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May 27, 1952


The opinion of the court was delivered by: BYERS

This cause can be thought of as a reincarnation of the case between the same parties reported in Burns Bros. v. Long Island R. Co., 2 Cir., 176 F.2d 406, modifying Burns Bros. v. Erie R. Co., D.C., 79 F.Supp. 948, and has for its object the recovery of a decree against the Central Railroad Company of New Jersey establishing secondary liability in rem. The cause in its original aspect was in personam and the libel was filed August 23, 1945 and came to trial March 25, 1947, somewhat in piecemeal, the last testimony seemingly being taken on May 26, 1947. On June 1, 1948 the cause was decided in this Court, an interlocutory decree having been signed on June 24, 1948.

About nine months later, the Long Island Railroad Company filed its petition for reorganization under Section 77 of the Bankruptcy Act, 11 U.S.C.A. § 205. The appeal from the interlocutory decree above referred to was reached for argument on June 14, 1949, nearly three months after the inception of the reorganization proceeding. The decision on appeal modified that made in the District Court to the extent of relieving the Central Railroad Company of New Jersey and its trustees from liability in personam since that railroad was not shown to have been negligent.

 A petition for rehearing was filed and denied, 176 F.2d 950 in an opinion containing the following:

 '* * * limited to the question of the secondary liability of Central on principles applicable to a proceeding in rem against its carfloat. Such action has been prompted by the fact that Long Island has become insolvent since the inception of this suit and proceedings for its reorganization are pending in the District Court for the Eastern District of New York. As a consequence there is a possibility that the decree against Long Island will not be fully satisfied.

 'Had this suit been brought in rem, it is apparent that the Central's carfloat could, and should, have been held secondarily liable. The Willie, 2 Cir., 231 F. 865, 867-868. But there seems to be an insuperable obstacle in the way of imposing such liability now.'

 Reference is then made to the reorganization proceedings as to the Central and to the fact that if amendments to the libel could be made as desired by the libelant, no decree in rem could be entered since there is no showing of jurisdiction over the vessel.

 Obviously no issue of fact is now presented since at this trial both sides rested upon the record heretofore made, which means that no factual discussion or findings would be in order. The controversy, therefore, is limited to questions of law, namely, (a) res judicata, and (b) laches.

 However inviting from the philosophical standpoint a discussion might be as to the precise impact of the decree on mandate (which conforms to the decision of the Court of Appeals), on the narrow question of whether the libelant is entitled to prevail because the present issues have already been determined between the same parties, it would be scarcely profitable to pursue it for the sake of reaching a conclusion involving a possible distinction between the legal remedies in personam and in rem, ad administered in admiralty.

 Ever since The China, 7 Wall. 53, 74 U.S. 53, 19 L. Ed. 67, it has been recognized in the United States that a liability in rem can be enforced against an offending vessel although her owners would not be answerable in personam. A reading of the arguments and opinions in that case, as they discuss the development of the law in England and in this country, and the conflict of views so revealed, is a rewarding experience. Such a liability was imposed in The Willie referred to in the opinion of the reviewing court on rehearing in this cause, and in view of the expression above quoted from that opinion, it is apparent that the Central Carfloat No. 42 was said to be an offending vessel with respect to the libelant's Coalboat Burns Bros. 77 on April 1, 1945.

 So much being clear, the only duty that confronts this Court is to follow the pronouncement of the Court of Appeals, without stopping to consider whether in the precise sense a decision in a personam cause can be deemed to establish res judicata in a cause in rem, but one disaster being involved.

 Whether laches should be attributed to the libelant is largely clarified by the conduct of the parties in submitting this cause on the record made in the earlier litigation; by so doing they have tacitly agreed that neither has been deprived of relevant testimony by reason of the lapse of time.

 Thus the question narrows itself to this: The present libel was filed October 12, 1949- which was 27 days after the date of the decision on the petition for rehearing above referred to. In view of the lapse of time between the pendency of the reorganization proceedings concerning the Central, which had continued since 1939, six years prior to the date of this collision, and until October 1, 1949, was there such a failure on the part of the libelant to seek the redress described in the pending libel as to afford the Central the defense of laches?

 In this connection it should be stated that no application was made to the District Court in New Jersey to lift the stay against all suits and causes which was granted by that Court October 30, 1939 and which, perhaps, would have operated to defeat the arrest of Carfloat No. 42 in these waters at the time of the collision or shortly thereafter. It seems unnecessary now to discuss this somewhat obscure question of law (Benedict, 6th Ed., § 17). At best, decision would merely suggest what might or should have been done, since it seems scarcely fair to penalize the libelant for not having made an application which the District Court in New Jersey might or might not have entertained; cases have occurred wherein such a stay has been lifted by a reorganization court in order that an asserted maritime lien could be adjudicated in another district, and I should suppose that such a practice would commend itself to most reorganization courts. However, this libelant was indeed confronted by a stay, and if an unsuccessful application to lift had been made, it (libelant) would have been no better off than it was at the termination of the reorganization proceedings in the District Court in New Jersey. If such an application had been successful, and libelant had been in a position to seek its remedy in rem prior to the date of the filing of this libel, some time might have been saved; however as has been said, only the same evidence would have been relied upon, and therefore it does not seem that the equitable defense of laches should be deemed applicable particularly in view of the language of Title 11 U.S.C.A. § 205 subs. b and j.

 Since the libelant merely seeks a decree declaring secondary liability in rem, as to which enforcement may never be required, no reason has been shown why such a decree should not be granted and, ...

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