Court Opinion

ID: 8776044
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:01:35.621269+00
Date Added: 2024-06-11T17:02:33.491683
License: Public Domain

HOUGH, District Judge
(after stating the facts as above). The first question suggested is this: During all the times covered by the pleadings herein were two contracts or only one contract made between the parties to this litigation? A complete and final definition of the word “contract” will perhaps never be reached, but I know of no better description of a business or commercial compact than that approved by Washington, J., in Dartmouth College v. Woodward, 4 Wheat., at page 656 (4 L. Ed. 629):
“A transaction between two or more persons in which each party comes under an obligation to the other and each reciprocally acquires a right to whatever is promised by the other.”
Applying this to the uncontradicted evidence, when and how did libelant and respondent obtain the reciprocal rights against each other averred in the libel and admitted by the answer? Clearly on or about May 1, 1908, when Mr. Groves, Jr., and Mr. Roome had their conversation. Until the minds of those two men met whatever other contract or contracts may have existed! between the lighterage company and the transportation line, the contract in suit did not exist; and the certain test of this is that no action could have been brought upon it. It does not advance matters to speak of this conversation as a modification of an existing contract. A contract once made cannot be modified except by a new meeting of minds, and, when such mind meeting occurs, a new contract springs into existence.
Holding, therefore, that the contract sued on in the libel had no existence before May, 1908, by what right can the respondent sustain either by.way of set-off or cross-libel the matters shown in its pleadings ?1
Undoubtedly the rule of the common law was hard, and a statute was required to correct an inequity that became more apparent as commercial transactions expanded, “but courts of equity from a very early day were accustomed lo grant relief in that regard independently as well as in aid of statutes upon the subject.” Per Fuller, C. J., Scott v. Armstrong, 146 U. S. 507, 13 Sup. Ct. 150, 36 L. Ed. 1059. The remedy of set-off “has been Very much extended in equity * * * (where) the mutual obligations have grown out of the same transaction; and * * * purely equitable considerations have been held to authorize the setting off of many classes of obligations held by the defendant against a judgment duly recovered against him, in a court of law.” Blount v. Windley, supra.
It is true that a court of admiralty is often spoken of as one of *905equity, but that phrase means no more than that equitable principles are applied to the solution of matters of maritime jurisprudence. It is a perversion of the phrase to argue* from it that, because admiralty seeks for aid in the analogies of equity, a maritime court is therefore entitled to draw within its jurisdiction matters primarily of nonmaritime cognizance. The temptation is often strong to' pursue a controversy between two litigants into all its ramifications, and endeavoi to adjudicate them all in one decree. But in a court of limited jurisdiction (however important) the temptation should! be carefully withstood, and in this matter of set-off the inquiries must always be made: (1) Does the alleged set-off grow out of the same transaction as that which must be proven to support the libel; and, if it does, (2) could the claim be made the subject of an independent action in the admiralty?
The first inquiry has often been pursued, and quite recently in this court in Hastorf v. Degnon-McLean Contracting Co. (D. C.) 128 Fed. 982, and the result reached that ordinary “set-off is not cognizable in admiralty except so far as it relates to the particular transaction which is the subject of the libel and goes to reduce or overcome the original demand.” The particular transaction alleged in this libel is the breach of a contract made in May, 1908, and therefore, without passing upon many interesting questions raised by libelant, I hold that the matters set out in the answer to the original libel are not proper subjects of set-off herein, and cannot therefore be regarded in the original suit.
The second! question above suggested, viz., whether a good set-off in admiralty must always be a good independent maritime cause of action, I do not find it necessary to consider in this case, and no opinion is expressed thereon. The cross-libel is, as the record herein shows, filed specifically in pursuance of rule 53 of the Supreme Court in admiralty. That rule declares the practice whenever a cross-libel is filed! “arising out of the same cause of action for which the original libel was filed,” and has been construed to mean that no cross-libel can be filed unless it does arise out of “the same cause of action as that propounded in the original pleading.” The Theresa Wolf (D. C.) 4 Fed. 152. And the same result has been reached in this court in George D. Emery Co. v. Tweedie Trading Co. (D. C.) 143 Fed. 144.
Under the cases cited, therefore, this cross-libel cannot be maintained because it does not arise out of the same cause of action as that on which the original libel is based. The further question whether the cross-libel sets forth a cause of action in admiralty at all need not therefore be considered, although I assume that even if it be possible to use equitable, but nonmaritime, demands by way of set-off, admiralty can grant no affirmative relief on any libel, original or cross, which does not reveal a cause of action on a maritime contract or for a maritime tort. Whether a recovery based upon alleged fraud in the procurement and enforcement of a completed contract can ever be the subject of a libel in admiralty, even though the completed contract be maritime, is an interesting question, but for the reasons above given not necessary for the determination of this case, and therefore as to it, no opinion is expressed.
Decree for libelant in original libel; cross-libel dismissed. Costs in both cases.

 The word “set-off” is not used in respondent’s pleadings, but the “counterclaim” (for which no warrant is found in admiralty practice) has been regarded by all parties as an attempted set-off. “Set-off” (properly so called) did not exist at common law, but is founded on St. 2 George XI, e. 24, § 4, which in substance and effect enacted that, where there were mutual debts between the plaintiff and the defendant, one debt may be set against the other, and such matter may be given in evidence under the general issue or be" pleaded in bar, so that notice shall be given of the sum or debt intended to be offered in evidence.” United States v. Eckford, 6 Wall. 488, 18 L. Ed. 920. And see, also, as to the origin of “set-off,” Hall v. United States, 91 U. S. 562, 23 L. Ed. 446; Blount v. Windley, 95 U. S. 176, 24 L. Ed. 424; Carr v. Hamilton, 129 U. S. 255, 9 Sup. Ct. 295, 32 L. Ed. 669.