Brief for the Respondents in Opposition — Wood v. United States

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SUBJECT INDEX

Page

Commbeis BGOW. 2.262. Ge a 1

FUR 5-5 s..pcatenentaunane ape ae 1

Restatement of the Quesiions Presented .................. 1

Supplement to Statement of the Case ...................... 2

ALQUIIOMR ain ci accsniee ee -

| ®

In Rejecting the Asserted Maritime Lien the

Court of Appeals Applied Established Princi-

ples of Admiralty Law: ..04..:..4000....20Ri 4

A. A Shipowner’s Lien Upon Cargo Is Pos-

sessory in Nature. It is Lost Upon Sur-

render of the Cargo. ..66.4.240880.208.8 4

B. Any Lien on Freights Was Discharged by

Payment of the Freights Prior to Assertion

OF the: Laem asin Gan ee 5

II

The Court of Appeals Decideu No Important

Question of Federal Law Warranting Certio-

rari. Review of the Jurisdiction Issue Would Be

Hypothetical and Advisory. The Decision Be-

low Created No Conflict in Its Determination

OR FROIN iiss htc coe aes 8

A. The Jurisdictional Issue Is [lusory Since

Petitioner Prevailed Thereon; Any De-

cision of This Court Would Be Advisory

Snacks dec itistn uate marks inte nctataadientaee 8

The Decision Below Created No Conflict .. 9

C. The Imposition of a Constructive Trust

Was Promeciy DhemeG nse siscisiiv i evvcetin. 1]

ad

te a NR Re RENT lS A ON PRE eA AE PI SE 13

li.

TABLE OF AUTHORITIES CITED

Cases Page

Alabama State Federation of Labor, et al. v. Mc-

Poe, SA tie, SIO CADE) cocaine ccinssnsccrsassnses.

Archawski v. Hanioti, 350 U.S. 532 (1956) ..........

Ariate Compania Naviera v. Commonwealth Tank-

ship Owners, Ltd., 310 F. Supp. 416 (S.D.N.Y.

1, 2 SIRE RRR CRS oS oS REEL Coe

4885 Bags of Linseed, 66 U.S. 108 (1861) ............

The Bird of Paradise, 72 U.S. 545 (1886) ........ 4,

Compania Anonima Venezolana De Navacione v.

A. J. Perez Export Co., 303 F. 2d 692 (Sth

NID soins spc Zins ciascnnedighs carpinnnanclaneaniendasias

GCutier v. Rae, 48 U.S. 374. (1848). .cccccccc.........

Economu v. Bates, 222 F. Supp. 988 (S.D.N.Y.

7 2 RRR i rete ic tener perry meena eae Sm, SP

Hall Corp. v. Cargo ex Steamer Mont Louis, 62 F.

NUE A Meets END Saincccsscncthcinacinconcanwmscsasbnnes

Luckenbach Overseas Corp. v. Subfreights of S. S.

Audrey J. Luckenbach, 232 F. Supp. 572

Ca ss ROD: sisbehnstibieicnapdiassnitnsinscuchanninelsSbecnarntetaes

F. D. Marchessini & Co. v. Pacific Marine Corp.,

af 3 ge TT AO DET IO ine.

Marine Traders Inc. v. Seasons Navigation Corp.,

422 -%. 20. 804 (26 Ci. S978) scl 6,

McKey v. Paradise, 299 U.S. 119 (1936) ..............

