United States v. One Lear Jet Aircraft, Serial No. 35a-280, Registration No. Yn-Bvo, Leybda Corp., Claimant-Appellant ( 1988 )

CLARK, Circuit Judge,

dissenting, in which ANDERSON, Circuit Judge, joins:

Through a rigid application of principles to which this court has previously refused to adhere blindly, the court divests itself of jurisdiction in this cause. Binding precedent compels the conclusion that the court is obligated to hear this appeal.

The majority’s argument that the court has lost in rem jurisdiction is predicated upon the admiralty fiction that a ship is a person against whom suits can be filed and judgments entered. The admiralty fiction permits actions to be filed against a vessel when the owner cannot be reached with service of process. It also restrains removal of a mobile vessel whose owner might wish to escape payment of debts incurred in port. Even in the admiralty context, however, the vitality of the rule has been questioned. In Continental Grain Company v. The Barge FBL-585, 364 U.S. 19, 23-24, 80 S.Ct. 1470, 1473, 4 L.Ed.2d 1540 (1960), the Supreme Court held that an action which had been brought in rem and in personam could be transferred on forum non conveniens grounds to a district where the action could not have been brought in rem. The Court, explaining the exception it had created, said that “[a] purpose of the fiction, ... has been to allow actions against ships where a person owning the ship could not be reached, and it can be very useful for this purpose still.” But this fiction should not “be transferred into a weapon to defeat that very purpose.” This court has previously interpreted Continental Grain as evidencing a Supreme Court preference for the “position that the presence of the res within the district is not an absolute prerequisite to the court’s jurisdiction.” Treasure Salvors v. Unidentified Wrecked and Abandoned Sailing Vessel, 569 F.2d 330, 334 (5th Cir.1978), citing with approval, 7A Moore’s Federal Practice ¶ E.05 at E203-06 (1977)¹G. Gilmore & C. Black, The Law of Admiralty 616 (2d ed. 1975).²

This view, that the admiralty fiction of personality should not be used to frustrate the adjudication of lawsuits, has been instrumental in the development of exceptions to the traditional admiralty in rem rule in both admiralty and forfeiture cases. As the Fifth Circuit has explained,

in recent years this court [in cases binding on the Eleventh Circuit] has shied away from a strict construction of this in rem rule, and has allowed, in certain circumstances, an in rem action to continue despite the absence of the res. Specifically, we have dispensed with strict application of this in rem rule when a legal fiction which exists solely to effectuate the adjudication of disputes is invoked for the opposite purpose, and we have found a substitute basis of in personam jurisdiction.

United States v. An Article of Drug Consisting of 4,680 Pails, 725 F.2d 976, 982 (5th Cir.1984) (emphasis added).

We first dispensed with strict construction of this in rem rule in Inland Credit Corp. v. M/T Bow Egret, 552 F.2d 1148 (5th Cir.1977), where a ship mortgagee brought suit in rem against the vessel and in personam against its owner to foreclose on its mortgage. Under a court order, the vessel was sold and the proceeds were distributed to various creditors. Two creditors not sharing in the distribution appealed the decision not to include them. As with the claimant in this case, these creditors had failed to seek a stay of execution. Because the res had been distributed, the mortgagee argued that jurisdiction over the matter had been destroyed. Judge Tuttle explained that

a strict construction of the limits of in rem actions might bar any appeal of an in rem action unless supported by continued in rem jurisdiction. This narrow view of our jurisdiction, however, is difficult to square with the modern view, now almost a cliche, that in personam jurisdiction can be asserted whenever the defendant has those minimum contacts with the forum state that will satisfy “ ‘traditional notions of fair play and substantial justice. ’ ”

552 F.2d at 1152. (emphasis added) (citations omitted).³ While reluctant to decide whether its holding had “critically shaken” the “philosophical underpinnings of the system of in rem jurisdiction in admiralty,” the court found that being “at the interface of in rem and in personam jurisdiction” enabled it to “properly exercise a broad in personam power.” 552 F.2d at 1152 (citations omitted).

The next case in which this court was presented with such an “interface of in rem and in personam jurisdiction,” see An Article of Drug, 725 F.2d at 983, was Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 569 F.2d 330 (5th Cir.1978). In Treasure Salvors, a Florida corporation sued for possession of and confirmation of title to a vessel located outside the territorial waters of the United States. The United States, intervenors in the district court, appealed summary judgment in favor of the plaintiffs, arguing that the district court lacked in rem jurisdiction to determine the rights of the parties.

