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Peralta Shipping Corp. v. Smith & Johnson Corp.

July 11, 1984

PERALTA SHIPPING CORPORATION, PLAINTIFF-APPELLANT,
v.
SMITH & JOHNSON (SHIPPING) CORP., DEFENDANT-APPELLEE



Appeal from a judgment of the District Court for the Southern District of New York (Vincent L. Broderick, Judge) dismissing plaintiff's complaint for lack of subject matter jurisdiction.

Lumbard, Newman, and Pratt, Circuit Judges.

Author: Newman

JON O. NEWMAN, Circuit Judge:

Navigating the jurisdictional channels of the federal courts' admiralty jurisdiction sometimes presents a choice between observance of ancient landmarks and heeding the siren call of the commentators to venture out into uncharted waters. The choice is put to us squarely by this appeal in which we are asked to abandon the long-standing rule that suits upon general agency contracts are not within the jurisdiction of the silver oar. The request is made by plaintiff-appellant Peralta Shipping Corp. ("Peralta") in its appeal from a judgment of the District Court for the Southern District of New York (Vincent L. Broderick, Judge), dismissing for lack of subject matter jurisdiction Peralta's complaint against defendant-appellee Smith & Johnson (Shipping) Corp. ("S&J"). Though we find considerable merit in the arguments favoring classification of general agency and sub-agency agreements as "maritime contracts" cognizable in admiralty, we feel bound by controlling precedent of the Supreme Court and this Court to affirm the judgment of the District Court.

Facts

Peralta, a New York corporation, is the general agent in the United States, Mexico, and the Panama Canal Zone for the Bangladesh Shipping Corporation (also known as Bangladesh National Lines) ("Bangladesh"), an operator of several ocean-going cargo vessels. On July 5, 1979, Peralta and S&J, also a New York corporation, executed an agreement entitled "Agency Agreement," whereby Peralta appointed S&J as "Gulf agents" responsible for arranging services for all Bangladesh vessels calling at ports between Brownsville, Texas, and Tampa, Florida.

S&J's principal obligations under the "Agency Agreement" were as follows:

S&J shall act as ships' husbanding agents for [Bangladesh's] vessels at the [Gulf] ports and shall perform the services normally incident thereto, including arranging for entrance and clearance of vessels at the Custom House, execution of all Custom House documents incidental thereto, arranging for fuel, water, provisions, emergency repairs, port charges and other similar matter, and for stevedoring, storage and other cargo handling; arranging for tugs . . .; assisting in the procuring/repatriating necessary ship's personnel as requested by the Master; hospitalization of officers and other crew members; and shall issue bills of lading to shippers and passenger tickets to passengers as Agents as required; and shall use its best efforts in soliciting and securing cargoes in developing traffic and passengers for [Bangladesh's] vessels.

[S&J shall appoint sub-agents] in all ports where S&J does not have its own offices. . . .

S&J will arrange for all services necessary for the prompt turnaround of vessels, including all matters of a ship husbanding nature, and will have qualified superintendents in attendance as necessary so as to at all times insure adequate supervision and the efficient working of the vessel, the cost of which is to be borne by S&J.

At a deposition Robert Johnson, President of S&J, summarized S&J's responsibilities more broadly -- "to handle [Bangladesh's] vessels at [the Gulf] ports, to shift cargo, enter and clear the vessels,*fn1 supervise the loading of the vessels and account for the disbursements and expenditures and to collect and remit freights."

Two years later, on September 10, 1981, Peralta commenced the present action. Although not specifically grounding jurisdiction on 28 U.S.C. ยง 1333 (1982), which grants the district courts jurisdiction over suits in admiralty, Peralta alleged the maritime nature of its suit: "This is an admiralty and maritime claim within the meaning of F.R. Civ. P. 9(h)." Peralta claimed that S&J had breached the "Agency Agreement" and sought an accounting and recovery of monies wrongfully retained by S&J -- (i) freight collected on Bangladesh vessels in S&J's agency, and (ii) monies advanced by Peralta to pay Bangladesh's vessels' suppliers and vendors but improperly diverted by S&J. In its answer S&J contested admiralty jurisdiction, but the issue was not presented for a ruling by a motion to dismiss.

Peralta subsequently moved for summary judgment, alleging as undisputed S&J's debt in the amount of $112,831.27. S&J did not challenge the amount of the sum claimed, but maintained that it was entitled to summary judgment on the ground that its sister corporation, Smith & Johnson (Gulf), Inc., a bankrupt Louisiana corporation, had assumed, with Peralta's consent, sole responsibility for S&J's obligations under the Agency Agreement.

Judge Broderick initially granted Peralta's motion for summary judgment and found S&J liable in the amount of $112,831.27. The District Judge rejected S&J's contention that it had been relieved of its contractual obligations. Prior to the entry of final judgment, however, the District Court, on its own motion, questioned its jurisdiction over this action. After the parties briefed the issue, Judge Broderick concluded that the sub-agency contract under which S&J acted as local port agent for Bangladesh's vessels was not a maritime contract within the Court's admiralty jurisdiction. He relied upon our opinion in CTI-Container Leasing Corp. v. Oceanic Operators Corp., 682 F.2d 377, 380 n.4 (2d Cir. 1982), and Judge Weinfeld's opinion in P.D. Marchessini & Co. v. Pacific Marine Corp., ...


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