Opposition Brief — W. E. Hedger Transportation Corp. v. Ira S. Bushey & Sons, Inc.

IN THE

Supreme Court of the United States

Ocroser Term—1946 ae

No. 423

W. E. HEDGER TRANSPORTATION CORPORATION,

Petitioner,

against

IRA 8S. BUSHEY & SONS, INC.,

Respondent.

BRIEF FOR RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

|

CuristopHer EK. Heckman,

Counsel for Respondent.

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INDEX

“PAGE

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Pornt I—The decision is correct........esseeeeeees 5

Pornt I[—The dismissal of the cause of action for

abuse of process was proper..........+...- 8

ConcLuston—The petition should be denied......... 8

AvurTuorities CITED

Carey v. Houston & Texas Central R. R. Co., 161 U. 8.

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City of Indianapolis v. Chase National Bank, 314 U. S.

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Supreme Court of the Anited States

Ocrosger Term—1946

No. 423

W. E. Hepcrr Transportation Corporation,

Petitioner,

against

Tra S. Busuey & Sons, Inc.,

Respondent.

Ce ee

BRIEF FOR RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

Respondent respectfully submits that the petition for

writ of certiorari should be denied.

The judgment of the District Court finally disposed of

the action because it dismissed petitioner’s complaint (R.

50). But the reversal of the judgment (R. 55) leaves con-

siderable doubt whether it is now final.

The Circuit Court of Appeals directed that petitioner’s

complaint be treated as a petition to vacate a decree in a

previous mortgage foreclosure action between the parties

(R. 55). It dismissed only a small part comprising peti-

tioner’s demand to recover damages on a cause of action

for abuse of process, there being no diversity of citizenship

and such cause of action being entirely separate and dis-

tinct from that which formed the basis of jurisdiction, viz. :

the application to vacate the Admiralty decree in the mort-

gage foreclosure proceeding.

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This Court has before it only the allegations of the com-

plaint. There is no final judgment on the merits.

The petition fails to show any conflict between the deci-

sions of the different Circuits or of this Court. There is

no important question of Federal or local law involved.

By holding that an application to vacate a judgment must

be considered an integral part of the proceeding in which

the judgment was rendered, the decision has followed the

usual course of judicial proceeding. No substantial ques-

tions of importance are shown to be involved.

Petitioner’s recitation of the facts alleged (but not yet

proven) is so incomplete that respondent deems a more

lengthy one necessary in the interests of clarity.

Facts

On February 10th, 1945, respondent instituted an action

in Admiralty in the United States District Court, Eastern

District of New York, under Title 46, U. S. C. A. Section

951, in rem against 35 wooden barges and im personam

against petitioner for the foreclosure of a United States

preferred maritime mortgage on the vessels.

Under process duly issued, the vessels were seized by

the Marshal. Petitioner filed an answer pleading payment

as well as lack of adequate consideration for the mortgage,

and demanding an accounting of the monies paid to respon-

dent (Complaint, 32nd Allegation, R. 13). The Court or-

dered a prompt trial, which was begun on March 7th, 1945

(44th Allegation, R. 17).

Despite the opportunity then open to obtain a prompt

decision on the merits of its asserted defense of pay-

ment, petitioner in open court, after the trial had begun,

formally tendered to respondent the amount demanded

and consented to the entry of a final decree in favor of re-

spondent in the mortgage foreclosure proceeding (Com-

plaint 22-23). On March 8th, 1944 petitioner obtained

3

satisfactions of the decree and of the preferred mortgage

in exchange for its payment to respondent (R. 23), Thus

respondent’s lien on the vessels was discharged.

On April 4th, 1945, twenty-seven (27) days after the

entry of the decree and delivery of mortgage satisfactions

petitioner instituted this action in Equity in the United

States District Court, Eastern District of New York (join-

ing its president as an individual party plaintiff). This was

before expiration of the term of Court in which the final de-

cree had been entered and long before the expiration of the

time for appeal therefrom.

