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FRONTIER ACCEPTANCE CORP. v. UNITED FREIGHT FORWAR

July 2, 1968

FRONTIER ACCEPTANCE CORPORATION, Limited, Plaintiff,
v.
UNITED FREIGHT FORWARDING CO., Limited, Defendant, and Keen Kraft Marina Company, Intervening-defendant



The opinion of the court was delivered by: COHEN

 COHEN, District Judge:

 This is an in personam suit in Admiralty, under Rule 9(h), F.R.Civ.P., 28 U.S.C., *fn1" based upon defaulted notes and security instruments arising out of the sale and purchase of a seagoing vessel. Process was effected by the issuance of a foreign attachment out of this Court, pursuant to Supplemental Rule B, F.R.Civ.P., 28 U.S.C., against the vessel. *fn2"

 Presently calling for resolution is a motion, submitted on deposition, affidavits and briefs and referred to the writer for disposition. This motion was made by the plaintiff, Frontier Acceptance Corporation, Limited (Frontier) of Ontario, Canada, to strike paragraphs 3, 4, 5, 6 and 8 of the answer of the intervening defendant, Keen Kraft Marina Company (Keen Kraft), likewise of Ontario, Canada, as being surplus, redundant, immaterial and impertinent. Frontier also moves to strike Keen Kraft's counterclaim asserted against it, for the same reasons. Keen Kraft's cross claim against the principal defendant, United Freight Forwarding Co., Limited (United), also an Ontario, Canada corporation, is not reached by Frontier's motion, nor has it been answered or otherwise opposed by United. Since it is an integral issue among the parties, in the interest of expediency, it will receive similar consideration and disposition.

 In the principal action, filed January 18, 1967, Frontier sued United for default upon two promissory notes in the amounts of $15,000.00 and $3,600.00 (Canadian money) respectively. The first note, dated December 22, 1965, was delivered for the purchase by United from Frontier of the Cabin Cruiser "Laval IV," which note was secured by a chattel mortgage of even date upon said cruiser and her contents. After acquiring possession of the cruiser, United borrowed a further $3,600.00 (Canadian money) for repairs on July 5, 1966 from Frontier and executed another note and an additional chattel mortgage on the vessel.

 On March 2, 1967, United filed a claim as owner of the attached vessel but in doing so, did not strictly comply with the requirements of Supplemental Rule C(6). *fn3" It does, however, clearly demonstrate that United had actual notice of Frontier's suit by foreign attachment. Nevertheless, it neither answered nor otherwise defended this suit.

 United, having failed to answer, Frontier requested entry of its default on June 1, 1967. Judgment by default was granted on July 7, 1967, and entered of record on September 14, 1967.

 The challenged answer of Keen Kraft admits, in substance, the sale by Frontier and the purchase by United of the cruiser and the execution of the notes and securities. However, Keen Kraft denies that United is in default on its obligations as alleged and contends that no indebtedness could accrue, or has accrued, under the instruments between United and Frontier because Frontier as seller failed to make proper registry of Canadian documentation of the cruiser in the name of United.

 On this motion, Frontier argues that portions of Keen Kraft's answer should be stricken because it asserts matters of defense which might have been raised by United had it seen fit to answer the complaint, but which cannot be interposed by Keen Kraft. With this proposition the Court agrees. In the strict sense, Keen Kraft was a stranger to the financing arrangements between the principal parties, Frontier and United; it was not a party thereto. Therefore, it has no legal standing or status to advance such defenses on behalf of United. Its attempt to do so is understandable in light of its interlocking relationship with United, discussed infra. Accordingly, Frontier's motion to strike paragraphs 3, 4, 5, 6 and 8 of Keen Kraft's answer will be granted. Since, other than the usual pedestrian admissions and denials, these paragraphs constitute the substance of the answer, the entire answer will be stricken.

 In Keen Kraft's counterclaim against Frontier, it alleges that it rendered service and made repairs to and upon the cruiser for United amounting to $23,314.07. It demands judgment in that amount, a lien in its favor against the cruiser and, further, a declaration that such lien has priority over any claim asserted by Frontier.

 As an intervening defendant, Keen Kraft clearly misconceives its remedies. In the primary suit in personam, Frontier sought judgment against United, which it subsequently obtained by default. Prior to entry of such default, Keen Kraft was permitted to intervene as a defendant in that suit because it asserted a claim against United and the vessel. However, by its pleadings, it attempted to interpose its claim against United and the vessel through a counterclaim against Frontier, who had asserted no claim whatsoever against Keen Kraft. While Keen Kraft's pleading is denominated "counterclaim," it utterly fails to state any legal basis for relief, or even make a demand therefor, from the principal plaintiff, Frontier. Further, it seeks to establish a maritime lien against the cruiser but, as mandated by the Special Provisions of Supplemental Rule C, F.R.Civ.P., 28 U.S.C., *fn4" such remedy against a vessel must be sought in an in rem proceeding. The principal action was in personam under Supplemental Rule B, supra. The vessel was used as a device under foreign attachment to compel the owner to respond to Frontier's suit and not to answer in its own character to admiralty in rem claims of others. Asiatic Petroleum Corp. v. Italia S. A. Di Navigazione, 119 F.2d 610, (3 Cir. 1941); 1941 A.M.C. 689. Thus, failing to state a claim against Frontier in its suit upon which relief can be granted under either Supplemental Rule B or C, supra, Keen Kraft's counterclaim will be stricken.

 Turning next to Keen Kraft's cross claim against United, it asserts the same claim of $23,314.07 for servicing and repair of the vessel allegedly made at the request and on behalf of United and demands judgment against it. It seeks as well a declaration of a maritime lien against the vessel and a sale of the vessel to satisfy such lien. Keen Kraft sought to serve notice of its cross claim upon United by mail but it did not issue any process against the vessel, nor verify its claim as required by Supplemental Rule C, note 4, supra. Its cross claim, therefore, is fatally defective because of its failure to effect proper service of process upon United, a non resident defendant. The foreign attachment process issued by the plaintiff in the principal action is confined to the securing of jurisdiction of the principal defendant, United, through its asset, the cruiser within this jurisdiction. The purpose of a writ of foreign attachment in Admiralty is twofold: (1) to obtain jurisdiction of a named respondent in personam through his property and only to the extent of his property, and (2) to obtain such property as security in the event that the suit against its owner is successful. Swift & Co. Packers v. Compania Colombiana del Caribe, 339 U.S. 684, 70 S. Ct. 861, 94 L. Ed. 1206, 19 A.L.R.2d 630 (1950); 2 Benedict on Admiralty (Knouth ed. 1940) ยงยง 288-291. Frontier's attachment subjected United, through its asset, to Frontier's suit in personam. The traditional use of foreign attachment process, in an in personam suit in maritime cases, *fn5" has been preserved under the 1966 Supplemental Rules of our Federal Practice. 7A Moore's Fed.Prac., P.90. At page 493 thereof, Professor Moore states:

 
"By preserving maritime attachment and garnishment, a claimant is enabled to obtain jurisdiction over credits and effects (property) of the defendant in any number of places where these may be attached or garnished, although the defendant's residence or place of business may be half way around the world and the occurrence underlying the suit took place in some other district, on the high seas, or in a foreign country. The practical importance to ...

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