Source: https://www.legalcrystal.com/case/94179/red-cross-line-vs-atlantic-fruit-co
Timestamp: 2016-12-04 17:54:24
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Matched Legal Cases: ['§ 24', '§ 24', '§ 237', '§ 670', '§ 9', '§ 24']

Red Cross Line Vs Atlantic Fruit Co - Citation 94179 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Red Cross Line Vs. Atlantic Fruit Co. - Court Judgment	LegalCrystal Citationlegalcrystal.com/94179CourtUS Supreme CourtDecided OnFeb-18-1924Case Number264 U.S. 109AppellantRed Cross LineRespondentAtlantic Fruit Co.Excerpt:
red cross line v. atlantic fruit co. - 264 u.s. 109 (1924)
1. a decision of the highest court of a state excluding maritime contracts from the operation of a state statute, not as a matter of statutory construction, but due to its opinion that the federal constitution so requires, present a constitutional question reviewable here. p.
2. under the provision of the judicial code (§ 24, par. 3) vesting the district court with exclusive..... Judgment:
2. Under the provision of the Judicial Code (§ 24, par. 3) vesting the district court with exclusive jurisdiction of all civil causes of admiralty and maritime jurisdiction but saving to suitors the right of a common law remedy, a state may confer upon its courts jurisdiction to specifically perform an agreement for arbitration, valid by the general maritime law and by the law of the state, which is contained in a charter party made in the state and which, by its terms, is to be performed there. P.
264 U. S. 122
The Arbitration Law of New York, enacted April 19, 1920, c. 275, and amended March 1, 1921, c. 14, declares that a provision in a written contract to settle by arbitration a controversy thereafter arising between the parties "shall be valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract." It authorizes the Supreme Court, or a judge thereof, to direct, upon the application of a party to such an agreement, that the arbitration proceed in the manner so provided; to appoint an arbitrator for the other party in case he fails to avail himself of the method prescribed by the contract, and to stay trial of the action if suit has been begun. The law applies to contracts made before its enactment if the controversy arose thereafter.
Matter of Berkovitz v. Arbib & Houlberg,
230 N.Y. 261, 270-271. Prior to this statute, an agreement to arbitrate was legal in New York. and damages were recoverable for a breach thereof.
Haggart v. Morgan,
5 N.Y. 422, 427. But specific performance of the promise would not be enforced, the promise could not be pleaded in bar of an action, and it would not support a motion to stay.
Finucane Co. v. Board of Education,
190 N.Y. 76, 83. These limitations upon the enforcement of a promise to arbitrate had been held to be part of the law of remedies.
Meacham v. Jamestown,
etc., R. Co.,
211 N.Y. 346, 352. The purpose of the statute was to make specific performance compellable. 230 N.Y. 261, 269. Whether agreements for arbitration of disputes arising under maritime contracts are within the scope of the statute, and whether, if so construed and applied, the state law conflicts with the federal Constitution, are the questions for decision.
Proceeding under the Arbitration Law, the Red Cross Line applied to the supreme court of the state, on April 12, 1921, for an order directing the Atlantic Fruit Company to join with it in the arbitration of a dispute arising out of the charter of the steamship
The substantive claim was that the master had not prosecuted the voyage with the utmost dispatch, and hence that certain amounts paid by the charterer should be returned. The charter party, which had been executed in New York on November 28, 1919, contained the following provision:
such controversies are within the exclusive jurisdiction of the admiralty courts, and that the state had no power to compel the charter owner to proceed to arbitration.
Matter of Red Cross Line v. Atlantic Fruit Co.,
233 N.Y. 373. The case is here on writ of certiorari under § 237 of the Judicial Code, as amended. 260 U.S. 716.
Respondent contends that the petition should be dismissed for lack of a federal question. The argument is that the Court of Appeals held, as a matter of statutory construction, that the Arbitration Law does not extend to controversies which are within the admiralty jurisdiction, and that the substantive claim sought to be enforced is so cognizable. The claim to recover an amount paid under a charter party as charter hire is within the admiralty jurisdiction.
