Petition for a Writ of Certiorari — W. E. Hedger Transportation Corp. v. Ira S. Bushey & Sons, Inc.

INDEX

PAGE

EDN i's oi wkd dwg 44905 4s HARA DAK ES SAR Da RAR ORES 1

EE hen 5 v4.55 cns'n0's.6004 SAN 0 6OKKARAS ALE OA OKObS 2

EE Or MEN 65 0 in4 <a nea p hn dncn dasa cewas 5

ET UNETOE 60s scans cnceaea csbadesdcandedes 6

Reasons for Granting the Writ ................... 6

ge og rr 9

ee END bs Ge nncxanenccksschacepas pease 9

i AN ANS S's a cach Vb s che 6 baeaw eh eee chee 9

Ill. Specification of Errors to be Urged ............ 9

Se : EROUNOOE sas wid aN winens cuvacdoensenes 9

EE NOU) sda South dwAu hh A O6SE NDA euRSOR ELD 9

ARGUMENT:

I. The petitioner has been deprived of its day in

Court through duress by means of abuse of

UND Navn ccacigecdevens Vewle dueacas ieedeed 10

II. The Cireuit Court of Appeals majority have seri-

ously misconceived the complaint, thus depriving

the petitioner of its day in Court .............. 11

Ill. The law of maritime liens requires delivery of a

discharge of a preferred ship mortgage in an

admiralty action of foreclosure thereof upon de-

posit of adequate security in Court to release

SE ks Vchb ses V4.6 oADAE ORNL EAR EOESAR REECE 13

vn

ii

PAGE

IV. The petitioner was deprived of substantial rights

when its bill in equity was ordered to be treated

as a petition to vacate in the foreclosure action . 15

V. There is a conflict between the decision of the

Circuit Court of Appeals for the Second Circuit

and a decisioa of the Circuit Court of Appeals

for the Seventh Circuit involving limitations on

vacating consent decrees ...................... 16

RIE a 5 5 vinwn 8s Eiicc nin ncna gs un beeen sens deca 18

Cases CrTEep

Ada, The (C. C. A. 2), 250 Fed. 194, 198 ............. 15

Brainard v. Van Dyke, 71 Vt. 359 .................. 10

Century Indemnity Co. v. N. Y. Tank Barge Co.

Pere 0 ry I BND i vd us vc sens dewarccsnes 14

City Nat’] Bank v. Kusworm, 91 Wis. Sa Rae 10

Cohen v. Randall, 137 F. (2d) 441, 445 .............. 10

Corey v. Houston & T. C. Ry. Co., ‘161 U.S. 115,130 .. 16

Detroit Trust Co. v. Thomas Barlum, 293 U.S. 21 .... 15

Fairmount Glass Works v. Cub Fork Coal Co., 287

Se es EE Ea kok 05 60K oi ens beeneneetibics 13

Fleming v. Huebsch Laundry Co., 159 F. (2d) 581 .... 7, 16

Freeman v. Howe, 24 How. 450, "460 iceaeuc ys eeenes 6 15

Grant v. Poillon, 20 How. 162, 168-9 ................ 15

Hodge v. Wallace, 129 Wis. 84 ................0005. 10

Ira S. Bushey & Sons, Inc. v. W. E. Hedger Trans-

oneion: Geni, TEE Be. CGE Os os ca vnc iFicavens 2

Krippendorf v. Hyde, 110 U. S. 276, 284-5 ............ 15

Lonergan v. Buford, 148 U. S. 581 ................ 6, 11

Morning Star, The [EDNY] 5 F. Supp. 502 .......... 14

Neibuhr v. Gage, 99 Minn. 149 ..................005: 10

a _—

PAGE

Pacific R. R. of Mo. v. Mo. Pac. Ry. Co., 111 U.S. 505,

OD sivck uns snuedane wa coeekkueesybe ers tee ceres 16

Restatement of Restitution, §70, comment a; § 128,

ce EERE TES OPTS eee | party peepee een 10

Rio Cape Line, Ltd. v. United States, 89 Ct. Cls. 307,

PE 6s See Koes onc ChE CAMAEASAT kaos vA tw eweRenn 11

Rock Island Bridge, The, 6 Wall. 213 ................ Ee!

