Court Opinion

ID: 9446203
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:49:06.395804+00
Date Added: 2024-06-11T17:30:33.911175
License: Public Domain

MEDINA, Circuit Judge
(dissenting).
I dissent and would reverse the decree of the District Court and give the United States an opportunity to prove its maritime claim for charter hire, subject to such denials and defenses as may be addressed to the merits of the claim alleged in the libel.
What is at bottom a simple case has been complicated by the forum shopping and other procedural maneuvers of the parties.
We start with a judgment of the Court of Claims for $54,097.16 in favor of Eastport, pursuant to the stipulation of June 8, 1954, which reduced East-port's claim for $100,000 to the amount for which judgment was rendered, as the cost of repairs to the SS. Opie Read which Eastport had purchased pursuant to the provisions of the Merchant Ship Sales Act of 1946 (60 Stat. 41, 50 U.S.C.A.Appendix, §§ 1735-1746), under a contract of sale by the terms of which the purchase price was to be reduced by the amount of the cost of the repairs necessary to enable the vessel to obtain valid certificates of classification and inspection. When this judgment was presented for payment the United States had an unrelated claim against Eastport for $31,102.71 for additional charter hire, which Eastport disputed and refused to pay. Accordingly, the Comptroller General followed the procedure outlined in 31 U.S.C.A. § 227 by withholding payment of the judgment to the extent of the disputed claim, and, after Eastport’s refusal to consent to the withholding, the balance due on Eastport’s judgment, less $100, the estimated cost of litigating the disputed claim, was paid, in the amount of $22,899.45. This payment was made on September 29, 1954, and the present action, to recover the disputed charter hire, was instituted by filing the libel against Eastport, to recover $31,102.71, in the United States District Court for the Southern District of New York on November 9, 1954. This was in strict accordance with the mandate of 31 U.S. C.A. § 227, that “it shall be the duty of the Comptroller General,” after the preliminary steps above outlined, “to cause legal proceedings to be immediately commenced.” Indeed, if, after withholding, he failed to take such action, mandamus was available to compel him to do so. See Hines v. United States, 70 App.D.C. 206, 105 F.2d 85; National Bulk Carriers v. Warren, D.C.D.C., 82 F.Supp. 511.
In the meantime, on October 7, 1954, and with the obvious purpose and intent of forcing the United States to litigate in the Court of Claims its maritime claim for charter hire, Eastport sued the United States in the Court of Claims on its 1954 judgment.
The proceedings in the Court of Claims action, prior to the dismissal of the libel herein by Judge Murphy on July 17,1956, while interesting as an example of the ingenuity with which those skilled in the law can manipulate procedural devices originally intended to further and simplify the administration of justice, are quite irrelevant to the disposition of this appeal. Nor did Judge Murphy base his dismissal of the libel on any of the rulings or upon the judgment entered in East-port’s action in the Court of Claims to recover the amount of its prior judgment. Suffice it to say that the United States paid the balance due on the judgment sued upon and later confessed judgment *807for the amount of the interest claimed by Eastport.
The dismissal below was based on two grounds: (1) that when the United States paid the balance of $31,102.71 due on Eastport’s judgment, this was a voluntary payment, “made with full knowledge of all the facts without necessity or urgency,” and could not “be recovered back” [142 F.Supp. 376] in this action; and (2) that the claim of the United States for additional charter hire was a compulsory counterclaim under Rule 17 (a) of the Court of Claims, and, as no such counterclaim had been pleaded prior to the final disposition of the case by the Court of Claims, the District Court was barred from giving relief as prayed in the libel. I think each of these two rulings was erroneous.
The short answer to the treatment of the payment of the $31,102.71 as a voluntary and non-recoverable payment is, that it was a payment by the United States of the balance due on a judgment entered against the United States. East-port’s claim relative to the repairs to the SS. Opie Read had been reduced to judgment, the United States having followed the procedure outlined in 31 U.S.C.A. § 227, decided the withholding of the $31,102.71 was no longer necessary for the protection of its rights, and this amount was paid on April 28, 1955. Obviously this payment was in liquidation of the judgment previously obtained against the United States, and the judgment thus paid was based upon a claim by Eastport for a sum equal to the cost of the repairs made to the SS. Opie Read. I do not see how the payment by a judgment debtor of a judgment against him can be considered a voluntary payment in liquidation of an entirely unrelated claim which that debtor had against the judgment creditor.
