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Penoro v. Disa

decided: April 3, 1967.


Friendly, Anderson and Feinberg, Circuit Judges.

Author: Anderson

ANDERSON, Circuit Judge:

On October 14, 1963, Bernardo Penoro, a longshoreman employed by appellee, Cunard Steamship Company, Ltd., was seriously injured while unloading a ship owned by appellant, Rederi Aì Disa, in New York harbor. On May 15, 1964, Penoro commenced suit for $100,000 against Rederi as shipowner. On June 23, 1965, Rederi, alleging that Penoro's injuries had been caused by the fault of Cunard, moved to implead Cunard as a third party defendant on the ground that Ryan Stevedoring Co., Inc. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S. Ct. 232, 100 L. Ed. 133 (1956) entitled appellant to indemnity from appellee for any liability appellant might have to Penoro. In Ryan the Supreme Court held that a shipowner has a right of indemnity to recover from a stevedore the amount of judgment which the shipowner was required to pay to one of the stevedore's employees for injuries incurred on its vessel but caused by the fault of the stevedore; the stevedore was said to have breached an "implied warranty of workmanlike service."

On March 23, 1966, appellee stevedore moved in the trial court for a dismissal of the third party indemnity action or in the alternative for a stay from the prosecution of that action pending arbitration.*fn1 The crux of appellee's motion was the somewhat unusual circumstance that at the time of the injury of its employee Cunard was not only the stevedore but also the charterer of the ship. Under the time charter between Rederi and Cunard, entered into on April 10, 1963, Cunard, as the charterer, was responsible for arranging and paying for the loading and unloading of the vessel;*fn2 and Cunard had elected to do its own stevedoring in New York. The time charter also provided that any dispute between the shipowner and charterer, arising under the charter, would be referred to arbitration.*fn3 The issue presented was whether or not Rederi's Ryan indemnity action against Cunard, as stevedore, was subject to the arbitration agreement in which Cunard is described only as charterer.

In the court below appellant contended that its Ryan action was independent of the charter, and that the holding in that case provided it with a right to indemnity from Cunard as stevedore wholly apart from the charter and from Cunard's status as charterer; that, in fact, as charterer Cunard was not subject to any duty of indemnity under the Ryan doctrine;*fn4 and that consequently the Ryan action did not "arise under" the charter. Cunard, on the other hand, claimed that a stevedore's implied warranty under Ryan must inhere in some contract made by the stevedore.*fn5 It argues that here the stevedore had made no contract with the charterer, because they were in fact the same person, and the only contract the stevedore had made with the shipowner was the time charter, which it had made in its capacity of charterer. Cunard asserts that any Ryan implied warranty therefore must inhere in, i.e. "arise under," the time charter and fall within the scope of the arbitration clause.*fn6

The trial court apparently adopted Cunard's theory of the case and on July 5, 1966, decided the issue in its favor.*fn7 Rederi's action was not dismissed but was ordered stayed pending arbitration pursuant to the charter. Rederi now seeks review, under 28 U.S.C. § 1292(a) (1), of the interlocutory order granting the stay.*fn8 Cunard moves to dismiss the appeal on the ground that § 1292(a) (1) does not apply. We grant the motion.

Section 1292(a) (1) provides:

"(a) The courts of appeals shall have jurisdiction of appeals from:

(1) Interlocutory orders of the district courts * * * granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court * * *."

Whether or not a stay of court proceedings is an "injunction" within the meaning of § 1292(a) (1) has depended on what proceedings are stayed by what court. The general principle is that where a court stays a proceeding on its own docket, that is not an injunction but merely a calendar order issued under the court's inherent power to regulate the administration of its own business. On the other hand, where a court stays a proceeding in another court, that stay is considered to be an injunction. Traditionally, only a court of equity could stay proceedings in another court.

In Enelow v. New York Life Insurance Company, 293 U.S. 379, 55 S. Ct. 310, 79 L. Ed. 440 (1935), the Supreme Court first considered the problem of stays of court proceedings under Title 28 U.S.C. § 129, predecessor to § 1292(a) (1). There the trial court had granted defendant's petition to try his equitable defense before trying plaintiff's action at law. Although there was only one court involved, the Supreme Court treated the court as consisting of two separate "sides" and held that the equity side of the court had enjoined the law side. The order was therefore appealable. In Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 55 S. Ct. 313, 79 L. Ed. 583 (1935), decided the same day, defendant in a suit on a contract pleaded an exclusive arbitration clause in the contract; the court denied a stay of the contract action pending arbitration. The Supreme Court held that the issue of the arbitration clause raised an equitable defense and that the order denying the stay was appealable under Enelow, which the Court interpreted as holding,

"An order granting or denying a stay based on an equitable defense or cross-bill interposed in an action at law * * * is appealable under [present 1292(a) (1)] * * *."

293 U.S. at 452, 55 S. Ct. at 314.

Enelow was decided shortly before the unification of law and equity under the Federal Rules of Civil Procedure, and it might have been thought that this unification would have spelled the end for Enelow's "two sides" approach to § 1292(a) (1). Indeed, that was the position of this court in Beaunit Mills, Inc. v. Eday Fabric Sales Corp., 124 F.2d 563 (2 Cir. 1942). The Supreme Court, however, reaffirmed Enelow, on virtually the same facts, in Ettelson v. Metropolitan Life Insurance Co., 317 U.S. 188, 63 S. Ct. 163, 87 L. Ed. 176 (1942). In two later cases, City of Morgantown v. Royal Insurance Co., Ltd., 337 U.S. 254, 69 S. Ct. 1067, 93 L. Ed. 1347 (1949) and Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 75 S. Ct. 249, 99 L. Ed. 233 (1955), the Court was presented with a reverse situation from Enelow-Ettelson : the plaintiff's action was one originally cognizable in equity rather than in law. In Morgantown the defendant interposed a counterclaim in law, and in Baltimore Contractors the defendant raised an equitable defense. As a court at law ...

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