Home Ins. Co. v. MERCHANTS'TRANSP. CO., 16 F.2d 372 (9th Cir. 1926)

*373 W. H. Bogle, Lawrence Bogle, Cassius E. Gates, and John C. Bowen, all of Seattle, Wash., for appellant.

Overton G. Ellis and Robert E. Evans, both of Tacoma, Wash., for appellee.

Before GILBERT and RUDKIN, Circuit Judges, and JAMES, District Judge.

GILBERT, Circuit Judge (after stating the facts as above).

Jurisdiction in admiralty in cases of contract depends upon the nature of the contract, "and is limited to contracts, claims, and services purely maritime and touching the rights and duties appertaining to commerce and navigation." The Eclipse, 135 U.S. 599, 608, 10 S. Ct. 873, 34 L. Ed. 269. A contract of marine insurance is a maritime contract. Insurance Company v. Dunham, 11 Wall. 1, 20 L. Ed. 90. But a contract to procure marine insurance is not enforceable in admiralty. Marquardt v. French (D. C.) 53 F. 603. Nor is a contract by a carrier by water to procure insurance on goods received for transportation a maritime contract. City of Clarksville (D. C.) 94 F. 201. In Plummer v. Webb, 4 Mason, 380, Fed. Cas. No. 11,233. Judge Story said: "In cases of a mixed nature it is not a sufficient foundation for admiralty jurisdiction that there are involved some in-gredients of a maritime nature. The substance of the whole contract must be maritime." In Williams v. Providence Washington Ins. Co. (D. C.) 56 F. 159, it was held that admiralty has no jurisdiction of an action to reform a policy of marine insurance. Said the court: "The complaint is, in fact, an action for false and fraudulent representations, by which the libelant was induced to accept the policy, supposing that he was insured for the Sound, when he was not. Such an action is not upon the policy itself, but upon the negotiations leading to it." Courts of admiralty cannot entertain an original bill or libel for specific performance, or to correct a mistake, or to grant relief against a fraud. Andrews & Shepherd v. Essex Fire & Marine Ins. Co., 3 Mason, 6, Fed. Cas. No. 374.

In United Transp. & L. Co. v. New York & Baltimore T. Line (C. C. A.) 185 F. 386, it was held that admiralty has no jurisdiction over nonmaritime transactions following the execution of maritime contracts. This was held in reference to a counterclaim for damages on account of excessive charges paid to the libelant by the respondent under a prior contract between them, which contract was alleged to be void and fraudulent, for the reason that the respondent's general manager, who made it, was also an officer of the libelant and betrayed the trust imposed in him by the respondent. *374 Said the court: "The matter is not maritime. The fundamental question is whether the general manager of the respondent corporation, induced by his interest in the libelant corporation, betrayed his trust, and this question is not maritime in its nature."

The appellant admits that its causes of action are in the nature of assumpsit for money had and received, and contends that, while it is true that the libel alleges that the appellee made incorrect proofs of loss, and that the payments were made under "misapprehension, misinformation, mistake, and ignorance of the facts," those allegations are not the basis of the causes of action, but are inserted to show admiralty jurisdiction, in that the question of the right to recover involves the construction of maritime contracts and the application of principles of maritime law, and it relies upon United States Shipping Board v. Banque Russo Asiatique (C. C. A.) 286 F. 918, The John Francis (D. C.) 184 F. 746, Allanwilde Corp. v. Vacuum Oil Company, 248 U.S. 377, 39 S. Ct. 147, 63 L. Ed. 312, 3 A. L. R. 15, and Int. Paper Co. v. The Gracie D. Chambers, 248 U.S. 387, 39 S. Ct. 149, 63 L. Ed. 318.

In the first two cases so cited the libels were brought to recover money exacted under duress and paid under protest. The parties to those actions were in the same attitude to the litigation that they would have been in, had the action been brought directly upon the contracts, and the only question before the court was the proper construction of contracts of affreightment and the determination of the rights of the parties thereunder. The same substantially is true of the Allanwilde and Gracie Chambers Cases. The question of jurisdiction was not raised or discussed in those cases, and decisions there turned wholly upon the meaning of the provisions of charter parties.

Those cases differ from the case at bar. Here the action is not merely an action on a maritime contract or tort, nor a suit to enforce liability under the covenants of policies of marine insurance. It is an action growing out of certain alleged inequitable acts of the appellee, and primarily its purpose is to recover money obtained by means of fraud and false representations. In such a case, in an action for damages as for tort, it is sufficient to entitle the plaintiff to recover if he has so far relied upon the false representations of the insured that, but for such representations, the payments would not have been made. Hartford Ins. Co. v. Matthews, 102 Mass. 221. Money so paid may also be recovered in an action as for money had and received, Western Assurance Co. v. Towle, 65 Wis. 247, 26 N.W. 104; or by a suit in equity, McConnel v. Delaware M. S. Ins. Co., 18 Ill. 229.

In either form of action the first question for determination is whether or not the appellee imposed upon the appellant by false proofs of loss, and the appellant, in ignorance of the fraud, paid the money upon the policies. In a case where, as here, the plaintiff has delayed more than two years after the payment before bringing his action, the time when he discovered the fraud may be decisive of his right to recover. A contract enforceable in admiralty must be wholly maritime. Grant v. Poillon, 20 How. 162, 15 L. Ed. 871. Citing that case, Chief Justice Taney, in Turner v. Beacham, Taney, 583, Fed. Cas. No. 14,252 said: "And I consider it to be a clear rule of admiralty jurisdiction that although the contract which the party seeks to enforce is maritime, yet if he has connected it inseparably with another contract, over which the court has no jurisdiction, and they are so blended together that the court cannot decide one, with justice to both parties, without disposing of the other, the party must resort to a court of law, or a court of equity, as the case may require."

No precedent is found presenting the precise question here involved, and its decision is attended with some difficulty, but we are not convinced that the court below erred in denying the jurisdiction.

The decree is affirmed.