N. H. Shipping Corp. v. Freights of the SS.

Jackie Hause, 181 F. Supp. 165 (S.D.N.Y. 1960)

North Atlantic & Gulf Steamship Co., In re, 204

F. Supp. 899 (S.D.N.Y. 1962), Aff’d Sub Nom

Schilling v. A/S D/S Dannebrog, 320 F. 2d

Cate Git IED Sebsnetucenveseccannebbinsiianceuesical 6,

10

10

10

12

Page

Ocean Cargo Lines v. North Atlantic Marine Co.,

227 F. Supp. 872 (S.D.N.Y. 1964). ..................

Oceanic Trading Corp. v. Freights, Sub-Freights

and Demurrage of the Vessel Diana, 423 F. 2d

5 ee ected ee

Port Welcome Cruises, Inc. v. S.S. Bay Belle, 215

F. Supp. 72 (D.C. MD. 1963), Aff'd Sub. Nom.

Humble Oil & Refining Co. v. S.S. Bay Belle, 324

ve Ss - 2e Ge Se.) een eee ees

Public Service Commission v. Brashear Freight

Lines, Inc., 306 US. 204 (1939) ...................0:.

Putnam v. Lower, 236 F. 2d 561 (9th Cir. 1956)..

Schirmer Stev. Co. Ltd. v. Seaboard Corp., 306 F.

2G 358 CO A. BE cette

Swift & Co. Packers v. Compania Columbiana Del

Caribe S.A., 339 U.S. 684 (1950) .................. 8,

Sword Line, Inc. v. United States, 228 F. 2d 344

(2d Cir. 1955), Aff'd on reh. 230 F. 2d 75

(1956) Affd 351 US. 976 (19356) ....................

The Eclipse, 135 U.S. 599 (1890) .....-.ccscccssceeeoee-

The Sholhaug, 2 F. Supp. 294 (S.D.N.Y. 1931) ....

Trailmobile Co. v. Whirls, 331 U.S. 40 (1947) ......

United Mine Workers v. Gibbs, 383 U.S. 715

RI. Sali ccas issih eiais sh oadenedn diate caaeecpedaatiilaccandacladbaianiia

Woodruff v. Coleman, 98 A. 2d 22 (D.C. 1953) .. 1

Zirker v. Baber, 161 Cal. App. 2d 355, 327 P. 2d

OD ED ticacihaasiseaeirciecaneneincahevapstanttincnientatindins

Rules

Federal Rules of Civil Procedure, Rule C(3) ........

iv.

Statute

Camtoraia Civil Code, $00: 2224 -.......:..-cecccscccicccsc

Textbooks

1 Bogart, Trusts & Trustees (2d Ed. 1965), Sec.

BN Be hts kcsdschncelatnilehanbneinian kaise keasnuadctiedaiinisjan

Bogart, Trusts & Trustees (2d Ed. 1965), Secs.

FRE nahin tdi tae bs Se ihn ids sii

89 Corpus Juris, Secundum, Sec. i139, pp. 1015-

IRI onskscccaceMbcbeaieiaecl staal iced deity attihocnsddenane

Gilmore & Black, The Law of Admiralty (1957),

pp: 105-00. . Kc ins.

Gilmore & Black, The Law of Admiralty (1957),

i Re CE EN iba cicsidneidasndiatcmiabiacaibiiladananitascia 6,

Gilmore & Black, The Law of Admiralty (1957),

Me A Ee |. apeieneiipee ipeiaa © eae be Onto ara OM

Poor, Charter Parties and Ocean Bills of Lading

ee Fi i Eh ccc

Restatement, Restitution, Sec. 160 and Comments ....

V_ Scott on Trusts (3d Ed. 1967), Sec. 462.2 ......

Stephens, Freight (1907), p. 200 ...................... 6,

11

11

IN THE

Supreme Court of the United States

October Term, 1970

No. 1600

COMPANIA DE NAVEGACIONE ALMIRANTE S.A., PANAMA,

a Panamanian corporation,

Petitioner,

vs.

BEVERLY HILLS NATIONAL BANK, a National Banking

Association,

Respondent.

Brief of Respondent in Opposition to

Petition for a Writ of Certiorari.

Opinions Below.

The opinion of the Court of Appeals for the Ninth

Circuit, as modified on denial of rehearing, (Petition,

Appendices A and B) is reported at 437 F. 2d 301.