We noted the “common concern of the courts” which had treated related issues “with finding the most practical and efficacious means of resolving disputes before them.” We noted further that their decisions demonstrated “[a]n interest in rendering justice rather than an automatistic reliance upon rigid legalisms.” 569 F.2d at 334.⁴ The court held that although no party had brought an in personam claim, the United States, by intervening in the action as a party defendant/claimant and by stipulating to the district court’s admiralty jurisdiction, had “waived the usual requirement that the res be present.” Id. at 335.

In a more recent case, decided under the seizure and forfeiture component of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., the Fifth Circuit again held that in personam jurisdiction over the parties existed even though no party had filed an in personam claim. An Article of Drug, supra. The United States sought the forfeiture of a drug that it claimed had not met the requirements specified by the Act. Upon judgment for the drug’s manufacturer, which had intervened as a claimant, the United States Marshal released the drug to the manufacturer.⁵ The United States, although it had not requested a stay of execution or an order seeking return of the res, filed a motion for a new trial which was granted. The manufacturer moved to dismiss the complaint for lack of in rem jurisdiction following the removal of the drug from the district; this motion was denied. The United States’ motion for summary judgment in the new trial was granted.

The Fifth Circuit explained that Treasure Salvors and Inland Credit permit the court to find a “substitute basis of in per-sonam jurisdiction” when the fiction of personality is invoked for a purpose inconsistent with its true purpose, namely, the adjudication of lawsuits. 725 F.2d at 982. The “substitute basis” of in personam jurisdiction stemmed primarily from the fact that, after the release of the res, the manufacturer voluntarily appeared before the district court for a number of reasons, in-eluding its opposition to the government’s motion for a new trial. Id. at 984.

Here, the facts are much the same. On October 21, 1985, seventeen days after the government took the plane to Missouri, it filed various papers in the district court, including a memorandum opposing Leyb-da’s motion for a new trial. Under the majority’s and the government’s view, the government should have argued that removal of the res destroyed the district court’s jurisdiction. Indeed, under this view, the government was not entitled to receive a new trial in An Article of Drug. The government cannot have it both ways. Here, the government’s continued participation in post-judgment and post-removal proceedings further supports the conclusion that a substitute basis of in personam jurisdiction exists in this case. An Article of Drug, 725 F.2d at 984.

As the facts in An Article of Drug show, a strict adherence to the government’s position would lead to absurd results. The district court did not lose its power to order a new trial even though the aircraft was no longer in the jurisdiction. Indeed, by opposing Leybda’s motion for a new trial without challenging the court’s jurisdiction, the government recognized the court’s continuing jurisdiction and its power to order the return of the aircraft. The majority acknowledges that An Article of Drug is factually indistinguishable from this case, yet declines to follow it because “precedent in this Circuit does not support [its] holding.” Maj. op. at n. 5. A careful review of An Article Drug demonstrates plainly that it is well supported by prior decisions which are binding on this court. The majority simply refuses to acknowledge the substantial limitations which this court, and others, have placed on the traditional in rem rule. Having voluntarily invoked the jurisdiction of the district court, the government cannot complain about remaining subject to this court’s jurisdiction for all purposes that justice requires. Adam v. Saenger, 303 U.S. 59, 67-68, 58 S.Ct. 454, 458, 82 L.Ed. 649 (1938), quoted in Inland Credit, 552 F.2d at 1152.⁶

The majority relies on two recent decisions of this court, L.B. Harvey Marine, Inc. v. M/V River Arc, 712 F.2d 458 (11th Cir.1983), and Taylor v. Tracor Marine, Inc., 683 F.2d 1361 (11th Cir.1982), cert. denied, 460 U.S. 1012, 103 S.Ct. 1252, 75 L.Ed.2d 481 (1983), in which we applied the traditional admiralty in rem rule. In both these cases, we dismissed as moot admiralty appeals because the vessels in question were no longer within the court’s jurisdiction. Both cases are distinguishable. In Harvey Marine, a ship was arrested by the district court pursuant to a creditor’s claim of a maritime lien. After a post-seizure hearing, the court dissolved the warrant of arrest. The ship, which had been scheduled to leave port on the same day the court dissolved the warrant, did so. We dismissed the appeal because no court could “proceed to adjudication” once the vessel had left the territorial jurisdiction. 712 F.2d at 459. The vessel’s departure was due to the dissolution of the arrest warrant, not any act of the parties.