The line of reasoning proffered by Eastport, which led to the holding that there was a voluntary and non-recoverable payment of the $31,102.71, is interesting as it cuts across all four of the cases argued together on November 6, 1957. Grace Line, Inc., v. United States of America, 2 Cir., 255 F.2d 810; Isthmian Steamship Company v. United States of America, 2 Cir., 255 F.2d 816; United States of America v. Eastport Steamship Corporation, 2 Cir., 255 F.2d 795; and Isbrandtsen Company, Inc., v. United States of America, 2 Cir., 255 F.2d 817. The argument here was that Eastport’s action on its judgment was in effect an action to recover money wrongfully withheld. Hence, it was said, the payment of the $31,102.71 was not a payment of the balance due on the judgment, which was the subject of the suit in the Court of Claims, but rather a voluntary admission that the $31,102.71 had been wrongfully withheld, thus eliminating the claim of the United States for additional charter hire. In other words, despite the insistence of government counsel that the United States had a valid maritime claim for additional charter hire, which had already been set forth in the pending libel herein, and the further insistence that the $31,102.71 was paid in liquidation of the judgment sued on in the Court of Claims, this payment was construed as in some way constituting an estoppel against the prosecution of the claim for additional charter hire, and the semantics used to arrive at this curious result was in terms of “voluntary payment.” Thus white was made to appear black, and Eastport’s maneuver of bringing its action on the judgment in the Court of Claims succeeded, at least temporarily. I do not think we should give the stamp of our approval either to this result or to the reasoning which led to it.
But it is only fair to say that part of this confusion was caused by the position taken by the government relative to withholdings generally. We have already dissipated some of this confusion by our decision in Grace Line, Inc., v. United States of America, handed down herewith, to the effect that withholdings by the Comptroller General, pursuant to 31 U.S.C.A. § 71, do not constitute a payment and discharge of the indebtedness on which such withholdings , are based, and our decision in Isbrandtsen Company, *808Inc., v. United States of America, also filed herewith, to the effect that a libel which attempted to assert a claim for charter hire due to Isbrandtsen by the United States was not to be construed as an action to recover amounts withheld by the Comptroller General by reason of claims wholly unrelated to the claim asserted in the libel. Such fictions as the one applied by the District Court in Isbrandtsen and the one applied in this case by the District Court serve no useful purpose and they inevitably have repercussions in seemingly similar situations.
What I would have us do in this case is precisely what we have done in Grace Line and Isbrandtsen, that is to say, take the claim asserted in each libel or complaint as stating the claim therein set forth, subject to such defenses as may exist, such as the time bar of limitations, and also subject to such set-offs or counterclaims as may be properly pleaded in accordance with the applicable rules. Here Eastport’s suit in the Court of Claims was an action on its prior judgment; and the payment was in liquidation of that judgment. This is an end of the matter; the claim of the United States for additional charter hire is not in any manner affected by the payment thus made. We are not now concerned with the question whether or not the Court of Claims had jurisdiction of such an action, based on a judgment rendered in the Court of Claims, Eastport Steamship Company v. United States, 130 F. Supp. 333, 131 Ct.Cl. 210; nor are we concerned with the propriety of the action of the Comptroller General, who first withheld and later paid the balance due on the judgment sued upon. To characterize this action on the judgment as one to recover moneys withheld by the ¡United States is a mere play on words. Any action for a sum of money alleged to .be due and owing by the United States may be called an action to recover moneys withheld.
I turn now to the ruling below to the effect that, the claim for additional charter hire, asserted by the United States in its libel herein, was a compulsory counterclaim, required by Rule 17(a) of the Court of Claims to be asserted in East-port’s action on the judgment, this being the second ground on which the libel was dismissed.
Rule 17 (a) of the Court of Claims provides :
“Compulsory Counterclaims. The answer shall state as a counterclaim any claim which at the time of serving the answer the defendant has against any plaintiff, if it arises out of the transaction or occurrence that is the subject matter of the petition and does not require for its adjudication the presence of third parties of whom the Court cannot acquire jurisdiction, except that such a claim need not be so stated if at the time the action was commenced the claim was the subject of another pending action, and except that in any case, where the hearing in the first instance is limited to the issues of fact and law relating to the right of plaintiff to recover, defendant may plead such a counterclaim within 60 days after the Court shall have rendered judgment determining that plaintiff has a right to recover.”
The sole question is whether the claim of the United States for additional charter hire “arises out of the transaction or occurrence that is the subject matter” of the complaint filed by Eastport in the Court of Claims in its action on the prior judgment.
My position is that this complaint clearly stated a claim based on the prior judgment, which was the “transaction” or “occurrence” that was the “subject matter” of the complaint; and that consequently the government claim for additional charter hire was not a compulsory counterclaim. Nor did the judgment cease to be the “transaction” or “occurrence” that was the “subject matter” of the complaint because Eastport chose to include additional allegations of - the ■withholding made by the Comptroller General pursuant to the provisions of 31 U.S.C.A. § 227.