Petitioner demanded (a) that the consent decree be

vacated; (b) an accounting; (c) discovery of respondent’s

books and records; (d) cancellation or reformation of the

mortgage instrument; (e) an injunction restraining re-

spondent from disposing of the sum paid in satisfaction

of the consent final decree and mortgage; (f) damages in

the sum of $109,288.06 (R. 25-26).

The damages demanded comprised the amount paid in

satisfaction of the decree and mortgage (64th allegation, R.

23), $30,000 damaged suffered as a result of the retention

of the vessels under process which was alleged to consti-

tute an abuse of process (R. 24) and $9,800 paid by peti-

tioner to respondent on account of the mortgage indebted-

ness previous to the institution of the foreclosure suit,

allegedly under a mutual mistake of fact as to the amount

due (R. 24-25).

Petitioner and respondent are New York corporations

(R. 3); the individual plaintiff a resident of New Jersey

(R. 3).

Respondent moved before answer for judgment dis-

missing the complaint on the grounds of non-jurisdiction .

of the Equity side of the Federal Court over the subject

matter and failure to state a claim on which relief could

be granted (Notice R. 32).

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4

Under City of Indianapolis v. Chase National Bank, 314

U.S. 63, 69; 62 S. Ct..15,.17;;.86 L. Ed. 48, jurisdiction could

not have been sustained on the ground of diversity of citi-

zenship and petitioner.did not so urge. The tine Court

dismissed for lack of jurisdiction of the Equi of the

Court without prejudice to petitioner’s right to file in Ad-

miralty a libel for review:of the mortgage foreclosure pro-

ceedings on the ground alleged in the complaint (Opinion,

R. 36-37). On appeal petitioner argued that the Equity

side has jurisdiction to set aside a decree entered in a

United States Court even though in Admiralty without any

other jurisdictional requirement and argued that the Ad-

miralty side of the Court was without jurisdiction to grant

the relief sought by the complaint.

The Circuit Court of Appeals, pointing out that matters

of form should he disregarded to reach the substance, held

that instead of dismissing the complaint the District Court

should have treated it as a libel of review or a petition in

the foreclosure suit to vacate the decree (R. 55 and 51);

that under such petition the Admiralty Court if pursuaded

that the decree:should be vacated has jurisdiction to grant

all the relief plaintiff requested except its demand for

damages for the abuse of process averred in the 67th allega-

tion (R. 51-53). The Court pointed out that recovery for

abuse of process would be a separate cause of action not

connected ‘with the subject matter of the foreclosure suit

as to which plaintiff must proceed in the State Court be-

cause it would not constitute a maritime tort within the

Admiralty jurisdiction and diversity of citizenship was

lacking (R.53). Thereafter, petitioner applied for reargu-

ment contending that the abuse of process cause of action

should not have been dismissed inasmuch as there was

Admiralty jurisdiction because the alleged wrongful at-

tachment of the vessels under the abuse of process occurred

on maritime waters, thus constituting a maritime tort (R.

59). Denying this petition the Circuit Court pointed out

that such contention had not been raised on the argument,

6

‘but that petitioner would be granted leave to file on inde-

-pendent libel in the District Court for the alleged maritime

tort, leaving the District Court free to decide the jurisdie-

‘tional question and if satisfied as to it ‘‘free to exercise

its discretion to hear the evidence in that suit at the same

‘time as the evidence in the foreclosure suit (R. 65-66). —

Under these rulings petitioner has an opportunity to

-have a single trial in one Court of all the issues of its com-

plaint and if it satisfies the Court that the Admiralty fore-

‘closure decree was wrongfully obtained to produce evidence

‘supporting its demand for an accounting.

It appears that if petitioner had proceeded in the man-

‘ner suggested in the Circuit Court’s decisions, the last of

which was rendered May 23rd, 1946, petitioner by this time

might well have obtained a final decision on all issues

tendered. Certainly it would be well on the way toward

termination of the litigation.

POINT I

The decision is correct.

When Congress gave the Admiralty Court exclusive

jurisdiction of in rem proceedings to foreclose a preferred

maritime mortgage (46 U. S. C. A. 951) it certainly did

not intend that after appropriate proceedings in such

Court a mortgagee should be subjected to another trial of

the same issue in a different Court in an action for review

of the Admiralty proceedings. Of course, the Admiralty

Court which granted the decree has jurisdiction to review

its own proceedings and to open its own decree, but if peti-

tioner be entitled to proceed in Equity in the Eastern

District of New York as it seeks to do here, it may proceed

on the Equity side of a District Court of some other State,

provided only venue jurisdiction can be had there.