The opinion of the District Court (Petition, Appendix

C) is reported at 288 F. Supp. 77.

Jurisdiction.

The jurisdictional requisites are adequately set forth

in the Petition.

Restatement of the Questions Presented.

1. Is a shipowner’s possessory lien upon cargo for

unpaid charter hire lost upon surrender of the cargo?

waliiion

2. Assuming that a shipowner has a non-possessory

lien upon freights earned by a vessel under charter, is

that lien lost if the freights are prepaid prior to ap-

propriate assertion of the lien?

3. Can one of two creditors of a common debtor

assert a constructive trust upon funds paid to the other

creditor in the absence of findings of fraud, undue

influence, unjust enrichment or any other of the

grounds historically required for the granting of equi-

table relief?

Supplement to Statement of the Case.

Both Petitioner and Respondent Beverly Hills Na-

tional Bank are creditors of a common debtor, Kenray,

Inc. Petitioner’s claim is for unpaid charter hire, while

Respondent’s is for monies loaned. The issues were

whether Petitioner could assert a maritime lien upon

certain funds paid by Kenray to Respondent and ap-

plied on the debt admittedly owed to Respondent, and

whether in the absence of a maritime lien, Petitioner

could assert an equitable claim based upon a theory

of constructive trust.

The Court of Appeals rejected both of Petitioner’s

theories. On the issues of maritime lien the Court held

—in accordance with numerous prior decisions—that

the shipowner’s possessory lien on cargo had been lost

by surrender of the cargo and that any maritime lien

on freights had failed by payment of the freights prior

to assertion of the lien. Contrary to Petitioner’s argu-

ments (Petition, pp. 7-8) the holding of the Court of

Appeals on the maritime issues was neither novel nor

did it extend a rule theretofore limited to holders of

negotiable bills of lading.

I...” eee

a am

On the issue of constructive trust, Respondent Bank

argued below that the Court, sitting in admiralty, had

no jurisdiction to consider what was purely an equi-

table claim. The Court of Appeals rejected Respond-

ent’s jurisdictional argument and ruled—in Petitioner’s

favor—that while there was no admiralty jurisdiction

to consider an independent equitable claim, the con-

structive trust claim could be asserted and considered

upon either a theory of “pendent” or diversity jurisdic-

tion. The Court of Appeals then went to the merits

of Petitioner’s constructive trust claim and concluded

—based upon hornbook equity law—that the findings

of fact made by the trial court did not sustain the impo-

sition of a constructive trust. In so holding the Court

of Appeals did not—as Petitioner asserts (Petition,

p. 11)—reweigh factual determinations; rather the

Court of Appeals exercised customary appellate stand-

ards in determining whether the trial court’s findings

sustained the legal conclusion which it reached.

on of pendent jurisdiction the Court of Ap-

peals relied upon the decision of this Court in United Mine

a en

ARGUMENT.

The issues in the present case are indeed narrow and

episodic. They relate entirely to the efforts of two cred-

itors to obtain payment from a common insolvent debt-

or. Despite ingenious—but nevertheless distorted—ar-

guments by Petitioner, the decision of the Court of

Appeals is not in conflict with other decisions of this

Court or other Courts of Appeals nor is it of such sig-

nificance to warrant review by this Court on certiorari.

I.

In Rejecting the Asserted Maritime Lien the Court of

Appeals Applied Established Principles of Admi-

ralty Law.

A. A Shipowner’s Lien Upon Cargo Is Possessory in Nature.

It Is Lost Upon Surrender of the Cargo.

A shipowner has a possessory lien upon cargo which

—unless waived—entitles him to retain the cargo until

the freight due has been paid. The lien, being pos-

sessory in nature, is lost upon unconditional surrender

of the cargo [e.g., 4885 Bags of Linseed, 66 U.S. 108,

113 (1861); The Bird of Paradise, 72 U.S. 545, 555-

556 (1886); Cutler v. Rae, 48 U.S. 374, 376 (1848);

Gilmore & Black, The Law of Admiralty, (1957)

pp. 165-66].

