Appendix — M. W. Zack Metal Co. v. Severn River

Supreme Court, U. S$,

FILED

SEP2 1978

, JR., CLERK

In the Supreme Court of the United States

October Term, 1978

vo. 8-174

M. W. ZACK METAL COMPANY, Petitioner,

Vv.

SS SEVERN RIVER, JANSEN & CO.,

CONTAM LINIE, and HANS H. JANSEN, respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

‘HE THIRD CIRCUIT

APPENDICES B and E

ANTHONY B. CATALDO

Attorney for Petitioner

Office and P.O. Address

lll Broadway

New York, New York 10006

212-962-0965

TABLE OF CONTENTS

APPENDIX B, decision of the

District Court of the District

of New Jersey. Dated October 19,

1976.

(Replacing the decision at pages

50-60 of the Petition for Writ,)

APPENDIX E, decision of the Court

of Appeals, Fourth Circuit, in

M. W. Zack Metal Company against

International Navigantion Corpor-

ation of Monrovia, Reported at

510 F.(2) 451.

Page

50

67

APPENDIX B

DECISION OF OCTOBER 19, 1976, DENYING MOTION

Not for Publication

UNITED STATES DISTRICT COUR

DISTRICT OF NEW JERSEY

M. W. ZACK METAL COMPANY, )

Libellant, )

Vv.

THE SS SEVERN RIVER, JANSEN & CO.,)

CONTAM LINIE and HANS H. JANSEN, Civil Action

) No. 386-61

Respondents.

& ) OPINION

Appearances:

Mr. Charles P. Saling

Attorney for libellant

By: Mr. Anthony B. Cataldo (New York bar)

Messrs: Lum, Biunno & Tompkins

Attorneys for respondents

By: Mr. David A. Birch

COOLAHAN, Senior Judge

This matter comes before the court on a

motion by plaintiff, M.W. Zack Metal Company,

to vacate an order of dismissal entered in the

instant admiralty action* and to permit an

loursuant to Fed. R. Civ. P. 60(b) (5).

-50-

APPENDIX B

amendment of its complaint substituting a

party against whom the claim is asserted.= irs

In 1960 International Navigation corp-

Oration chartered its vessel SS Severn River ."

to Contam Linie (the charterer), a German

Partnership (including Jansen & Co. and Hans

H. Jansen), for a voyage from Antwerp, Bel-

gium, to the port of New York. The charterer

solicited cargo to be transported on Board the

Severn River, and Zack shipped with the Char-

terer 93 coils of hot rolled steel for which

a clean bill of lading was issued but which

were found to be damaged when they were dis-

charged in Jersey City in February, 1960.4

A libel was filind in this court

on May 12, 1961,° by Zack against the SS Severn

River, Contam Linie, Jansen & Co., and Hans H.

Jansen for the damaged cargo. The action was

*plaintiff seeks to substitute the owner of a

vessel as a named defendant in place of the ves-

sel itself.

3pursuant to Fed. R. Civ. P. 15(a), 15(¢c).

* PURSUANT TO 46 U.S.C. § 740, which provides

the federal courts with admiralty and maritime

jurisdiction, and 46 U.S.C. §§ 1300, et seq.,

pertaining to bills of lading in conjunction

with the carriage of goods by sea in foreign

trade, to or from ports of the United States.

~The Court notes at this time the history of liti-

gation concerning these parties in various courts

of law. Zack Metal Company instituted a suit

alleging the same cause of action as herein in *

the Southern District of New York on February 1l,

1961, which was subsequently dismissed for lack

of prosecution. In May, 1961, it instituted a

-8le

APPENDIX B

DECISION OF OCTOBER 19, 1976, DENYING MOTION

5

a suit in a court in Hamburg, Germany, where

the charterer resided, against the charterer,

the individual partners of the charterer, and

International Navigation Corporation. In 1966

that court found the charterer and its partners

liable for the damage to Zack's steel, but

Zack's claim against International was post-

poned for later decision. In 1971 the German

court rendered a decision against International.

