Pacific Surety Co. v. Leatham & Smith Towing & Wrecking Co.

151 F. 440, 80 C.C.A. 670, 1907 U.S. App. LEXIS 4168
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 2, 1907
DocketNo. 1,285
StatusPublished
Cited by41 cases

This text of 151 F. 440 (Pacific Surety Co. v. Leatham & Smith Towing & Wrecking Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pacific Surety Co. v. Leatham & Smith Towing & Wrecking Co., 151 F. 440, 80 C.C.A. 670, 1907 U.S. App. LEXIS 4168 (7th Cir. 1907).

Opinion

SEAMAN, Circuit Judge,

after stating the facts, delivered 'the opinion of the court.

The liability with which the appellant is charged under the decree, in conformity with the libel, rests upon its execution of a bond, as surety, with Chamberlain as principal, which states the condition of the obligation to be that:

“Chamberlain fulfills a certain contract made with the Leatham & Smith Towing & Wrecking Co. managing owners of the Steamer Jos. L. Hurd to guarantee a contract covering the charter of said steamer for a period or term commencing May 14, 1901, and ending November 30th, 1901. unless otherwise provided for, guaranteeing the paying of all bills for running expenses, wages and repairs, except as otherwise provided in the contract and release of all liens that may arise on said steamer, by reason of her employment or navigation. * * * ”

The contract thus referred to—disregarding the inaccuracy of 'the reference, as the intention is plain—was made on the same day, chartering to Chamberlain the steamer Joseph I,. Hurd, for the season, with personal covenants on the part of Chamberlain (as usual in charter parties) respecting the use, limits of navigation, keeping properly manned and equipped, payment of hills, release of liens, and redelivery in good condition at the end of the term. It recites, as considerations for the charter, that monthly payments are to be made for the use, “a satisfactory bond furnished,” and the conditions mentioned to be kept and performed. Thus the inquiry of jurisdictional subject-matter is sharply presented, under the settled doctrine that cognizance of contract obligations in the admiralty is limited to contracts which are purely maritime; and its solution is not without difficulty under the various distinctions pointed out in the reported decisions.

That the charter party was a maritime contract and the undertaking of the charterer was for maritime service and transactions is unquestionable. Morewood v. Enequist, 23 How. 491, 493, 16 L. Ed. 516. The appellant, however, as surety on the bond, was no party to the maritime undertaking; neither promised performance of the charter service, nor was authorized under the contract terms to perform. Chamberlain was the sole contractor under the charter, which was neither assignable in terms, nor subject to performance of the obligations by another. The charter use and service were coupled with liabilities which made them personal and not open to performance by the appellant, if it so desired. Arkansas Smelting Co. v. Belden Co., 127 U. S. 379, 388, 8 Sup. Ct. 1308, 32 L. Ed. 246; Clark on Contracts, 524. The obligation of the appellant as surety on the bond was not for performance of the charter party, but for the payment of damages in the event of nonperformance on the part of the charterer. Unless this bond is a maritime contract, within the tests established for admiralty jurisdiction, it is plain that the, libel founded thereon cannot he entertained.

The Constitution grants, as the judiciary act provides, in general terms only, for the exercise of judicial power in “all cases of admiralty and maritime jurisdiction,” leaving the extent of that jurisdiction to be ascertained by the courts. Eor many years the limits were un[442]*442settled, both in reference to locality and subject-matter, and the broader definitions which are now established were not recognized in the early cases in the Supreme Court, although the research of great admiralty judges in the Circuit and District Courts furnished valuable light in that direction. Ultimately, however, the Supreme Court departed from certain restrictions which appeared in these early cases, notably, in Cutler v. Rae, 7 How. 729, 730, 12 L. Ed. 890, 1221, and adopted as the jurisdictional test of contract subject-matter tire nature of the contract—whether it was maritime or nonmaritinre. If the undertaking is for maritime service or transactions, it is within .the cognizance of admiralty; otherwise it is not. New Jersey Steam Navigation Co. v. Merchants’ Bank, 6 How. 344, 392, 12 L. Ed. 465; Insurance Co. v. Dunham, 11 Wall. 1, 26, 20 L. Ed. 90; The Richard Winslow, 34 U. S. App. 542, 545, 71 Fed. 428, 18 C. C. A. 344. This rule extending the limits to include all maritime contracts, instead of a specific class of such contracts, resulted from reference to and adoption of like rules of the maritime law as administered in the continental courts, as within the intention of the constitutional grant, rather than the English precedents, which had narrowed the admiralty jurisdiction, through jealous regard for the common-law jurisdiction. No relaxatioñ was intended of the elementary rule that the limits so established must be strictly observed, and the decisions of the Supreme Court are uniform in such requirement. Without a contract purely maritime in its nature, the obligation is not enforceable in the admiralty.

The rule of strict limitation is uniformly recognized and generally applied in the admiralty courts. Instances are numerous of its application and denial of jurisdiction in reference to causes which appear to be maritime in certain aspects, but are not purely maritime in the jurisdictional sense. These examples will suffice for illustration : A 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.” The J. E. Rumbell, 148 U. S. 1, 15, 13 Sup. Ct. 498, 37 L. Ed. 345, and cases cited. Neither a contract for building a vessel nor one for furnishing materials' therefor is a maritime contract. Edwards v. Elliott, 21 Wall. 532, 555, 22 L. Ed. 487. The fact that the vessel is launched when materials were furnished does not make the contract therefor maritime. The William Win•dom (D. C.) 73 Fed. 496, and cases cited. Where the contract is maritime in part only, and adjudication of nonmaritime subject-matter is required, it is not within the jurisdiction of admiralty. Grant v. Poillon, 20 How. 162, 168, 15 L. Ed. 871; Turner v. Beacham, Taney, 583, Fed. Cas. No. 14,252. “The substance of the whole contract must be maritime,” and it is insufficient that elements of that nature are involved. Mr. Justice Story, in Plummer v. Webb, 4 Mason, 388, Fed. Cas. No. 11,233. In Alberti v. The Virginia, 2 Paine, 115, Fed. Cas. No. 141, the opinion by Mr. Justice Thompson, at circuit, denies jurisdiction to enforce stipulations in a charter party, which are of a personal arid not maritime nature. In The Eclipse, 135 U. S. 599, 606, 10 Sup. Ct. 873, 34 L. Ed. 269, jurisdiction is

[443]*443denied to enforce an alleged contract of sale of a vessel or a trust arising therein. Andrews v. Essex F. & M. Ins. Co., 3 Mason, 6, Fed. Cas. No. 374, is an instructive case. Mr. Justice Story, who delivered the opinion, had in earlier cases upheld the jurisdiction over contracts of marine insurance, as maritime contracts (subsequently approved by the Supreme Court in Insurance Co. v. Dunham, supra), but in the case referred to denied jurisdiction over an unexecuted contract to effect such insurance—remarking that “the law looks to the proximate and not to the remote cause as the source of jurisdiction.” This view, in reference to contracts to procure insurance, has been frequently reaffirmed. The City of Clarksville (D. C.) 94 Fed. 201, and cases cited.

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Bluebook (online)
151 F. 440, 80 C.C.A. 670, 1907 U.S. App. LEXIS 4168, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pacific-surety-co-v-leatham-smith-towing-wrecking-co-ca7-1907.