Washingtonsouthern Nav Company v. Baltimore & Philadelphia Steamboat Company/Opinion of the Court

The Washington-Southern Navigation Company, the charterer of two steamers of the Baltimore & Philadelphia Steamboat Company, filed, in the Eastern District of Pennsylvania, a libel in personam against the owner to recover the sum of $120,000 for breach of the charter party. The usual bond for costs was given. No attachment or seizure of the property of the respondent was made or sought. The owner traversed the essential averments of the libel and also filed a cross-libel in which it sought damages in the sum of $43,443.25. There was no attachment or seizure of person or property under the cross-libel. The essential allegations of the cross-libel were in turn denied by the charterer. Thereafter the owner moved that the charterer be required to give security to respond in damages on the counterclaim. The trial court ordered it to do so, provided the owner first gave security to pay the charterer's claim. 271 Fed. 540. This the owner did of his own motion and without compulsion. The charterer did not give the security ordered. Thereupon the trial court entered a decree staying all proceedings until its order should be obeyed.

The motion and order were based on rule 50 of the new Admiralty Rules, promulgated December 6, 1920 (254 U.S. 24, appendix, 40 Sup. Ct. xix), which amends former rule 53 (210 U.S. 53, 29 Sup. Ct. xiv), by adding thereto the words italicized, so that it now reads:

Rule 50: 'Whenever a cross-libel if filed upon any     counterclaim arising out of the same contract or cause of      action for which the original libel was filed, and the      respondent or claimant in the original suit shall have given      security to respond in damages, the respondent in the      cross-libel shall give security in the usual amount and form      to respond in damages to the claims set forth in said      cross-libel, unless the court, for cause shown, shall      otherwise direct; and all proceedings on the original libel      shall be stayed, until such security be given unless the      court otherwise directs.'

The charterer appealed to the Circuit Court of Appeals. That court, under section 239 of the Judicial Code (Comp. St. § 1216), asks instruction whether this rule empowers the District Court to stay proceedings in the original suit until the original libelant shall have given security to respond to the counterclaim, in a case where the original libel was in personam and the original respondent (the cross-libelant) has given the security voluntarily; that is, of his own motion and without compulsion.

The owner insists that the terms of rule 50 are so clear that there is no room for a construction different from that given to it by the District Court. But to ascertain the true meaning of the rule, the operation and effect of the construction urged must be considered. Under that given, a libelant may be automatically barred from prosecuting his suit, merely because he is unable or unwilling to give security to satisfy the claim made in the cross-libel. For, although no security is asked of the original respondent, he may, by voluntarily giving security, effect a stay of all proceedings against himself, 'unless the court, for cause shown,' directs otherwise. Thus construed, rule 50 would abrogate the right to proceed in admiralty, and substitute therefor either a conditional right to prosecute the suit, provided libelant gives security to satisfy the counterclaim, or a permission to do so, provided the court, in its discretion, for cause shown, grants leave. Moreover, the circumstances under which alone this loss of the right to sue would occur are whimsical. The original libelant could proceed without giving the security, if the respondent, instead of filing a cross-libel, brought an independent cross-suit. Likewise, if the person who feels himself aggrieved, instead of exercising diligence in prosecuting his claim, exercises self-restraint, and allows the other party to the controversy to commence the hostilities, he may, without giving the security, exercise the right to prosecute his cause of action, either by a cross-libel or by an independent cross-action. An intention to introduce a practice so capricious is not to be lightly imputed.

To ascertain the true meaning of the rule, it must be read, also, in the light of the established admiralty jurisdiction, of the general principles of maritime law, and of the appropriate function of rules of court. Before rule 53 was adopted, the general practice in admiralty concerning the giving of security had long been settled. Every party-libelant, respondent, claimant, and intervener-was obliged, or could be required, to give security for costs. No party could be required to give security to satisfy the claim of another. In suits in personam, where the mesne process was solely by simple monition in the nature of a summons to appear and answer the suit, no security, except that for costs, was ever given by the respondent. Where the process included a clause for mesne attachment of property, the respondent was not obliged to give any security except for costs; but he could, if he chose, obtain dissolution of the attachment by giving security to pay the amount of the decree against him not exceeding the value of the attached property. Where the mesne process was by warrant of arrest of the person in the nature of a capias, the respondent was, likewise, not obliged to give security for the claim; but he could, if he chose, obtain his release by giving bail to secure his appearance and/or to satisfy the decree. Where the suit was in rem, the claimant was under no obligation to give such security; but he could, if he chose, obtain release of the property seized by giving security for its value or for the amount required to satisfy the claims made. Thus, neither respondent, claimant nor intervener could, as a condition of prosecuting his claim or defense, be compelled to furnish any security other than for costs. And the libelant could never be put into a situation which obliged him to give any other security. Such was still the practice concerning the giving of security for claims prosecuted in admiralty (except as modified by rule 53) when rule 50 was incorporated in the revision of December 6, 1920.

