Cargo was lost through the alleged fault of the carrier while
being towed in a canal -- a navigable water of the United States --
under a maritime contract providing that all disputes under it
should be arbitrated before a designated board, whose decision
should be final and binding. The cargo owners, proceeding in a
District Court of the United States in admiralty, filed a libel for
damages against the carrier and also libeled the tug belonging to
the carrier which was charged with having occasioned the loss. The
carrier answered as respondent and also as claimant of the tug, and
released the latter by a stipulation for value.
Held:
1. The proceedings were within the jurisdiction of the court of
admiralty. P. 271.
2. Under the United States Arbitration Act, the Court had
authority to direct that the issues arising under the contract
between the cargo owners and the carrier be arbitrated, as provided
by the contract, and to confirm the award of the arbitrators. Pp.
284 U. S.
274-276.
3. Under the agreement that the award should be "final and
binding," the carrier was bound by the award against it, both as
respondent and as owner and claimant of the tug, and a decree
against it upon the award was authorized by § 8 of the Act. P.
284 U. S.
276.
4. The fact that the award in this case was signed by only four
of the five arbitrators is not a valid objection to the decree
enforcing it, since it does not appear by the record that the
agreement required unanimity (the statute being silent on the
subject) or that any specific objection raising the point was made
on the motion for confirmation. P.
284 U. S.
276.
5. Whether the admiralty court committed error in decreeing
against the stipulator as well as the respondent-claimant will not
be decided when the stipulator has not sought review in this Court.
P.
284 U. S.
277.
Page 284 U. S. 264
6. In authorizing admiralty court to require specific
performance of valid stipulations for arbitration in maritime
contracts, and to enter decrees on awards found to be regular and
in accordance with the agreements, Congress did not infringe upon
the judicial power as extended to cases of admiralty and maritime
jurisdiction. P.
284 U. S.
277.
49 F.2d 215 affirmed.
Certiorari,
post, p. 601, to review a decree in
admiralty, in a loss-of-cargo case, enforcing an agreement to
arbitrate and the award of the arbitrators.
Page 284 U. S. 268
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
The petitioner, Marine Transit Corporation, entered into a
written booking agreement with the respondents, Louis Dreyfus &
Co., to furnish insurable canal tonnage for about 200,000 bushels
of wheat, to be carried from Buffalo to New York. The contract
provided that it should be "subject to New York Produce Exchange
Canal Grain Charter Party No. 1 as amended." That charter party
contained the following provision as to disputes:
"All disputes arising under this contract to be arbitrated
before the Committee on Grain of the New York Produce Exchange
whose decision shall be final and binding."
Under this contract, the Marine Transit Corporation, in
September, 1928, provided the barge
Edward A. Ryan to
carry 19,200 bushels of the above-stated amount. This was a
shipment, as the bill of lading of the Marine Transit Corporation
shows, to the order of the Bank of Nova Scotia, and was from Ft.
William, Ontario, "in bond, for export," to be delivered "on
surrender of original Lake bill of lading properly endorsed." While
in tow of the petitioner's tug
Gerald A. Fagan on the New
York Barge Canal, and approaching the Federal lock at Troy, the
Edward A. Ryan struck the guide wall and sank with its
cargo. The respondents, Louis Dreyfus & Co., filed a libel in
admiralty against the Marine Transit Corporation
in
personam, and against the tug
Gerald A. Fagan in rem,
to recover damages for the loss of the wheat. The libel was also
against a barge
John E. Enright, one of the boats in the
tow, but the action as to that boat was subsequently discontinued.
A claim for
Page 284 U. S. 269
the tug
Gerald A. Fagan was made by the Marine Transit
Corporation, and a stipulation for value was filed by it, as
claimant, in the sum of $26,000, with the usual provision that the
stipulation should be void if the claimant and the stipulator (the
Continental Casualty Company) should abide by all orders of the
court and pay the amount awarded by its final decree, and that
otherwise the stipulation should remain in full force.
After answer to the libel had been filed by the Marine Transit
Corporation as respondent, and as claimant of the tug
Gerald A.
