Home Insurance v. North Western Packet Co.

32 Iowa 223

• Court: Supreme Court of Iowa
• Decided: July 28, 1871
• Status: Published

Opinion

Peck, J".

i. jubisdicmSaity'oases. I. The question of jurisdiction submitted to and decided by the district c'ourt, upon the motion of plaintiff to dismiss the action, first demands our attention. It is this: -Is this action, brought to recover upon a bill of lading for the loss of property caused by a vessel navigating the Mississippi river, within the exclusive jurisdiction of the district court of the United States? Without delaying to pass upon any objection as to the time or manner in which the question was presented to the court below, we will proceed at once to its consideration. The position of counsel for plaintiff is, that the action is a case of admiralty and maritime jurisdiction within the exclusive cognizance of the United States district court. Counsel-rest the support of their position upon article 3, section 2, of the constitution of the United States. The consideration and interpretation of this provision, so far as may be found necessary to determine the question before us, now devolves upon us. It is in these words: “ The judicial power shall extend to all cases in law and equity, arising under this constitution, the laws of the United States, and treaties made, or which shall be made, under their authority; to all cases affecting ambassadors, other public ministers and consuls*; to all oases of ad/miralty and maritime jvrisctiotion ; to controversies to which the United States shall be a party; to controversies between two or more States; between a State and a citizen of another State; between citizens of different States, between citizens of the same States claiming lands under grants of different States, and between a State or the citizens thereof, and foreign States, citizens or subjects.”

It will be observed that the judicial power of the United States, under this provision of the constitution, extends to three classes of cases, determined, respectively: 1. By the subject-matter of the action wherein the power is exercised; 2. By the parties thereto; and 3. By the remedy to be enforced or course of proceedings adopted. We will proceed, by considering the language used, to point out the reasons supporting this classification. In the course of this investigation, by regarding alone the true meaning of the words used, we will discover principles which will aid us in the final solution of the question of jurisdiction involved in this case.

The word “cases,” three times used in this section, must be understood in its legal, technical sense as meaning contested questions before courts of justice, suits or actions. The word was so understood by the United States supreme court in Osborn v. U. S. Bank, 9 Wheat. 738. Chief Justice Marshaíl, construing the identical section of the constitution now under consideration, uses this language: “This clause enables the judicial department to receive jurisdiction to the full extent of the constitution, laws and treaties of the United States, when any question respecting them shall assume such a form that the judicial power is capable of acting on it. That power is capable of acting only when the subject is submitted' to it by a party who asserts his rights in the form prescribed by law. It then becomes a case, and the constitution declares that the judicial power shall extend to all cases arising under' the constitution, laws and treaties of the United States.” The clause under consideration then, by the use of the word “ cases,” means that the judicial power shall extend to certain actions wherein, according to the forms of law, the rights of parties are presented for adjudication. The first clause of the section confers judicial power in actions arising under the constitution, laws and treaties of the United States. That is, where rights are given or preserved, or liabilities accrue under them, whenever they affect or operate upon parties to actions, to such actions the judicial power of the United States extends. Here, then, the judicial power is determined in a class of cases by the subject-matter of the action. The conditions, character or citizenship of the parties to the actions have nothing to do with the jurisdiction of the United States courts. Eor instance, if an action arises between citizens of the same State, under the laws of the United States, the Federal courts take jurisdiction thereof. It will be seen that, in this elaás of cases, the subject-matter and not the parties is the test of jurisdiction. The Federal judicial power in such instances extends to all cases in lorn cmd ohcmoery, separate jurisdictions existing in the States when the constitution was adopted, and which had been found sufficient for the administration of justice to the people. The system of jurisprudence then prevailing was, doubtless, recognized by the framers of the constitution, and it was intended that all rights arising under the constitution, laws and treaties of the United States should be settled by actions in the jurisdictions of law, chancery and admiralty in which justice was then administered.

To this class of actions belong controversies between citizens of the same State claiming lands under grants of different States.

The second class of actions are those in which the jurisdiction of the Federal courts is determined by the parties. These are all actions against “ ambassadors, other public ministers, and consuls,” and “controversies to which the United States shall be a party; to controversies between two or more States; between a State and citizens of another State, between citizens of different States. * * * And between a State or the citizens thereof, and foreign States, citizens or subjects.” It is very plain that whatever may be the subject-matter of such actions, jurisdiction therein is conferred upon the United States. The use of the word “ controversies” in the latter part of the section, in the place of the term “cases,” before used, cannot fail to attract observation. It is broader in its meaning than the term it supersedes, especially as that term is qualified, when first and last used, in the section under consideration. It is not improbable that it is used for this reason. This appears quite reasonable, when we consider that, in some controversies in which jurisdiction is conferred, “ cases” or actions could not have been prosecuted before the constitution in any forum, as controversies between States, and actions against a State by citizens of another State, or by a foreign state, citizens or subjects, of which jurisdiction has been taken away by an amendment. As no actions could then be prosecuted in such instances, it may have been thought that no power would have been conferred if the word “ cases” had been used. But, for whatever reason the word “ controversies ” is used, it appears to us to be of more general and extensive import, so far as it relates to the occasion for the exercise of power, than the other word “ cases ” used for the same purpose.

