United States v. Laflin, 24 F.2d 683 (9th Cir. 1928)

*684 Geo. J. Hatfield, U. S. Atty., and T. J. Sheridan, Asst. U. S. Atty., both of San Francisco, Cal.

J. N. Gillett and H. H. North, both of San Francisco, Cal., for defendants in error.

Before GILBERT, RUDKIN, and DIETRICH, Circuit Judges.

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

Counsel for the government assert that the principal point involved on the writ of error is presented in their assignment that the court below in appraising damages failed to diminish the gross probable income of the venture by deducting therefrom the probable expenses and outlay, including the cost of service and wages of necessary employés. To that proposition are cited cases such as Guerini Stone Co. v. P. J. Carlin Co., 240 U.S. 264, 280, 36 S. Ct. 300, 307 (60 L. Ed. 636) in which it was said: "No more definite or certain method of estimating the profits could well be adopted, than to deduct from the contract price the probable cost of furnishing the materials and doing the work." But the principle there involved has no relation to the present case.

The contention of the plaintiff in error is answered by the fact that the owners of the bark assumed no liability for the cost of the service of employés and were under no obligation to pay wages to the crew. The crew's compensation was provided for in the shipping articles. It was therein stipulated that, after the return of the bark to the port of San Francisco, each officer and seaman should be settled with and paid his share of the catch of said vessel in certain specified proportions, as soon as the quantity of her oil and bone could be ascertained, and the *685 master and crew signed an article stating the particular employment of each, and providing that they should receive a stated share as indicated therein. It is admitted that the court below, in appraising the amount of damages, took into consideration all the probable outlay incident to carrying on the enterprise, other than the compensation to be paid to the crew, and deducted that amount from the sum total of the damages.

It has been the maritime law from the time of Oleron that agreements, by which seamen, engaged in a fishing or whaling voyage, are to receive for their services shares of the profits of the voyage, are contracts of hiring, and the shares so agreed upon are in the nature of wages, to recover which actions may be maintained after the end of the voyage. Wilkinson v. Frasier, 8 Esp. 141; The Crusader, Fed. Cas. No. 3,456, 1 Ware, 448; Reed v. Hussey, Fed. Cas. No. 11,646, Blatchf. & How. 525, 539; Coffin v. Jenkins, Fed. Cas. No. 2,948, 3 Story, 108; Crowell v. Knight, Fed. Cas. No. 3,445, 2 Lowell, 307. No claim was made in the court below, nor is any here presented, that the members of the crew might have reduced the amount of their damages by entering into other employment during the period of time covered by their contract. Nor is there evidence to support such a contention.

In its brief in this court the plaintiff in error contends that the owners should not be taken as representing the crew of the vessel or possessed of the right to recover under the act for the losses sustained by the members thereof, and it relies upon the provision of the statute that "all American citizens whose rights were affected" may submit their claims. No objection was taken in the court below to the nonjoinder of the members of the crew, and no question was made of the right of the owners to represent them in the action. Nor does any assignment of error direct attention to either proposition.

We find no difficulty in sustaining the trial court's conclusion that the owner could bring the action as representing the crew, and that within the meaning of the statute the latter might "submit their claims" through him, and might sue him for damages, if he neglected to prosecute the same. The statute confers jurisdiction "to hear and determine the claims of American citizens." It must be presumed to have been enacted in view of the well-settled principles applicable to the owner's right to represent the crew in such cases, and without intention to exclude from the amount recoverable the shares of members of a crew who were not citizens of the United States.

