Source: https://m.openjurist.org/359/us/314
Timestamp: 2019-11-17 02:47:15
Document Index: 287253937

Matched Legal Cases: ['§ 741', '§ 741', '§ 71', '§ 71', '§ 887', '§ 743', '§ 743', '§ 743', '§ 743', '§ 741', '§ 741', '§ 1346', '§ 1346', '§ 2073', '§ 2073', '§ 1503', '§ 1503', '§ 1346', '§ 1346', '§ 3', '§ 783', '§ 783', '§ 331', '§ 331', '§ 227', '§ 227']

359 US 314 United States v. Isthmian Steamship Co | OpenJurist
359 U.S. 314 - United States v. Isthmian Steamship Co
359 US 314 United States v. Isthmian Steamship Co
79 S.Ct. 857
3 L.Ed.2d 845
Argued Feb. 25, 1959.
The principal question presented in this case is whether in an action under the Suits in Admiralty Act, 41 Stat. 525, as amended, 46 U.S.C. § 741 et seq., 46 U.S.C.A. § 741 et seq., the United States may defend by pleading against the libelant a claim arising out of an unrelated transaction.
Isthmian filed a libel in the United States District Court for the Southern District of New York alleging that the United States owed Isthmian $116,511.44 for cargo transported on the S.S. Steelworker; that Isthmian had presented a bill for that amount; and that the United States had failed and refused to pay $115,203.76 which was due and payable.1 Isthmian made no reference whatsoever to the parties' dispute over additional charter hire for the 1946—1948 period.
Isthmian excepted to the answer of the United States on the ground that the defensive matter pleaded therein did not arise 'out of the same contract, cause of action or transaction for which the libel was filed.' Isthmian moved that the excepted matter be stricken and asked 'judgment on the pleadings.' The District Court held that the answer setting forth the withholdin an d application of the $115,203.76 did not set forth a defense of payment but rather was a claim of setoff arising from a separate transaction.2 The District Court then held that setoffs arising from distinct transactions could not be asserted in admiralty and sustained Isthmian's exceptions. Since there was no longer any common issue, consolidation of the libel and cross-libel was denied and Isthmian was awarded a decree pro confesso. D.C., 134 F.Supp. 854. The Government's cross-libel is still pending.
The Government relies upon the Act of March 3, 1817, 3 Stat. 366, which now appears in similar form as Section 305 of the Budget and Accounting Act of 1921, 42 Stat. 24, 31 U.S.C. § 71, 31 U.S.C.A. § 71. This section provides that the General Accounting Office shall settle and adjust all claims and demands by or against the Government. This is said to mean that when the General Accounting Office administratively sets one claim off against another that is the same as payment. But recognizing the Government's long-standing power to set off is far different from finding that the Government's setoff is 'payment' which enables the Government to plead in admiralty foreign and unrelated transactions. See United States v. Munsey Trust Co. of Washington, D.C., 332 U.S. 234, 239, 67 S.Ct. 1599, 1601, 91 L.Ed. 2022; McKnight v. United States, 13 Ct.Cl. 292, 306, affirmed 98 U.S. 179. 25 L.Ed. 115; Climatic Rainwear Co. v. United States, 88 F.Supp. 415, 418, 115 Ct.Cl. 520. In other situations, the claim of withholding and applying has traditionally been treated as setoff. Virginia-Carolina Chemical Co. v. Kirven, 215 U.S. 252, 257—258, 30 S.Ct. 78, 79—80, 54 L.Ed. 179; Merchants Heat & Light Co. v. James B. Clow & Sons, 204 U.S. 286, 289—290, 27 S.Ct. 285, 286, 51 L.Ed. 488 (a recoupment case); Scammon v. Kimball, 92 U.S. 362, 367, 23 L.Ed. 483; United States v. Eckford, 6 Wall. 484, 18 L.Ed. 920. See also 3 Williston, Contracts (rev. ed. 1936), § 887E. In this context, 'payment' connotes tender by the debtor with the intention to satisfy the debt coupled with its acceptance as satisfaction by the creditor. See Luckenbach v. W. J. McCahan Sugar Co., 248 U.S. 139, 149, 39 S.Ct. 53, 55, 63 L.Ed. 170; Bronson v. Rodes, 7 Wall. 229, 250, 19 L.Ed. 141; Sheehy v. Mandeville, 6 Cranch 253, 264, 3 L.Ed. 215; United States to Use of Par-Lock Appliers of New Jersey, Inc. v. J.A.J. Const. Co., 3 Cir., 137 F.2d 584, 586.
We can understand the Government's desire to litigate all of its disputes with Isthmian in one lawsuit, but that is no warrant for abandoning the traditional meaning of the defense of payment.3
We therefore reach the question posed at the outset. Section 3 of the Suits in Admiralty Act, 46 U.S.C. § 743, 46 U.S.C.A. § 743, provides that suits against the United States under the Act shall 'poroceed and shall be heard and determined according to the principles of law and to the rules of practice obtaining in like cases between private parties.' With this express command before us, we must ascertain whether admiralty practice permits private parties to defend by setting up claims arising out of separate and unrelated transactions between the parties.
