Source: https://supreme.justia.com/cases/federal/us/339/684/
Timestamp: 2019-04-25 17:51:13+00:00

Document:
Swift & Company Packers v. Compania Colombiana del Caribe, S.A.
Petitioners brought a libel in personam in the District Court for the Canal Zone against a steamship company on a claim arising upon a contract of affreightment supplemented by charges of negligence in the nondelivery of a sea cargo, and by process of foreign attachment secured the attachment of a vessel which the company allegedly had transferred to respondent in fraud of petitioners' rights. Concluding that there was no jurisdiction in admiralty to inquire into the alleged fraudulent transfer, and that, in any event, the exercise of jurisdiction would be inappropriate since the transfer had taken place between two foreign corporations and in a foreign country, the District Court vacated the attachment. The Court of Appeals affirmed.
1. The order of the District Court vacating the attachment was reviewable by the Court of Appeals under 28 U.S.C. § 1291. Pp. 339 U. S. 688-689.
(a) The provision of 28 U.S.C. § 1291 for appeals to the courts of appeals only from final decisions of the district courts should not be construed so as to deny effective review of a claim fairly severable from the context of a larger litigious process. Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541. Pp. 339 U. S. 688-689.
2. In the circumstances of this case, the District Court, to discharge its maritime jurisdiction, was not without power to determine whether the transfer of the vessel was fraudulent, and the power should be exercised. Pp. 339 U. S. 689-695.
3. In the posture of the case in the District Court, the vacation of the attachment was not justified by petitioners' failure to establish a prima facie case of fraud, although the ultimate burden of establishing a fraudulent transfer was upon them. Pp. 339 U. S. 695-696.
4. The District Court's order vacating the attachment was not justified as an exercise of discretion to decline jurisdiction under the doctrine of forum non conveniens. Pp. 339 U. S. 697-698.
without assuring the citizen that respondents would appear in those courts and that security would be given equal to what had been obtained by attachment in the District Court. Pp. 339 U. S. 697-698.
An order of the District Court vacating the attachment of a vessel in an admiralty proceeding, 83 F.Supp. 273, was affirmed by the Court of Appeals. 175 F.2d 513. This Court granted certiorari. 338 U.S. 813. Reversed and remanded, p. 339 U. S. 698.
The question before us is the propriety of an order of the District Court for the Canal Zone vacating a foreign attachment of a vessel made in a libel in personam. We granted certiorari because important questions relating to the scope of admiralty jurisdiction and its exercise are in issue. 338 U.S. 813.
be attached, particularly a vessel known as the Alacran, or Caribe. This vessel was thereupon attached by the marshal.
On March 8, libellants filed a supplemental and amended libel, and, on the basis of the following allegations, joined the Compania Colombiana Del Caribe, S.A. as respondent. On or shortly prior to March 4, the Compania Del Caribe had been organized under the laws of Colombia, and the Alacran had been transferred by Transmaritima to Del Caribe in fraud of the rights of libellants. The latter company had been organized by directors, officers, and stockholders of Transmaritima, but no funds had been paid into its treasury for the issue of its stock, and the transfer of the Alacran was without real consideration. Del Caribe was "merely the creature or alter ego" of Transmaritima, and "they should be held to be, as they are, one and the same." Del Caribe, on or about March 4, had had the Vessel's name changed from Alacran to Caribe, and a new register had been issued accordingly. In the alternative, the claim was that Del Caribe was indebted to Transmaritima for at least a substantial part if not all of the purchase price of the Caribe.
respondent companies or the sale of the Caribe. In any event, the court declined to exercise jurisdiction to look into the transfer, since it had taken place between two foreign corporations and in a foreign country. Accordingly, the attachment was ordered to be vacated. While libellants submitted additional evidence upon a rehearing, the court adhered to its original views. 83 F.Supp. 273.
The Court of Appeals affirmed. It held that jurisdiction to set aside a fraudulent transfer before judgment on the main claim was, at best, "doubtful," that there was discretion to decline jurisdiction on principles of forum non conveniens, and that, in any event, libellants had not sustained their burden of producing proof that the transfer was fraudulent. [Footnote 3] 175 F.2d 513.
I. There is a threshold question as to the jurisdiction of the court below to entertain the appeal. It is claimed that the order vacating the attachment was not a final order, and therefore not reviewable.
to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated."
