Fredelos v. Merritt-Chapman & Scott Corp.

447 F.2d 435, 1971 A.M.C. 1347

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 23, 1971
• Docket: No. 71-1212
• Status: Published

Opinions

PER CURIAM:

This is an interlocutory appeal in an admiralty case. On February 10, 1966, S/T PADRE ISLAND was stranded in a leaking condition on Hen and Chicken’s Shoal not far from Bimini. Merritt-Chapman & Scott Corporation entered into a “no cure-no pay” salvage agreement with the vessel’s owner and mortgagee to salvage the leaking ship and to deliver it to the Port of Jacksonville, Florida. Shortly after its delivery to Jacksonville, numerous attachment proceedings were instituted. These in rem libels included actions for cargo damage, shipyard repairs both before and after the grounding, salvage, maintenance and cure, seamen’s wages, and the foreclosure of a preferred ship mortgage on this vessel of Panamanian registry.

By order of the court, the various libels were consolidated into a single cause. On October 14; 1966 an order was entered directing the sale of the S/T PADRE ISLAND for the sum of 116,000 dollars. The vessel was sold and the proceeds were deposited into the registry of the district court. Merritt-Chapman & Scott moved for summary judgment and filed affidavits and certain documentary evidence in support of its motion. No responsive affidavits or other proofs were tendered by any party in opposition to this motion. On October 20, 1966 the district judge entered summary judgment in favor of Jacksonville Shipyards, Inc. and Moon Engineering Company, Inc., for repair work and in favor of Merritt-Chapman & Scott for salvage. The court reserved a ruling on the priorities of all claims before it and stayed execution of the summary judgments pending an adjudication of these priorities.

During the pendency of these proceedings a separate action was commenced in the United States District Court for the Southern District of Texas by the vessel’s owner and mortgagee against the hull insurers on marine insurance policies for recovery of 877,000 dollars. The district court stayed the instant proceedings pending the outcome of the Texas proceedings. The federal district judge in Texas, late in 1969, entered a memorandum against the claim of the vessel owner and mortgagee and in favor of the insurers.

Thereupon the district judge in the instant cause removed the stay and on December 17, 1970, entered an order establishing the priorities with respect to the several competing claims. This order provided for two categories:

Category

1 Seamen’s Wage Claims (not to exceed $18,000.00);

1 Merritt-Chapman & Scott Corporation — Salvage Claim of $85,000, for which summary judgment has been issued;

2 Seamen’s personal injury and maintenance and cure claims;

2 Rawls Brothers Contractors, Inc. [Jacksonville Shipyards, Inc.] 1966 repair claims of $35,767.00 for which summary judgment has been issued.

In the same order, after finding that the wages of all intervenor seamen had been paid for all time actually worked aboard the vessel and that their claim for statutory wages did not exceed the sum of 18,000 dollars, the district judge removed the stay of execution with respect to the summary judgment in favor of Merritt-Chapman & Scott and directed the payment of 85,000 dollars to the said claimant. The trial judge also denied motions for summary judgment on behalf of the seamen, but on the same day directed that each of the seamen file with the court an affidavit setting forth the amount of their unpaid wages, together with a statement of the manner in which such wages were computed, and proof of Panamanian law, if such law were determined to be applicable.

Realizing that if the 85,000 dollar salvage award could somehow be defeated or lessened, then the remaining libelants could take more, the appellant-seamen, who not only assert their Category 1 claims for wages but also Category 2 claims for personal injuries and maintenance and cure, attack the propriety of the 1966 summary judgment entered in favor of the salvor.

We now determine that this prior summary judgment in favor of Merritt-Chapman & Scott on its salvage claim for 85,000 dollars was without error. Based upon the pleadings, the exhibits, and the affidavits, the trial court properly concluded that there was no issue of material fact to be determined. The uncontested proof and documentation made it undisputedly apparent that Merritt-Chapman & Scott had entered into a no cure-no pay salvage agreement with the owners of S/T PADRE ISLAND to salvage the leaking and stranded ship, which had the warranted value of 620,000 dollars. The fee was to be 85,000 dollars and was payable only if the salvage were successfully accomplished.

We are likewise unable to perceive any error in the ruling of the trial court on the issue of priorities. First wages and then salvage have the first and second priorities. These were properly placed in Category 1. City of Athens, 83 F.Supp. 67 (D.C.Md.1949); Gilmore and Black, Law of Admiralty, Ch. IX § 9-20 (1957). Into Category 2 were placed seamen’s personal injury claims and maintenance and cure and the contract repair claim of Jacksonville Shipyards. The trial judge specifically reserved his ruling on the priority between these two claims. There is no impropriety in this abstinence because the determination may become unnecessary for either of two reasons. The total fund remaining for distribution is slightly over 103,000 dollars and it would be consumed by the two Category 1 claims if seamen’s wages approach 18,-000 dollárs. Secondly, the court has not yet dealt with the priority, if any, which will be accorded to such interest as the salvor may be entitled to receive Even at six percent per annum from the date of judgment, it would consume all of the fund not payable as wages.

The trial judge properly excluded the remaining contract claims from Category 2, since Jacksonville’s claim has a higher priority because it arose more recently than other contract claims. Rubin Iron Works v. Johnson, 100 F.2d 871 (5th Cir. 1939). Similarly, the contract claim would outrank the preferred ship mortgage on a foreign vessel. See, 46 U.S.C.A. § 951 (1958).

Finally, the seamen attack the denial of summary judgment on their behalf on the question of wages. They contend that, as a matter of law, they are entitled to an award of statutory wages. Well in advance of the December 17 hearing, the vessel owner had filed and served copies of properly verified releases purporting to show that all the seamen had been paid in full for all wages due. The seamen did not oppose the owner’s proof prior to or at the hearing. Thus, there was a total absence of proof to sustain summary judgment in favor of the seamen. Their complaint was un-sworn and no affidavits or other proofs were filed or offered. The only affidavit filed by them in this connection was that of the seamen’s counsel to the effect that Panamanian law entitled his clients to recover statutory wages upon separation from the ship’s service. Despite the fact that there was simply no proof, the judge nevertheless acted with an abundance of caution by allowing the seamen additional time to supply some proof of their claims.

Affirmed and remanded.