Fagan, the libelants moved for a reference of the dispute to
arbitration in accordance with the provision of the booking
contract. This motion was granted "only as to the issues raised by
the contract between the libellants and the Marine Transit
Corporation," and the latter was ordered to submit to arbitration
as to these issues before the Committee on Grain of the New York
Produce Exchange. The arbitration proceeded and resulted in an
award against the Marine Transit Corporation for the sum of
$23,016, with interest and the costs and expenses of the
arbitration. The award was confirmed by the district court, and an
order -- in substance, a final decree -- was entered for the
recovery by the libelants against the Marine Transit Corporation of
the amount of the award, with the further provision that, if
payment was not made within ten days, execution should issue
against the Marine Transit Corporation and the stipulator. A motion
to restrain the libelants from recovering from the claimant or its
stipulator on behalf of the tug
Gerald A. Fagan was
denied. The decree entered upon the award was affirmed by the
circuit court of appeals, 49 F.2d 215, and the case comes here on
writ of certiorari.
There is no question that the controversy between the petitioner
and the respondents was within the arbitration clause of the
booking contract. That provision was valid,
Page 284 U. S. 270
Red Cross Line v. Atlantic Fruit Co., 264 U.
S. 109,
264 U. S. 122,
and, as it related to all disputes arising under the contract, it
applied to the controversy with the Marine Transit Corporation as
operating owner of the tug
Gerald A. Fagan, which was used
for the agreed transportation. The questions presented are (1)
whether the action of the district court was authorized by the
United States Arbitration Act (9 U.S.C.A §§ 1-15); [
Footnote 1] and (2) whether that Act, as thus
applied, is constitutional.
Page 284 U. S. 271
First. In construing the statute, we deal only with the
questions raised by the present record. The loss occurred
Page 284 U. S. 272
upon a waterway which was part of the navigable waters of the
United States,
The Robert W. Parsons, 191 U. S.
17, and while the cargo was being transported by the
petitioner under a maritime contract. The subject matter of the
controversy thus lay within the jurisdiction of admiralty. The
ambiguities of the statute have been
Page 284 U. S. 273
stressed in argument, but we think that its provisions embrace a
case such as the one before us, [
Footnote 2] and it is not necessary to discuss others.
Section 4 of the act authorizes a court, which would otherwise have
jurisdiction in admiralty "of the subject matter of a suit arising
out of the controversy
Page 284 U. S. 274
between the parties" to a written agreement for arbitration, to
"make an order directing the parties to proceed to arbitration in
accordance with the terms of the agreement." Section 8 explicitly
provides that, where a cause of action is
"otherwise justiciable in admiralty, then, notwithstanding
anything herein to the contrary, the party claiming to be aggrieved
may begin his proceeding hereunder by libel and seizure of the
vessel or other property of the other party according to the usual
course of admiralty proceedings,"
and the court may then "direct the parties to proceed with the
arbitration and shall retain jurisdiction to enter its decree upon
the award."
In this instance, the libel against the vessel came directly
within the provision of § 8. But the petitioner insists that the
district court "had no power under that § to make an order for
arbitration of the proceeding against the Marine Transit
Corporation,
in personam." Section 8, it is said, applies
"only to proceedings
in rem or proceedings
in
personam where there has been an attachment of the property of
the respondent," and there was no such attachment in this case. And
it is contended that, aside from § 8, the Act does not provide for
the granting of an order for arbitration "in a pending suit." With
respect to the last contention, it may be observed that § 3
provides for a stay in a pending suit until arbitration has been
had in accordance with the terms of the agreement, and it would be
an anomaly if the court could grant such a stay and could not
direct the arbitration to proceed,
Page 284 U. S. 275
although the court, admittedly, could have made an order for the
arbitration if no suit had been brought. We think that the
petitioner's argument is based upon a misconception of the statute.
The intent of § 8 is to provide for the enforcement of the
agreement for arbitration, without depriving the aggrieved party of
his right, under the admiralty practice, to proceed against "the
vessel or other property" belonging to the other party to the
agreement. The statutory provision does not contemplate "the vessel
or other property," which may be seized, as being the party to the
arbitration agreement. By the express terms of § 8, the libel and
seizure are authorized as an initial step in a proceeding to
enforce the agreement for arbitration, and it is the parties to
that agreement who may be directed to proceed with the arbitration.
Here, the Marine Transit Corporation was the party to the
arbitration agreement. It had used the tug as a facility for the
transportation of the libelants' wheat, and the dispute as to
liability was within the promise to arbitrate. If there was to be
an order for arbitration, it would appropriately run against the
Marine Transit Corporation to enforce that obligation. It was not
necessary or proper that the order should run against the tug. Nor
was it necessary that the court, in directing the arbitration,
should attempt to split the proceeding with respect to the demand
in the suit
in personam against the corporation and that
in rem against the tug. The Marine Transit Corporation was
before the court both as respondent and as owner and claimant of
the vessel seized, and the agreement to arbitrate bound the
corporation in both capacities. We conclude that the order
directing the arbitration of the issues arising under the contract
between the libelants and the Marine Transit Corporation was
authorized by the statute.