Siisbee v. Webber, 171 Mass. 378, 380 .............. 11

Smith v. Blakesburg Savings Bank, 182 Ia. 1190 .... 10

Union Pac. R. R. Co. v. Public Service Comm., 248

is MC: Kak 84K RAMS ok nde ws ba cdsh 7, 11

United States. v. Ames, 99 U.S. 35 ................. 6, 14

United States v. Throckmorton, 98 U. S. 61, 65 ...... 11

75 A. L. R., 658, 79 A. L. R., 655; 17 Am. Jur., page

879, § 7—Doctrine of ‘‘Business Compulsion’”’.... 11

Statutes CrrTep

Admiralty Rule XXII—U. S. District Court, Eastern

ee Pry ees ne: 12, 16, 18

Judicial Code § 240 as amended by the Act of February

13, 1925 (43 Stat. 938, Ch. 229; 28 U.S. C. $347). 9

Ship Mortgage Act, 1920 (46 U. S. C. §$§911, et

MR hee ca Viki ev ab een deck oey abana 5, 6, 7, 9, 14, 18

ee puree

Supreme Court of the Anited States

Octoper Term, 1947

No.

W. E. Hepcer Transportation

CoRPoRATION,

Petitioner,

against

Ira S. Busuey & Sons, Inc.,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT AND BRIEF

IN SUPPORT THEREOF

PETITION

To tHE HonoraBLE THE CHIEF JUSTICE OF THE UNITED

STATES AND THE ASSOCIATE JUSTICES OF THE SUPREME

CourT OF THE UNITED STaTEs:

W. E. Hedger Transportation Corporation prays that

a writ of certiorari issue to review the judgment and decree

of the United States Circuit Court of Appeals for the

Second Circuit (R. 220) entered in the case of Ira S. Bushey

€ Sons, Inc. v. Barges B & B No. 5, et al. and W. E.

Hedger Transportation Corporation, on February 27, 1948,

-

a

affirming, by a divided court, the judgment of the District

Court of the United States for the Eastern District of

New York (Byers, J.) which dismissed the proceeding with-

out a trial of the merits.

The prevailing opinion and the dissenting opinion of

Judge Frank are reported sub nomine Ira 8. Bushey ¢

Sons, Inc. v. W. E. Hedger Transportation Corp., in 167

F. (2d) at page 9.

The Circuit Court of Appeals entertained a motion for

rehearing and filed its order denying the motion—without

opinion—March 16, 1948 (R. 227-8).

Statement.

For the sake of brevity and clarity, the petitioner will

be referred to as ‘‘Hedger’’ and the respondent as

‘‘Bushey’’.

The action was instituted on April 4, 1945, by a Bill in

Equity (R. 116-140) to vacate and set aside for fraud a

consent decree of foreclosure of a preferred ship mortgage

held by Bushey upon a fleet of barges owned by Hedger,

entered on the admiralty side in the Eastern District of

New York, on March 8, 1945 (R. 113). The claimant in

the foreclosure action (Hedger) had interposed a plea of

non indebitatus to the libel and demanded an accounting of

transactions between the parties and privies covering a

period of about twelve years and involving over $1,000,000

in values es to which Bushey was in effect a trustee for

Hedger.

The District Court dismissed the Bill on the ground that

Hedger’s only remedy lay by libel of review in admiralty.

Upon appeal, the Circuit Court reversed (155 F. [2d] 321)

and remanded the cause with instructions to treat the com-

plaint as a petition in the foreclosure suit to re-open the

decree upon the grounds therein alleged.

