Source: http://supreme.nolo.com/us/264/109/case.html
Timestamp: 2019-09-22 03:40:40
Document Index: 730732547

Matched Legal Cases: ['§ 2', '§ 256', '§ 670', '§ 9', '§ 24', 'art, 253']

RED CROSS LINE V. ATLANTIC FRUIT CO., 264 U. S. 109 - Volume 264 - 1924 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 264 > RED CROSS LINE V. ATLANTIC FRUIT CO., 264 U. S. 109 (1924) > Full Text
Certiorari to a judgment of the Supreme Court of New York entered on a judgment of the New York Court of Appeals reversing a judgment of the Appellate Division of the Supreme Court which had affirmed an order of the Supreme Court, in New York County, by which the present respondent was directed to proceed to arbitration under its contract contained in a charter party, executed in New York, whereby a vessel was chartered to the petitioner by the respondent
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,
Before instituting this proceeding, the Red Cross Line had duly appointed its arbitrator, but the Atlantic Fruit Company had refused to appoint the one to be named by it. The court ordered the latter company to proceed to arbitration as provided in the contract, and to appoint its arbitrator by a day fixed. This order was affirmed by the Appellate Division without opinion. Its judgment was reversed by the Court of Appeals, which stated that the controversy between the parties is one of admiralty; that, under Article III, § 2, of the federal Constitution, and § 256, cl. 3, of the Judicial Code,
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. Quong Ham Wah Co. v. Industrial Accident Commission, 255 U. S. 445; Ward & Gow v. Krinsky, 259 U. S. 503, 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, 259 U. S. 263. We proceed therefore to the consideration of the constitutional question.
The federal courts, like those of the states and of England, have, both in equity and at law, denied, in large measure, the aid of their processes to those seeking to enforce
executory agreements to arbitrate disputes. They have declined to compel specific performance, Tobey v. County of Bristol, 3 Story, 800, 819-826; [Footnote 1] 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; Martinsburg & Potomac R. Co. v. March, 114 U. S. 549. 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. Karthaus v. Ferrer, 1 Pet. 222; Burchell v. Marsh, 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
In admiralty, also, agreements to submit controversies to arbitration are valid. Reference of maritime controversies to arbitration has long been common practice. [Footnote 3] Houseman v. Schooner North Carolina, 15 Pet. 40, 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. [Footnote 4] An executory agreement may be made a rule of court. United States v. Farragut, 22 Wall. 406, 89 U. S. 419; Kleine v. Catara, 2 Gall, 61.
By reason of the saving clause, state courts have jurisdiction in personam, 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; Leon v. Galceran, 11 Wall. 185; Schoonmaker v. Gilmore, 102 U. S. 118; Chappell v. Bradshaw, 128 U. S. 132; De Lovio v. Boit, 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
Page 264 U. S. 124
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 in pais, 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., 237 U. S. 303. A state may not provide a remedy in rem for any cause of action within the admiralty jurisdiction. The Hine v. Trevor, 4 Wall. 555; The Glide, 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 Southern Pacific Co. v. Jensen, 244 U. S. 205, Clyde Steamship Co. v. Walker, 244 U. S. 255, Peters v. Veasey, 251 U. S. 121, and Knickerbocker Ice Co. v. Stewart, 253 U. S. 149, 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. Western Fuel Co. v. Garcia, 257 U. S. 233; Great Lakes Dredge & Dock Co. v. Kierejewski, 261 U. S. 479. See also Steamboat Co. v. Chase, 16 Wall. 522; Sherlock v. Alling, 93 U. S. 99, 93 U. S. 104; The Hamilton, 207 U. S. 398; La Bourgogne, 210 U. S. 95, 210 U. S. 138. 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, 257 U. S. 469; Industrial Commission v. Nordenholt Co., 259 U. S. 263. No state statute was involved in Chelentis v. Luckenbach, 247 U. S. 372. 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.
See also Thornton v. Carson, 7 Cranch 5961; Carnochan v. Christie, 11 Wheat. 446; 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. See Russell on Arbitrators (5th ed.) 52.
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.
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., 222 F. 1006; Aktieselskabet Korn-Og Foderstof Kompagniet v. Rederiaktiebolaget Atlanten, 250 F. 935; Atlantic Fruit Co. v. Red Cross Line, 276 F. 319.
But it is said under the local law a state court may enforce arbitration, and thus effectuate the provision, although unenforceable in admiralty, since the statute relates to the remedy and not to substantive rights. In Union Fish Co. v. Erickson, an admiralty cause, we refused to give effect to the state statute of frauds, holding that the parties had contracted with reference to maritime law, not the local enactment. Here also, the effort is to modify an agreement made with reference to the general rules of maritime law by applying the local law. Certainly this could not be done in an admiralty court;
Fifty years ago, this Court pointed out the essential relationship between rights and remedies. Von Hoffman v. City of Quincy, 4 Wall. 535, 71 U. S. 552.
The remedy saved must relate to some right or liability given or imposed by maritime law -- certainly not one which that law does
not recognize. Furthermore, common law remedy is the thing excepted from the exclusive jurisdiction, not a remedy wholly unknown to that law. The Moses Taylor, 4 Wall. 411, 71 U. S. 430-431, distinctly announced this construction:
The same view is approved by The Hine v. Trevor, 4 Wall. 555, 71 U. S. 571; The Glide, 167 U. S. 606, 167 U. S. 616-617, and Knapp, Stout & Co. v. McCaffrey, 177 U. S. 638, 177 U. S. 644, 177 U. S. 648.
The latter cause "was clearly one in personam 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, The Moses Taylor, was the exclusive character of admiralty jurisdiction brought to this Court's attention. Earlier opinions must be read accordingly, with Southern Pacific Co. v. Jensen and the uniformity of maritime rules in mind. Rounds v. Cloverport Foundry & Machine Co., 237 U. S. 303, 237 U. S. 308, follows Knapp, Stout & Co. v. McCaffrey.
The court below has held [Footnote 2/1] that the New York Arbitration Law, c. 275, Laws N.Y.1920, [Footnote 2/2] provides "a statutory
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