The Lydia, 1 F.2d 18 (2d Cir. 1924)

*19 *20 *21 Edward H. Wilson and Alvin C. Cass, both of New York City, for appellants the Lydia and Susquehanna S. S. Co.

William J. Griffin and John M. Woolsey, both of New York City, for appellant National Surety Co.

Burlingham, Veeder, Masten & Fearey, of New York City (Ray Rood Allen and Frederic Conger, both of New York City, of counsel), for appellees.

Before HOUGH, MANTON, and MAYER, Circuit Judges.

HOUGH, Circuit Judge (after stating the facts as above).

It must be emphasized that this appeal has vacated the decree of the District Court and that the case is here tried de novo (the John Twohy, 255 U.S. 77-79, 41 Sup. Ct. 251, 65 L. Ed. 511), although such new trial is conducted in accordance with our own rules. We have recently considered at length the rights of stipulators for value in suits in rem (The Cartona, 297 Fed. 827; The Buckhannon, 299 Fed. 519), and the same rules apply to stipulators for costs. National Surety Company had under these decisions no right to intervene, and no such effort was made; but it has substantially sought to intervene by appealing from the decrees entered. This cannot be done.

It is almost elementary that any one upon whom a judgment or decree directly, immediately, and necessarily operates may appeal from it so far as it affects himself. Thus it has been held that "the sureties on the stipulation (for value) are entitled to an appeal from any decree that may be rendered against them." Ex parte Sawyer, 21 Wall. 235-240, 22 L. Ed. 617. The decrees at bar were entered in the form common, if not universal, in this circuit, and the practice as it has been followed for generations is laid down in Benedict's Admiralty (4th Ed.) § 498. This form is even less stringent, so far as sureties are concerned, than that considered by the Supreme Court in the Sawyer Case, supra. That decree provided that, unless an appeal be taken, "a summary judgment" be entered in favor of the libelants against the sureties, naming them; whereas, under the practice followed here, it is necessary to issue an order to show cause against the sureties, and no execution can issue against them until after they have been heard and such objections as they may make have been overruled. Yet in the Sawyer Case it was held that the decree was not final and did not authorize an appeal. As we *22 have power to consider only appeals from final decrees in admiralty, it is clear that the surety company has no technical standing in this court.

The practice in the several circuits is not uniform in respect of methods of compelling stipulators to make good their stipulations. In the Fifth circuit a final decree seems to be in effect a final judgment against the stipulator by name, and it was held that such stipulator was a necessary party on appeal, unless a severance was had. The Bylands, 231 Fed. 101, 145 C. C. A. 289. The same practice seems to be followed in the Sixth Circuit, yet it was there held "that the sureties did not become parties to the suit in any such sense as to require their joinder in appeal." The New York, 104 Fed. 561, 44 C. C. A. 38.

To avoid, however, circuity and delay, we have considered the argument for the surety company and shall express opinion as to the stipulator's liability, without admitting any standing in this court, except that of amicus. The general principle regarding stipulator's liability was summarily laid down in Newell v. Norton, 3 Wall. 257, at page 266, 18 L. Ed. 271, viz. stipulators and sureties have no right to complain of any treatment of the res or any amendment of pleadings so long as their liability is neither increased nor diminished, and this is because "every person bailing such property is considered as holding it subject to all legal dispositions of the court." Citation might be extended, but the tendency to interpret admiralty stipulations in terms of common-law bail is quite noticeable. The matter was more fully considered in The Oregon, 158 U.S. 186, 15 Sup. Ct. 804, 39 L. Ed. 943. There the previous authorities were examined at length, with the result that interveners setting up wholly different causes of action were held unable to avail themselves of the stipulation given to answer the exigency of the original libel. In other words, a stipulation for value is given to secure only the demand propounded in the libel.

But that demand may be ill pleaded, or it may be propounded by a person who presently appears to be without full authority in the premises, and when it comes to changes naturally following from these conditions (one or both) the matter was fully gone into in The Beaconsfield, 158 U.S. 303, 310, 15 Sup. Ct. 860, 863 (39 L. Ed. 993): "Stipulations in admiralty are not subject to the rigid rules of the common law with respect to the liability of the surety, and so long as the cause of action remains practically the same a mere change in the name of the libelant" does not discharge the stipulator. And the court particularly approved Judge Ware's remark in Lane v. Townsend, 1 Ware, 286, Fed. Cas. No. 8,054, to the effect that it is not into the intention of the party that one should inquire, but into the intention of the court or of the law which required the stipulation and dictated its terms.

We turn now to the one assignment of error filed by the stipulator and above quoted, to the effect that it was error to grant any decree against the stipulator after the substitution of the "H. D." Company for the "Hugh" Company. This assignment would have been appropriate, had the appeal been taken by it from a decree finally made against it.

An answer on this record is that there never was any substitution. For all that this record shows, both these corporations still possess corporate existence. There is no evidence that bankruptcy or insolvency proceeding winds up a Canadian or Nova Scotian Company; that it has no such effect under our law is elementary. The "H. D." Company was brought in quite unnecessarily, as we think, but merely to insure its presence before the court as one on whose behalf the "Hugh" Company might continue the suit. Inasmuch as the contract out of which ut supra this whole trouble grew was made with the "Hugh" Company, we see no reason why that concern could not bring suit when it did, and continue the suit without any further multiplication of parties.

