Loud v. United States , 286 F. 56 ( 1923 )

DONAHUE, Circuit Judge

(after stating the facts as above). Section 20 of the Rivers and Harbors Act, approved March 3, 1899, provides, among other things:

“That under emergency, in the case of any vessel, boat, water craft, or raft, or other similar obstruction, sinking or grounding, or being unnecessarily delayed in any government canal or lock, or in any navigable water mentioned in section nineteen, in sueb manner as to stop, seriously interfere with, or specially endanger navigation, in the opinion of the Secretary of War, or any agent of the United States to whom the Secretary may delegate proper authority, the Secretary of War or any such agent shall have the right to take immediate possession of such boat * * * so far as to remove or to destroy it and to clear immediately the channel * * * that the expense of removing any such obstruction as aforesaid shall be a charge against such craft and cargo; and if the owners thereof fail or refuse to reimburse the United States for such expense within thirty days after notification, then the officer or agent aforesaid may sell the craft or cargo, or any part thereof that may not have been destroyed in removal, and the proceeds of such sale shall be covered into the treasury of the United States.”

The Constitution of the United States confers authority upon Congress to regulate navigation. Incident to that power Congress has the right to determine what constitutes a menace or obstruction to navigation. It is the purpose and intent of section 20 of the Rivers and Harbors Act of March, 1899, that this decision of the Secretary of War shall have the same force and effect as direct action by Congress itself. Such power, of course, cannot-be exercised arbitrarily or beyond constitutional limitations, but in this case there is neither averment nor proof that either the Secretary of War or the engineer officer in charge abused the discretion conferred upon him by this section. Monongahela Bridge Co. v. United States, 216 U. S. 177, 195, 30 Sup. Ct. 356, 54 L. Ed. 435; Union Bridge Co. v. United States, 204 U. S. 365, 27 Sup. Ct. 367, 51 L. Ed. 523; Southern Pacific Co. et al. v. Olympian Dredging Co., 43 Sup. Ct. 26, 67 L. Ed. -, decided by the Supreme Court of the United States November 13, 1922.

It is equally clear that the owner of a vessel is not personally liable for the expense incurred by the government in removing obstructions to navigation under authority of this section, but, on the contrary, that the claim for such expenses must be asserted directly against the vessel and its cargo. The further claim of the United States government that, notwithstanding it did no more than straighten this vessel in the channel, still leaving it resting on the bottom, this money was expended for the uSe and benefit of the owners, even if tenable under other facts and circumstances of this case, is negatived by the uncontradicted evidence that this vessel was a total loss, and that the owners did not receive out of the vessel or its proceeds even as much as they advanced at the request of the Reid Wrecking Company in an effort to salvage the cargo.

Nor did the expenditure of this money inure to the benefit of the owners of the vessel by reason of any money paid to them by the insurance companies or by reason of any settlement agreement made with such companies. It appears from the evidence that the owners first concluded that the vessel was a total loss and surrendered it to the insurance companies. Eater they reached the conclusion that the value of the damaged vessel was still in excess of the liens of the United States and the Reid Wrecking Company, and so believing entered into a compromise agreement with the underwriters, by the terms of which they agreed to protect the insurance companies from further payment on account of either of these liens. This agreement in no way changed or affected the status of these 'liens, nor did it obligate the Louds to pay either of them, unless such payment was required for the protection of the insurance companies with whom this compromise agreement was made.

For the reasoffs above stated the judgment, in, so far as it is challenged by the cross-writ of error, is affirmed.

It is wholly unnecessary to determifie the character of the lien of the United States for the money expended by it in straightening this vessel in the channel, or whether or not such lien survived the uncon; ditional surrender of possession of the vessel and cargo to its owners. The fact remains that the United States, wholly failed and neglected ■to assert that lien, when required to do so, in a court having jurisdiction of the vessel and its proceeds.

The familiar principle that all the parties to a suit are bound by the decree of a court having jurisdiction of the subject-matter in controversy has its widest application in cases of admiralty suits of this character and other proceedings in rem. Every person claiming any right or title is charged with constructive notice of its seizure by a court of admiralty when notice is-properly served upon the vessel itself. The decree therefore binds the world in so far as it disposes of the vessel or its proceeds. Penhallow et al. v. Doanes’ Adm’r, 3 U. S. (3 Dall.) 54, 85, Fed. Cas. No. 10,925; The Mary, 13 U. S. (2 Wheat) 125, 143, 4 L. Ed. 200; The James G. Swan (D. C.) 106 Fed. 94; The Garland (D. C.) 16 Fed. 283; Benedict’s Admiralty (4th Ed.) § 297. The effect of a decree in admiralty is well stated in an opinion by Attorney General Wickersham in relation to the transaction here involved in this language:

“It seems to be tbe well-settled rule of admiralty that a decree of any' of its courts binds all tbe world, and tbat ‘whatever tbe court settles as to tbe right or title, or whatever disposition it makes of the property by sale, revendieation, transfer, or other act will be held valid in every other country where the same question comes directly or indirectly in judgment before any other foreign tribunal.’ ” Steamer John B. Ketcham No. 2, 29 Op. Atty. Gen. 276.

It is said, however, that because the residue of the proceeds of the sale of this vessel, after paying the claim of the Reid Wrecking Company, was paid to the owners that the United States now has the right to assert its claim and lien to that extent against the owners, but in the opinion of a majority of this court the decree entered by the Exchequer Court of Canada in the libel suit disposed of the entire proceeds of the sale of the vessel upon an entirely different theory than ownership.

While it appears from the evidence in this case that the cost of transshipment was paid by the Louds at the instance and request of the Reid Wrecking Company, and upon its promise and agreement to repay the same, nevertheless, we are not advised of the evidence introduced upon that subject in the libel action. In that action a court of competent jurisdiction awarded the surplus to Henry N. Loud, and not to the owners, evidently upon the theory that Henry N. Loud had advanced this money to enable the Reid Wrecking Company to comply with its contract, and for that reason, in the opinion of that court, he was personally entitled to be subrogated to that extent to its lien upon the vessel and its proceeds.

The question of whether this was or was not a proper awards is no longer open to inquiry. This court has no power or authority to review or reverse that decree, but it must be given full force and effect in each and all of its parts. The order distributing the proceeds of the sale of a libel vessel to the different claimants of the fund discharges the fund so distributed from all liens against the vessel that attached to the proceeds after its sale. The J. W. Tucker (D. C.) 20 Fed. 129, 135; The City of Tawas (D. C.) 3 Fed. 170.

This case, therefore, does not present the question whether surplus funds paid to the owner in a libel1 suit out of the proceeds of the sale of a vessel after the liens adjudicated have been paid in full may be recovered from the owner by one claiming a lien that was not presented and adjudicated in the libel suit, but, on the contrary, whether the maritime court in the libel action erred in the adjudication of the claims presented and the distribution of the fund among the several claimants. This court has no jurisdiction to decide this question.

A majority of the court is of opinion that the judgment should be reversed, so far as it awards to the United States the surplus of $2,-111.40 received by Henry N. Loud out of the proceeds of the sale of the vessel, after payment of the lien of the Reid Wrecking Company.

The judgment of the District Court is reversed^ and cause remanded, with directions to enter judgment in conformity with this opinion.