Morewood v. Enequist,
23 How. 491. If that court had construed the Arbitration Law as excluding from its scope controversies which are within the admiralty jurisdiction, the construction given to the state statute would bind us, and there would be no occasion to consider the constitutional question presented.
Ward & Gow v. Krinsky,
259 U. S. 510
. An expression used by the Court of Appeals lends some color to respondent's contention. 233 N.Y. 373, 381. But a reading of the whole opinion shows that the state court excluded maritime contracts from the operation of the law, not as a matter of statutory construction, but because it thought the federal Constitution required such action.
Compare State Industrial Commission v. Nordenholt Corporation,
. We proceed therefore to the consideration of the constitutional question.
executory agreements to arbitrate disputes. They have declined to compel specific performance,
Tobey v. County of Bristol,
3 Story, 800, 819-826; [
] or to stay proceedings on the original cause of action. Story, Equity Jurisprudence, § 670. They have not given effect to the executory agreement as a plea in bar, except in those cases where the agreement, leaving the general question of liability to judicial decision, confines the arbitration to determining the amount payable or to furnishing essential evidence of specific facts, and makes it a condition precedent to the cause of action.
Hamilton v. Liverpool, London & Globe Insurance Co.,
136 U. S. 242
136 U. S. 255
. But an agreement for arbitration is valid even if it provides for the determination of liability. If executory, a breach will support an action for damages.
Hamilton v. Home Insurance Co.,
137 U. S. 370
137 U. S. 385
-386. If executed -- that is, if the award has been made -- effect will be given to the award in any appropriate proceeding at law, or in equity.
1 Pet. 222;
17 How. 344;
Bayne v. Morris,
1 Wall. 97. And, although there is no federal legislation on the subject, an executory agreement, however comprehensive, will, if made a rule of court, be
enforced in courts of the United States by any appropriate process.
Heckers v. Fowler,
2 Wall. 123. [
In admiralty, also, agreements to submit controversies to arbitration are valid. Reference of maritime controversies to arbitration has long been common practice. [
40 U. S. 45
. The insertion in a charter party of a provision for such settlement of disputes arising thereunder was practiced at least as early as the eighteenth century.
Thompson v. Charnock,
2 Durnford & East, 139. For breach of an executory agreement, a libel for damages will lie. [
] An executory agreement may be made a rule of court.
2 Gall, 61.
An award will be given full effect. [
] the agreement, whether executory or executed, cannot be enforced in admiralty by specific performance, merely because that court lacks the power to grant equitable relief.
] The executory agreement (perhaps in deference to the rule prevailing at law and in equity) will not be given effect as a bar to a libel on the original cause of action. The reluctance of the admiralty court to lend full aid goes, however, merely to the remedy. The substantive right created by an agreement to submit it disputes to arbitration is recognized as a perfect obligation. [
By reason of the saving clause, state courts have jurisdiction
concurrent with the admiralty courts, of all causes of action maritime in their nature arising under charter parties. Judiciary Act Sept. 24, 1789, c. 20, § 9, 1 Stat. 73, 77; Judicial Code, § 24, par. 3;
11 Wall. 185;
2 Gall. 398, 475. The "right of a common law remedy," so saved to suitors, does not, as has been held in cases which presently will be mentioned, include
attempted changes by the states in the substantive admiralty law, but it does include all means other than proceedings in admiralty which may be employed to enforce the right or to redress the injury involved. It includes remedies
as well as proceedings in court; judicial remedies conferred by statute, as well as those existing at the common law; remedies in equity, as well as those enforceable in a court of law.
Knapp, Stout & Co. v. McCaffrey,
177 U. S. 638
177 U. S. 644
et seq.; Rounds v. Cloverport Foundry & Machine Co.,
. A state may not provide a remedy
for any cause of action within the admiralty jurisdiction.
4 Wall. 555;
167 U. S. 606
. But, otherwise, the state, having concurrent jurisdiction, is free to adopt such remedies, and to attach to them such incidents, as it sees fit. New York therefore had the power to confer upon its courts the authority to compel parties within its jurisdiction to specifically perform an agreement for arbitration which is valid by the general maritime law, as well as by the law of the state, which is contained in a contract made in New York and which, by its terms, is to be performed there.