All parties, including Zack, appealed to a high-

er German court. In 1972, while the appeal was

pending, Zack commenced suit in the Eastern Dis-

trict of Virginia and caused an attachment to

issue against another vessel owned by interna-

tional. The District Court dismissed the action

and the Court of Appeals for the Fourth Circuit

affirmed. M.W. Zack Metal Co. y. International

Navigation Corp., 510 F.2d 451 (4th Cir. 1975).

The court held that the trial court judgment in

Germany was an in rem judgment against the Ss

Severn River which furnished no basis for the

assertion of in personam liability on the owner,

Or the attachment of another vessel Owned by

International

Also in 1975, the Hanseatic Proyincial

Court of Appeals in Germany dismissed the ac-

tion with respect to International and affirmed

the judgments against the other defendant, but

in reduced amounts. Plaintiff petitioned the

Supreme Court for review of the Fourth Circuit

holding on the ground that the Circuit Court

had lost jurisdiction to interpret the 1971

German judgment when the German Appeals Court

reversed and dismissed the action with respect

to International. Certiorari was, however,

denied. 422 U.S. 1010 (1975).

-51A-

APPENDIX B

OPINION OF OCTOBER 19, 1976

dismissed administratively on March 6, 1964,

for lack of prosecuiton, pursuant to General

Rule 12, the predecessor to General Rule 30.

Upon Zack's application, an order was entered

on March 12, 1965, restoring the case to the

court's docket for the purpose of arresting

the SS Severn River. A monition was issued

on that date, but was returned unseryed. A

second order dismissing the suit administra-

tively for lack of prosecution pursuant to

General Rule 12 was then entered on March 24,

1965, without prejudice to the right of plain-

tiff to reopen the proceedings for good cause

shown. Plaintiff seeks to vacate the March 24,

1965, order of dismissal and to amend its com-

plaint,

Fed, R, Civ, P. 60(b) (5) provides:

"On motion and upon such terms as

are just, the court may relieve a party

or his legal representative from a final

judgment, order, or proceeding for the

following reasons: ...(5)..,. it is no

longer equitable that the judgment should

have prospective application,"

Relief under 60(b) is a matter addressed to

the discretion of the court. Torockio y.

Chamberlain Mfg. Co., 56 F.R.D, 82 (W.D. Pa.

, affirmed without opinion, 474 F.2d

1340 (3d Cir. I973); Wagner v. Pennsylvania

R.R. Co., 282 P,2d 157 en Cir, 1353}5 Toozer

v. Charles A, Krause Milling Co., 189 F.2d 242

Gd Cir. I95I). Plaintiff requests the Court

to exercise its discretion and restore this

case to the docket so that it might have an

adjucation on the merits of its claim for

damage with respect to International Naviga-

=82-

APPENDIX B

gation Corporation, Plaintiff suggests that

laches is the only element appropriate for

consideration when examining the issue whether

the case should be restored, and that since

it has been “diligently” prosecuting its claim

in Germany, restoration should be permitted.

International argues against restoration

on the basis that the March 24, 1965, order

of dismissal has no prospective effect and

therefore the discretionary relief afforded by

Rule 60(b) (5) is unavailable. It further con-

tends that restoration of the instant proceed-

ing would be an abuse of the Court's discretion

since plaintiff "now having lost, on appeal, its

first bite of the apple, ... seeks, by reopening

this suit, to take a second bite."

It is unnecessary for the Court to reach

the merits of the conflicting positions as to

whether it should in the exercise of its dis-

cretion vacate its previous order. Plaintiff's

exclusive purposed in bringing this motion is

to receive an adjudication on its claim for

damage with respect to International. If Zack

is precluded from substituting International

for the SS Severn River (destroyed in 1969),

restoration becomes meaningless. A determin-

ation whether the complaint may properly be

amended is thus in a practical sense disposi-

tive of the restoration issue.

Plaintiff seeks leave of the Court to amend

its libel by substituting International Naviga-

tion Corporation of Monrovia, Liberia, as owner

of the SS Severn River, in place of the SS

Severn River as a party defendant. The issue

for the Court's determination is whether the

complaint may now be amended so as to assert

the claim therein against the vessel's owner

without violating the rule expressed in Fed. R.