Petitioner’s assertion, (Petition, p. 7) that the

Court of Appeals’ decision conflicts with the decision

in The Bird of Paradise, supra, 72 U.S. 545, cannot

be sustained. The Bird of Pardise confirms the accepted

rule—recognized here by the Court of Appeals—that

the shipowner’s lien on cargo is possessory in nature

and is lost upon unconditional surrender of the cargo.”

2This Court said: “Although the lien is maritime and cogniz-

able in the admiralty, yet it stands upon the same ground with

callie,

In The Bird of Paradise the shipowner had not made

an unconditional surrender of the cargo and had as-

serted a lien upon the cargo for unpaid charter hire.

The issue there was whether the shipowner’s lien had

been waived by accepting credit arrangements for the

payment of the charter hire. This Court held that there

had been a partial waiver and that no lien on cargo

could be asserted for that portion of the freight charges

which were not payable until a date following dis-

charge.

Petitioner argues that a release of cargo after secu-

rity had been arranged is not an unconditional release

so as to discharge the shipowner’s lien. But such secu-

rity arrangements must be consensual [See: N. H. Ship-

ping Corp. v. Freights of the S.S. Jackie Hause, 181

F. Supp. 165, 171 (S.D.N.Y. 1960)] and no such

consensual arrangements were made here.*

B. Any Lien on Freights Was Discharged by Payment of the

Freights Prior to Assertion of the Lien.

Petitioner argued below that it had a non-possessory

lien upon the freights and sub-freights earned by the

cargo and that the attached funds included such

freights. Those funds, however, had been paid to Re-

the lien of the carrier on land, and arises from the right of

the ship-owner to retain the possession of the goods until the

freight is paid, and is lost by an unconditional delivery to the

consignee.” (72 U.S. at 555).

8The record is undisputed that no security was posted for

charter hire as it was for general average. Petitioner argued

below that the levying of an attachment on Respondent under

former General Admiralty Rule 37 (now Supplemental Rule

C(3) of the Federal Rules of Civil Procedure) was the equiva-

lent of a consensual posting of security. The argument is specious.

A unilateral attachment is not the equivalent of a bilateral posting

of security in lieu of cargo. If an attachment were equivalent to

the posting of security, the whole concept of possessory liens and

the necessity for retaining possession could be avoided by the

unilateral exercise of a provisional remedy.

ee

spondent prior to the assertion of any lien and the

Court of Appeals properly concluded that the lien had

been discharged, in accordance with numerous author-

ities that a shipowner’s lien on freights is lost if the

funds are paid prior to assertion of the lien [Marine

Traders Inc. vy. Seasons Navigation Corp., 422 F. 2d

804, 806-07 (2d Cir. 1970); Oceanic Trading Corp.

v. Freights, Sub-Freights and Demurrage of the Vessel

Diana, 423 F. 2d 1, 5-6 (2d Cir. 1970); Ariate Com-

pania Naviera v. Commonwealth Tankship Owners,

Ltd., 310 F. Supp. 416, 422 (S.D.N.Y. 1970); In

re North Atlantic & Gulf Steamship Co., 204 F.

Supp. 899, 904 (S.D.N.Y. 1962), Affd Sub Nom

Schilling v. A/S D/S Dannebrog, 320 F. 2d 628 (2d

Cir. 1963); Gilmore & Black, Op. Cit. p. 208, note

129 and cases collected; Stephens, Freight, p. 200

(1907); Poor, Charter Parties and Ocean Bills of Lad-

ing (1968 ed.), § 16 at p. 51].*

‘Since the Court of Appeals decided that any lien that Peti-

tioner may have had on freights had been discharged by prepay-

ment of the freights, the Court was nor required to decide

whether Petitioner had such a lien in the first instance. A lien

on freights (unlike the shipowner’s possessory lien on cargo)

exists only by reason of an express grant in the charter agree-

ment. Such grant was absent here. [See: Oceanic Trading Corp.

v. Freights, Sub-Freights and Demurrage of Vessal Diana, supra,

423 F. 2d 1 at 5; In re North Atlantic & Gulf Steamship Co.,

supra, 204 F. Supp. 899, at 904 and 906; Ocean Cargo Lines

v. North Atlantic Marine Co., 227 F. Supp. 872, 880 (S.D.N.Y.

