United States v. Cargo Salvage Corp.

228 F. Supp. 145, 1964 U.S. Dist. LEXIS 7439
CourtDistrict Court, S.D. New York
DecidedMarch 31, 1964
StatusPublished
Cited by6 cases

This text of 228 F. Supp. 145 (United States v. Cargo Salvage Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Cargo Salvage Corp., 228 F. Supp. 145, 1964 U.S. Dist. LEXIS 7439 (S.D.N.Y. 1964).

Opinion

FEINBERG, District Judge.

This is a declaratory judgment action brought by the United States to determine whether it or respondent Cargo Salvage Corporation has the right to cargo aboard a wrecked vessel on the bottom of Lake Huron. For reasons indicated below, the Court concludes that the cargo belongs to respondent.

The S.S. Monrovia, a Liberian ship, with a cargo of steel,1 sank in the Lake as a result of a collision with the S.S. Royalton on June 25, 1959. The ship went down to the west of the westerly limit of the heavily trafficked2 down-bound lane 3 of the Lake. From a survey of the wreck taken by the United States Army Engineers (“Engineers”)4 in 1960, it appears that the superstructure of the ship is seventy-four feet below the surface, the hull with cargo below that depth, and the top of the masts of the ship are between twenty-five and twenty-nine feet below the surface.5 The ear-go of steel in its original state was worth about half a million dollars ;6 its salvage value is unclear.

On October 1, 1959, a Chicago law firm sent a letter7 to the Engineers to inform them that the owner of the hull had abandoned all claim to the vessel, and that the cargo interest represented by a New York law firm intended to undertake cargo salvage operations. A formal letter 8 of abandonment from the agents of the owner of the hull to the Engineers followed on October 16, 1959. Meanwhile, the cargo interest was making plans to salvage the cargo of steel. After learning of the sinking within two or three days after it happened,9 the cargo underwriters retained a New York law firm to protect their interests.10 Assignments were made by the individual underwriters to one corporation, respondent Cargo Salvage, so that negotiations with potential salvors could be facilitated.11 By September 1959, a list of salvors was compiled and letters were then written to them to ascertain their interest in bringing up the cargo aboard the S.S. Monrovia.12 A contract to salvage the cargo was entered into by August 8, I960.13 However, this contract was never carried out for reasons which are not clear in the record.14

Apparently, at about the same time, the Engineers were also making plans to salvage the cargo. On September 23, 1960, the Engineers issued invitations for bids to remove the wreck of the S.S. Monrovia to a clear swept depth of forty feet.15 This came to the attention of the [148]*148cargo interest. By letter dated September 29, 1960, the cargo interest informed the Engineers that it intended to salvage the cargo and that it would “hold United States and the Contractor full [sic] responsible for any loss which may be incurred.”16 This was the first letter directly from the cargo interest to the Engineers informing them that it actually intended to commence salvage operations.17 As a result of the September 29, 1960 letter to the Engineers, their invitations to bid were cancelled.18 Suit was instituted by the United States in October 1961. In January 1963, Cargo Salvage entered into a contract with another salvor,19 but the Engineers have not issued a salvage permit to this salvor. Because the parties cannot agree on a suitable salvor or fee, the S.S. Monrovia, together with her cargo, still lies below the surface of Lake Huron with a buoy overhead warning off traffic.20

Respondent bases its claim to the cargo on assignments made to it by the insurance underwriters who became subrogated to the rights of the cargo interest upon payment to it of the insured value. Libelant United States claims that it has the right to dispose of the cargo pursuant to Section 19 of the Rivers and Harbors Appropriation Act of March 3, 1899, 30 Stat. 1154, 33 U.S.C. § 414, arguing that this statute permits it to remove and dispose of an obstruction to navigation and all cargo on board, if the obstruction is not removed by the private owner. Application of the statute in this case to cut off the alleged rights of the cargo interest raises questions of statutory construction and, according to Cargo Salvage, constitutional issues, as well.

The United States argues that Cargo Salvage does not have any legal interest in the cargo or, if it does, it must recover its full damages for any injury from a third party. The contentions that Cargo Salvage has no proper interest in the cargo will be considered first.

The government attacks the assignments to Cargo Salvage on a number of grounds. The first is that the only consideration for the assignments were promises by Cargo Salvage that it would endeavor to effect salvage and after “payment of all proper expenses and charges” would turn over any net recovery to the underwriters. The government argues that these are “assignments for collection” and as such do not convey sufficient interest to Cargo Salvage to allow it to make claim to the cargo. However, an “assignment for collection” conveys legal title and interest to maintain suit. Rosenblum v. Dingfelder, 111 F.2d 406 (2 Cir. 1940); see generally 3 Moore, Federal Practice ¶ 17.09 p. 1341 (2 ed. 1963).

The government further contends that the assignments to Cargo Salvage are null and void by virtue of the anti-assignment statute, 31 U.S.C. § 203. This statute nullifies assignments of claims upon the United States unless there is compliance with certain conditions, concededly not met by the assignments involved here. In support of its position, the government cites, inter alia, United States v. Gillis, 95 U.S. (5 Otto) 407, 24 L.Ed. 503 (1877) and Coté v. United States, 3 Ct.Cl. 64 (1867). In those cases, confederate property had been lawfully seized by the government during the Civil War and sold. Suit was brought for return of the proceeds under an act of Congress setting forth the conditions under which the former owners of property so seized could claim the proceeds of the sale of the property. Act of March 3, 1863, 12 Stat. 820. It was held in both cases that the anti-assignment statute forbade assignments of claims for these proceeds. However, in those cases the United States was clearly the owner of the property before it [149]*149was sold so that any claim on the proceeds was a “claim upon the United States.” Coté v. United States, supra at 67. Here, it must be determined whether the United States has any right to the cargo at all. Under these circumstances, it would be a strained construction indeed to regard Cargo Salvage’s claim on the cargo as a “claim upon the United States.” In any event, in urging the application of the anti-assignment statute to bar Cargo Salvage, the United States assumes as a basic premise that it has obtained title to the cargo under 33 U.S.C. § 414, the very thing in dispute. Accordingly, the anti-assignment statute does not require judgment for libelant.

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228 F. Supp. 145, 1964 U.S. Dist. LEXIS 7439, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-cargo-salvage-corp-nysd-1964.