© memorandum of law on behalf of International

Navigation Corporation in opposition to plaintiff's

motion to vacate dismissal and amend complaint, p.3

APPENDIX B APPENDIX B

facts of the instant suit are sufficient to

bring this motion within the requirements

of Fed. R. Civ. P. 15(c), the Cogsa one-year

limitation period will be applied.

Civ. P. 15(c) against adding new parties

to an action after the expiration of the .

statute of limitations,

The first paragraph of Rule 15(c)

provides:

"Whenever the claim or defense

asserted in the amended pleading arose

out of the conduct, transaction or oc-

currence set forth or attempted to be

set forth in the original pleading, the

amendment relates back to the date of

the original pleading. An amendment

changing the party against whom a claim

Suit herein was commenced in 1961 against

the SS Severn River, and also against the char-

terers, Jansen and Co., Contam Linie, and Hans

H. Jansen. Plaintiff now seeks by way of

amendment to substitute an in personam claim

against International Navigation Corporation

as owner of the SS Severn River for the initial

in rem claim against the vessel itself. Plain-

tiff contends that it is entitled to such an

amendment as a matter of course. While the

thrust of Rule 15 as a whole is to allow the

liberal use of amendments to implement the

important federal policy of encouraging liti-

gation on the merits,’ Rule 15(c) imposes the

necessary restrictions in deference to the

equally important premises of the statute of

limitations,®8 with which relation back is in

the terms of the Federal Rules,Advisory Com-

mittee "intimately connected."?2 Rule 15(c)

determines whether an amendment that changes

parties after the expiration of the statute

of limitations relates back to the time of

filing of the original complaint. "It should

be read together with the general provision

in Rule 15(a) that leave to amend should be

freely given when justice so requires."

Yordan v. Flaste, 374 F. Supp. 516, 518-19

(D. Del. 1974).

is asserted relates back if the foregoing

provision is satisfied and, within the

period provided by law for commencing

the action against him, the party to be

brought in by amendment (1) has recieved

such notice of the institution of the

action that he will not be prejudiced in

maintaining a defense on the merits and

(2) knew or should have known that, but

for a mistake concerning the identity of

the proper party, the action would have

been brought against him." (Emphasis

added. )

This action is brought before the Court

pursuant to the Carriage of Goods by Sea Act,

46 U.S.C. §§ 1300, et seq., which contains

its own limitations period. 46 U.S.C. §

1303(6) states in part:

Although courts do not agree on whether

the terminology "changing the party" found in

Rule 15(c) encompasses the addition or substi-

"In any event, the carri i

Y ' der and the ship tution of parties, this court will assume that

shall be discharged from all liability in

respect to loss or damage unless suit is

brought within one year after delivery of

the goods or the date when goods should have

been delivered,"

7conley v. Gibson, 355 U.S. 41, 48 (1957).

Thus, for purposes of examining whether the 57 Minn. L. Rev. 83, 87 (1972).

9

aye Fed. R. Civ. P. 15(c) Advisory Committee's Note.

~88e

addition or substitution is possible and will

proceed to test the plaintiff's proposed amend-

ment against the explicit requirements of Rule

15(c). Those courts which prohibit joinder

of new parties (see People of Living God v.

Star Towing Co., 289 F. Supp. 635 (B.D. ba.

1968)) apply a restrictive construction to the

Rule 15(c) reference to an amendment changing

a party. The Advisory Committee's Note, how-

ever, seems to reject this restrictive constuc-

tion. The stated purpose of Rule 15(c) is to

Clarify when an amendment of a pleading changing

the party against whom a claim is asserted

(including an amendment to correct a misnomer

or a misdescription of a defendant) shall relate

back to the date of the original pleading. Fed.

R. Civ. P. 15ic) Advisory Committee's Note, 39

F.R.D. at 82. Proper interpretation of the

phrase “changing the party” should therefore

include the addition and substitution of a

party as well as misnomer situations.