1964); Hall Corp. v. Cargo ex Steamer Mont Louis, 62 F. 2d

603, 605 (2d Cir. 1933) and cases collected; Gilmore & Black,

Op. Cit., p. 517, note 103 and cases cited]. The Court of Ap-

also was not required to decide what portion of the monies

paid to the Bank (which represented the total purchase price of

the steel shipped) actually were freight monies. Respondent con-

tends that no portion is so identifiable and that therefore no lien

could ever exist.

sli

Petitioner asserts (Petition, p. 8) ihat the foregoing

rule is applicable only to bona fide holders in due

course of negotiable bills of lading. That argument is

not supportable. A shipowner has no lien upon frieghts

which have been prepaid whether such payment has

been made to the charterer, its assigns or creditors,

or to any other third person [See: Marine Traders,

Inc. v. Seasons Navigation Corp., supra, 422 F. 2d 804

at 806; In re North Atlantic & Gulf Steamship Co.,

supra, 204 F. Supp. 899 at 906; Luckenbach Over-

seas Corp. v. Subfreights of S. §. Audrey J. Lucken-

bach, 232 F. Supp. 572 at 577 (S.D.N.Y. 1963);

Schirmer Stev. Co. Ltd. v. Seaboard Corp., 306 F. 2d

188 (9th Cir. 1962); Gilmore & Black, op. cit., p.

208; Stephens, op. cit., p. 200].

Petitioner’s oblique suggestion (Petition, p. 8) that

the decision here conflicts with that in The Solhaug,

2 F. Supp. 294 (S.D.N.Y. 1931) is without merit. In

Solhaug a shipowner sought to impose a lien on the

unpaid portion of subfreights still held by a consignee

of a sugar shipment. Solhaug did not involve, as does

_ the case at bar, a shipowner’s claim of lien upon

freights previously paid to and in the possession of a

third party. Moreover, several cases of the Second Cir-

cuit, cited above, are in accordance with the result

reached here by the Ninth Circuit Court of Appeals.

Long accepted, well established principles of ad-

miralty law were applied by the Court of Appeals in

the case at bar. The decision below presents no con-

flict with prior decisions of this Court or other Circuits.

Nor does the present case raise issues of such im-

portance as to even arguably warrant review by this

Court on certiorari.

nnn aie

a

il.

The Court of Appeals Decided No Important Question

of Federal Law Warranting Certiorari. Review of

the Jurisdiction Issue Would Be Hypothetical and

Advisory. The Decision Below Created No Con-

flict in Its Determination of Jurisdiction.

A. The Jurisdictional Issue Is Illusory Since Petitioner Pre-

vailed Thereon; Any Decision of This Court Would Be

Adviscry Only.

In an approach which is long on ingenuity but short

on rationality, Petitioner proposes that this Court should

grant certiorari on the basis of the Court of Appeals’

decision on the jurisdictional issue (Petition, pp. 9-11).

Since Petitioner prevailed on that issue in the Court of

Appeals, its present argument is surprising, if not be-

wildering.

To understand the distortion it should be recalled

that Petitioner argued below that absent a maritime

lien, it had an equitable claim in the nature of a con-

structive trust. Respondent Bank, on the other hand,

contended that the constructive trust claim was not

within the admiralty jurisdiction of the Court, and

that in any event the findings of the trial court did

not support the imposition of such a trust.

