubt its jurisdiction ultimately depends on that. But the jurisdiction begins before actual seizure, and authorizes a warrant to arrest, which may or may not be successful. Here the debtor is within the power of the Court and therefore the debt, if there is one, is also within it. The Court has the same jurisdiction to try the existence of the debt that it has to try the claim of the libellant for the hire of the Mount Shasta. If the proof that there is freight due shall fail it does not matter very much whether it be called proof that the Court had no jurisdiction or proof that the plaintiff had no case. Either way the libel will be dismissed. See Ira M. Hedges, 218 U.S. 264, 270, 31 S.C.t. 1039, 20 Ann. Cas. 1235; Lamar v. United States, 240 U.S. 60, 64, 36 S.C.t. 255, 60 L. Ed. 526.

Decree reversed.

The separate opinion of Mr. Justice McREYNOLDS.

I am unable to accept the view that an admiralty court may entertain an action in rem when there is nothing which the marshal can take into custody. The technical term 'in rem' is used to designate a proceeding against something. This court and text-writers again and again have pointed out the essential nature of such thing. The jurisdiction is founded upon physical power over a res within the district upon the theory that it is 'a contracting or offending entity,' a 'debtor' or 'offending thing,' something that can be arrested or taken into custody, or which can be fairly designated as tangible property. The Sabine, 101 U.S. (11 Otto) 384, 388, 25 L. Ed. 982; The Robert W. Parsons, 191 U.S. 17, 37, 24 S.C.t. 8, 48 L. Ed. 73; Benedict on Admiralty (5th Ed.) §§ 11, 297; Hughes on Admiralty (2d Ed.) 400, 401; admiralty rules 10, 22.

Here the thing supposed to be within the district and proceeded against was an unliquidated, uncertain and disputed claim for freight, which manifestly could not be arrested or taken into custody. To base jurisdiction for an action in rem upon this intangible claim would amount to a denial of the essential nature of the proceeding.

Of course, jurisdiction of an admiralty court-that is, power to hear and adjudge the issues, not merely to send out a monition-is not finally to be determined by mere allegations of the libel any more than jurisdiction of a court of law ultimately depends upon the plaintiff's allegation that the defendant is alive and within the district. If it appear that the defendant has never been there or was dead when the action began, certainly the court can go no further.

An examination of Freights of the Kate (D. C.) 63 F. 707, American Steel Barge Co. v. Chesapeake & Ohio Coal Agency Co. (C. C. A.) 115 F. 669, Bank of British North America v. Freights of the Hutton (C. C. A.) 137 F. 534, 538, and Larsen v. 150 Bales of Sisal Grass (D. C.) 147 F. 783, 785, I think, will fail to disclose any adequate support for the theory repudiated by the court below. Some language of American Steel Barge Co. v. Chesapeake & Ohio Coal Agency Co., taken alone, seems to favor that view; but, in fact, the libel there was against 'the cargo of coal' 'and the freight on said cargo of coal.' The prayer asked for process against 'said cargo of coal and against said sub-freight thereon,' and 'that said cargo may be ordered by the court to be sold and the proceeds thereof applied to said payment.'

The decree below should be affirmed.