We do not conceive it to be open to question that, where the
court has authority under the statute, as we find
Page 284 U. S. 276
that it had in this case, to make an order for arbitration, the
court also has authority to confirm the award or to set it aside
for irregularity, fraud,
ultra vires, or other defect.
[
Footnote 3] Upon the motion to
confirm the award in this case, objections to the proceedings
before the arbitrators were overruled by the district court, and
are not pressed here. It is, however, urged against the award that
it was signed by only four of the five arbitrators. The statute is
silent with respect to a decision by a majority, but it does
authorize action by a majority in compelling the attendance of
witnesses. (§ 7). In the absence of statutory requirement, the
question as to the necessity of unanimity in the decision on the
merits would be determined by the arbitration agreement, and it
does not appear that, under the agreement in this instance,
unanimity was needed. Nor does the record show that specific
objection upon this point was taken in the district court upon the
motion for confirmation, and the rules of the New York Produce
Exchange with respect to arbitrations under its Canal Grain Charter
Party No. 1 (to which the petitioner's booking agreement was made
subject) are not set forth. We think that there was no error in the
ruling of the circuit court of appeals upon this point.
The petitioner also insists that, under § 9, a judgment may be
entered upon the award only if the parties have so agreed in their
contract for arbitration, and that the agreement here does not so
provide. But the agreement for arbitration stipulated that the
award should be "final and binding." The award was accordingly
binding upon the Marine Transit Corporation both as respondent and
as the owner and claimant of the tug, and the district court
entered its decree upon the award against that corporation under
the authority expressly conferred by § 8.
Page 284 U. S. 277
The Circuit Court of Appeals also upheld the decree as against
the stipulator, as its stipulation conformed to Admiralty Rule 8 of
the Southern District of New York, [
Footnote 4] and the decree was in accord with the
stipulation and admiralty practice.
The
Palmyra, 12 Wheat. 1,
25 U. S. 10;
The Wanata, 95 U. S. 600,
95 U. S. 611.
We express no doubt as to the correctness of this conclusion, which
the petitioner contests, but we have no occasion to deal with the
question, as the stipulator has taken no steps to obtain a review
of the decree in this Court.
We find no ground for disturbing the decree as unauthorized by
the statute.
Second. The constitutional question raised by this
application of the statute is whether it is compatible with the
maintenance of the judicial power of the United States as extended
to cases of admiralty and maritime jurisdiction (Const., Art.
III).
In
Red Cross Line v. Atlantic Fruit Co., supra at pp.
264 U. S.
122-123, this Court pointed out that, in admiralty,
"agreements to submit controversies to arbitration are valid," and
that "reference of maritime controversies to arbitration has long
been common practice." "An executory agreement," said the court,
"may be made a rule of court" and the "substantive right created by
an agreement to submit its disputes to arbitration is recognized as
a perfect obligation." The question, then, is one merely as to the
power of the Congress to afford a remedy in admiralty to enforce
such an obligation. It was because the question was one of remedy
only that this Court decided that a state, by virtue of the clause
saving to suitors "the right
Page 284 U. S. 278
of a common law remedy," [
Footnote 5] had the power
"to confer upon its courts the authority to compel parties
within its jurisdiction to specifically perform an agreement for
arbitration, which is valid by the general maritime law, as well as
by the law of the state,"
and is contained in a maritime contract made within the state
and there to be performed.
Red Cross Line v. Atlantic Fruit
Company, supra at p.
264 U. S. 124.
The general power of the Congress to provide remedies in matters
falling within the admiralty jurisdiction of the federal courts,
and to regulate their procedure, is indisputable. The petitioner
contends that the Congress could not confer upon courts of
admiralty the authority to grant specific performance. But it is
well settled that the Congress, in providing appropriate means to
enforce obligations cognizable in admiralty, may draw upon other
systems. Thus, the Congress may authorize a trial by jury in
admiralty, as it has done in relation to certain cases arising on
the Great Lakes. [
Footnote 6]
Courts of admiralty may be empowered to grant injunctions, as in
proceedings for limitation of liability. [
Footnote 7] Similarly, there can be no question of the
power of Congress to authorize specific performance when that is an
appropriate remedy in a matter within the admiralty jurisdiction.