The Court of Appeals held that the constructive

trust claim was an independent equitable claim (rather

than one incidental to admiralty jurisdiction). In so

holding the Circuit Court’s decision was in accordance

with that of this Court in Swift & Co. Packers v.

Compania Columbiana Del Caribe S.A., 339 U.S. 684,

690 (1950) and its own prior decision in Putnam v. |

Lower, 236 F. 2d 561, 569 (9th Cir. 1956). The |

Court of Appeals went on, however, to agree with

Petitioner that the District Court had jurisdiction over

9

Petitioner’s equitable claim, basing such juridiction on

two alternative grounds, i.e., “pendent” jurisdiction and

“diversity” jurisdiction. Thus, as the jurisdictional issue

was finally resolved, Petitioner prevailed in its effort to

have its equitable claim considered on its merits.

Since Petitioner’s equitable claim was in fact con-

Sidered and decided on its merits by the Court of Ap-

peals, it is now irrelevant whether the Court did so

under a theory of pendent or diversity jurisdiction rather

than in admiralty. In either event, Petitioner prevailed

on the jurisdictional issue and had a full hearing on

the merits. The granting of certiorari to review the juris-

dictional issue would be an entirely hypothetical, academ-

ic and advisory exercise by this Court—wholly incon-

sistent with this Court’s settled practice [e.g., Alabama

State Federation of Labor, et al. v. McAdory, 325

U.S. 450, 461 (1945); Trailmobile Co. v. Whirls, 331

U.S. 40, 48 (1947)]. Petitioner having prevailed in |

inducing the court below to consider its equitable claim

on the merits, the granting of certiorari would, in

effect, grant appellate review of an issue to the party

which was successful on that issue in the lower court—

an exercise in which this Court has refused to indulge

[Public Service Commission v. Brashear Freight Lines,

Inc., 306 U.S. 204, 206-07 (1939) ].

B. The Decision Below Created No Conflict.

In holding that the claimed constructive trust was

an independent equitable claim, beyond admiralty juris-

diction, the Court of Appeals’ decision was in accord

with Swift & Co. Packers v. Compania Columbiana Del

Caribe §.A., supra, 339 U.S. 684, 690 (1950) where

this Court said: “Unquestionably a court of admiralty

will not enforce an independent equitable claim merely

eae EEE

ome

because it pertains to maritime property.” The decision

also conformed to the Ninth Circuit’s prior decision in

Putnam v. Lower, supra, 236 F. 2d 561, 569, as

well as to other cases in which a court of admiralty

has refused to entertain what is essentially an inde-

pendent equitable claim [e.g., The Eclipse, 135 US.

599, 608 (1890); Port Welcome Cruises, Inc. v. S.S.

Bay Belle, 215 F. Supp. 72, 84-85 (D.C. MD. 1963),

Affd Sub. Nom. Humble Oil & Refining Co. v. S.S.

Bay Belle, 324 F. 2d 954 (4th Cir. 1963); F.D. Mar-

chessini & Co. v. Pacific Marine Corp., 227 F. Supp. 17,

20 (S.D.N.Y. 1964); Economu v. Bates, 222 F. Supp.

988, 991-92 (S.D.N.Y. 1963) ].

Petitioner’s assertions (Petition, p. 10) that the judg-

ment here conflicts with other decisions cannot be sus-

tained. Archawski v. Hanioti, 350 U.S. 532, 536

(1956) was a claim for restitution and unjust enrich-

ment where there had been failure of consideration in

a contract of passage; the claim arose as “the result of

the breach of a maritime contract”. In Archawski this

Court was not (as here) concerned with a claim sound-

ing exclusively in equity, but rather with one arising

within the admiralty. Similarly Sword Line, Inc. v.

United States, 228 F. 2d 344 (2d Cir. 1955), Affd

on rehearing 230 F. 2d 75 (1956), Affd 351 USS.