In Taylor, crew members brought an action in rem against a vessel to obtain payment of past wages. The vessel was sold and the proceeds were distributed to priority lienholders. We dismissed the claim as moot since the res was no longer in the jurisdiction. We noted, however, that if the case had “also involved claims in personam, jurisdiction might still lie.” 683 F.2d at 1362 n. 2 (citing Treasure Salvors, supra, and Inland Credit Corp., supra). Here, because we are “presented with an interface of in rem and in personam jurisdiction,” An Article of Drug, 725 F.2d at 983, and because the government is retaining exclusive possession of the plane, Taylor and Harvey Marine do not apply.

The majority also relies on those cases that hold it is “incumbent upon [claimant] to obtain a stay of the district court’s judgment if he desired to preserve jurisdiction for an appeal.” United States v. $57,480.05 United States Currency, 722 F.2d 1457, 1459 (9th Cir.1984); see also United States v. 66 Pieces of Jade And Gold Jewelry, 760 F.2d 970, 973 (9th Cir.1985). We relied on similar cases in Harvey Marine, but only to conclude that where the traditional admiralty in rem rule does apply, it does not work to deny fundamental fairness to the complaining party. 712 F.2d at 459. The presence of the substitute basis of in personam jurisdiction is sufficient to distinguish these cases.

Yet a rigid application of Fed.R.Civ.P. 62’s provisions poses substantial problems if the court refuses to acknowledge the presence of in personam jurisdiction. In other types of proceedings, when a judgment for property is rendered, the losing party has a choice. He need not post a bond. He can still appeal the judgment. If he wins on appeal, he can bring an action to recover his property or its value. The rule established by the court today enables the United States to defeat the right to appeal a forfeiture judgment for mobile property if the losing party has insufficient funds to post a bond. Where the subject property is a jet aircraft, the security required to post such a bond is no small sum. The harshness of the Circuit’s new rule is fully demonstrated in this case where, as the government acknowledged, “Leybda ha[d] no assets other than the Lear Jet.” United States’ Mem. in Opp. to Claimant’s Motion for Attorney’s Fees and Costs, Rec. Vol. 10, Tab 352 at 5 n. 1.

I respectfully dissent.

1 . Professor Moore notes that Continental Grain may be persuasive authority for concluding that, with consent of a vessel’s owners, in rem process can be effectively served in a district in which the vessel is not physical situated and that consent or a general appearance by the vessel’s owner will be sufficient to give the court jurisdiction over the cause.

7A Moore's Federal Practice, ¶ E.05 at E206. See also Reed v. Steamship Yaka, 307 F.2d 203, 205 (3d Cir.1962) ("voluntary appearance of the claimant to respond to the libel on its merits ... was an equivalent and equally effective undertaking that its interest in the ship should be subject to the authority of the court") (cited with approval in Treasure Salvors, 569 F.2d at 334.).

2 . Professors Gilmore and Black note that the "fiction of a ship’s personality has never been much more than a literary theme" and that “it is not and never has been a principle of decision.” Gilmore & Black, The Law of Admiralty at 626.

3 . In spite of the majority’s assertions to the contrary, a close examination of this language reveals that these principles are in no way limited to cases in which the party initiating an action files claims in personam.

4 . The court referred to these decisions: Continental Grain, supra (action brought in personam and in rem could be transferred on forum non conveniens grounds to district where no in rem jurisdiction existed); Steamship Yaka, supra (voluntary appearance by claimant resulted in waiver of the requirement that the res be present); Booth Steamship Co. v. Tug Dalzell No. 2, 1966 A.M.C. 2615 (S.D.N.Y.1966) (even though res was absent from district, claimant submitted vessel to court’s jurisdiction by filing claim, alleging vessel’s presence, and making a general appearance). See also The Fairisle, 76 F.Supp. 27, 34 (D.Md.1947) (vessel owners appearing in in rem action to contest plaintiffs’ claim "may be equitably treated as if they had been brought into court by personal process"), cited with approval in Mosher v. Tate, 182 F.2d 475 (9th Cir.1950).

5 .Although the drug was released in violation of the automatic ten-day stay provision of Fed.R. Civ.P. 62(a), this was not a factor in the court’s decision.

6 . The majority’s elaborate effort to distinguish Adam v. Saenger is totally unavailing. Inland Credit did not cite Adam for its holding, but for the equitable principle that a party cannot, under a given set of circumstances — here the absence of the res — acknowledge a court’s jurisdiction and then,' without a change in these circumstances, contend that the court’s jurisdiction has vanished. That this court has fully adopted such a principle is clear from the discussion in Treasure Salvors.