Summary
holding that maritime contract fell within saving to suitors clause and that jurisdiction was proper in the state court
Summary of this case from BDG International, Inc. v. BowersOpinion
Docket No. 77-3650.
Decided June 6, 1978.
Gillard, Bauer Mazrum, for plaintiff.
Lowell Blumberg, for defendant Peter Bill.
Before: J.H. GILLIS, P.J., and D.E. HOLBROOK and N.J. KAUFMAN, JJ.
This is an appeal by defendant Bill from an adverse verdict by a jury in the trial court, holding him liable to plaintiff in the amount of $20,672. Plaintiff had alleged that he provided certain diving services for inspection and salvage operations for which defendants failed to pay. It was also alleged that certain checks issued by defendant Schmidt and Michigan Marine Salvage were returned unpaid and that payment was wrongfully and fraudulently stopped on another check.
Plaintiff testified that he was a commercial diver who did substantial salvage work. In February, 1974, Schmidt contacted him concerning the possible salvage of a load of steel aboard a sunken vessel known as the "Monrovia". During the meeting, plaintiff and Schmidt discussed the cost of the operation and Schmidt informed plaintiff at that time that there was a third party who was backing the project financially. He did not disclose the name of that third party. It was not until later that plaintiff came to the conclusion that defendant Bill was in charge.
After their discussion, Schmidt agreed to the rates quoted by plaintiff. Under the terms of the agreement, plaintiff would furnish four divers in addition to himself (who were to be paid once a week), and Schmidt and Bill would furnish the equipment.
Pursuant to the parties' agreement, plaintiff arrived in Alpena on May 17, 1974. The parties intended to inspect the "Monrovia" the next day. However, on that occasion, they were unable to locate the wreck. It was when they returned from this trip that plaintiff met defendant Bill. The sunken vessel was located on May 27, 1974. It was after the ship was discovered that defendant Bill called in four extra divers against the recommendation of plaintiff and defendant Schmidt. Of the four weeks that plaintiff and his divers were on the job, they were in the water only seven days and retrieved only a small amount of steel from the ship.
Financial difficulties arose shortly after the project began. Schmidt instructed plaintiff to hold a check issued on June 4, 1974, until sufficient funds could be put in the account to cover it. A stop-payment order was later issued by Mr. Schmidt. Other checks issued by Schmidt were returned marked "non-sufficient funds".
When it became apparent that the divers might not be paid, they met with plaintiff and defendants Schmidt and Bill, and informed the latter that unless they were paid, they would stop working. At that time, Bill guaranteed payment of the money and ordered Schmidt to pay the fees of the divers. It was plaintiff's opinion that Bill was guaranteeing payment with his personal finances, since at no time did he mention a corporation.
The evidence at trial showed that plaintiff knew of the existence of a corporation that was connected with defendant Bill and also knew it was named after Peter Bill. However, plaintiff was not told nor was he aware that Peter Bill Associates, Incorporated, was financing the project, if that in fact was the case. Plaintiff did acknowledge that checks had been made out by Peter Bill Associates to plaintiff; however, there was no other writing between plaintiff and Peter Bill Associates.
Plaintiff Light was the only witness called by plaintiff at trial. Following Light's testimony, a motion for directed verdict as to defendant Schmidt was granted by the trial court. The trial court held that Schmidt was an agent for Bill and was therefore not liable on the contract with plaintiff or on the checks issued for payment of plaintiff's services.
Defendant Bill was found liable for the difference between the amount plaintiff received, $1,813, and the total cost of the project, $22,485, as of June 18, 1974 — the day operations were halted.
On appeal, defendant's (hereinafter, unless otherwise specified, reference to "defendant" shall mean reference to defendant Bill) major contention is that the trial court lacked subject matter jurisdiction to hear this case. Defendant argues that, by definition, this was a case properly cognizable only in admiralty jurisdiction.
The extent of Federal admiralty and maritime jurisdiction is set forth in 28 U.S.C. § 1333:
"The district courts shall have original jurisdiction, exclusive of the courts of the States, of:
(1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.
(2) Any prize brought into the United States and all proceedings for the condemnation of property taken as prize."
It is claimed here that the contract with plaintiff was of a maritime nature and therefore subject to admiralty jurisdiction. In order for a contract to be of a maritime nature, it must have a connection with navigation of a ship, its equipment, its preservation, or the maintenance or preservation of its crew. As noted in The W T Blunt, 291 F 899, 901 (ED Mich, 1923):
"If a contract pertains to maritime service or a maritime transaction, that is, if it has a direct or substantial connection or relation to navigation, it is maritime in nature and may afford a sufficient basis for the jurisdiction of a court of admiralty."