On the coming down of the mandate, the district judge

proceeded thus: Before any answer to the petition had been

2

3

filed, and without hearing any evidence in support of the

petition’s allegations, he considered parts of the face of

the petition and some of the previous record in the fore-

closure suit. On that basis, he held that no duress or abuse

of process appeared, and that the petition was therefore

without merit. Accordingly, he entered an order dismissing

the petition (and without leave to amend). In other words,

the judge, of his own motion, acted as if Bushey had de-

murred (R. 23). This district judge was the same judge

who entered the consent decree and whose conduct of the

foreclosure proceeding prior to decree was criticized in the

complaint as denying the claimant in the foreclosure action

(Hedger) due process of law (R. 131).

Briefly stated, this is the case stated in the complaint:

The holder of a preferred ship mortgage (Bushey) was

sued by the mortgagor (Hedger) in the State Court for an

accounting between them covering transactions involving

more than $1,000,000 paid to Bushey and its privies, in

trust. Within two months after the accounting suit was

brought, Bushey, knowing the ship mortgage had been fully

paid, but desiring to foree Hedger to abandon the State

Court action for an accounting, libels and ties up Hedger’s

barges in a suit to foreclose, wrongfully claiming that some

$70,000 is still owing under the mortgage and, by attaching

the mortgaged vessels, stops Hedger’s business for all prac-

tical purposes. Proof by Hedger that the mortgage has

been paid will lead to a trial lasting several weeks. If,

during those weeks, the vessels are idle because of the

attachment, Hedger will suffer severe financial loss, and

probably financial ruin. By giving a bond for some $70,000

Hedger can obtain the release of the vessels from the at-

tachment. Hedger offers to give such a bond or deposit

cash with the libellant (R. 92-3) on condition that there-

upon (a) not only will the attachment be dissolved but also

(b) Bushey will satisfy the mortgage of record. Bushey

4

rejects the second condition. The judge rules that, if a bond

is given, it will release the attachment only, not the mort-

gage lien, and that, despite the filing of a bond, or deposit

of cash, he will not direct Bushey to satisfy the mortgage.

As Bushey knows, the financial condition of Hedger is such

that it cannot give a bond for $69,491.56 or deposit that

sum with Bushey, except through the aid of a certain bank.

As Bushey also knows, the bank will supply such a bond,

or make an advance to enable Hedger to pay the $69,491.56

if, but only if, simultaneously Bushey executes and delivers

a satisfaction of the mortgage so that the bank can have

an unclouded first mortgage on the vessels as security.

Hedger tenders the $69,491.56 and Bushey at first indicates

that, upon payment thereof, it will satisfy the mortgage and

discontinue the action (R. 108-9). Subsequently, however,

during recess, Bushey apparently realizes that the State

accounting action would not thus be defeated, and refuses

to execute and deliver such a satisfaction of the mortgage

unless Hedger both consents to a decree and pays the

wrongful $69,491.56 claim. Mere payment of the $69,491.56

without a consent, will not cause prompt termination of

the suit, thereby freeing the vessels of both the attachment

and the outstanding mortgage. For Bushey notifies Hedger

that unless the latter both consents and pays, Bushey will

amend the pleadings and claim $25,000 more (R. 135, 94).

This will mean that, to bring the suit to an end without a

long and ruinous trial, Hedger must either (a) consent to

and comply with a $69,491.56 decree or (b) without a con-

sent, pay some $95,000 which Hedger cannot obtain. Under

this pressure, to save itself from financial ruin—even upon

a successful defense to the foreclosure—Hedger yields,

unwillingly consenting to a $69,491.56 decree and paying

the $69,491.56 decreed. Within the term, Hedger filed its

Bill of Complaint for vacation of the decree, an accounting

and restitution of the amount thus paid to Bushey (R. 139).

5

A somewhat more extended statement of the case ap-

pears in Judge Franx’s dissenting opinion (R. 163-166).

The complaint is printed in full at pages 116-140 of the

Record.

To date, Hedger has been completely thwarted in get-

ting any accounting of over $1,000,000 of its money and

property paid over to Bushey and its privies in trust. The

Record does not disciose why Bushey has been fighting

so strenuously for over three years to evade an accounting.

