J. G. Jackson and J. G. Jackson, Jr., Intervenors v. Inland Oil and Transport Co.

318 F.2d 802
CourtCourt of Appeals for the Fifth Circuit
DecidedJune 25, 1963
Docket19579
StatusPublished
Cited by15 cases

This text of 318 F.2d 802 (J. G. Jackson and J. G. Jackson, Jr., Intervenors v. Inland Oil and Transport Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
J. G. Jackson and J. G. Jackson, Jr., Intervenors v. Inland Oil and Transport Co., 318 F.2d 802 (5th Cir. 1963).

Opinions

RIVES, Circuit Judge.

This appeal is from a decree ranking claims against the proceeds derived from the sale by the United States Marshal of the Tug Three Jacks, formerly owned [804]*804by Gulf Transportation Company. Only two claims are now involved. The district court ranked the claim of appellee, Inland, as superior to that of appellants, the Jacksons. Inland had chartered to Gulf, the owner of the Three Jacks, certain oil barges, and had secured a judgment against Gulf.to recover the unpaid charter hire. Gulf had purchased the Three Jacks from the Jacksons and, to secure the unpaid part of the purchase money, had granted to the Jacksons a nonmaritime mortgage.

At the outset certain jurisdictional questions must be decided. Inland insists that the Jacksons’ ordinary commonlaw mortgage is beyond the pale of jurisdiction, and cannot be foreclosed or enforced in admiralty. The Jacksons concede that their mortgage cannot be made the subject of an original libel in admiralty, nor can it support a seizure in rem of the vessel. The principle was clearly expressed by Mr. Justice Matthews on circuit in the early case of The Guiding Star, Cir.Ct.S.D. Ohio, 1883, 18 F. 263, 264:

“The jurisdiction of the court, sitting in admiralty, is founded upon the nature of the liens sought to be enforced by its process, as maritime, although as to any surplus of the proceeds of sale remaining after satisfaction of all maritime liens, it will, having acquired jurisdiction as an admiralty court, proceed upon principles of equity to dispose of the entire fund, awarding it to the claimants, either as owners of the vessel or as having, either at law or in equity, by contract or liens, succeeded to the owners’ rights.”

See also, Andrews v. Wall et al. 1845, 3 How. 568, 44 U.S. 568, 572, 11 L.Ed. 729.

Again, in The J. E. Rumbell, 1893, 148 U.S. 1, 15, 13 S.Ct. 498, 501, 37 L.Ed. 345, the Court said:

“An ordinary mortgage of a vessel, whether made to secure the purchase money upon the sale thereof, or to raise money for general purposes, is not a maritime contract. A court of admiralty, therefore, has no jurisdiction of a libel to foreclose it, or to assert either title or right of possession under it. The John Jay, 17 How. 399 [15 L.Ed. 95]; The Eclipse, 135 U.S. 599, 608 [10 S.Ct. 873, 34 L.Ed. 269]. But it has jurisdiction, after a vessel has been sold by its order, and the proceeds have been paid into the registry, to pass upon the claim of the mortgagee, as of any other person, to the fund, and to determine the priority of the various claims, upon petitions such as were filed by the mortgagees and the material-men in this case. The Globe, 3 How. 568, 573 [11 L.Ed. 729]; The Angelique, 19 How. 239 [75 L.Ed. 625]; The Lottawanna, 21 Wall. 558, 582, 583 [22 L.Ed. 654] ; Rule 43 in Admiralty.”

The litigation in this matter began on April 2, 1959 when Inland filed a libel, in personam, against Gulf Transportation Company to recover the unpaid charter hire. On April 4, 1959 the Marshal executed the writ of foreign attachment issued under that libel “by seizing and taking into custody the within named Tug Three Jacks engines, tackle, etc. as she lay in Bayou Sorrell at Plaquemine, La.”

On May 12, 1959, the court permitted the Jacksons to file their petition for intervention asserting the mortgage claim which is the subject of this appeal. In their intervention the Jacksons prayed for preference and priority over Inland’s claim “in and to the proceeds which may be realized from any sale of the * * * Three Jacks. * * * ”

Gulf consented that Inland’s claim might be reduced to final decree, and the Jacksons also agreed (by letter) “that you would proceed to obtain a final decree without reference to any execution against the Three Jacks.” On May 29, 1959, the court entered a final in personam decree in favor of Inland against Gulf for $21,948.37, plus interest and costs.

[805]*805Meanwhile, on May 26, 1959, a libel in rem had been filed by Avondale Marine Ways seeking to recover the cost of certain repairs performed by Avondale on the Three Jacks. On June 2, 1959, the Marshal executed the admiralty warrant issued on that libel by seizing the Three Jacks. On June 12, 1959, the court permitted the Jacksons to file a duplicate petition for intervention in that proceeding.

While the Three Jacks remained in the custody of the court under the seizure by Avondale Marine Ways, Inland caused its decree against Gulf, in personam, to be recorded in the office of the County Clerk for Harris County, Texas, on February 10, 1960, and on February 26, 1960, caused the same decree to be filed in the records of the Clerk of Court for the Parish of East Baton Rouge, State of Louisiana, where the Three Jacks was actually located during the time when she remained under seizure. On March 4, 1960, the Three Jacks was sold by the Marshal under a writ of venditioni exponas issued in the proceeding instituted by Avondale Marine Ways.

The Three Jacks sold for $38,000.00. Avondale Marine Ways and other admittedly prior claimants have been permitted to withdraw the amounts of their claims. Meanwhile, Gulf had filed a petition in bankruptcy which is still pending. See Parks v. B. F. Leaman & Son, Inc., 5 Cir., 1960, 279 F.2d 529. The proceeds of sale remaining in the registry are considerably less than the sum of the combined claims of Inland, $22,445.44 principal, and of the Jacksons, $31,000.00 principal. A determination of priority between the two claims is therefore essential. All libels were consolidated for the ranking of claims.

Under the doctrine of The J. E. Rumbell, supra, it is clear-that the admiralty court has jurisdiction to make a proper distribution of the proceeds of sale, and to determine the priority of all claims, including that of the Jacksons on their nonmaritime mortgage.

Inland calls attention that the Jacksons intervened before, and not after, the Marshal s sale of the Three Jacks, and insists that their right under Admiralty Rule 42 accrued only after the proceeds of the sale were deposited in the registry. Our cases of Point Landing v. Alabama Dry Dock & Shipbuilding Co., 5 Cir., 1958, 261 F.2d 861, 866, and Crabtree v. The SS Julia, 5 Cir., 1961, 290 F.2d 478, 481, illustrate the liberality necessarily required in the allowance of interventions to assert claims against the proceeds of the sale of a vessel. It may be, as held in United States v. Maryland Casualty Co., 5 Cir., 1956, 235 F.2d 50, 52, 53, that nonmaritime claims cannot, prior to the sale, intervene against the proceeds as a matter of “right,” but that case makes it clear that a “permissive” intervention may take place earlier. Such earlier intervention may, indeed, be necessary to defend against the establishment of maritime liens and the consequent depletion of the fund upon which the nonmaritime claimant must rely. Gray v.

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Bluebook (online)
318 F.2d 802, Counsel Stack Legal Research, https://law.counselstack.com/opinion/j-g-jackson-and-j-g-jackson-jr-intervenors-v-inland-oil-and-ca5-1963.