As Chief Justice Taney said in
The Genesee
Chief, 12 How. 443,
53 U. S.
460:
"The Constitution declares that the judicial power of the United
States shall extend to 'all cases of admiralty and maritime
jurisdiction.' But it does not direct that the court shall proceed
according to ancient and established forms, or shall adopt any
other form or mode of practice. . . . In admiralty
Page 284 U. S. 279
and maritime cases, there is no such limitation as to the mode
of proceeding, and Congress may therefore, in cases of that
description, give either party right of trial by jury, or modify
the practice of the court in any other respect that it deems more
conducive to the administration of justice."
In this instance, a remedy is provided to fit the agreement. The
Congress has authorized the court to direct the parties to proceed
to arbitration in accordance with a valid stipulation of a maritime
contract and to enter a decree upon the award found to be regular
and within the terms of the agreement. We think that the objection
on constitutional grounds is without merit.
Decree affirmed.
[
Footnote 1]
Act of February 12, 1925, c. 213, 43 Stat. 883 [U.S.C., Title 9,
§§ 1-15]. The title of the Act and §§ 1 to 4, inclusive, and §§ 6,
7, 8, a portion of § 9, and §§ 13 and 14 are as follows:
"CHAP. 213. -- An Act To make valid and enforceable written
provisions or agreements for arbitration of disputes arising out of
contracts, maritime transactions, or commerce among the states or
territories or with foreign nations."
"
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That
'maritime transactions,' as herein defined, means charter parties,
bills of lading of water carriers, agreements relating to wharfage,
supplies furnished vessels or repairs to vessels, collisions, or
any other matters in foreign commerce which, if the subject of
controversy, would be embraced within admiralty jurisdiction;
'commerce,' as herein defined, means commerce among the several
states or with foreign nations, or in any territory of the United
States or in the District of Columbia, or between any such
territory and another, or between any such territory and any state
or foreign nation, or between the District of Columbia and any
state or territory or foreign nation, but nothing herein contained
shall apply to contracts of employment of seamen, railroad
employees, or any other class of workers engaged in foreign or
interstate commerce."
"Sec. 2. That a written provision in any maritime transaction or
a contract evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such contract
or transaction, or the refusal to perform the whole or any part
thereof, or an agreement in writing to submit to arbitration an
existing controversy arising out of such a contract, transaction,
or refusal, shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
contract."
"Sec. 3. That, if any suit or proceeding be brought in any of
the courts of the United States upon any issue referable to
arbitration under an agreement in writing for such arbitration, the
court in which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application of one of
the parties stay the trial of the action until such arbitration has
been had in accordance with the terms of the agreement, providing
the applicant for the stay is not in default in proceeding with
such arbitration."
"Sec. 4. That a party aggrieved by the alleged failure, neglect,
or refusal of another to arbitrate under a written agreement for
arbitration may petition any court of the United States which, save
for such agreement, would have jurisdiction under the judicial code
at law, in equity, or in admiralty of the subject matter of a suit
arising out of the controversy between the parties, for an order
directing that such arbitration proceed in the manner provided for
in such agreement. Five days' notice in writing of such application
shall be served upon the party in default. Service thereof shall be
made in the manner provided by law for the service of summons in
the jurisdiction in which the proceeding is brought. The court
shall hear the parties, and, upon being satisfied that the making
of the agreement for arbitration or the failure to comply therewith
is not in issue, the court shall make an order directing the
parties to proceed to arbitration in accordance with the terms of
the agreement:
Provided, That the hearing and proceedings
under such agreement shall be within the district in which the
petition for an order directing such arbitration is filed. If the
making of the arbitration agreement or the failure, neglect, or
refusal to perform the same be in issue, the court shall proceed
summarily to the trial thereof. If no jury trial be demanded by the
party alleged to be in default, or if the matter in dispute is
within admiralty jurisdiction, the court shall hear and determine
such issue. Where such an issue is raised, the party alleged to be
in default may, except in cases of admiralty, on or before the
return day of the notice of application, demand a jury trial of
such issue, and upon such demand the court shall make an order
referring the issue or issues to a jury in the manner provided by
law for referring to a jury issues in an equity action, or may
specially call a jury for that purpose. If the jury find that no
agreement in writing for arbitration was made or that there is no
default in proceeding thereunder, the proceeding shall be
dismissed. If the jury find that an agreement for arbitration was
made in writing and that there is a default in proceeding
thereunder, the court shall make an order summarily directing the
parties to proceed with the arbitration in accordance with the
terms thereof."
