Matter of Red Cross Line v. . Atlantic Fruit Co. , 233 N.Y. 373 ( 1922 )

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Section 2, article 3 of the Federal Constitution provides: "The judicial power shall extend * * * to all cases of admiralty and maritime jurisdiction."

The Judicial Code confers upon the District Courts original jurisdiction of all civil causes of admiralty and maritime jurisdiction saving to suitors in all cases the right of common-law remedy where the common law is competent to give it. Section 256 of the Judicial Code provides: "The jurisdiction vested in the courts of the United States * * * shall be exclusive of the courts of the several states."

The appellant having invoked the foregoing provisions of the Federal Constitution in opposition to the granting of an order of arbitration and thereby made the provisions of the Constitution stated, as amplified by the Judicial Code, the subject of construction, the appeal is properly before this court. (Code Civ. Pro. § 191, subd. 1.)

By reason of an alleged breach of contract of a charter party contract by the owner of a steamship, and a clause contained in said contract that any dispute or controversy between the parties thereto shall be determined by arbitration, the chatterers have thus far sustained an order of the Supreme Court directing the owner to proceed to arbitration as provided in the Arbitration Law. The fundamental question to be determined upon this appeal is whether or not the controversy between the parties is one of admiralty or of state jurisdiction. If the dispute be one of jurisdiction by the admiralty court, the state court was powerless to order the owner to proceed to arbitration notwithstanding the clause of the contract providing for the settlement of disputes arising thereunder.

In a consideration of the question as to the jurisdiction of the Supreme Court we must examine the petition and answer thereto used upon the application for the order directing arbitration and determine therefrom the subject-matter of the charter party contract and the nature of the controversy to be submitted to arbitration. A repetition of the language of the contract and of the petition and answer is unnecessary. A synopsis of the provisions of the instrument is set forth in the statement preceding our conclusions and discloses that the subject-matter of the contract is the use of a steamship and transportation of a cargo from the port of New York to a port of Newfoundland, consequently the contract pertains to navigation. By the allegations of the petition and of the answer is presented the questions: Is the owner of a steamship under charter liable to charterers for delay in sailing from a port when a duly licensed pilot, under pilotage laws, believes it unsafe to take the vessel to sea? Is the master of a steamship justified in turning the steamship about and proceeding temporarily to a port other than the port of destination? Necessarily an answer to the questions is dependent upon the facts and circumstances surrounding the refusal of the pilot to immediately take the vessel to sea, the act of the master of the vessel in turning the vessel from its course and proceeding to the Azores and the reasonableness or necessity of the alleged delay at the latter port. We may assume that the condition of the weather, the seaworthiness of the steamship, the existing situation at the time of the deviation of the vessel from its course and the safety of the steamship and cargo would have an important bearing upon the questions propounded; therefore, the subject of the controversy existing between the parties is clearly one pertaining to navigation; consequently, the question of liability or non-liability of the owner to the charterer is within the exclusive jurisdiction of the courts of admiralty. We cannot attribute to the legislature an intention to limit or usurp the jurisdiction of the Federal courts. The section of the Arbitration Law (Section 3) under which the order herein was granted has been construed by us as a statutory legal remedy of a character unknown to the common law (Matter of Berkovitz v. Arbib Houlberg. Inc., 230 N.Y. 261) ; it, therefore, is not embraced within the exceptions contained in the Judicial Code.

Counsel for the charterers urges that a remedy provided in the state court that makes available a remedy for the settlement of a maritime controversy through the specific performance of an agreement for that remedy is not an infringement of the jurisdiction of the Admiralty courts; that the charterers are not seeking a judgment for overpaid charter hire, etc., but an order decreeing that the arbitration proceed in the manner provided by the contract. Even if we assume that the proceeding is practically one to enforce specific performance of the arbitration clause of the contract, an order granting such relief presupposes the existence of a controversy the subject-matter of which is within the jurisdiction of the court granting the order. It would be idle ceremony for the courts to grant an order requiring specific performance of an agreement to arbitrate a dispute, where upon an examination of the papers presented as the basis for such an order it is apparent that the subject-matter of the controversy which the "charterers" desire submitted to arbitration clearly arose under maritime clauses in a charter party over which the arbitrators could not assume jurisdiction even if arbitration was ordered.

In the present case, the agreement to arbitrate which is sought to be enforced is part of a maritime contract. It is contained in a charter party and such clause is void in the federal forum. (United States Asphalt Refining Co. v. Trinidad Lake PetroleumCo., 222 Fed. Rep. 1006, and cases cited therein.)

To sustain the arbitration clause and enforce the same in the state courts would deny to the federal court the exclusive jurisdiction with which Congress has clothed it, and likewise destroy a rule of uniformity. (So. Pac. Co. v. Jensen,244 U.S. 205; Knickerbocker Ice Co. v. Stewart, 253 U.S. 149.)

The order appealed from should be reversed and the proceedings dismissed, with costs in all courts.

HISCOCK, Ch. J., CARDOZO, POUND, MCLAUGHLIN, CRANE and ANDREWS, JJ., concur.

Order reversed, etc.