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Agricultural Cooperative Ass'n of Lithuania Lietukis v. Denny

March 27, 1942


Appeal from the District Court of the United States for the District of New Jersey; William F. Smith, Judge.

Author: Maris

Before MARIS, JONES, and GOODRICH, Circuit Judges.

MARIS, Circuit Judge.

Baltic Lloyd*fn1 was organized as a stockholders' association and Lietukis*fn2 as a cooperative association under the laws of the Republic of Lithuania. These associations were juridical persons with the power to sue and be sued. In 1940 Litamcor,*fn3 American agent for the two corporations, purchased the S. S. Denny for Baltic Lloyd and a large quantity of gasoline, lubricating oil and other cargo for Lietukis. The vessel and cargo remained in the United States in the custody of Litamcor. On February 1, 1941 a libel for possession of the S. S. Denny and her cargo and for damages for their detention was filed in the District Court for the District of New Jersey in the names of Baltic Lloyd and Lietukis by one Charles Recht purporting to act as their attorney-in-fact. The marshal of the district executed the moniton and citation by seizing the S. S. Denny and her cargo at Newark, New Jersey and by serving notice upon the respondents, Litamcor and Ole Hanvorsen, the watchman in charge of the vessel. On February 20, 1941 the Consul Genernal of the Republic of Lithuania, under written authority of the Minister of Lithuania to the United States appointed Litamcor trustee of the S. S. Denny and her cargo. On February 24, 1941 Litamcor filed an answer to the libel as claimant. Before the matter came on for trial Charles Recht, purporting to act as attorney-in-fact for the State Steamship Line,*fn4 a corporation of the Soviet Socialist Republic of Latvia obtained leave for that corporation to intervene as libellant.On July 28, 1941 the District Court dismissed the libel and the intervening libel. On October 20, 1941 the libellants filed a notice of appeal with bond for costs on appeal. No supersedeas bond has ever been filed. After the expiration of ten days from the entry of the decree of the District Court dismissing the libel the clerk of the court ordered their release to the claimant. Counsel for the claimant stated at bar that the vessel has since engaged in trade between American and Canadian ports. He likewise stated that the cargo has been sold and that the proceeds are in the possession of the claimant. Consequently when the appeal was taken the court had neither actual nor constructive possession of the res.

The first question to be considered on this appeal is whether the court lost jurisdiction before the appeal was taken. The libellants maintain that an admiralty court which has obtained jurisdiction following a valid arrest and seizure of the res retains that jurisdiction despite the removal of the res and cites The Rio Grande, 23 Wall. 458, 90 U.S. 458, 23 L. Ed. 158 as authority. We take the rule laid down by that case to be that if the removal is accidental, fraudulent or improper, jurisdiction is not lost. In the Rio Grande case the District Court of Alabama dismissed a libel on the ground that the debts set forth therein did not constitute a maritime lien so as to give the court jurisdiction. This was on May 11, 1968. On the same day and immediately after the rendition of the decree of dismissal the court allowed an appeal and an order was made fixing the amount of the bonds to be given on the appeal. On May 12th the vessel was delivered by the marshal to the claimants and was by them carried out to sea. On May 14th and 15th the libellants gave their appeal bonds which were accepted. The statutes in regard to appeals in admiralty from the District Court to the Circuit Court provided that upon sufficient security and service of notice, the appeal should be a supersedeas and stay execution. The Circuit Court reversed and decreed for he libellants. The vessel was at that time in New Orleans. The libellants seized her there, attaching a copy of the record of the Alabama proceeding to the libel. The defense was that at the time the libellants took their appeal from the decree the vessel proceeded against in rem was not in the actual or constructive possession of the District or Circuit Court. As to this argument the Supreme Court said at pages 463, 465 of 23 Wall., 90 U.S. 458, 23 L. Ed. 158:

"But the appeal which was allowed by that court on the 11th of May, operated as a stay of all proceedings upon or under the judgment of dismissal of the libels made on that same day, and but a few minutes before. The appeal was well allowed, the bonds are in compliance with the order of the court so far as it appears, were accepted by the clerk, and were not objected to by the parties. We cannot agree with the argument of the claimant that under such circumstances the Circuit Court in Alabama had no jurisdiction of the appeal, and that its decree was void.

"The appeal stayed all proceedings, and the parties were bound to keep the vessel where it then was, to wit, in the possession of the court. The appeal was taken and allowed before any order of discharge was granted, and the bonds required to make the appeal a stay of proceedings were given within the time required by the statute.

"The removal of the vessel pending an appeal to the Circuit Court was illegal, in violation of the express directions of the statute regulating appeals.

"We do not understand the law to be that an actual and continuous possession of the res is required to sustain the jurisdiction of the court. When the vessel was seized by the order of the court and brought within its control the jurisdiction was complete. A subsequent improper removal cannot defeat such jurisdiction. * * *

"We hold the rule to be that a valid seizure and actual control of the res by the marshal gives jurisdiction of the subject-matter, and that an accidental or fraudulent or improper removal of it from his custody, or a delivery to the party upon security, does not destroy jurisdiction. In the present case the order for restoration was in direct violation of the statute regarding appeals, and did not operate to destroy the jurisdiction of the Circuit Court. That court was authorized to proceed as if no such order had been made."

In the present case the removal was neither accidental, fraudulent nor improper. Rule 28 of the Admiralty Rules of the District Court for the District of New Jersey contemplates that a decree in admiralty may be executed after ten days. It reads:

"In appealable cases ten days from the time of service of a copy of the decree on the opposite proctor, with notice of its entry, shall be allowed to enter an appeal, within which time the decree shall not be executed * * * "

Rule 57 of the Admiralty Rules of the Supreme Court, 28 U.S.C.A. following section 723, contemplates the delivery of property int he custody of the marshal to the claimant upon the dismissal of the libel. The decree dismissing the libel was filed July 28th. The notice of appeal was not filed until October 20th. Between July 28th and October 20th nothing was done by the libellants to prevent the execution of the decree. After October 20th there was a notice of appeal of record but nothing to stay proceedings. For although an appeal from a decree of the district court may be taken by the filing of a notice of appeal, a stay of proceedings under the decree may only be had upon the filing of a supersedeas bond. Federal Civil Procedure Rule 73(d), 28 U.S.C.A. following section 723c, made applicable to admiralty cases by Rule 15 of this court. Since the marshal properly abandoned custody of the res and since there is neither stipulation nor bond to treat as a substituted res, neither the district court nor this court now has such jurisdiction in rem as would support a decree awarding possession of the vessel and its cargo.

The libel, however, is not only in rem for possession of the vessel and cargo but also in personam for damages for their wrongful detention. The prayers for process and for relief are in the form customarily used in a libel which combines a suit in rem with one in personam, 2 Benedict on Admiralty ยงยง 262, 263. Insofar as the suit is in personam this court retains the jurisdiction which it acquired when the respondents were served with ...

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