Rule 15(c) provides three conditions which

must be satisfied in order for an amendment

changing a party to relate back: (1) the

claim asserted in the amended pleading must

arise out of the conduct, transaction or oc-

currence set forth or attempted to be set

forth in the original pleading; (2) the party

to be brought in by amendment must have, with-

in the period provided by law for commencing

the action against him, received such notice

of the institution of the action that he will

not be prejudiced in maintaining his defense

on the merits; and (3) the party to be brought

in must or should, within the period of time

provided by law for commencing the action

against him, have known that but for a mistake

concerning the identity of the proper party ,

the action would have been brought against him.

Since plaintiff seeks only to substitute

a defendant against whom its claim is asserted

APPENDIX B.

the first condition of Rule 15(c) is clearly

satisfied. The second condition, however,

does not seem to have been met. For plain-

tiff to satisfy that condition, it must make

a two-fold showing: (a) that International

Navigation Corporation had notice of the in-

stitution of this action!° before the statute

of limitations had run, and (b) that such no-

tice was sufficient to prevent International

from being prejudiced in maintaining its de-

fense on the merits. Without reaching the

question of prejudice, there is nothing in

the record to indicate that International re-

ceived even informal notice of the institution

of this lawsuit prior to the attempted arrest

of the SS Severn River in March, 1965, several

years after the Cogsa one-year limitation

period had expired.

10,1 though the Advisory Committee suggested that

purpose of the 1966 amendment to Rule 15 was the

Clarification of those instances in which relation

back was appropriate, there still exist certain

uncertainties in Rule 15(c) as amended. The un-

certainty stems from the construction given to

the language of the rule itself. (See discussion

"changing the party.") Possible conflict exists

with respect to how the phrase "notice of the

institution of the action" should be construed.

Two Courts of Appeals have expressly held that

this language means notice of a lawsuit and not

merely notice of the incident which led to the

suit. Craig v. United States, 413 F.2d 854 (9th

Cir.), Cert. den., 396 U.S. 987 (1969); Archuleta

v. Duffy's, Inc., 471 F.2d 33 (10th Cir.

Within the Third Circuit, two District Courts have

affirmed the position adopted in Crai Slack v.

Treadway Inn of Lake Harmony, Inc., 8 F. Supp.

I5 (M.D. Pa. 1974); Francis v. Pan American Trin-

idad Oil Co., 392 F. Supp. 1252 (D. Del. 1975).

This court also adopts the position announced in

Craig. The notice requirement applicable to plain-

tiff's motion is thus notice of the commencement of

the instant suit.

APPENDIX B

Regardless of whether plaintiff can sur-

mount the second condition of Rule 15(c), the

third requirement cannot be met, The third

condition of the rule necessitates a showing

that the party to be brought in by amendment

must or should within the period of time for

commencing the action against it have known

that but for a mistake concerning the identity

of the proper party, the action would have

been brought against it. There is not in this

case, nor could there be, any allegation that

the original naming of the ship (SS Severn River)

as a defendant was a mistake within Rule 15(c) (2).

Admiralty has long recognized the "person-

ality" of the ship as distinct from the owner,

and has traditionally distinguished between

actions in rem brought against a vessel itself,

and proceedings in personam directed against a

vessel's owner or charterer. The Supreme Court

alluded to the difference between the two causes

of action when it commented that it is "a long

standing admiralty fiction that a vessel may be

assumed to be a person for the purpose of filing

a lawsuit and enforcing a judgment." Continen-

tal Grane v. Barge FBL-585,364 U.S. 19, 22 (1960).

This Court refuses to accept plaintiff's conten-

tion that there exists no difference between an

in rem and an in personam cause of action. One

not only may, but must, distinguish between in

rem and in personam actions. Gilmore & Black,

The Law of Admiralty 2d (1975) §§ 1-12, p. 37.

Our own Circuit Court of Appeals has indicated

that the distinction between in rem and in per-

sonam proceedings is "fundamental." The Chickie,

141 F.2d 80, 86 (3d Cir. 1944). The court noted

that an action in rem directs a plaintiff's claim

to a thing, the vessel itself. A successful

judgment in an in rem action was said to affect

persons, but only with respect to "their inter-

est in the thing which is personified as a de-

fendant in the litigation." Id,

-58~-

APPENDIX B

An action in rem may be initiated concur-

rently with or as an alternative to a proceeding

in personam, If as in Continental Grain, supra,

an admiralty libel has been brought against a

vessel in rem and an in personam libel has been

instituted against the vessel owner, the prac-

tical effect is the bringing of a single civil

action with two inseperable parts against the

vessel owner. Construction Aggregates Corp. v.