The argument for the surety appellant goes entirely beyond the assignment of errors, and asserts that "the procedure followed below has entirely changed the parties, the cause of action, and the risk." The change of parties may be summarily held to be no business of the stipulator. For this The Beaconsfield, supra, is sufficient authority, and The Horsa (D. C.) 232 Fed. 993, is a rather striking and extreme example of applying the doctrine that, as against the stipulator, it is the nature of the action that counts, and not the person who propounds it. These causes of action have never changed; they have always remained as first stated above, and the risk that the stipulator took was as to the view of the court concerning those causes of action, and not as to the court's opinions as to who might propound them, or own them at the end of the litigation.

Without recognizing the surety company *23 as a proper party appellant, it is our opinion that the stipulator is responsible, if the Lydia is.

Turning to the merits of the causes, the vital question is: Whose coal was it that went on board the Lydia, whether into her hold or her bunkers? The coal was laden under a contract with the "Hugh" Company; we have no doubt it belonged to that company for contract purposes. That concern was, and still is, so far as we know, an existing corporate entity; therefore, for the purposes of this suit, it owned the coal and had good right to sue.

Suit in rem for conversion is by no means unknown to the admiralty nor to this court. The Hattie Palmer (D. C.) 63 Fed. 1015, affirmed 68 Fed. 380, 15 C. C. A. 479, is an instance under circumstances much less plain than the present. The reason for the exercise of admiralty jurisdiction is that conversion is a tort, and a tort so elementary in its nature that it may be maintained even against an infant (Vasse v. Smith, 6 Cranch, 226, 3 L. Ed. 207), and if that tort is committed on navigable waters, admiralty has jurisdiction.

Furthermore the cause of action arising out of tortious conversion of property is assignable, as was summarily held under very unusual circumstances by this court in United States v. Ferguson, 78 Fed. 103, 24 C. C. A. 1. Furthermore, conversion is a transitory action. Compania v. Mexican, etc., (C. C. A.) 292 Fed. 846.

The doctrine of venue in the admiralty is not like that of common law, but the same result is reached by the common holding that cases in rem arising under the general maritime law may be brought wherever the vessel is found.

As to the action for bunkers, probably the court below gave decree on the theory that the libel asserted a demand for necessaries or supplies. It is now urged that, since there is no lien for supplies under British law, the libel cannot be sustained. It needs no citation to show that the courts of this country have always regarded liens for repairs and supplies as arising under general maritime law. That they are now most conveniently and most usually enforced under a statute of the United States does not change the truth of the statement made. Prima facie, in our courts, suit in rem for supplies furnished on due request is within the jurisdiction of the United States District Courts, because it is a suit in admiralty.

In this instance the British law was not pleaded, and no point was made of that law in the court below. It is now said that the denial of jurisdiction raised the whole question, even though no argument was made to the point. The matter must be treated as in The Buckhannon, supra, a somewhat similar situation. The formal denial of jurisdiction did not raise the question, both on principles of pleading and because the court had jurisdiction to hear and adjudicate the case. That it might have adjudicated the matter differently, had the pleadings been different, does not raise a question of jurisdiction. In short, the matter is within the familiar principle that a point not raised below, nor presented by the pleading, cannot be raised for the first time in this appellate court. The Minnie, 225 Fed. 36, 140 C. C. A. 362; Jova, etc., Works v. New York (C. C. A.) 277 Fed. 180.

There is, however, another ground upon which the recovery for bunkers is properly sustainable. When the Lydia refused a receipt for bunker coal, it refused even to acknowledge the character of that shipment or lading. It used its bunkers merely as an excuse for getting the coal on board, and then ran away with it. This was a conversion just as much as, and perhaps a little more flagrant than, that of the cargo.

The position of the Canadian trustee is a question merely academic. He has been held to be without any right or title in the premises because the rights to which he might have succeeded were gone before he came into being, by an assignment to the Canadian Bank. Therefore we merely point out that virtue officii he would be entirely without authority in this country, though he might obtain it by an assignment from the bankrupt. Remington on Bankruptcy (2d. Ed.) § 1114.

It remains to consider the position of the Canadian Bank of Commerce. In substance, after hearing evidence, and without any objection from either of the MacKenzie Companies or the trustee in bankruptcy, the court below has held that the Canadian Bank is entitled as owner to the recovery that should be granted. This is a point in which again the stipulator is not concerned in any way. The duty of the stipulator is to respond to the court; indeed, historically the foundation of a stipulator's obligation rests in an open, public, and final submission by the stipulator to the court's jurisdiction. Therefore, if the court ultimately directs the stipulator to pay one party *24 rather than another, the stipulator is protected, and that is all that can be asked.

The claimant and respondent were brought into court to answer the demands of the MacKenzie Companies, either or both. The Canadian Company was joined as a party libelant, not because it had a cause of action, but because it had come to own the cause of action. It is enough for us that the party who had the cause of action and brought the suit is satisfied to admit that what it used to own the Canadian Bank now owns. Therefore, to avoid assignments or other circuity, the decree might just as well pass in the name of the company which is now the real party in interest.

Decrees affirmed, with costs, said costs to be paid, one-half by claimant and respondent, and one-half by National Surety Company.

[*] Certiorari denied 45 S. Ct. 97, 69 L. Ed. ___.