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.

‘Such step would be contrary to the well settled rule of

Carey v. Houston & Texas Central RR. Co., 161 U. S. 115,

at 130, that an action for the review or correction of a

decree or judgment is a ‘‘continuation of the main suit.’’

In Carey v. Houston, supra, this Court said (132):

‘We regard it as not open to argument that the

jurisdiction of the circuit court, as a court of the

United States, over this suit, rested on the juris.

diction of that court over the suit in which the decree

of May 4th, 1888, was rendered * * *.’’

The Equity side of the United States District Court for

the Eastern District of New York had no jurisdiction over

the suit in which the decree of March 8th, 1945, was ren-

dered, because that was a decree in an in rem proceeding

in Admiralty to foreclose a preferred mortgage. There-

fore, it has no jurisdiction over this suit to vacate that

decree.

Petitioner suggests that the Admiralty Court’s juris-

diction ended when the decree of foreclosure was entered

and satisfied. This contravenes the basic principle that

within certain time limitations not here involved a Court

has general power to vacate, change or modify its own

decree improperly obtained.

If we assume petitioner’s success in proving its asser-

tion that this decree was obtained by improper means

(which imputes misconduct to three District Judges)

(Cf. 37th, 39th, 43rd and 44th allegations, R. 15 and 17)

the foreclosure decree should be vacated, but there would

still remain for trial and disposition the original suit in

rem to foreclose the mortgage. If petitioner offered enough

evidence to warrant an accounting there can be no doubt

about the Court’s power to require one when necessary to

render final judgment in an action over which jurisdic-

tion was expressly conferred by statute.

As the Circuit Court of Appeals stated in its opinion

(R. 52): at :

“Clearly a Court of Admiralty at times must

state accounts as an incident to the disposition of

suits within its cognizance; general average is one

instance, salvage is another. In the case at bar tie

foreclosure suit was brought under Section 951 of

Title 46 U. S. C. and it would be impossible to en-

force the statute, if the suit must be halted every

time a question of accounting arose as to the amount

due upon the mortgage.’’

Petitioner states the case as though its resort to Equity

to vacate an Admiralty decree of foreclosure in an in rem

proceeding involving a preferred maritime mortgage was

proper and as though its case involved only incidental

Admiralty matters. It also says (in its brief, pp. 9 and 10)

that an accounting must first be had to ascertain whether

petitioner owed respondent any money and that to open

the Admiralty decree first ‘‘just to have an equitable ac-

counting in an Admiralty Court seems to be putting the

cart before the horse.’’ It is petitioner who confuses the

cart’s location. Until petitioner succeeds in proving that

the decree in the Admiralty proceeding was improperly

obtained, it stands as an adjudication that there was a

balance in favor of respondent. The existence of such

decree, the attempt to vacate it and the necessity for vacat-

ing it are the very grounds which petitioner must urge as

the base of jurisdiction in this action between two corpora-

tions of the same state. Certainly a Federal Court has no

jurisdiction in a suit for a simple accounting between two

citizens of the same State.

.

POINT Il

The dismissal of the cause of action for abuse of

process was proper.

In Hurn v. Oursler, 289 U. S. 238, the Court clearly

stated that if one cause of action be separate and distinct

from another in the sense that it is based upon entirely

different facts and is outside the Federal jurisdiction, it

must be dismissed even though the other cause be within

the jurisdiction. Petitioner does not contend that the

causes of action are the same.

That petitioner’s claim for damage for abuse of process

may be cognizable in Admiralty (which we do not concede)

where jurisdiction depends on the maritime character of

the transaction does not mean it is cognizable on the Law

or Equity side where diversity or a Federal question is a

prerequisite to jurisdiction.

CONCLUSION

The petition should be denied.

Respectfully submitted,

CurisToPpHER KE. HeckMan,

Counsel for Respondent.