S.S. Azalea City, 399 F. Supp. 662 (D. N.J. 1975).

Here, however, plaintiff initially institu-

ted suit in rem agaisnt the SS Severn River and

now, 15 years later, seeks to bring the claim

aginast International Navigation Corporation in

personam. Although it is true, as plaintiff

urges, that the courts have consistently held

that instituting or filing suit constitutes the

bringing of suit within one year as required by

the Carriage of Goods by Sea Act, 46 U.S.C.

§1303(6), irrespective of the time when process

is issued, United Nations Relief and R. Adm. v.

The Mormacmail, 99 F. Supp. 552, 554 (S.D. N.Y.

T9551); Ore Steamship Corp. v. D/S/A/S Hassel,

137 F.2d 326, 329 (ed Cir. 1543); Internatio-

Rotterdam, Inc. v. Thomsen, 218 F.2a 514, 516

(4th Cir. 1954), the cases so stating involve

factual circumstances easily distinguished from

those in the instant action. The Fourth Cir-

cuit Court of Appeals stated in Internatio-Rot-

terdam, supra, that the filing of suit in ad-

miralty begins the litigation as far as the

statute of limitation is concerned. Suit there-

in was commenced by the filing of a libel in rem

and a libel in personam. Internatio-Rotterdan,

Inc. v. the Karachi, 122 F. Supp. 37 (D. Md. 1954).

The Circuit Court made no determination whether

commencement of a suit in rem is the equivalent

of commencement of suit within the meaning of

Cogsa with respect to a later amendment changing

the action into a proceeding in personam. The

Carriage of Goods by Sea Act has not eroded the

-59-

APPENDIX B

long-standing admiralty tradition of dis-

tinguishing between an action in personam and

one in rem. This Court finds, therefore,

that based upon the factual circumstances pre-

sented the commencement of suit against a ves-

sel in rem is not the commencement of suit with-

in the Cogsa statute of limitations with re-

spect to a later proposed amendment which aims

to assert the same claim against the vessel's

owner.

Plaintiff's claim against International

Navigation Corporation as owner of the vessel

is barred by the Cogsa one-year statute of limi-

tation unless the proposed amendment is found

to relate back to the date of filing of the ori-

ginal complaint. The facts of the instant suit

indicate that the relief afforded by Fed. R.

Civ. P. 15(c) is not available to plaintiff

Zack Metal Co. Plaintiff has failed to safisfy

the second and third requirements of Rule 45(c),

and the motion to amend the complaint is there-

fore denied.

As previously indicated, resoluiton of

the issue of an amendment to plaintiff's com-

plaint is dispositive of the question of res-

toration. Plaintiff's motion for an order va-

cating the Court's March 24, 1965, order of

dismissal is therefore denied. Counsel shall

submit an order in conformity with this opinion.

-60-

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No, 74-1544

M. W. ZACK METAL COMPANY

Appellant

Vv.

INTERNATIONAL NAVIGATION CORPORATION

Appellee

Appeal from the United States District Court for

the Eastern District of Virginia, at Norfolk.

Richard B. Kellam, Judge.

Argued December 5, 1974 Decided March 10, 1975.

Before HAYNSWORTH, Chief Judge, BUTZNER, Circuit

Judge, and THOMSEN, Senior District Judge.

Anthony B. Cataldo (Jett, Berkley, Furr and

Heilig on brief) for Appellant; John W. Winston

(Seawell, McCoy, Winston and Dalton on brief)

for Appellee.

o67J=

APPENDIX E

APPENDIX E

THOMSEN, Senior District Judge

UNITED STATES COURT OF APPEALS

M. W. Zack Metal Company (Zack) appeals

from an order of the district court dismissing

.- an action filed therein by Zack against Inter-

national Navigation Corporation, a Liberian

corporation (International). Zack had desig-

nated its action as an admiralty and maritime

Claim within the meaning of Rule 9(h), F. R.