"
* * * *"
"Sec. 6. That any application to the court hereunder shall be
made and heard in the manner provided by law for the making and
hearing of motions, except as otherwise herein expressly
provided."
"Sec. 7. That the arbitrators selected either as prescribed in
this Act or otherwise, or a majority of them, may summon in writing
any person to attend before them or any of them as a witness and in
a proper case to bring with him or them any book, record, document,
or paper which may be deemed material as evidence in the case. The
fees for such attendance shall be the same as the fees of witnesses
before masters of the United States courts. Said summons shall
issue in the name of the arbitrator or arbitrators, or a majority
of them, and shall be signed by the arbitrators, or a majority of
them, and shall be directed to the said person and shall be served
in the same manner as subpoenas to appear and testify before the
court; if any person or persons so summoned to testify shall refuse
or neglect to obey said summons, upon petition the United States
court in and for the district in which such arbitrators, or a
majority of them, are sitting may compel the attendance of such
person or persons before said arbitrator or arbitrators, or punish
said person or persons for contempt in the same manner now provided
for securing the attendance of witnesses or their punishment for
neglect or refusal to attend in the courts of the United
States."
"Sec. 8. That, if the basis of jurisdiction be a cause of action
otherwise justiciable in admiralty, then, notwithstanding anything
herein to the contrary, the party claiming to be aggrieved may
begin his proceeding hereunder by libel and seizure of the vessel
or other property of the other party according to the usual course
of admiralty proceedings, and the court shall then have
jurisdiction to direct the parties to proceed with the arbitration
and shall retain jurisdiction to enter its decree upon the
award."
"Sec. 9. If the parties in their agreement have agreed that a
judgment of the court shall be entered upon the award made pursuant
to the arbitration, and shall specify the court, then, at any time
within one year after the award is made, any party to the
arbitration may apply to the court so specified for an order
confirming the award, and thereupon the court must grant such an
order unless the award is vacated, modified, or corrected as
prescribed in the next two sections. If no court is specified in
the agreement of the parties, then such application may be made to
the United States court in and for the district within which such
award was made. . . ."
"Sec. 13. That the party moving for an order confirming,
modifying, or correcting an award shall, at the time such order is
filed with the clerk for the entry of judgment thereon, also file
the following papers with the clerk:"
"(a) The agreement, the selection or appointment, if any, of an
additional arbitrator or umpire, and each written extension of the
time, if any, within which to make the award."
"(b) The award."
"(c) Each notice, affidavit, or other paper used upon an
application to confirm, modify, or correct the award, and a copy of
each order of the court upon such an application."
"The judgment shall be docketed as if it was rendered in an
action."
"The judgment so entered shall have the same force and effect in
all respects, as, and be subject to all the provisions of law
relating to, a judgment in an action, and it may be enforced as if
it had been rendered in an action in the court in which it is
entered."
"Sec. 14. That this Act may be referred to as 'The United States
Arbitration Act.'"
[
Footnote 2]
The Committee on the Judiciary of the House of Representatives,
in its report upon the bill, which, with the Senate amendment,
became the Act in question, said:
"The purpose of this bill is to make valid and enforceable
agreements for arbitration contained in contracts involving
interstate commerce or within the jurisdiction of admiralty, or
which may be the subject of litigation in the Federal courts. . . .
The remedy is founded also upon the federal control over interstate
commerce and over admiralty."
House Rep. No. 96, 68th Cong. 1st Sess.
See also
Cong.Rec. vol. 66, pt. 3, 68th Cong.2d Sess. pp. 3003, 3004.
[
Footnote 3]
See §§ 10 to 12.
[
Footnote 4]
This rule is as follows:
"Such stipulation shall contain the consent of the stipulators,
that, if the libellant or petitioner recover, the decree may be
entered against them for an amount not exceeding the amount named
in such stipulation, and that thereupon execution may issue against
their goods, chattels, lands, and tenements or other real
estate."
[
Footnote 5]
Judicial Code, § 24(3), U.S.C. Tit. 28, § 41(3).
[
Footnote 6]
Act of February 26, 1845, c. 20, 5 Stat. 726, R.S. § 566 (U.S.C.
Tit. 28, § 770);
The Genesee
Chief, 12 How. 443,
53 U. S.
459-460;
The Eagle, 8
Wall. 15,
75 U. S. 25.
[
Footnote 7]
Hartford Accident & Indemnity Co. v. Southern Pacific
Co., 273 U. S. 207,
273 U. S.
218.