Traditionally, admiralty has narrowly circumscribed the filing of unrelated cross-libels and defenses. The first American case considering this problem appears to be Willard v. Dorr, 1823, 29 Fed.Cas. page 1277, No. 17,680, in which Justice Story sitting as Circuit Justice refused to permit the attempted setoff. Since that early holding various reasons have been offered for refusal to entertain unrelated defenses: protection of the seaman's wage claims;4 preservation of relatively simple proceedings not affecting third-party rights;5 and the recognition that allowing cross-libels might deprive litigants of jury trials to which they would otherwise be entitled if the cross-libel were pressed in an independent proceeding.6 But for whatever reason, the doctrine gained general acceptance.7
That rule has remained in the Admiralty Rules8 ever since with only slight change and now appears as Rule 50 in the following form which still reflects the underlying settled state of the law:
'Whenever a cross-libel is filed upon any counterclaim arising out of the same contract or cause of action for which the original libel was filed, and the respondent or claimant in the original suit shall have given security to respond in damages, the respondent in the cross-libel shall give security in the usual amount and form to respond in damages to the claims set forth in said cross-libel, unless the court for cause shown, shall otherwise direct; and all proceedings on the original libel shall be stayed until such security be given unless the court otherwise directs.'9
But the Government urges the Court in this particular case to apply the more flexible procedure utilized in civil cases in federal courts.10 The Government contends that none of the reasons for limited cross-libels suggested above has any application to the particular facts of this case and that, moreover, the rule has become an anachronism and is out of line with the practice in specific courts11 and with the general rules of practice for federal courts.12 But it should be observed that where the procedure has been changed in this regard it has been the result of legislation or rulemaking and not the decisional process.13
Whether the setoff and cross-libel procedure now operative in admiralty is anachronistic, is not a matter best considered by this Court in a litigation without the benefits which normally accompany intelligent rulemaking—including hearings and opportunities to submit data. In addition to this Court's responsibility for rulemaking, the Judicial Conference of the United States14 has been given certain responsibilities in this area by the Act of July 11, 1958, 72 Stat. 356:
The result in this case does not cause irreparable loss to the United States nor indeed require any expenditure of government funds prior to the complete disposition of all claims. The Government is authorized to withhold payment of Isthmian's judgment in this case to the extent the Government has claims outstanding against Isthmian.15 The only requirement is that the Government press the libel now pending in the District Court. In other situations where no suit is pending, the United States may have to commence a separate suit rather than set up an unrelated defense in the original suit. This may be an inconvenience to the United States but it must be remembered that Congress has expressly declared that when sued under the Suits in Admiralty Act the United States is to have its procedural rights determined and governed in the same manner as private parties.
Section 3 of the Suits in Admiralty Act, 46 U.S.C. § 743, 46 U.S.C.A. § 743, provides:
Isthmian first attempted to recover the unpaid portion of the freight bill by a suit in the Court of Claims. The United States moved to dismiss that suit because Isthmian's claim was said to have been maritime in nature, thus giving the District Courts exclusive jurisdiction under the Suits in Admiralty Act. 46 U.S.C. § 741 et seq., 46 U.S.C.A. § 741 et seq. The Court of Claims dismissed Isthmian's suit. Isthmian Steamship Co. v. United States, 130 F.Supp. 336, 131 Ct.Cl. 472. Before that dismissal, Isthmian filed the instant proceeding.
The Government cites several cases, e.g., United States v. New York, N.H. & H.R. Co., 355 U.S. 253, 78 S.Ct. 212, 2 L.Ed.2d 247; Alcoa Steamship Co. v. United States, 338 U.S. 421, 70 S.Ct. 190, 94 L.Ed. 225, and Wabash R. Co. v. United States, 59 Ct.Cl. 322, affirmed sub nom. United States v. St. Louis S.F. & T.R. Co., 270 U.S. 1, 46 S.Ct. 182, 70 L.Ed. 435, in which the courts adjudicated disputes which were not the bases of the original complaints. None of the cases cited was brought under the Suits in Admiralty Act. The first two suits invoked the Tucker Act, now 28 U.S.C. § 1346, 28 U.S.C.A. § 1346, while Wabash was brought in the Court of Claims. The controlling statutes contain express authority for entertaining unrelated setoffs. See n. 11, infra. On this point, these cases indicate no more than that when the pladings properly in the case, taken together, indicate there are disputes as to issues not raised in the complaint, those issues will be determined.
See, e.g., Howard v. 9,889 Bags of Malt, D.C., 255 F. 917; The Ping-On v. Blethen, 9 Cir., 11 F. 607, 611—612. In British Transport Commission v. United States, 354 U.S. 129, 77 S.Ct. 1103, 1 L.Ed.2d 1234, the rights of the various parties arose from the same collisio. C f. Powell v. United States, 300 U.S. 276, 290, 57 S.Ct. 470, 477, 81 L.Ed. 643.
Present authority for this Court's promulgation of Admiralty Rules is found in 28 U.S.C. § 2073, 28 U.S.C.A. § 2073. Original authority is found in the Act of August 23, 1842, 5 Stat. 516, 518.
The jurisdictional statute of the Court of Claims, 28 U.S.C. § 1503, 28 U.S.C.A. § 1503, provides:
See also 28 U.S.C. § 1346(c), 28 U.S.C.A. § 1346(c) relating to jurisdiction of the District Courts over certain claims against the United States:
See n. 10, supra. But see § 3 of the Public Vessels Act, 43 Stat. 1112, 46 U.S.C. § 783, 46 U.S.C.A. § 783, providing that when the United States files a libel against a private party, the private party may only set off or counterclaim for damages 'arising out of the same subject matter or cause of action. * * *'
For the composition and function of the Judicial Conference of the United States see 28 U.S.C. § 331, as amended by the Act of July 11, 1958, 72 Stat. 356, 28 U.S.C.A. § 331, quoted in the text.
Act of March 3, 1875, 18 Stat. 481, as amended, 31 U.S.C. § 227, 31 U.S.C.A. § 227