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AMERICAN HAWAIIAN VENTURES v. M. V. J. LATUHARHARY

February 10, 1966

AMERICAN HAWAIIAN VENTURES, INC., formerly Hawaiian Sumatra Plantations Limited, Libelant,
v.
M. V. J. LATUHARHARY, her tackle, apparel, furniture, engines, cargo of rubber, general cargo and other cargo lately laden on the M. V. J. Latuharhary, Djakarta Lloyd Lines, a corporation, and all persons intervening for their interest therein for the course of action civil on information and belief alleges as follows: Respondents



The opinion of the court was delivered by: COOLAHAN

 This is a libel in admiralty brought by American Hawaiian Ventures, Inc., (Hawaiian) against Djakarta Lloyd Lines *fn1" (Djakarta) as respondent in personam and against the motor vessel M. J. V. Latuharhary, as respondent in rem. Hawaiian seeks damages for an alleged tortious conversion.

 The gravamen of the libel is that the Government of the Republic of Indonesia by virtue of its actions during 1959 wrongfully confiscated rubber plantations and related property of the libelant situated in and about the Island of Sumatra. It is further alleged that Djakarta is a "fully owned entity of the Government of Indonesia" and that in turn the Latuharhary is owned by Djakarta.

 Respondents raise six separate exceptions to the libel. The first five of these also were pleaded in a substantially identical action involving the same parties brought in the United States District Court for the Southern District of California. Those five exceptions were as follows:

 
"1. The wrong of which libelant complains does not lie within the admiralty jurisdiction of this Honorable Court.
 
2. The libel states no cause of action sufficient to constitute a cause of action in admiralty.
 
3. The libel states no cause of action against the in rem respondent M. V. J. LATUHARHARY.
 
4. The libel states no cause of action against the in personam respondent P. N. Djakarta Lloyd.
 
5. In any event, this Court is barred from granting Libelant the relief it seeks by reason of the sovereign immunity of the Republic of Indonesia." Exceptions to Libel, Doc.No. 65-687-WB. (S.D.Cal., filed May 11, 1965).

 Each and every one of these exceptions was sustained and the libel dismissed by Order of the District Court, Order of May 14, 1965 (S.D.Cal.).

 In the instant Motion respondents repeat those five exceptions and, in addition, plead the earlier Order as a bar to the present action under doctrines of res judicata and collateral estoppel.

 Upon review of the briefs, the authorities cited therein, and the oral argument upon the Motion, this Court is of the opinion that the first five exceptions now pleaded were properly granted by the California District Court in the original action and should be sustained.

 The clearest fact about the action is that it is not one properly within admiralty jurisdiction since libelant's grievances do not arise to a significant degree from any maritime tort or relationship. Although libelant alleges that loading boats used to transport rubber from the plantations to waiting freighters were also seized, he concedes this was quite incidental to the basic expropriation of the plantations themselves.

 It is libelant's contention, however, that this Court, sitting in admiralty, possesses broad power to hear nonadmiralty matters if they relate to admiralty questions in a manner analogous to a court of equity's broad "clean up" powers to hear related matters of law. Libelant's reliance on Benedict and on Swift & Co. Packers v. Compania Colombiana, 339 U.S. 684, 70 S. Ct. 861, 94 L. Ed. 1206 (1949) is misplaced in both instances. The cited passage in Benedict states that, "admiralty courts are courts of limited jurisdiction confined to admiralty matters, but within those confines they have the capacity of a court of law and in certain respects the capacity of a court of equity." 1 Benedict 148, § 71 (6th Ed. 1940); but that passage goes on to rebut the libelant's contention: "Admiralty having obtained jurisdiction will not, except in cases of limitation of liability [a special problem not pertinent here], dispose of non-maritime matters for the purpose of doing complete justice after the manner of a court in equity." Id. at 149.