Thus, it is the subject matter of the contract or the nature of the transaction that determines whether the contract is maritime in nature and subject to Federal court jurisdiction and neither the place where the contract is made nor the place where obligations arising therefrom are to be performed is, in and of itself, conclusive of the maritime nature of the agreement. Franks v Land Marine Applicators, Inc, 347 F. Supp. 243 (ED La, 1972). Accord, Ocean Science Engineering Inc v International Geomarine Corp, 312 F. Supp. 825, 828 (D Del, 1970), where Judge Latchum observed:
"Romero v International Terminal Operating Co, 358 U.S. 354, 360; 79 S Ct 468, 474; 3 L Ed 2d 368 (1958) recognized the organic growth and evolving nature of maritime law and jurisdiction by pointing out that Article III, § 2, Cl. 1 (3d provision) of the United States Constitution `empowered the federal courts in their exercise of the admiralty and maritime jurisdiction * * * to continue the development of this law within constitutional limits.' Whether a contract is maritime is not a static concept; it depends, as always, upon the nature of the contract and the service to be rendered and performed and its manner of performance."
When a contract involves salvage services to vessels both afloat or wrecked on the high seas or on the public navigable waters of the United States or to property being transported on such vessels, it is generally held that such a contract is maritime in nature. Houseman v The Cargo of the Schooner North Carolina, 40 US (15 Peters) 40; 10 L Ed 653 (1841). It is not material that the salvage services were performed under a written contract and that the compensation was not dependent on result but was regulated by the terms of the contract. The Roanoke, 50 F 574, 577 (ED Wis, 1892).
Therefore, the contract in this case is of a maritime nature and subject to the admiralty jurisdiction of a Federal district court. However, that conclusion does not settle the issue. Account must be taken of the "saving to suitors" clause of 28 U.S.C. § 1333. That clause has been held to authorize any competent forum that has jurisdiction of the parties to entertain a civil suit at law for the enforcement of a right conferred by the maritime laws where the right is of such a nature that relief may be given in an action at law. In Atlantic Gulf Stevedores, Inc v Ellerman Lines, Ltd, 369 U.S. 355, 359-360; 82 S Ct 780; 7 L Ed 2d 798 (1962), reh den, 369 U.S. 882; 82 S Ct 1137; 8 L Ed 2d 284 (1962), the United States Supreme Court concluded:
"Congress since 1789, in giving Federal District Courts original jurisdiction of civil cases in admiralty, has saved `to suitors in all cases all other remedies to which they are otherwise entitled.' 28 U.S.C. § 1333(1). Therefore, a suit for breach of a maritime contract, while it may be brought in admiralty, may also be pursued in an ordinary civil action, since, unlike the proceeding in The Moses Taylor [v Hammons, 71 U.S. 408] 4 Wall 411 [ 18 L Ed 397 (1867)], it is a suit in personam. `Where the suit is in personam, it may be brought either in admiralty or, under the saving clause, in an appropriate non-maritime court, by ordinary civil action.' Gilmore and Black, The Law of Admiralty (1957), p. 36." (Footnote omitted.)
Accord, Thornes v Socony Vacuum Oil Co, 37 F. Supp. 616 (SD NY, 1940), noting that "[a]s a general proposition rights arising out of maritime contracts are thus enforceable at law as well as in admiralty". See also, Granger v Judge of Wayne Circuit Court, 27 Mich. 406 (1873), Adams v John R White Son, Inc, 41 R.I. 157; 103 A 230 (1918).
Therefore, the cause of action in this case comes within the "saving to suitors" clause and was properly brought and maintained in the trial court. Having concluded that the trial court had jurisdiction in this matter, we pass to defendant's other contentions on appeal. After careful examination of those issues, we hold that none are meritorious. There was sufficient evidence to support the jury's verdict. Thus, we affirm the judgment arrived at in the trial court. However, we do want to elucidate on defendant's argument that the trial court committed reversible error in granting a directed verdict for codefendant Schmidt on the ground that Schmidt was acting as an agent for defendant.
A directed verdict is properly granted where there are no factual questions in dispute. Thus, this Court is faced with the question of whether there was sufficient evidence presented at the conclusion of plaintiff's proofs to raise the issue of whether Schmidt was other than an agent for Bill. As noted earlier, the trial court held that there was not sufficient evidence and granted codefendant Schmidt's motion for directed verdict.
When a defendant is seeking a directed verdict, the motion may be offered at the close of plaintiff's evidence. GCR 1963, 515.1. On appeal from a trial court order granting defendant's motion for a directed verdict, this Court will view the evidence presented in the light most favorable to the plaintiff. Cody v Marcel Electric Co, 71 Mich. App. 714; 248 N.W.2d 663 (1976), lv den, 399 Mich. 851 (1977), Hensley v Colonial Dodge, Inc, 69 Mich. App. 597; 245 N.W.2d 142 (1976). The proper test for determining whether the motion should be granted is whether or not evidence was offered upon which reasonable minds could differ. Armstrong v LeBlanc, 395 Mich. 526; 236 N.W.2d 419 (1975). It should also be noted that the trial court may grant a directed verdict as to one of several codefendants. Annis v Reiser Co, 209 Mich. 512; 177 N.W. 212 (1920).
Examining the facts in this case, it will be remembered that plaintiff Light was the only person to testify during plaintiff's case in chief. Following this testimony, codefendant Schmidt moved for a directed verdict which was granted by the trial court. We hold that the evidence presented supported the conclusion that Schmidt was merely an agent for defendant. There was no evidence to suggest that Schmidt was an independent contractor hired by defendant to procure divers and equipment on his own. The trial court's grant of codefendant Schmidt's motion did not constitute reversible error.
Affirmed. Costs to appellee.