Civ. P., and caused the vessel Virtus, owned

by International, to be attached,

FOR THE FOURTH CIRCUIT

M.W. ZACK METAL COMPANY :

Vv. H No, 74-1544

INTERNATIONAL NAVIGATION ;

CORPORATION

International chartered its vessel Severn

River to Contam Linie Hansen (the charterer),

a German partnership, for a voyage in 1960

from Antwerp, Belgium, to New York. The char-

terer solicited cargo to be transported on

board the Severn River and issued its bills

of lading for such cargo signed by the vessel's

master. Zack shipped with the charterer 93

coils of hot-rolled steel, for which a clean

bill of lading was issued, but which were found

to be damaged when they were discharged in New

York.

©“ ORDER-

Upon consideration of the Petition

for Rehearing, it is now ORDERED;

(1)

that the opinion be modified to

conform to the copy attached to this Order, and

(2) that the Petition be and it here- In 1961 Zack instituted a suit in a court

in Hamburg, Germany, where the charterer resided,

against the charterer, the individual partners

liable for the damage to Zack's steel and entered

a money judgment for the full amount of the dam-

age in favor of Zack against the charterer and

its partners. Zack's claim against International

was postponed for later decision.

by is denied.

With concurrences of Judges Haynsworth

and Butzner.

In 1971 the German court rendered a fur-

ther decision holding, according to the agreed

translation, that "personal liability of the

ship's owner does not exist", but that the

“, "claims because of cargo damages are secured

through a ship's creditor's right, even if - as

in the present case - the carrier is not at the

* same time the ship's owner". The court entered

a judgment that Internationa] “is convicted to

Roszel C. Thomsen

Senior U. S. District Judg

March » 2975.

-69-

APPENDIX E

submit to execution being levies on the S. Ss.

Severn River" of US$ 64,018.83, plus inter-

est and part of Zack's expenses. The affida-

vits of German lawyers submitted by Zack and

International respectively, as well as the

agreed translation of the judgment itself,

show that the judgment was essentially a judg-

ment in rem against the Severn River. All of

the parties, including Zack, appealed to a

higher German court, which under the German

practice may take additional testimony and re-

view both the facts and the law.

In early 1972 Zack learned that ano-

ther vessel owned by International, the Virtus,

was to arrive at Norfolk. Although the appel-

late proceedings in Germany were and are still

pending, Zack commenced the present suit against

International in the Eastern District of Vir-

ginia, and caused an attachment to be issued

against the Virtus. International appeared

specially and moved to quash the attachment

and dismiss the suit. The Virtus was released

after International agreed to post security.

After two hearings, the district court dismissed

the suit, with a full opinion.

Zack has declared on the German judg-

ment, which furnishes no basis for an in per-

sonam claim against the owner or for the attach-

ment of the Virtus.

The judgment of the trial court in

Hamburg is under review on appeal. It may be

that the appellate court will impose some other

liability upon the Owner, but it is plain that

the trial court limited the owner's liability to

its interest in the Severn River. Essentially

and substantively, it is an in rem judgment

against the Severn River, imposing no in per-

sonam liability upon its owner, and furnishing

no basis for the assertion of an in personam

=-70=

; ™ .

~~ ———e

APPENDIX E

liability of the owner or the attachment of

any vessel owned by International. The attach-

ment, of course, may not be based upon the

speculative possibility that the reviewing

court in Germany may give Zack greater rights

against the owner than the trial court did.

The German judgment did not justify

the suit in the Eastern District of Virginia

or the attachment of the Virtus. The decision

of the district judge dismissing that suit will

be affirmed.

We have treated the cause of action

being founded solely on the German judgment.

Nothing we have done or said Should be con-

strued as intimating any opinion upon any cause

of action Zack may have against any person,

firm or corporation, including International,

under the Carriage of Goods by Sea Act, 46 U.S.C.

1300 et seq.

Affirmed.