Schnell v. United States

166 F.2d 479, 1948 U.S. App. LEXIS 3277
CourtCourt of Appeals for the Second Circuit
DecidedMarch 1, 1948
Docket134, Docket 20832
StatusPublished
Cited by22 cases

This text of 166 F.2d 479 (Schnell v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schnell v. United States, 166 F.2d 479, 1948 U.S. App. LEXIS 3277 (2d Cir. 1948).

Opinions

SWAN, Circuit Judge.

This is an appeal by the owners of a shipment of garlic carried from the port of Valparaiso in Chile, to the port of New York on the S. S. “Tubul” owned by the United States. The libel was filed in the Eastern District of New York where the libellants do business as a partnership under the firm name of H. Schnell & Co. and where three of the four partners reside. On the day of the trial the respondent was permitted to amend its answer to deny the jurisdiction of the court (admitted in the original answer) and to set up, as an additional defense, that the vessel was being operated under a demise charter and was not in the control of the United States on the voyage in question. At the conclusion of the trial the district court dismissed the libel on the ground (1) that the United States was not liable in personam because the vessel was operated under a demise charter, and (2) that the suit could not be maintained as an action in rem because the vessel was in Valparaiso when the libel was filed. The appellants contend that both rulings are erroneous.

There is no dispute as to the facts. The steamship was owned by the United States, was chartered by the United States to the Republic of Chile, and was manned, supplied and operated by the Chilean Line under a subcharter. The captain and crew were hired and paid by the Chilean Line; and it collected and retained the freights. The bills of lading, upon the alleged breach of which the suit was based, were issued by the Chilean Line and signed in its name “For the Master.” When the libel was filed, August 13, 1945, the vessel was moored to a pier at Valparaiso. Subsequently, and during pendency of the suit it made six voyages to and from the port of New York and returned to the United States on February 23, 1947.

The appellant’s argument that the charter was not a demise because of restrictions contained in Articles 16 and 24 of the charter party is not supportable. Article 16 provided that the charter shall be subject “to all regulations of general application in the trade issued by the United States with respect to cargoes, priority of cargoes, contracts of affreightment, rates of freight and other charges, and as to all matters connected with the operations of vessels in the trade.” We understand this to refer to regulations which the United St-ates in the capacity of a sovereign might impose as a war measure upon any ship engaged in the trade. See Horowitz v. United States, 267 U.S. 458, 461, 45 S.Ct. 344, 69 L.Ed. 736. Such provisions should not be construed to make the charter party only a contract for the use of the vessel as distinguished from a lease of the vessel itself., The charterer was plainly given complete command and possession and consequent control over the navigation of the ship; this meets the test of a demise. Leary v. United States, 14 Wall. 607, 610, 20 L.Ed. 756; United States v. Shea, 152 U.S. 178, 14 S.Ct. 519, 38 L.Ed. 403. Nor was control retained by the owner by reason of the requirement of Article 24 that certain specified clauses should be incorporated in the charterer's bills of lading. Such clauses' are relevant only to the in rem liability of the vessel. The district court was correct in holding that the charter was a demise: This being so, the mas[481]*481ter is not the shipowner’s agent and bills of lading signed by him bind the charterer but not the shipowner. Scruton on Char-terparties and Bills of Lading, 14th ed. 59; Robinson on Admiralty 616, note 48; Schooner-Freeman v. Buckingham, 18 How. 182, 189, 15 L.Ed. 341. And this is true although the bill of lading contains no reference to the charter party and the shipper had no notice of its existence. Baumwoll v. Furness, [1893] A.C. 8; The Capitaine Faure, 2 Cir., 10 F.2d 950, 962, certiorari denied, sub nom. Societe de Navigation a Vapeur France Indo-Chine v. Cooper & Cooper, Inc., 271 U.S. 684, 46 S.Ct. 634, 70 L.Ed. 1150; Schnell v. United States, D.C.E.D.N.Y., 69 F.Supp. 877. Nor is the shipowner liable in personam for torts committed by the agents of the demise charterer. Muscelli v. Frederick Starr Contracting Co., 296 N.Y. 330, 73 N.E.2d 536; Vitozi v. Balboa Shipping Co., 1 Cir., 163 F. 286. Consequently, under the proven facts, the United States cannot be held liable in personam for damage to the appellants’ cargo.

In reliance on Blamberg Bros. v. United States, 260 U.S. 452, 43 S.Ct. 179, 67 L.Ed. 346, the court ruled that it was without jurisdiction as to any in rem cause of action. That case held that section 2 of the Suits in Admiralty Act, 46 U.S.C.A. § 742, does not authorize a suit in personam as a substitute for a suit in rem if, when the libel is filed, the vessel is not in a port of the United States or one of its possessions. As Chief Justice Taft explained, both in his Blamberg opinion and in later cases, the main purpose of the Act was to relieve the United States from the inconvenience to which it was subjected by the arrest of its merchant vessels, and to substitute an equivalent remedy in personam for the right in rem against the vessel.1 The statute provides that “in cases where if such vessel were privately owned or operated * * * proceeding in admiralty could be maintained at the time of the commencement of the action herein provided for, a libel in personam may be brought against the United States * * *. ”2 The sovereignty of the United States raises a presumption against its suability unless the conditions for suit prescribed by the statutory language are satisfied.3 In Nahmeh v. United States, 267 U.S. 122, 45 S. Ct. 277, 69 L.Ed. 536, in construing liberally the venue provisions of section 2, it was held that the vessel must be in some United States port, although she need not be in a port within the district where the suit was brought. Concededly “at the time of the commencement of the action” at bar, the “Tubul” was in a foreign port.

As a suit in rem there was also another defect in the appellants’ libel in that it contained no allegation of an election to proceed in accordance with the principles of libels in rem.4 In form it was only a libel in personam; it contained no allegation that during the pendency of the suit, the vessel would be within the jurisdiction of the court,5 and as to jurisdiction said only that “the premises are true and within the admiralty and maritime jurisdiction of the United States and of this Honorable Court.” Hence service of copies of the libel upon the United States at[482]*482torney and the Attorney General gave no notice that the suit tyas a substitute for an action in rem. Consequently the admission of jurisdiction in the respondent’s original answer was an admission only with respect to the asserted in personam liability. Under such a libel we cannot accept the appellants’ contention that the temporary presence of the vessel within United States water's during the pendency of the suit would automatically confer on the court substantive jurisdiction over the in rem cause of action. No such result would follow, even if the vessel were privately owned and operated.

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Schnell v. United States
166 F.2d 479 (Second Circuit, 1948)

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Bluebook (online)
166 F.2d 479, 1948 U.S. App. LEXIS 3277, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schnell-v-united-states-ca2-1948.