*809It must be borne in mind that the decision on this point turns not on the scope of “transaction” or “occurrence” as used in the compulsory counterclaim rule, and as broadly construed in such cases as Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 46 S.Ct. 367, 70 L.Ed. 750; United Artists Corp. v. Masterpiece Productions, 2 Cir., 221 F.2d 213, 216; and Lesnik v. Public Industrials Corp., 2 Cir., 144 F.2d 968, 975, but rather on the determination of the “subject matter” of Eastport’s 1954 suit in the Court of Claims.
The Court of Claims assumed jurisdiction over Eastport’s 1954 suit because it was “founded upon (an) Act of Congress” within the moaning of 28 U.S.C. § 1491 (2); Benedict v. United States, 66 Ct.Cl. 437, 443. The act of Congress relied on was 68 Slat. 827-828, which appropriated money for the payment of Eastport’s prior judgment against the United States, and, had there been no such appropriation act enacted by Congress, the Court of Claims would have lacked jurisdiction over the suit on the judgment alone. Hetfield v. United States, 78 Ct.Cl. 419. Thus, the basis or subject matter of Eastport’s suit was its prior judgment for the payment of which Congress had appropriated funds.
The government’s libel in the court below was based on a charter party agreed upon by Eastport and the United States in 1947. That this libel for additional charter hire did not arise from the same “transaction” or “occurrence” which was the “subject matter” of East-port’s suit is clear. Nor, in addition, was the government’s libel in any way related to the claim on which Eastport recovered its prior judgment in the Court of Claims.
Moreover, the claim for interest was merely for part of what is alleged to be due on the judgment because of the provisions of 31 U.S.C.A. § 227 as interpreted by Eastport. Otherwise, the general rule that interest is not recoverable against the United States would be applicable.
Were this not so any private party, who had recovered a judgment, however small, against the United States could force the government to litigate in the Court of Claims any and all claims the government might have against that party, as 28 U.S.C. § 1503 confers on the Court of Claims jurisdiction over “any set-off or demand by the United States against any plaintiff in such court.”
If the reasoning of the District Court below is to be upheld, the United States adopts the procedure outlined in 31 U.S.C.A. § 227 at its peril. Once the withholding contemplated by Section 227 is made, the judgment creditor has only to rush into the Court of Claims, before the United States has had an opportunity “to cause legal proceedings to be immediately commenced to enforce” its causé of action, as was done in this case, and this would force the United States to choose between pleading a set-off or counterclaim in the Court of Claims or being forever foreclosed from suing on its claim. Such a result, which, in the not atypical situation now before us, makes every claim of the United States against the private party a compulsory counterclaim, cannot, I think, have been within the Congressional intent in enacting 31 U.S.C.A. § 227 and 28 U.S.C. § 1503. Certainly the anomalous and procedurally unsound result we have here should be avoided in the absence of some compelling statutory mandate.
There remains the question of res judicata, which was not before the District Court, as the proceedings hereinafter referred to, which led to the pro confesso judgment for the unpaid interest at 6% on the prior judgment, were had after July 17, 1956, when Judge Murphy dismissed the libel.
Briefly stated there was a series of motions, amended pleadings and rulings in the Court of Claims. Eastport, even after the United States paid the balance due on the judgment sued upon, resorted to a variety of maneuvers to compel ad*810judication in the Court of Claims of the government claim for additional charter hire, but the United States insisted that its claim was of an exclusively maritime character (Sword Line, Inc., v. United States, 351 U.S. 976, 76 S.Ct. 1047, 100 L.Ed. 1493), and that it was entitled to have that claim, as alleged in its libel herein, adjudicated by the United States District Court for the Southern District of New York. And in its amended answer the United States refused to allege that its prior action in withholding a part of the sum due Eastport on its judgment was justified because of Eastport’s indebtedness for the additional charter hire. Eastport Steamship Corporation v. United States, 140 F.Supp. 773, 775, 135 Ct.Cl. 175. Finally, however, and after the striking of its answer and amended answer, the United States filed a statement with the Court of Claims to the effect that it consented to have its pleadings amended “so as to admit owing the amount for which judgment is confessed,” i.e., for the amount of interest Eastport claimed. On October 19, 1956, the Court of Claims ordered that the answer of the United States be amended “so as to admit liability” for the amount of interest claimed, and awarded East-port a judgment in that amount, which was paid.
Clearly the principle of res judicata is not applicable. Nor is the claim asserted in the libel in this case barred by collateral estoppel. Such an estoppel by judgment prevents subsequent litigation only of those issues that were actually litigated and determined in the earlier action, but has no effect on those questions which might have been but were not previously litigated and determined. United States v. International Building Co., 345 U.S. 502, 73 S.Ct. 807, 97 L.Ed. 1182.
For these reasons I would reverse the decree appealed from, deny the motion to dismiss the libel, based on the exceptions and exceptive allegations, and permit libelant to proceed.