It is well settled by the decisions that in whaling ventures the sailors who have a certain lay or share in the proceeds as wages are never regarded as partners with the owners, though they may participate in the profits of the voyage; and it is equally well settled that neither the officers nor members of the crew may join with the owners in a recovery of the proceeds of the voyage, and that the owners of the vessel and projectors of the voyage are the owners of the products thereof. In dealing with such a contract it was held in Lewis v. Chadbourne, 54 Me. 484, 92 Am. Dec. 558, that the crew are rather to be deemed hired seamen than partners or joint contractors, and in Baxter v. Rodman, 3 (Mass.) Pick. 435, answering the objection that by virtue of the contract on which the master and crew engaged in the voyage, they are to receive their pay out of the proceeds of the oil, they are joint owners and quasi partners, and so ought all to have joined in the action, the court said:

"That every seaman should be tenant in common with all the other seamen, the master and the owners of the vessel, in all the oil which may be taken on a whaling voyage, so that no action could be brought respecting it without joining all, and none could be sued without the whole, giving every seaman a right to discontinue the action, or to release the claim, or to receive payment for the whole, would be a state of things not suspected by the wise and enterprising men who have carried on the whale fishery. But we think it is not the law."

That ruling was followed in Grozier v. Atwood, 4 (Mass.) Pick. 234.

In Taber v. Jenny, Fed. Cas. No. 13720, 1 Spr. 315, 322, it was said: "It is the right and duty of the owners to protect the products of the voyage, and if unlawfully taken by any one, to pursue and obtain them, and the seamen have then a right to share in the net avails. The owners must obtain and hold them for this purpose. Otherwise, the seamen could not get redress; they have no title to the property, and could maintain no action for it. If the owners neglect to take proper means to obtain indemnity, they would be responsible to seamen for that neglect. It is not for the respondents to say that the owners will not pay the crew. The respondents certainly have no right to their share; and an individual might as well say, when sued by a guardian, that perhaps he might never settle with his ward."

"It is clear from the foregoing and other *686 like decisions that the funds received by the owners in a case such as this are charged with a trust for the payment of the claims of the officers and crew of the vessel.

Error is assigned to the allowance of damages which were awarded to the Tallant Banking Company. The court below found that the banking company was a California corporation, and that the plaintiffs McKee, Brice, Tallant, and Monroe were the sole surviving directors and trustees thereof, that its charter had elapsed prior to the commencement of the action, but that said trustees had full power to represent the corporation for the benefit of its creditors and stockholders.

It is urged, contrary to the court's findings, that there was a voluntary dissolution by decree under section 1227 et seq. of the California Code of Civil Procedure, and that under the laws of the state, when a corporation thus ceases to exist, the stockholders become the owners of its former property as tenants in common, and that, inasmuch as the stockholders here are unnamed and unidentified, and are not shown to be citizens of the United States, and the corporation has ceased to be a citizen, there should be no recovery by the trustees. The corporation voluntarily dissolved on February 29, 1912. The above-named trustees were the directors elected at the last meeting of the stockholders, and no successors were thereafter elected or appointed. The decree of dissolution authorized the board of directors to settle all the affairs of the corporation and to distribute all its property and assets to its stockholders in proportion to their respective interests.

The Act of June 7, 1924 (28 USCA § 52) gave a right of action to the heirs and legal representatives of American citizens. The Tallant Banking Company, incorporated under the laws of the state of California, was an American citizen. The legal presumption is that its members were American citizens. Ohio & Mississippi Railroad Co. v. Wheeler, 1 Black, 286, 17 L. Ed. 130. In Havemeyer v. Superior Court, 84 Cal. 327, 24 P. 121, 10 L. R. A. 627, 18 Am. St. Rep. 192, it was held that under sections 400 of the Civil Code and 565 of the Code of Civil Procedure the administration of the assets of a dissolved corporation is left, as a rule, to the directors in office at the date of dissolution, whether the dissolution be voluntary or involuntary. Section 400 of the Civil Code provides: "Unless other persons are appointed by the court, the directors or managers of the affairs of a corporation at the time of its dissolution are trustees of the creditors and stockholders or members of the corporation dissolved, and have full power to settle the affairs of the corporation." No time limit is placed upon the exercise of the power thus vested in the directors, and we find no warrant for holding that it expires before the final settlement of the affairs of the corporation.

The judgment is affirmed.

[*] Rehearing denied May 14, 1928.