337 U.S. at 337 U. S. 546. Appellate review of the order dissolving the attachment at a later date would be an empty rite after the vessel had been released and the restoration of the attachment only theoretically possible. Cf. The Panaghia Kathariotisa, 165 F.2d 430. Under these circumstances, the provision for appeals only from final decisions in 28 U.S.C. § 1291, should not be construed so as to deny effective review of a claim fairly severable from the context of a larger litigious process. See Cobbledick v. United States, 309 U. S. 323, 309 U. S. 328-329. The situation is quite different where an attachment is upheld pending determination of the principal claim. Such was Cushing v. Laird, 107 U. S. 69, which is urged on us. In such a situation, the rights of all the parties can be adequately protected while the litigation on the main claim proceeds.
was a matter for determination by a court of equity, and therefore outside the bounds of admiralty jurisdiction. There is a good deal of loose talk to this effect in the reports, concurrent with talk that courts of admiralty exercise their jurisdiction upon equitable principles. Even as to admiralty jurisdiction, we must be wary of verbal generalizations unrelated to their applications. Not the least creative achievement of judicial lawmaking is the body of doctrines that has been derived from the brief words of the Constitution extending the judicial power "to all Cases of admiralty and maritime Jurisdiction." U.S.Const. Art. III, § 2. But it would be beyond human achievement even of a long line of judges especially equipped for dealing with admiralty matters to have produced a wholly harmonious body of admiralty law, or to have written opinions that should not have lent themselves through largeness or looseness of statement beyond the scope of their adjudications.
so unrelenting as to bar the grant of any equitable relief even when that relief is subsidiary to issues wholly within admiralty jurisdiction. Certainly there is no ground for believing that this restriction was accepted as a matter of course by the framers of the Constitution so that such sterilization of admiralty jurisdiction can be said to have been presupposed by Article III of the Constitution.
parties to resort to another court."
W. E. Hedger Transp. Corp. v. Ira S. Bushey & Sons, Inc., 155 F.2d 321, 323, per Learned Hand, J.
In each of these cases, a holding that admiralty must stay its hands as to a matter intrinsically nonmaritime but "necessary to the complete adjustment of rights over which admiralty has independent jurisdiction" would have seriously impaired the discharge by admiralty of the task which belongs to it. To recognize these subsidiary powers of admiralty to deal justly with the claims that are within its jurisdiction is not to enlarge the admiralty jurisdiction, but to avoid its mutilating restriction. To generalize beyond this is to invite misleading or empty abstractions.
a court of admiralty when a libel in personam has been brought in a District where the respondent cannot be personally served, admiralty jurisdiction would be sacrificed to a sterile theory of judicial separatism. No support for such a conclusion is to be found in any decision of this Court or in those of the lower courts which have had so large a share in the development of admiralty law. The relevant rulings look the other way.
"incidental to its general jurisdiction, and for maintaining the same, it [the admiralty court] has plenary power to decide, and frequently does decide, conflicting claims to property. Without such power, its jurisdiction would often be defeated."
with executing its judgment or authorizing an attachment to secure an independent maritime claim. Cf. The New York, 113 F. 810; The Columbia, 100 F. 890 (judgment in admiralty vacated because obtained by fraud).
We must conclude that the District Court was not without power to look into the transfer of the Caribe under the circumstances of this suit. But because power exists, its use is not inexorable. Cf. Massachusetts v. Missouri, 308 U. S. 1, 308 U. S. 19. We would be passing on situations not before us were we to attempt now to define when power which we recognize should be withheld. In the circumstances of this case, the power should be exercised, for there are good reasons for the attachment. If the libellants are ultimately successful, judgment may well avail them nothing unless duly secured. Cf. Asiatic Petroleum Corp. v. Italia Societa Anonima Di Navigazione, 119 F.2d 610. The issues of fact on which libellants' claim of fraud turn do not appear to be complicated and they may be speedily adjudicated by the District Court prior to a hearing on the affreightment contract.
libellants to present their proof in order to determine whether substantial questions of fact were raised respecting the fraudulence of the transfer. Had libellants then failed to respond without adequate reason, the attachment would properly have been vacated.
