Court Opinion

ID: 6921382
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:03:01.101027+00
Date Added: 2024-06-11T16:06:48.580794
License: Public Domain

HAND, Circuit Judge.
These are appeals from four decrees of Ca£hin, J., in suits in admiralty, each refusing to reopen decrees taken by default in favor of the libellants in four suits to recover seamen’s wages. There were six libellants in each of two of the suits and one libellant in each of the other two. In all the suits the claims were for wages, statutory penalties for delay in payment of wages, unlawful discharge or other claims for the payment of specified sum of money, not necessary to state. In a libel filed by Bardis alone a claim was joined for personal injuries due to the respondent’s neglect to give him medical treatment. The libellants had all been members of the crew of respondent’s ship, “Santa Despo,” registered in Panama at the time when the claims arose. The libels were filed and the respondent served in December 1955 and October 1956, but the respondent did not answer in any of the suits and the libellants took final decrees by default on April 30,1959 and June 17,1959. On May 20, 1960, the respondent moved in each of the suits to reopen the defaults and to be allowed to answer. Judge Cashin denied the motions, but modified the decree in the Bardis suit by requiring the respondent as a condition of contesting the amount of the damages “to file a bond of $5,000 as security for any decree entered upon such inquest.”
Admiralty Rule 28, 28 U.S.C.A., provides that, if the respondent fails to answer the libel on the return day of the process, the court may pronounce him to be “in contumacy and default,” and may then “proceed to hear the cause ex parte”; or it “may set aside the default” and allow the respondent to answer “on such terms as the court may direct.” Rule 39 cuts down to 60 days any motion of the respondent to “rescind the decree in any suit in which, on account of his contumacy and default, the matter of the libel shall have been decreed against him.” These two rules mean that, if the respondent has failed to answer, the court may proceed to dispose of the case without notice, or may allow him to answer; but Rule 39 gives the court discretion to rescind a decree that has pronounced him in default within a period *711of sixty days after the default decree has been entered. Thus, applied to the suits at bar nothing could be done after sixty days to change the decrees entered on default, which had unconditionally declared that the libellants should recover the amounts fixed in the decrees themselves. That part of the decree in the Bardis suit that refused to rescind the imposition of liability for neglect to give Bardis medical care was subject to the same rule; as was the reservation of any liquidation of the amount of damages. The condition that the respondent must file a bond as security was within the court’s discretion, especially in the light of the allegations that the respondent had been removing its assets from the district.
It is true that Judge Cashin did not rely upon Rule 39 as an answer to the respondent’s motion, but decided it on what he conceived to be the inadequacy of the defense presented, particularly the allegations that the libellants had given releases of any claim at the time they were discharged from the ship. Nevertheless, Rule 39 did apply, for there is nothing in the words quoted that confines it to final decrees. Moreover, we cannot see why with the exception of the Bardis decree the decrees were not final. As we have said, they were for the recovery of a fixed sum of money, and constituted the final action of the court in disposal of the libels. Rule 39 was as complete a bar to any relief under Rule 28 as though the Rule had been a statute; it was an answer to the motion regardless of the merits of the defenses that might have been available. So far as Afghan Motor Co. v. The M. V. Silverash, D.C., 46 F.Supp. 306, decides to the contrary we cannot concur.
Six of the libellants in one of the suits at bar claim the right to collect their decree in that suit from several other corporations by a supplementary proceeding under § 794 of the New York Civil Practice Act, which Rule 20 of the Admiralty Rules makes “available” to suits in admiralty. They allege that the respondent, the San George Company, had assets formerly in the possession of another corporation, which we shall call “Cargo,” which “Cargo” paid to other shipowning corporations (the “third party ships”) in fraud of the libellants’ claims in suit. “Cargo” and these shipowners, they assert, are liable for money paid in fraud of themselves, as judgment creditors of the San George Company. They demanded judgment upon their claims which Judge Palmieri granted. The situation is complicated and the motion was decided upon depositions and affidavits. The facts, so far as we can understand them, were as follows. The respondent — The San George Company - — owned two ships, not only the “Santa Despo,” but the “Santa Despoina,” the management of all of whose local transactions was entrusted to a corporation, by the name of “Mar-Trade.” “Mar-Trade” acted as agent, not only of the ships, “Santa Despo” and “Santa Despoina,” but of other ships collectively known as the “Santa Group,” and owned by corporations of which the San George’s shareholders were also shareholders. Each month “Mar-Trade” sent a statement to each corporation showing a detailed account of receipts and disbursements. On December 31, 1958, the agency of “Mar-Trade” was cancelled, but the same powers were granted to “Cargo.” Thereafter “Cargo” accounted for the ships “Santa Despo” and “Santa Despoina” in the same way as “Mar-Trade” had done. Already in 1955 the San George Company had sold the “Santa Despo,” and late in 1958 or early in 1959, it sold the “Santa Despoina” for more than $800,-000, and the amount of both sales appeared as credits to the San George Company in “Cargo’s” account for the month of June 1959. However, on July 31, 1959, in this account the credit for the “Santa Despoina” had disappeared, a debit of over $12,000 had been substituted, and the credit for the “Santa Despo” had become only $405. The only explanation offered for these changes is that they were made by “auditors” appointed by the owners of seven or more of the ships that “Cargo” was managing *712as the “Santa Group,” and that they showed the true obligations of the Santa Group inter se.
The question on which the validity of the summary judgment depends is as follows. All the ships in the “Santa Group” were owned by separate corporations of which, however, two Greek citizens were also shareholders, and all local transactions that involved these ships were left for decision to an agent in New York who was a relative of these shareholders. This agent acted as ship’s husband for all Santa ships through “Cargo,” and allocated the debits and credits apparently at the direction of this agent, but, as we may assume, under the supervision of the two Greek shareholders.
On June 30, 1959 “Cargo” remitted to the respondent, San George Company, one of the “Santa Ships,” an account showing a credit of over a million dollars for the “Santa Despoina” but in the account for July 31, 1959, this item was replaced by a debit of more than $12,-000. This, as the libellants maintain, was enough to justify the conclusion that “Cargo” had diverted to the other members of the “Santa Group” more than enough cash to pay the judgment of the libellants and to justify a summary judgment, not only against “Cargo,” but against these corporations. “Cargo” denies that it received any part of the proceeds of the “Santa Despoina,” except as an agent for the San George Company, and alleges that all that it did receive it paid to the “third party” corporations under authority of all the Santa Group. Accordingly, “Cargo” claims to be liable only to the Santa Group and to them only for a balance of $15,000 as shown by their books. “Cargo” does not attempt to allocate this sum among the group.
Out of the tangle of rights and obligations in which the two Greek shareholders involved their dealings it is extremely difficult to make any distribution of these payments. However, it appears to my brothers that on this record the libellants proved -that the proceeds from the sale of the “Despoina” were deflected from the creditors of the San George Company without consideration and in fraud of the libellants, judgment creditors of that company. It seems to me that the relations between the corporations owning the “Santa Ships” were too complicated to decide summarily and I think that the decree in the summary proceeding should be reversed and the issues should be remanded to the district court for trial as that court may decide.
The judgments affirming the libellants’ judgments against the San George Company are unanimously affirmed. The order in the summary proceeding directing the “third party ship-owning corporations” to pay the decrees is affirmed by a majority vote. The order directing “Cargo” to pay the libel7 lants is reversed. The order requiring the respondent to post a bond is affirmed. All the orders involved, even if any be interlocutory, are appealable under § 1292(3), Title 28.