976 (1956), involved a claim clearly maritime in aa-

ture; there the court passed on an overpayment of

charter hire.*

®Notwithstanding its colorful language, Compania Anonima

Venezolana De Navacione v. A. J. Perez Export Co., 303 F. 2d

692 (Sth Cir. 1962)—cited at page 10 of the Petition—has no

relevance here. iD reed Stare Rye tg Forde D ages say

ws elie y whether a berth agent, as the subrogee of a carrier,

ong oa to collect freight charges from a shipper where the

poor genta: op-ed paid a a treat forwarder who in turn

fale to pay

sation

The Court of Appeals correctly concluded that the

constructive trust claim constituted a separate basis for

recovery and was therefore an independent equitable

claim beyond the admiralty jurisdiction. Therefore even

had the court declined to exercise jurisdiction on other

bases, certiorari would not be warranted. But such ju-

risdiction was exercised and the matter fully considered

on the merits, and a fortiori certiorari should be de-

nied. ?

C. The Imposition of a Constructive Trust Was Properly

Denied.

Having decided the jurisdictional issue favorably to

Petitioner, the Court of Appeals addressed itself to

the merits of the constructive trust claim and held

that “the district court’s findings do not support impo-

sition of a constructive trust for [Petitioner’s] benefit”

(Petition, Appendix A, p. 10). In so holding the Court

of Appeals did not, as Petitioner now argues, assume

the role of a ‘rier of fact ( Petition, p. 11); rather the

Court of Appeals accepted the findings of the District

Court, and held that those findings were insufficient,

as a matter of law, to impose a trust upon one creditor

in favor of another creditor.

Hornbook law dictates that a constructive trust may

be imposed only where one acquires property to

which he is not entitled by reason of fraud, accident,

mistake, undue influence or the violation of an express

trust or confidential relationship [Bogart, Trusts &

Trustees (2d Ed. 1965) §§471-475; Scott on Trusts

(3d Ed. 1967) Vol. V, §462.2: Restatement, Restitu-

tion, §160 and Comments; 89 CJS. Trusts, §139, pp.

1015-1024; California Civil Code §2224.] The find-

ings of the District Court established none of the fore-

going grounds for the imposition of a constructive trust.

LE IRENE IRINA AES AILS PONE eee

=|

Petitioner suggests (Petition, pp. 10-11) that the

Court of Appeals’ exercise of pendent or diversity juris-

diction interjected a choive of laws issue into the con-

structive trust claim which would not have been present

had admiralty jurisdiction been exercised. The atgu-

ment lacks both candor and merit. First, Petitioner

itself argued the applicability of California law in urg-

ing the merits of its claim;’ Second, California law

fully accords with generally accepted principles of con-

structive trust.

‘the court below was confronted with two creditors,

one of whom was paid and the other sot. These cir-

cumstances do not create a constructive trust [McKey

v. Paradise, 299 U.S. 119, 122-23 (1936); Woodruff

v. Cole.aan, 98 A, 2d 22 (D.C. 1953); Zirker v.

Baber, 161 Cal. App. 2d 355, 327 P. 2d 63

(1958); 1 Bogart, Trusts & Trustees (2d Ed. 1965),

$19, p. 129]. 5

Resolution of the merits of the constructive trust

claim essentially involved the application of routine and

established principles of law to an admitted set of facts

concerning the claims of two creditors against the same

debtor. The day has long passed when matters of this —

nature should burden this Court’s calendar. No im-

portant question of Federal Law warrants the granting

of certiorari. |

*The opinion of the Court of makes note of the fact

that both sides argued the icability of California substantive

law to the merits of the constructive trust claim (Petition, Ap-

For the foregoing reasons it is respectfully submitted

| that the Petition for a Writ of Certiorari should be

| denied.

| Dated: May 3, 1971.

| Respectfully submitted,

WALTER S. HiLsorn,

JEROME L. GoLpBERG,

| Counsel for Respondent.

| Of Counsel:

LOEB AND LOEB.