This state statute is wholly unlike those which have recently been held invalid by this Court. The Arbitration Law deals merely with the remedy in the state courts in respect of obligations voluntarily and lawfully incurred. It does not attempt either to modify the substantive maritime law or to deal with the remedy in courts of admiralty. The Workmen's Compensation Laws involved in
Clyde Steamship Co. v. Walker,
244 U. S. 255
Peters v. Veasey,
251 U. S. 121
, were declared invalid because their provisions were held to modify or displace essential features of the substantive maritime law. In
Union Fish Co. v. Erickson,
248 U. S. 308
, the state statute did not deal with the substantive maritime law. It was held invalid because, as construed
and applied, it attempted to modify the remedial law of the admiralty courts. The state statutes involved in all the other cases were declared valid. Those giving the substantive right to recover for negligence resulting in death were upheld because they merely supplemented the substantive maritime law, and did not conflict with any essential feature of it.
16 Wall. 522;
. The Workmen's Compensation Laws involved in other cases were upheld because their provisions, as applied, were found not to be in conflict with any essential feature of the general maritime law.
Grant Smith-Porter Co. v. Rohde,
Industrial Commission v. Nordenholt Co.,
. No state statute was involved in
Chelentis v. Luckenbach,
. The Court held there that, under the general maritime law, the seaman had no substantive right to recover; that this rule of substantive maritime law applied whether he sued in the state courts or in the court of admiralty, and that the Seaman's Act of 1915 (38 Stat. 1164) did not change this rule of substantive law. In no case has this Court held void a state statute which neither modified the substantive maritime law, nor dealt with the remedies enforceable in admiralty.
As the constitutionality of the remedy provided by New York for use in its own courts is not dependent upon the practice or procedure which may prevail in admiralty, we have no occasion to consider whether the unwillingness of the federal courts to give full effect to executory agreements for arbitration can be justified. [
7 Cranch 5961;
Lutz v. Linthicum,
8 Pet. 165;
The Alexandria Canal Co. v. Swann,
5 How. 83;
New York & Cumberland R. Co. v. Myers,
18 How. 246;
Newcomb v. Wood,
97 U. S. 581
97 U. S. 583
. The practice of making the agreement for arbitration a rule of court was introduced by Stat. 9 & 10 William III, c. 15.
Russell on Arbitrators (5th ed.) 52.
In England, maritime controversies were settled by arbitration as early as 1320. Selden Society, Select Pleas in the Court of Admiralty, vol. 1, pp. xxii, xxiii. After the establishment of that court (about 1340,
xiv), arbitration became a common mode of settling disputes in shipping cases.
lxix; lxi; [1539] p. 90; [1540] p. 101; Vol. 11 [1548] p. 18; [1571] p. lxx; [1573] p. lxxi; [1575] p. 39; [1589] p. 44.
The phraseology of the arbitration clause here in question is identical with that contained in the common form of the time charter party long in use. Scrutton, Charter Parties and Bills of Lading (1886) pp. 268, 270. The form appears as clause 15 of the charter party executed in New York in 1886 which was involved in
Compania Bilbania v. Spanish-American Light & Power Co.,
146 U. S. 483
See Ross v. Compagnie Commerciale, etc.,
45 F. 207, 208;
Munson v. Straits of Dover,
99 F. 787; 102 F. 926;
Aktieselskabet, Korg-Og, etc. v. Rederiaktiebolaget, Atlanten,
250 F. 935, 937.
See McConnochie v. Kerr,
9 F. 50, 57-58;
Toledo S.S. Co. v. Zenith Transp. Co.,
184 F. 391, 401;
Hannevig v. Sutherland,
256 F. 445.
Admiralty is likewise unable to afford relief by way of reformation of a marine contract,
Andrews v. Essex Fire & Marine Ins. Co.,
3 Mason 6, 16; or to set it aside for fraud,
Dean v. Bates,
2 Woodb. & M. 87, 90; or to establish an equitable title in a ship; or to take an account among part owners,
Kellum v. Emerson,
2 Curt. 79, 82; or to put an equitable owner of a ship into possession,
Kynoch v. The Propeller S.C. Ives,
Newb.Ad. 205, 211. In all such cases, as in the case of specific performance, the relief must be sought in a court of equity.