The State Court has denied Bushey’s subsequent motion

to dismiss the action for an accounting on the ground of

res adjudicata pending the outcome of this action to vacate

the consent decree in the federal court.

The rank injustice to Hedger is clearly explained in a

masterly dissenting opinion by Judge Franx (R. 158-189)

to which the Court is respectfully referred.

Specification of Errors.

Both Courts below erred:

1. In denying the petitioner a trial of the issues of

duress and indebtedness.

2. In denying the petitioner relief from the abusive

employment of the processes of the district court as success-

ful coercive weapons against it.

3. In excluding from their consideration matters which

were appropriate to a decision.

4. In misconstruing the Ship Mortgage Act, 1920 (46

U.S. C. $$ 911, et seg.), with respect to the general mari-

time law in actions in rem relieving the res of the lien

upon the giving of security.

5. In denying relief in equity under the Bill of

Complaint.

6

Questions Involved.

1. Whether a court should allow its processes to be

employed abusively as coercive weapons.

2. Whether a decree may be vacated or modified, during

or after the term, on the ground that it was obtained by

duress, only when the duress was the equivalent of a threat

of kidnapping the defendant’s child.

3. Whether a consent decree may be vacated or modi-

fied, during or after the term, on the ground that the

consent was procured by fraud through duress.

4. Whether a consent cecree in admiralty, fraudulently

procured by duress, may be vacated or modified in a pro-

ceeding in equity where the Bili prays elements of relief

beyond the power of an admiralty court to afford.

5. Whether the distinction between an attack made on

a decree or judgment during the term and one made there-

after is important.

6. Whether the maritime law as stated in United States

v. Ames, 99 U. S. 35, releases the res from the lien of a

preferred ship mortgage upon the filing or deposit of ade-

quate security in court by the claimant; and whether such

law requires the delivery by the holder of the mortgage to

the mortgagor of the certificate of discharge required by

§925 (b) of the Ship Mortgage Act, 1920 (46 U. S. C.

§925 [b]) upon the deposit or filing of such security.

Reasons for Granting the Writ.

1. This case presents a novel question of duress and

invasion of civil rights which is of great public importance.

2. The decisions of the lower courts herein were con-

trary to the decisions of this Court in Lonergan v. Buford,

7

148 U. S. 581, and Union Pac. R. R. Co. v. Public Service

Comm., 248 U. S. 67.

3. There is a conflict in principle and policy concerning

the vacating of consent decrees between the decision in this

ease and the decision of the Circuit Court of Appeals for

the Seventh Circuit in the case of Fleming v. Huebsch

Laundry Corp., 159 F. (2d) 581.

4. The Ship Mortgage Act, 1920, should be construed

(1) with respect to the delivery by the mortgagee of a

formal discharge of a preferred ship mortgage on filing or

deposit of adequate security in a foreclosure proceeding

and (2) with respect to whether the statutory jurisdiction

of the admiralty court survives, after satisfaction, a final

decree of foreclosure therein.

5. With respect to duress and ‘‘business compulsion’’,

the reasons stated by Judge Frank, in his dissenting

opinion (R. 188-189) are particularly pertinent:

‘*The ruling of the majority here will create, I

think, a most unfortunate precedent, which will per-

mit one who thus uses litigation coercively to be un-

justly enriched at the expense of his coerced victim.

It ought, I think, to be the highest obligation of the

courts to see to it that legal proceedings are not

abusively exploited to deprive citizens of their

rights. There is much discussion today, and justifi-

ably, of the dangers to civil liberties through im-

proper uses of power by executive and legislative

agencies of Government. With such misbehavior by

such agencies, the courts often, for a variety of rea-

sons, cannot cope effectively, in which event rectifica-

tion must be left to the electorate. But the courts

can far more readily and expeditiously deal with

abuses of court processes. Such abuses, occurring

in their very own domain, should be a matter of

lively and anxious concern to judges (especially

a

8

those appointed for life and thus insulated from a

critical electorate). By keeping their own house in

order, judges will set an example to other govern-

mental officers.