The third class of cases to which the judicial power of the United States extends, is determined by the remedy sought, the course of proceeding had, the form, manner and forum in which the actions are prosecuted. It is prescribed that the Federal jurisdiction shall extend “ to all cases of admiralty and maritime jurisdiction.” The word “jurisdiction” in this connection relates to the forum and course of proceedings. Thus we speak of cases of chancery jurisdiction, meaning thereby actions cognizable in a court of chancery .within the limits of the authority of chancery courts. In this class the judicial power conferred is limited by the authority of the court of admiralty; cases within its jurisdiction are cognizable in the Federal courts. It is readily seen that the parties to such actions have nothing to do in determining the jurisdiction to which they are assigned. And we think it is equally as plain that the same is true of the subject-matter of the action. As we have before pointed out, a “ case ” is a contested question before a court of justice, submitted in the form prescribed by law, which will call into exercise the judicial power.

Proceedings are necessary to create a case and enter into the idea expressed by the term. "When we speak of a case at law, in chancery or in admiralty, we mean a judicial question submitted to a court of one jurisdiction or another, according to the form of proceedings prescribed by law. The form of these proceedings, and-not the subject-matter of the case, determines its character and to which jurisdiction it belongs. The course of proceedings necessary to call into exercise the judicial power at once decides to what forum it must be assigned. The subject-matter of the action, the lights to be affected or property to be reached, may be alike the foundation of an action in one jurisdiction or another. The remedy sought dictates the proceeding to be instituted, the means whereby the judicial power is applied to the subject. The proceedings give character to the case, and assign it to the proper jurisdiction. We conclude that the subject-matter of the action is not the test of jurisdiction in this class of cases.

In this view a contested question, involving rights and property of parties, if the remedy sought is alone authorized by the proceedings peculiar to a certain forum, must be brought therein; but, if authorized by the proceedings of another, the action, at the option of the plaintiff, may be instituted in either court, both having concurrent jurisdiction. Such cases are of frequent occurrence in the administration of the law.

a_oonstitutionai law. The clause of the constitution in question confers judicial power in actions maritime, and in admiralty. It does not deprive the State courts of jurisdiction over -the game subject-matter, when exercised under other forms of proceeding. Admitting that the power conferred is exclusive, yet it is limited to certain forms of proceedings to be exercised therein. Therefore, if the proceedings pursued in any case are those of admiralty, the State courts cannot acquire jurisdiction thereof. But if the action be at law or in chancery, although founded upon a subject-matter which, under proper proceedings, could have been brought before an admiralty court for adjudication, it is cognizable there.

s-; — jurisdiclimited. It is very clear that the reasons for conferring judicial power upon the Federal courts in admiralty cases are based upon the remedies sought and proceedings prevailing in that jurisdiction, rather than upon the subject-matter involved. In cases in rmn or m personam, where ships are to be seized, or property upon shipboard is to be subjected to the judgment of a court, it was, doubtless, thought by the framers of the constitution that these remedies could be more efficiently enforced'by the United States, being provided with a naval force that can be called to the aid of officers of United States courts in executing their process. The proceedings and practice in admiralty courts are peculiarly adapted to enforce the rights of seamen and protect them from wrong. Being a class of citizens that are abroad upon the seas, they are peculiarly within the protection of the national government. It is proper that a Federal court should be open to them, where their rights may be speedily adjusted. Other instances, where the remedies necessary to do justice to parties appear to require proceedings peculiar to courts of admiralty, and that the law should be therein administered by the United States, could be mentioned. But in other cases there seems to be the most weighty reasons why the Federal court should not be clothed with exclusive jurisdiction to determine questions affecting the rights of parties in these courts. One instance will be sufficient to illustrate the position here assumed, though many others could be mentioned. Upon a contract of affreightment between citizens of a State there arises a claim for damages for its breach, by one party against the other. It is simply a contract for the transportation of property upon shipboard. An action thereon, it has been held, is within the jurisdiction of admiralty courts. Can any sound reason, based upon considerations of the due and proper administration of law, be given why the case should be exclusively within such jurisdiction? Why shall it be said that the State government, which is capable of adjudging between the parties upon all other hinds of contracts, must be deprived of jurisdiction in this case ? We are unable to discern any sound reason to support the doctrine of exclusive jurisdiction in such a case, based upon the demands of justice and the due administration of the law.