The contruction given to rule 50 by the District Court would, by imposing an impossible or onerous condition, deprive many litigants of the right to prosecute their claims in admiralty. Among others, it would, if applied, generally, deny this right to seamen, upon whom, regardless of their means or nationality, Congress, shortly before the adoption of rule 50, had conferred the right to prosecute their claims, in both trial and appellate courts, without giving security even for costs. It would likewise deny to poor citizens of the United States the right to proceed in admiralty, which Congress had by successive acts sought to ensure, in order to relieve litigants from dependence upon the judicial discretion theretofore incident to leave to sue in forma pauperis. The right of a citizen of the United States to sue in a court having jurisdiction of the parties and of the cause of action includes the right to prosecute his claim to judgment. Illinois Central R. R. Co. v. Adams, 180 U.S. 28, 34, 21 Sup. Ct. 251, 45 L. Ed. 410; McClellan v. Carland, 217 U.S. 268, 281, 30 Sup. Ct. 501, 54 L. Ed. 762. Obviously, it was not the intention of this court in adopting the rule to disregard the right of seamen, of poor persons or of others to prosecute suits in admiralty. The function of rules is to regulate the practice of the court and to facilitate the transaction of its business. This function embraces, among other things, the regulation of the forms, operation and effect of process; and the prescribing of forms, modes and times for proceedings. Most rules are merely a formulation of the previous practice of the courts. Occasionally, a rule is employed to express, in convenient form, as applicable to certain classes of cases, a principle of substantive law which has been established by statute or decisions. But no rule of court can enlarge or restrict jurisdiction. Nor can a rule abrogate or modify the substantive law. This is true, whether the court to which the rules apply be one of law, of equity or admiralty. It is true of rules of practice prescribed by this court for inferior tribunals, as it is of those rules which lower courts make for their own guidance under authority conferred.

It remains to consider the purpose of rule 50. The cross-libel, unlike the cross-bill in equity, is of recent origin. This simple device in aid of the administration of justice was not established in the English courts of admiralty until, under the name of cross-cause, it was authorized by the Admiralty Court Act of 1861, 24 and 25 Vict. c. 10, § 34. Theretofore, that court considered itself without power even to compel consolidation of independent cross-suits or to stay one to await proceedings in the other. Moreover, where the original libel was filed by a nonresident resident libelant, substituted service in a cross-action, by serving his proctor, was not permitted, until this was authorized by a rule of court adopted in 1859. In American courts of admiralty the practice was more liberal. Set-off being of statutory origin and not expressly authorized in admiralty, was rejected here as in England. But Congress conferred upon all federal courts, in 1813, the right to compel consolidation of causes. The North Star, 106 U.S. 17, 27, 1 Sup. Ct. 41, 27 L. Ed. 91. Leter our admiralty courts recognized the propriety of affording affirmative relief by a cross-libel, in analogy to the cross-bill in equity. The procedure on cross-libels and their scope remained, however, unsettled.

Rule 53 was doubtless suggested by section 34 of the English Admiralty Court Act. By that provision, the court was authorized, in certain cases, to suspend proceedings in the original cause until security had been given to answer judgment in the 'crosscause.' The power was in its terms limited to cases in which the ship of the original defendant had been arrested or he had given bail. The courts held that the act does not apply where the original libel was in personam, and that in actions in rem, it had, thereunder, no power to order a stay where there had been no arrest and the defendant had given bail voluntarily. Rule 53 did not so limit the power to suits in rem; for, while process in the nature of foreign attachment in suits in personam fell into disuse in England, it had become the established practice in this country. Neither was rule 53 in terms limited to suits where the original libelant had made an arrest or attachment. But, although it remained in force, unmodified, for more than half a century, no reported case discloses that a stay was ordered under it, except where the original respondent had been obliged to give security in order to obtain release of the ship or of attached property. Here, as in England, the purpose of the provision was declared to be to place the parties on an equality as regards security. And under it, security to satisfy the counterclaim could not be exacted by means of a stay, unless the original libelant had compelled the giving of such security to satisfy his own claim.

The new phrases introduced in rule 50 were not designed to introduce any new practice concerning cross-libels. Their purpose was to formulate the practice which had become settled. This is true of those relating to the giving of security, as it is of those concerning the character of the claims which may be asserted by means of a cross-libel. The answer to the question of the Circuit Court of Appeals is:

No.