It is unimaginative for judges, or anyone else, to

regard the loss of civil liberties as confined to the

direct loss of physical freedom or of free speech

(or the like). For, if, in our kind of society, a man,

coerced into submission to a false claim in a law suit,

is deprived of his property or savings, he and his

family may find themselves in such an impoverished

condition that their legal freedoms—to move physi-

cally or to speak their minds—may dry up into

pure formalities, devoid of all practical reality.

* * Things of the spirit (such as civil liberties

and what they make possible) are, or should be,

more precious than material things. Yet, for most

mortals, the former can have little value in the com-

plete absence of the latter.”’

WHEREFORE, it is respectfully submitted that this peti-

tion for a writ of certiorari to review the final judgment of

the United States Circuit Court of Appeals for the Second

Cireuit hereinbefore described should be granted.

W. E. Hepcer TransportaTION CorRPORATION.

Horace M. Gray,

Advocate for Petitioner.

I hereby certify that I have examined the foregoing

petition, that in my opinion it is well founded and entitled

to the favorable consideration of this Court and that it is

not filed for the purpose of delay.

Horace M. Gray,

Advocate for Petitioner.

— eset

BRIEF IN SUPPORT OF PETITION

I.

Opinions Below.

The opinion filed in the District Court appears at pages

7-24 of the Record and is reported in 70 Fed. Supp. 578.

The opinion of the Circuit Court of Appeals is reported

at 167 F. (2d) 9, and appears at pages 141-220 of the Record.

Il.

Jurisdiction.

The decree of the Circuit Court of Appeals was entered

February 27, 1948 (R. 220). Petition for re-argument was

entertained and denied March 16, 1948 (R. 227). Jurisdic-

tion of this Court is invoked under § 240 (a) of the Judicial

Code as amended by the Act of February 13, 1925 (43

Stat. 938, Ch. 229; 28 U. S. C. § 347).

III.

Specification of Errors to be Urged.

All of the errors set forth in the Specification of Errors

(Petition, p. 5) will be urged.

The Statute Involved.

The statute involved is the Ship Mortgage Act, 1920

(41 Stat. 1000, Ch. 250, §30). The pertinent provisions

from subsections G (46 U. S. C. $925 [b]) and K (46

U. S. C. §951) are printed in the appendix post, page 18.

The Facts.

The facts are stated in the petition (ante, pp. 2-5) to

which reference is made.

10

ARGUMENT

The petitioner has been deprived of its day in

Court through duress by means of abuse of process. .

Hedger sought an accounting from Bushey, as trustee,

of more than $1,000,000, in an action brought in the New

York Supreme Court late in December, 1944, in which

$600,000 damages were demanded.

Thereupon Bushey seized and immobilized Hedger’s

fleet of 31 barges worth over $250,000, on February 10,

1945, unjustly claiming some $70,000 to be due on a pre-

ferred ship mortgage secured on the barges. Hedger de-

nied any indebtedness and offered to deposit cash with

Bushey to release the fleet while trying out the question

of indebtedness which, of course, would involve an ac-

counting by Bushey. Bushey refused unless the account-

ing were abandoned.

Thus, the fundamental issue between the parties since

1944 has been: Does Hedger owe Bushey or does Bushey

owe Hedger?

Bushey Las evaded trying that issue and hopes to have

laid it to rest as res adjudicata through this consent decree

under attack which was forced from Hedger by duress

through threats of imminent ruin and by abuse of process.

Duress by abuse of process is fraud.

City Nat’l Bank v. Kusworm, 91 Wis. 166;

Hodge v. Wallace, 129 Wis. 84;

Neibuhr v. Gage, 99 Minn. 149;

Smith v. Blakesburg Savings Bank, 182 Ia. 1190;

Brainard v. Van Dyke, 71 Vt. 359;

cf. Restatement of Restitution, § 70, comment a;

§ 128, comment d;

ef. Cohen v. Randall, 137 F. (2d) 441, 445.

=

11

This Court has repeatedly held that duress such as that

existing in this case entitles the party coerced to relief.