Upon this course of reasoning, based upon the constitution. itself, we arrive at the conclusion, that the judicial power of the United States, in admiralty cases, is limited by the proceedings had, the form, manner and forum in which actions, under the law in that jurisdiction, are prosecuted; and that exclusive jurisdiction is not bestowed upon the Federal courts over subjects which may be the foundation of actions in admiralty, and also according to the course of the common law, in chancery or at law. In such cases the State courts have concurrent jurisdiction with the United States admiralty courts.

4 aotof im That such is the congressional interpretation of the constitution of the United States, and that, if under the clause in question the exclusive judicial power in admiralty cases may be assumed by the United States, it has not been but is preserved to the States, is made plain by the act of congress of the 24th of September, 1189, section 9, which is in these words: “ The district courts * * * * shall also have exclusive original cognizance of all civil causes of admiralty and maritime jurisdiction, including all seizures under laws of impost, navigation or trade of the United States, * * * * * * saving to suitors, in all cases, the right of a common-law remedy, where the common law is competent to give it.”

Counsel for defendant contend that if this act, in effect, attempts to preserve jurisdiction in the State courts of any matter which, in a proper action, is cognizable in admiralty, it is in conflict with the clause of the constitution of the United States considered above. But as we do not hold that that clause confers exclusive jurisdiction in this class of cases upon the Federal courts, our discussion of that question is a sufficient answer to this position of counsel.

In case it be conceded that, under the constitution, congress may confer upon the Federal courts exclusive jurisdiction of all questions that may be cognizable in admiralty, it is, as we have just remarked, very clear that this has not been done by the statute cited above; but, on the other hand, jurisdiction is preserved therein to the State courts, in all cases where the common law provides a competent remedy. The language of the statute requires no extended discussion. It saves to suitors the right of a common-law remedy where it existed. Remedies applicable to subjects, which, in many instances, form the foundation of actions in admiralty, are afforded by the State courts under the common law. These are saved to suitors. This doctrine has been repeatedly recognized by the United States supreme court. Waring v. Clarke, 5 How. 441 (460); New Jersey Steam Navigation Co. v. Merchants’ Bank, 6 id. 344 (390); The Genesee Chief v. Fitzhugh, 12 id. 443 (459); The Belfast, 7 Wall. 624 (644); The Moses Taylor, 4 id. 411 (431); The Hine v. Trevor, id. 555 (571).

5. corporasur&noe^oóm§enta? povr-" ers> II. The counsel of defendant contend that plaintiff has not the capacity to maintain this action, as the assignee &e bill of lading and of Sturges’ claim against defendant; that its only right to sue is as an equitable subrogee to the extent of the amount paid upon the policy to Sturges. Upon the trial, objection having been made to the introduction of certain evidence, the plaintiff filed an amended petition, to the effect that the assignments set up in the petition were made in furtherance of plaintiff’s right of subrogation to the claim of Sturges upon the defendant, and for the purpose of closing up and settling the matters of insurance and litigation pending between plaintiff and Sturges, in regard to the loss of the produce. Defendants’ counsel insist that plaintiff can recover to no greater extent than the amount paid upon the policy to Sturges, and in no other capacity than as his subrogee. It is argued that the amended petition bases the right to recover upon the equitable subrogation of plaintiff, under the policy, to the rights of Sturges. This is a misapprehension of the amended petition. It sets out the fact that the assignment was made because of plaintiff’s right of subrogation, and to effectuate the settlement of the > claim he held against plaintiff, growing out of the insurance and litigation pending in regard to it.

No issue was tendered in the petition as to the capacity of plaintiff to maintain this action, and its incapacity is not set up as a defense to recovery. Had the petition averred plaintiff’s capacity to maintain the suit, it would have been taken as true without a denial thereof in the answer. Rev., §§ 2923, 2925.

Upon the trial defendant admitted that plaintiff is an insurance company duly incorporated and existing under the laws of the State of New York. This is the only fact appearing in the record, other than the fact that the policy was issued and the loss thereon paid to Sturges, tending to disclose the power possessed by plaintiff, and whether it was authorized to accept an assignment of the bill of lading and of Sturges’ claim against defendant, and prosecute the action thereon.

The plaintiff, being a corporation, is presumed to be endowed with the usual powers necessary and proper to enable it, as such, to carry out the purposes of its existence. It was organized for the object of carrying on the business of insmance; it has the power so to do, and all incidental powers necessary or proper to carry into effect the general power to transact business of that kind. This is undoubtedly in accord with a rule applicable to all corporations. Angell & Ames on Corporations, §§ 110, 111; Matter of Howe, 1 Paige, 214; Insurance Co. v. Perkins, 38 N. Y. 404; Ferry v. People's Insurance Co., 2 Rob. 599; Beers v. Phœnix Glass Co., 14 Barb. 362; Barry v. Merchants' Express Co., 1 Sanf. Ch. Pr. 280.