See United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co.,
222 F. 1006;
Aktieselskabet, Etc. v. Rederiaktiebolaget, etc., Atlanten,
232 F. 403, 405;
The Eros,
241 F. 186, 191.
See The Atlanten,
252 U. S. 313
252 U. S. 315
United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co.,
Aktieselskabet Korn-Og Foderstof Kompagniet v. Rederiaktiebolaget Atlanten,
250 F. 935;
Atlantic Fruit Co. v. Red Cross Line,
276 F. 319.
Parties to such agreements contract with reference to the maritime law; consequent rights and liabilities depend upon its rules and are the same in all courts, admiralty or state. This general doctrine, definitely stated in
, has been reaffirmed and applied again and again.
Clyde S.S. Co. v. Walker,
248 U. 308;
Industrial Comm'n v. Nordenholt Co.,
Great Lakes Co. v. Kierejewski,
no more should it be possible under state practice. If
Union Fish Co. v. Erickson
had been before a state tribunal, the applicable rule would have been the same, and would have required enforcement of the contract notwithstanding the local statute. Obligations under maritime contracts do not vary with the tribunal.
Fifty years ago, this Court pointed out the essential relationship between rights and remedies.
4 Wall. 535,
71 U. S. 552
not recognize. Furthermore, common law remedy is the thing excepted from the exclusive jurisdiction, not a remedy wholly unknown to that law.
71 U. S. 430
-431, distinctly announced this construction:
"The case before us is not within the saving clause of the ninth section. That clause only saves to suitors 'the right of a common law remedy, where the common law is competent to give it.' It is not a remedy in the common law courts which is saved, but a common law remedy. A proceeding
as used in the admiralty courts, is not a remedy afforded by the common law; it is a proceeding under the civil law. When used in the common law courts, it is given by statute."
The same view is approved by
167 U. S. 616
-617, and
177 U. S. 648
The latter cause "was clearly one
to enforce a common law remedy." The opinion carefully points out that the state court enforced such a remedy and, further (p.
177 U. S. 640
), that not until 1866,
was the exclusive character of admiralty jurisdiction brought to this Court's attention. Earlier opinions must be read accordingly, with
and the uniformity of maritime rules in mind.
Rounds v. Cloverport Foundry & Machine Co.,
237 U. S. 308
Knapp, Stout & Co. v. McCaffrey.
Even where permitted by local law, state courts cannot entertain proceedings
for the reason stated by the
"A proceeding
) declares:
This negatives the suggestion that the remedy of the saving clause includes any means other than proceedings
which may be provided for the enforcement of rights or to redress injuries.
, clearly affirms that the thing saved to suitors is the right of a common law remedy:
such proceedings as are and such as are not invasions of the exclusive admiralty jurisdiction is this: if the cause of action be one cognizable in admiralty, and the suit be
against the thing itself, though a monition be also issued to the owner, the proceeding is essentially one in admiralty. If, upon the other hand, the cause of action be not one of which a court of admiralty has jurisdiction, or if the suit be
against an individual defendant, with an auxiliary attachment against a particular thing or against the property of the defendant in general, it is essentially a proceeding according to the course of the common law, and within the saving clause of the statute (sec. 563) of a common law remedy. The suit in this case being one in equity to enforce a common law remedy, the state courts were correct in assuming jurisdiction."
I can find no authority for the broad claim that the "right of a common law remedy" extends to any and all means other than proceedings
which may be employed to enforce rights or redress injuries, including remedies
as well as proceedings in court, those conferred by statute as well as those existing at common law. Neither
Knapp, Stout & Co. v. McCaffrey
supports it. It conflicts with
and is clearly opposed by the reason advanced in
for excluding proceedings
from state courts.
The court below has held [
] that the New York Arbitration Law, c. 275, Laws N.Y.1920, [
] provides "a statutory
legal remedy of a character unknown to the common law . . . declares a new public policy and abrogates an ancient rule." This statutory remedy is not of the common law, nor were the proceedings under review instituted to enforce such a remedy, as was
See Southern Pacific Co. v. Jensen.
230 N.Y. 261, 269.