United States v. Throckmorton, 98 U. 8. 61, 65;

Lonergan v. Buford, 148 U. 8. 581, 590;

Union Pac. R. R. Co. v. Public Service Comm.,

248 U. S. 67, 70;

cf. Silsbee v. Webber, 171 Mass. 378, 380; and

Rio Cape Line, Ltd. v. United States, 89 Ct. Cls.

307, 315-16.

The majority of the Circuit Court of Appeals in this

case have retreated to the old, abandoned concept of bodily

fear or fear of injury to a near relative only as actionable

duress. The present day concept of ‘‘business compul-

sion’’ deals with realities and provides protection for those

oppressed by economic dictators (cf. 75 A. L. R., 658,

79 A. L. R. 655; 17 Am. Jur., p. 879, §7—Doctrine of

‘‘Business Compulsion’’).

The Circuit Court of Appeals majority have seri-

ously misconceived the complaint, thus depriving the

petitioner of its day in Court.

The instances where the majority have misapprehended

the record pointed out in the motion for re-hearing (R.

294-6) will not be repeated here, but the Court is referred

thereto. Two additional and important lapses by the

majority deserve attention here.

The majority stated (R. 155):

‘‘Here there was more than a mere failure to

seek Court protection; there was a deliberate choice

to avoid it when the doors of justice were already

open and the parties were within the temple. Such

a voluntary payment cannot be duress.”’

Ce ae eet —

12 :

The majority totally disregarded the fact (R. 130) that

Hedger had moved for relief under Rule 22 of the Eastern

District Admiralty Rules (Appx. post, p. 18) by order to

show cause (R. 59) returnable before the case was called

for trial; and was in court pressing its motion, under that

Rule (R. 90) for relief against the abuse of process that

threatened to ruin Hedger; and welcoming an orderly and

deliberate trial of the issue of indebtedness that Hedger

had been seeking since December.

If the judge had enforced Rule 22 as equity and Hedger

demanded, the judge would have ordered Bushey to de-

liver a discharge of the mortgage upon deposit with Bushey

by Hedger of cash or surety bond for the amount of the

claim. Whereupon the bank that supplied the funds on

the collateral mortgage of Hedger’s fleet would have been

secured, Hedger’s fleet would have been back at work and

the question of indebtedness could have been fully tried

out in an orderly procedure. Instead, the district judge

did not pass upon Hedger’s motion which was still pending

when the decree was signed (R. 112) but without a decision

thereon ordered the trial to proceed (R. 107). Compare

the equally unjustified statement (R. 156):

‘*We have been cited to no case and have dis-

covered none, where relief is accorded a suitor who

runs away from court, instead of toward it.’’

Another critical disregard of the record is found in

the last sentence of the majority opinion (R. 158):

‘*Accepting the motives and intent ascribed to

libellant in the petition, we can still find nothing

illegal in its acts or erroneous in the Court’s grant

of respondent’s (Hedger’s) request for the consent

decree and later refusal to vacate it.’’

Paragraph Sixty-third of the complaint alleges (R. 137)

to the contrary (and is controlling since the case was being

decided as on demurrer) :

13

‘“'The tender described in paragraph Fifty-eighth

hereof and the said consent to said decree and said

delivery were made and given under said unlawful

compulsion, duress and abuse of process by the libel-

lant (Bushey) hereinbefore described and by reason

of the gross fraud of the defendant (Bushey) upon

the plaintiff corporation (Hedger) whereby the

plaintiff corporation was deprived of the free exer-

cise of its will in making such tender and delivery

and giving such consent, all of which were with-

out consideration and voidable, and the plaintiff

corporation (Hedger) therefore hereby repudiates

and rescinds said tender, delivery and consent.’’

Such exclusion from the consideration of the Court of

facts so vital deprived the petitioner of its right to its

day in Court as effectively as though the whole complaint

were ignored. These merit review and relief by this Court.