In our opinion, the power to accept the assignment of the bill of lading and the claim of Sturges is necessary to enable plaintiff to carry on its business, and is, therefore. an incidental power with which it is clothed. It, of course, has power to receive and make payment upon its contracts. If it be sued, it has the incidental power to settle the action against it, and if, in such ‘settlement, it be found necessary for its interest to receive property of any kind, we know of no principle of law that will prohibit it. It appears that after the loss, for the purpose of effecting a settlement with Sturges of a suit instituted upon the policy, the arrangement for the assignment of the bill of lading and claim of Sturges on defendant was entered into and perfected. By it, plaintiff is required to pay to Sturges a portion of the amount sued for in case of recovery. If this arrangement was necessary in order to protect the interest of plaintiff, it is authorized under the principles above announced in the exercise of incidental powers. It may be regarded, as it was designated in the argument by defendant’s counsel, as the purchase of a chose in action, yet if such an act be necessary to carry on the proper business of the plaintiff, — and that the settlement of a law suit was within the proper business, cannot be doubted,— it is, as is the purchase and holding of other property for proper purposes, within the implied powers of plaintiff. We think these views are well supported by reason and in accord with the authorities above cited.

7-_settlement of aoubtfui claim. TTT- It is insisted by defendant’s counsel, that as the vessel upon which the produce was shipped was unseaworthy, the policy did not attach, and therefore there was no liability of plaintiff thereon. That under these circumstances the assignments to plaintiff gave it no power to institute and prosecute this action, as it had no power to receive the assignments. This question is raised upon the refusal of the court to give certain instructions. Whatever may have been the effect of the unseaworthiness upon the policy, it cannot be disputed but that a claim was based upon the instrument against plaintiff, which was settled as above stated. Plaintiff, the same as a natural person, has the right to settle all claims against it, and its action in this matter is presumed to have been in good faith, for innocence, rather than wrong, will be imputed to the acts of corporations as well as of men. Angell & Ames on Corps., § 111; Chautauqua Co. Bank v. Risley, 19 N. Y. 369, 381. Receiving the assigmnents in the settlement of the action against plaintiff was therefore done in the exercise of an implied power, as though the binding force of the policy had not been affected by the unseaworthy character of the vessel. '

8. Jtmv aud ^ecTafvérdl0t IY. The defendant requested the court to require the jury to respond to the following question, viz.: “"Was the loss of the property described in the bill of lading caused by a peril of river navigation?” This request was properly refused. The question involved the very issue in the action. An answer thereto would have required, not the simple statement of a single fact found by the jury, but of a conclusion drawn from many facts, which is not contemplated by Revision, section 3079, under which the request was made. The answer, had it been required, would have been quite as indefinite. as a general verdict, and would have failed to answer the purposes for which the law allows such questions to be propounded.

Y. There was evidence tending to prove that one of the rudders of the steamboat towing the barge was wanting at the time of the loss. The defendant asked the court to instruct the jury, in ’effect, that if the absence of the rudder did not contribute to the accident which was the occasion of the loss, then the want of it did not affect the defendant’s liability. The instruction was refused. An issue as to the unseaworthiness of the boat was not raised under the instructions given by the court and submitted to the jury, nor made by the pleadings. They were instructed to determine whether the loss was caused by the want of proper care, prudence and skill of the officers of the boat. The instruction asked, not being relevant, was properly refused.

VI. Complaint is made on tbe ground that, after tbe filing of plaintiff’s second amended petition, tbe cause was conducted by attorneys of defendant on tbe supposition that plaintiff claimed under subrogation to tbe right of Sturges, and that counsel were surprised by tbe contrary view presented by tbe final instructions to tbe jury. Tbe record fails to support tbe question of fact here stated. It does not appear that tbe action was conducted as counsel state. Certainly no foundation for tbe statement is found in tbe amended petition itself, which, as we have before stated, avers that tbe assignments were made “ in furtherance of plaintiff’s right to subrogation,” and for tbe purpose of a settlement of tbe controversy and litigation relating to tbe policy of insurance.

9. Stamps : contract. VII. Tbe contract between Sturges and defendant, Under which tbe shipment was made, was written, in tbe language the record, “ upon three pages or upon two leaves of tbe book containing the same,” and was stamped upon one page with a six cent revenue stamp. It is claimed that tbe instrument, not having a five cent stamp upon each sheet or piece of paper upon which it is written, is insufficiently stamped. Ye are unable to reach tbe conclusion that tbe facts support tbe position of defendant, namely, that tbe instrument was written upon separate sheets or pieces of paper. It is not made to appear affirmatively by tbe record that in contemplation of law tbe instrument was written upon more than one piece of paper, and therefore was not sufficiently stamped.

"Wehave considered all objections made by tbe appellant and find no error in tbe proceedings. Tbe judgment is therefore

Affirmed.