 The Swift case illustrates an admiralty court's ability to exercise broader powers within the confines of an admiralty question. The lower court had ruled on a subsidiary issue of the alleged fraudulent transfer of the libeled vessel, an issue directly affecting the available relief. The Supreme Court approved this disposal of non-maritime matters, but stressed that the transfer issue was but a slight incident of libelant's major claim, "a claim incontestably in admiralty." 339 U.S. at 691, 70 S. Ct. 861.

 Beyond dispute the present action is overwhelmingly one for conversion on Sumatra proper of non-maritime property, a conversion having no flavor of admiralty whatsoever. The added assertion of incidental seizures of loading vessels, even if not subject to defects discussed below, is insufficient to work some magical conversion of this suit into one in admiralty.

 The third and fourth exceptions denying any specific cause of action against either respondent are equally well taken. The libel in rem of the Latuharhary must be supported by a valid maritime lien against that vessel. Such a lien cannot be established since no maritime contract with it nor injury of which it was the instrumentality is alleged. 1 Benedict 617 (6th Ed. 1940). The ship was in no way involved in the acts of which Hawaiian complains.

 Nor is the assertion that some of its present cargo may be rubber which was seized in the alleged conversion some six years ago sufficient to support a maritime lien. The connection between the alleged conversion is too remote from the activities of the vessel to invoke admiralty jurisdiction. Schoening v. 102 Bags of Jute, 132 F. Supp. 561 (E.D.Pa.1955).

 For the libel in personam against Djakarta, no maritime lien against the Latuharhary need exist if other grounds of admiralty jurisdiction are established - the vessel's seizure for purpose of that claim would merely be an attachment of Djakarta's property. However, the effort to find an alternative basis for the action against Djakarta raises an insurmountable dilemma.

 If Hawaiian asserts the action is against Djakarta as an independent shipping company, no maritime relationship exists between the parties; there is no assertion that Djakarta participated in the seizure of libelant's property, on the high seas or anywhere else. Not only are both Djakarta and the Latuharhary strangers to that seizure, they were not even in existence at the time!

 On the other hand, if libelant claims Djakarta is the mere instrumentality of the Republic of Indonesia whose property may be reached to satisfy a claim against that Nation, the Court is faced with respondents' fifth exception based on the claim of Indonesia's sovereign immunity. The Republic has not yet been joined as a party respondent, but in its brief libelant asserts, "[We] are dealing here with the Indonesian Government." Libelant's Brief, p. 3.

 Respondents contend that apart from any question of this Court's admiralty jurisdiction over the subject matter, to the extent Indonesia is the real party in interest the Court lacks personal jurisdiction because of Indonesia's immunity to suit without its consent. The Court finds this exception was also properly granted in the California proceeding.

 To be sure, the defense of sovereign immunity is not always allowed in actions involving the operation of non-military vessels by a foreign government. Victory Transport, Inc. v. Comisaria General, 336 F.2d 354 (2nd Cir. 1964) cert. denied 381 U.S. 934, 85 S. Ct. 1763, 14 L. Ed. 2d 698 (1965). In that case the Court of Appeals explained that the privilege of immunity is strictly construed and granted only to a foreign state's public or sovereign acts (jure imperii), and not to its commercial activities (jure gestionis), 336 F.2d at 358. The Spanish Ministry of Commerce had charted a shipping vessel and the contract was disputed. Since the Court deemed the charter an act jure gestionis, and since the State Department made no special request, the defense of sovereign immunity was denied.

 In addition, however, that opinion listed several classes of actions typically considered jure imperii and afforded sovereign immunity when the country does not consent to be used. Specifically included in that list was expropriation of the kind involved here. 336 F.2d at 360.

 In reply, libelant asserts that the Sabbatino Amendment to the 1964 Foreign Assistance Act, § 620(e)(2), 78 Stat. 1013 (1964), deprives Indonesia of any claim to sovereign immunity. This is incorrect. In Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S. Ct. 923, 11 L. Ed. 2d 804 (1964), the Supreme Court ruled that American Courts were precluded by the Act of State Doctrine from determining whether Nation's expropriation of American property violated international law. All the "Sabbatino Amendment" does is to ...


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