Fairmount Glass Works v. Cub Fork Coal Co.,

287 U.S. 474, 482-3.

The law of maritime liens requires delivery of a

discharge of a preferred ship mortgage in an admiralty

action of foreclosure thereof upon deposit of adequate

security in Court to release the res.

Hedger’s fleet was seized by Bushey in an action im rem

to foreclose an alleged debt of $60,700 with interest and

expenses (total $69,491.56).

Hedger wished to try out the issue of indebtedness in

the-action and offered to deposit cash with Bushey to cover

(R. 93, 97) or to file a surety bond to secure the claim and

release Hedger’s fleet then wholly engaged in the war

effort. (See Complaint, 940, R. 129).

Bushey refused unless relieved of an accounting (R.

129-30).

—

14

The filing of a stipulation (bond) for value in an action

im rem relieves the res of the lien according to long estab-

lished maritime law.

The law was stated by this Court as long ago as United

States v. Ames, 99 U. S. 35, 36:

‘*Bail in such a case is a pledge or substitute for

the property as regards all claims that may be made

against it by the promotor c« the suit.’’

The Ship Mortgage Act, 1920, 46 U. S. C., § 951 (Appx.

post, p. 18) makes a preferred mortgage a lien to be en-

forced in admiralty by suit in rem.

The mortgage lien is a maritime lien because, this

Court said in The Rock Island Bridge, 6 Wall. 213 at page

215:

‘‘The (maritime) lien and the proceeding in rem

are, therefore, correlative—where one exists, the

other can be taken, and not otherwise.’’

The Ship Mortgage Act, 1920, 46 U. S. C., §925(b)

(Appx. post, p. 18) requires the mortgagor, upon the dis-

charge in whole or in part of the mortgage to file a certifi-

cate of discharge with the Collector of Customs at the

port of documentation of the ships. Such a certificate, to

be effective, must be executed by the holder.

That is the certificate Bushey refused to deliver either

for cash or upon filing a bond. Cash in the amount of the

claim is obviously adequate security for the claim.

Bushey’s proctors induced the district judge to rule that

the filing of security does not relieve the res of the lien

but merely of the attachment (cf. proctors’ prior conten-

tions in Century Indemnity Co. v. N. Y. Tank Barge Co.

[EDNY] 6 F. Supp. 280 and The Morning Star [EDNY] 5

F. Supp. 502).

It is important in the application of the Ship Mortgage

Act, 1920, that the law of U. S. v. Ames (supra) control

15

as it does with all other maritime liens. The precedent

established in this case is arbitrary and illogical and tends

to unsettle the long settled law relative to bonding maritime

liens and releasing vessels therefrom.

This statute takes the foreclosure of certain ship mort-

gages away from prior exclusive common law jurisdiction

and places them under exclusively admiralty jurisdiction

(Detroit Trust Co. v. Thomas Barlum, 293 U. 8. 21).

The question then arises whether upon the entry of the

consent decree, and the purpose of the admiralty jurisdic-

tion having been wholly accomplished, the statutory admir-

alty jurisdiction lapsed. If so, a Bill in Equity to vacate

the decree for fraud, becomes the only available remedy.

This action was commenced by such a Bill (R. 116-140).

IV.

The petitioner was deprived of substantial rights

when its bill in equity was ordered to be treated as a

petition to vacate in the foreclosure action.

This proceeding was commenced by the filing of a Bill

of Complaint in equity.

The Bill prayed relief that included elements outside

the jurisdiction of an admiralty court to afford (R. 139).

Grant v. Poillon, 20 How. 162, 168-9;

The Ada (C. C. A. 2), 250 Fed. 194, 198.

A Court of Equity may vacate a judgment for fraud.

Freeman v. Howe, 24 How. 450, 460;

Krippendorf v. Hyde, 110 U. 8. 276, 284-5.