would appear in those courts and that security would be given equal to what had been obtained by attachment in the District Court. The power of the District Court to give a libellant such assurance is shown by Canada Malting Co. v. Paterson Steamships, Ltd., 285 U. S. 413, 285 U. S. 424. See also City of Agra, 35 F.Supp. 351. While the District Court exercised discretion to vacate only the attachment and not to dismiss the entire libel, libellants' rights were seriously impaired by their loss of security. The importance of the right to proceed by attachment to afford security has been emphasized. E.g., In re Louisville Underwriters, 134 U. S. 488; Asiatic Petroleum Corp. v. Italia Societa Anonima Di Navigazione, 119 F.2d 610. Libellants' right to maintain the attachment will depend on their ability to prove fraud in the transfer of the Caribe upon a hearing. They are entitled to have that hearing.
The Marshal's return failed to state that respondents could not be found within the jurisdiction. Cf. International Grain Ceiling Co. v. Dill, 13 Fed.Cas. page 70, No. 7,053, 10 Ben. 92. The Court of Appeals properly held this to be a formal defect, easily correctable on remand.
The district judge also found that the stockholders and managing officers of the two respondents were not identical, but these facts were irrelevant to his disposition of the case, and are to the disposition made here.
The District Court did not dismiss the garnishment proceeding against Del Caribe, since that company was allegedly indebted to Transmaritima and some of the property of the Cali had been attached aboard the Caribe. The Court of Appeals suggested that the issue of fraud in the transfer of the Caribe could be adjudicated as part of the garnishment proceeding.
Libellants also sought to hold Del Caribe personally liable for the destruction of the Cali's cargo of rice on the ground that it was merely the alter ego of Transmaritima. Success on this theory would render the issue of fraudulent transfer irrelevant, for then the assets of either company could be attached. The jurisdiction of a court of admiralty to determine the question of alter ego is undoubted. The Willem Van Driel, Sr., 252 F. 35; Luckenbach S.S. Co. v. W. R. Grace & Co., 267 F. 676; Yone Suzuki v. Central Argentine R. Co., 27 F.2d 795, 806; Kingston Dry Dock Co. v. Lake Champlain Transp. Co., 31 F.2d 265; Gardner v. Dantzler Lumber & Export Co., 98 F.2d 478. But it is settled doctrine that, apart from any transfer of assets by Transmaritima to Del Caribe, the latter company could not be held personally liable on an alter ego theory, since it came into existence after the Cali sank. Yone Suzuki v. Central Argentine R. Co., supra; Kingston Dry Dock Co. v. Lake Champlain Transp. Co., supra.
It is important to note, however, that the relationship between the two respondent companies has an obvious relevance to the issue of fraudulent transfer.
"In suits in personam the mesne process shall be by a simple monition in the nature of a summons to appear and answer to the suit, or by a simple warrant of arrest of the person of the respondent in the nature of a capias, as the libellant may, in his libel or information pray for or elect; in either case with a clause therein to attach his goods and chattels, or credits and effects in the hands of the garnishees named in the libel to the amount sued for, if said respondent shall not be found within the district."
The Court of Appeals apparently regarded this distinction as important, for it held that the issues relating to the vessel Caribe might be adjudicated in the garnishment proceeding, but not in connection with the attachment.
"In case of the attachment of property . . . , the party arrested or any person having a right to intervene in respect of the thing attached may, upon evidence showing any improper practice or a manifest want of equity on the part of the libellant, have an order from the judge requiring the libellant to show cause instanter why the arrest or attachment should not be vacated."
See 5 Benedict on Admiralty (Whitman ed.1949) 234.
The eight months intervening between the filing of the libel and the opinion on rehearing were spent largely on respondents' motions and to afford respondents opportunity to file answers. It is also pertinent that libellants' interrogatories to Del Caribe were never answered, and the exceptions taken to them never passed on by the District Court. The evidence contained in respondents' affidavits was inadequate to support any determination of the fraud issue. Of course, if the court had required libellants to present such proof as they had, it would have been for them to move that the exceptions to the interrogatories be overruled. But, as indicated, the importance of such a move was never made clear.
"In any balancing of conveniences, a real showing of convenience by a plaintiff who has sued in his home forum will normally outweigh the inconvenience the defendant may have shown."
See also O'Neill v. Cunard White Star, Ltd., 160 F.2d 446.

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