Court Opinion

ID: 8870071
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:23:22.080377+00
Date Added: 2024-06-11T17:06:08.686479
License: Public Domain

FRIENDLY, Circuit Judge
(dissenting).
I am persuaded that under the admiralty precedents Greenwich asserted a cause of action sufficiently ripe to meet even the demanding interpretation Judge Wyatt gave to § 8 of the Federal Arbitration Act. More important, I believe that he interpreted § 8 too narrowly — clearly an issue of law and not a matter of discretion — and that a libel is good under § 8 if it asserts a valid claim for arbitration of a maritime controversy, as all of us agree appellant’s did.
Section 8 of the Arbitration Act provides :
“If the basis of jurisdiction be a cause of action otherwise jus-ticiable in admiralty, then, notwithstanding anything herein to the contrary, the party claiming to be aggrieved may begin his proceeding hereunder by libel and seizure of the vessel or other property of the other party according to the usual course of admiralty proceedings, and the court shall then have jurisdiction to direct the parties to proceed with the arbitration and shall retain jurisdiction to enter its decree upon the award.”
The district judge and my brothers interpret § 8 as merely protecting a li-belant with a traditional maritime cause of action from having to elect between suing in admiralty, with its remedy of seizure, in disregard of the arbitration agreement, and pursuing his contractual right to arbitrate. To me that is not its full thrust. Section 8 must be construed along with § 4, which provides in part:
“A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement.”
I read the phrase “If the basis of jurisdiction be a cause of action otherwise justiciable in admiralty” in § 8 as simply a cross-reference to the provision just quoted from § 4. Section 8 thus says that when the maritime nature of the controversy would give jurisdiction in admiralty apart from the arbitration clause, the person seeking arbitration may begin his proceeding to compel arbitration by libel and seizure, rather than by the petition otherwise prescribed in § 4, although his libel, like a complaint based on some other jurisdictional ground, will be dismissed for failure to state a claim on which relief can be granted if he does not make out a case for arbitration. Cf. Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939, 13 A.L.R.2d 383 (1946). The requisite showing of jurisdiction is made by alleging the kirid of claim that the district court would have had power to entertain, here the breach of a warranty in the charter of the Alexandra — not necessarily one on which a court, as distinguished from arbitrators, would grant relief, an issue of only academic interest when an arbitration clause is invoked. Plainly, when the basis of district court jurisdiction is diverse citizenship, the allegation of an arbitrable claim would be enough to make available in a civil action the preliminary remedies of garnishment or attachment now permitted under certain circumstances by F.R.Civ. P. 4(e); the same ought be true for seizure when the basis is admiralty.
The narrower reading assumes that although Congress meant that the showing of a maritime contract and a dispute arbitrable thereunder sufficed to empower, federal courts to compel arbitration under § 4, to enter judgment under § 9 *910if the contract so provided, and to review the award under §§ 10 and 11, it boggled at extending the provisional remedy under § 8 quite so far, and left an uncertain penumbral area in which a party may have all the other benefits of the Arbitration Act but be denied those of § 8. While the words of § 8, read in isolation, are susceptible of such a construction, they surely do not compel it, as opposed to the view that § 8 was intended to be coextensive with the admiralty side of § 4. To read § 8 as my brothers do means that a court must decide two preliminary questions rather than one; it means also that unless a libel filed under § 8 falls within the smaller circle thought to be there delimited, a libelant must start all over again with a petition under § 4. I see no reason for supposing that Congress contemplated such exaggerated nicety; its purpose rather was to give the benefit of admiralty process to any party who had agreed to subject a maritime claim to the new remedy of arbitration which Congress meant to encourage and proved himself entitled to that remedy.
This broader construction accords with what the Supreme Court has indicated in its decisions dealing with § 8. “By the express terms of section 8, the libel and seizure are authorized as an initial step in a proceeding to enforce the agreement for arbitration * * Marine Transit Corp. v. Dreyfus, 284 U.S. 263, 275, 52 S.Ct. 166, 169, 76 L.Ed. 282 (1932). Congress “may have thought that in many cases in admiralty if the aggrieved party could not seize the ship of his opponent, an arbitral award would be wholly unenforceable as the vessel might seldom or never again be within the jurisdiction of our courts.” The Anaconda v. American Sugar Ref. Co., 322 U.S. 42, 46, 64 S.Ct. 863, 865, 88 L.Ed. 1117 (1944). To me these opinions ’ say just what I have tried to say here — that the maritime nature of the controversy permits the filing of a libel with the attendant remedies, although the libel will be dismissed and a seizure vacated if the claim for Arbitration is not made out. Thus since the district court held, and all of us agree, that the present charter controversy does warrant arbitration, a sufficient reason is provided for retaining the seizure in force.
Indeed, even if the test for utilizing § 8 were the more severe one which my brothers suggest, this claim would pass it. No one denies that if the Ministry had libeled Greenwich for the cargo damage, Greenwich could have brought Fidelity into the case and had the benefit of § 8, even though Greenwich would not be entitled to a judgment against Fidelity unless the Ministry prevailed. This would be true even if the Ministry had also sued Fidelity for cargo damage. That, by withholding the freight, the Ministry put the burden on Greenwich to initiate a suit which would inevitably include the issue of cargo damage, should not deprive Greenwich of the right to bring a simultaneous suit for indemnity that it would otherwise have had. The controversy was anything but “speculative and hypothetical.” Not merely had the Ministry given notice of a claim against Greenwich, but Greenwich was already out of pocket for some $93,000 of freight not paid by the Ministry because of the alleged cargo damage, for which Greenwich would surely have to sue Fidelity if the Ministry prevailed; indeed, the decision on Greenwich’s claim for the freight would almost necessarily settle the liability for the entire cargo damage. Moran Towing & Transp. Co. v. United States, 56 F.Supp. 104 (S.D. N.Y.1944), is very much in point to the effect that the admiralty will not deprive a party of a remedy because of a technical claim of prematurity. Furthermore the standard read into § 8 by the majority may well be met by considering the circumstances as warranting declaratory relief under Admiralty Rule 59. There is no need for a libel seeking arbitration to make express mention of this since, on the majority’s view, the test is whether relief could be given in a traditional admiralty proceeding. No Admiralty Rule excludes seizure in -a case where jurisdiction is so founded, *911although in determining the amount of a bond under Rule 12, the court would naturally consider what damages might ultimately be added at the foot of the decree. All this has now been given point by the arbitral award; it is small comfort for appellant to be told it can now seize the Alexandra if Fidelity should be so kind as to make her available.
I would reverse the dismissal of Greenwich’s libel.