In the absence of diversity jurisdiction lies because the

action is regarded as ancillary to the action in which the

decree under attack was entered.

ase

16

Corey v. Houston & T. C. Ry. Co., 161 U. §,

115, 130;

Pacific R. R. of Mo. v. Mo. Pac. Ry. Co., 111

U. 8S. 505, 522.

Hedger has been deprived of remedies available to it in

equity and has been forced to submit its complaint (under

the procedure prescribed by the Circuit Court on the prior

appeal) to the same district judge who abused his discretion

in granting no relief under Rule 22. And now he has

abused his discretion again by dismissing the complaint

(R. 173).

That, we claim, is a clear denial of due process of law.

The contention that the statutory admiralty jurisdiction

(Ship Mortgage Act, 1920) spent itself upon payment of the

decree has been adverted to (ante, p. 15).

The question of equity jurisdiction has been presented

to this Court before by Hedger on a petition for a writ

of certiorari; No. 423, October Term, 1946, qg. v., which

was denied. But it is thought that the denial may have

been based upon lack of finality in the proceeding. For

that reason it is again submitted.

V.

There is a conflict between the decision of the Cir-

cuit Court of Appeals for the Second Circuit and a

decision of the Circuit Court of Appeals for the

Seventh Circuit involving limitations on vacating con-

sent decrees.

The Circuit Court of Appeals for the Seventh Circuit

in the case of Fleming v. Huebsch Laundry Corporation,

‘ 159 F. (2d) 581, has applied a common sense measure to

the vacating of decrees obtained by consent under circum-

stances indicating that the party consenting did so with-

17

out full realization of the facts and free exercise of the will.

In that case a laundry company prosecuted by the OPA

consented to a penalty and injunction against it upon the

erroneous information from an OPA official that it was in

violation of OPA regulations as interpreted by the OPA.

After paying one installment of the penalty the laundry

company moved to set the decree aside. Relief was granted

on the ground of ‘‘excusable negligence’’.

The decision in that case was consistent with the modern

trend cf the law to relieve the weak from oppression by

the strong.

The action of the Circuit Court of Appeals for the

Second Circuit in the case at bar is in direct conflict with

that philosophy and harks back to the times when duress

was recognized and relieved against only under conditions

equivalent to a threat of bodily harm or kidnapping

(R. 158).

It is important that this Court consider the broad sub-

ject of duress and establish a policy of relief that may serve

as a guide to the federal courts.

It is respectfully requested that the petition be

granted. Bushey should not escape an accounting.

Horace M. Gray,

Advocate for Petitioner.

June 11, 1948.

18

Appendix.

§925 (b), Title 46, U. S. Code (Ship Mortgage Act,

1920, subsec. G):

‘‘The mortgagor upon a discharge in whole or

in part of the mortgage indebtedness, shall forth-

with file with the collector of customs for the port

of documentation of the vessel, a certificate of such

discharge. Such collector of customs shall there-

upon record the certificate. In case of a vessel

covered by a preferred mortgage, the collector of

customs at the port of documentation shall (1) in-

dorse upon the documents of the vessel, or direct

the collector of customs at any port in which the

vessel is found, to so indorse, the fact of such dis-

charge, and (2) shall deny clearance to the vessel

until such indorsement is made.’’

$951, Title 46, U. S. Code (pertinent portion, first three

sentences) (Ship Mortgage Act, 1920, subsee. K):

‘*A preferred mortgage shall constitute a lien

upon the mortgaged vessel in the amount of the out-

standing mortgage indebtedness secured by such

vessel. Upon the default of any term or condition

of the mortgage, such lien may be enforced by the

mortgagee by suit in rem in admiralty. Original

jurisdiction of all such suits is granted to the dis-

trict courts of the United States exclusively.’’

Admiralty Rule XXII—U. S. District Court, Eastern

District of New York:

**In case of the attachment of property, or the

arrest of the person (except in suits for seamen’s

wages when the attachment is issued upon certificate

pursuant to Sections 4546 and 4547 of the Revised

Statutes), the party arrested, or any person having

a right to intervene in respect of the thing attached,

may, upon evidence showing any improper practice

or a manifest want of equity on the part of the

libellant, have an order from the judge requiring the

libellant to show cause instanter why the arrest or

attachment should not be vacated.’’

HI