Petitioner Exxon Corporation and Waterman Steamship Corporation
negotiated a marine fuel requirements contract, in which Exxon
agreed to supply Waterman's vessels with fuel when the vessels
called at ports where Exxon could supply fuel directly and, when
the vessels were in ports where Exxon had to rely on local
suppliers, to arrange for, and pay, those suppliers to deliver the
fuel and then invoice Waterman. In the transaction at issue, Exxon
acted as Waterman's agent, procuring fuel from a local supplier in
Jeddah, Saudi Arabia, for a ship owned by respondent Central Gulf
Lines, Inc., but chartered by Waterman. Exxon paid for the fuel and
invoiced Waterman, but Waterman filed for bankruptcy and never paid
the bill's full amount. When Central Gulf agreed to assume personal
liability for the bill if a court were to hold the ship liable
in rem, Exxon commenced litigation in the District Court
against Central Gulf
in personam and the ship
in
rem, claiming to have a maritime lien on the ship under the
Federal Maritime Lien Act. The court concluded that it did not have
admiralty jurisdiction. Noting that a prerequisite to the existence
of a maritime lien based on a breach of contract is that the
contract's subject matter must fall within the admiralty
jurisdiction, it followed Second Circuit precedent, which holds
that
Minturn v.
Maynard, 17 How. 477 -- in which an agent who had
advanced funds for repairs and supplies necessary for a vessel was
barred from bringing a claim in admiralty against the vessel's
owners -- established a
per se rule excluding agency
contracts from admiralty. However, the court ruled in Exxon's favor
on a separate unpaid bill for fuel that Exxon supplied directly to
the ship in New York. The Court of Appeals affirmed.
Held:
1. Because there is no
per se exception of agency
contracts from admiralty jurisdiction,
Minturn is
overruled.
Minturn is incompatible with current principles
of admiralty jurisdiction over contracts. The rationales on which
it apparently rested -- that an action cognizable as
assumpsit was excluded from admiralty, and that a claimant
had to have some form of a lien interest in a vessel to sue in
admiralty on a contract -- have been discredited, and are no longer
the law of this Court.
See Archawski v. Hanioti,
350 U. S. 532,
350 U. S. 536;
see also, e.g., 249 U. S. S.
604� S.S. Co. v. Hall Bros. Marine Railway & Shipbuilding
Co.,
249 U. S. 119,
249 U. S.
126. Minturn's
approach is also inconsistent
with the principle that the "nature and subject matter" of the
contract at issue should be the crucial consideration in assessing
admiralty jurisdiction. Insurance Co. v.
Dunham, 11 Wall. 1, 78 U. S. 26. And
a per se
bar of agency contracts from admiralty ill serves
the purpose of the grant of admiralty jurisdiction, which is the
protection of maritime commerce, Foremost Ins. Co. v.
Richardson,@
457 U. S. 668,
457 U. S. 674.
There is nothing in the agency relationship that necessarily
excludes such relationships from the realm of maritime commerce,
and rubrics such as "general agent" reveal nothing about whether
the services actually performed are maritime in nature. Pp.
500 U. S.
608-612.
2. Admiralty jurisdiction extends to Exxon's claim regarding the
delivery of fuel in Jeddah. The lower court correctly held that the
New York transaction is maritime in nature. Since the subject
matter of both claims -- the value of the fuel received by the ship
-- is the same as it relates to maritime commerce, admiralty
jurisdiction must extend to one if it extends to the other. P.
500 U. S.
612-613.
3. This Court expresses no view on whether Exxon is entitled to
a maritime lien under the Federal Maritime Lien Act, and leaves
that issue to be decided on remand. P.
500 U. S.
613.
904 F.2d 33 (CA 2 1990), reversed and remanded.
MARSHALL, J., delivered the opinion for a unanimous Court.
JUSTICE MARSHALL delivered the opinion of the Court.
This case raises the question whether admiralty jurisdiction
extends to claims arising from agency contracts. In
Minturn v.
Maynard, 17 How. 477 (1855), this Court held that
an agent who had advanced funds for repairs and supplies necessary
for a vessel could not bring a claim in admiralty
Page 500 U. S. 605
against the vessel's owners.
Minturn has been
interpreted by some lower courts as establishing a
per se
rule excluding agency contracts from admiralty. We now consider
whether
Minturn should be overruled.
I
This case arose over an unpaid bill for fuels acquired for the
vessel,
Green Harbour ex William Hooper (Hooper). The
Hooper is owned by respondent Central Gulf Lines, Inc.
(Central Gulf) and was chartered by the Waterman Steamship
Corporation (Waterman) for use in maritime commerce. Petitioner
Exxon Corporation (Exxon) was Waterman's exclusive worldwide
supplier of gas and bunker fuel oil for some 40 years.
In 1983, Waterman and Exxon negotiated a marine fuel
requirements contract. Under the terms of the contract, upon
request, Exxon would supply Waterman's vessels with marine fuels
when the vessels called at ports where Exxon could supply the fuels
directly. Alternatively, in ports where Exxon had to rely on local
suppliers, Exxon would arrange for the local supplier to provide
Waterman vessels with fuel. In such cases, Exxon would pay the
local supplier for the fuel and then invoice Waterman. Thus, while
Exxon's contractual obligation was to provide Waterman's vessels
with fuel when Waterman placed an order, it met that obligation
sometimes in the capacity of "seller" and other times in the
capacity of "agent."
In the transaction at issue here, Exxon acted as Waterman's
agent, procuring bunker fuel for the
Hooper from Arabian
Marine Operating Co. (Arabian Marine) of Jeddah, Saudi Arabia. In
October, 1983, Arabian Marine delivered over 4,000 tons of fuel to
the
Hooper in Jeddah and invoiced Exxon for the cost of
the fuel. Exxon paid for the fuel and invoiced Waterman, in turn,
for $763,644. Shortly thereafter, Waterman sought reorganization
under Chapter 11 of the Bankruptcy Code; Waterman never paid the
full amount
Page 500 U. S. 606
of the fuel bill. During the reorganization proceedings, Central
Gulf agreed to assume personal liability for the unpaid bill if a
court were to hold the
Hooper liable
in rem for
that cost.
Subsequently, Exxon commenced this litigation in federal
district court against Central Gulf
in personam and
against the
Hooper in rem. Exxon claimed to have a
maritime lien on the
Hooper under the Federal Maritime
Lien Act, 46 U.S.C. § 971 (1982 ed.). [
Footnote 1] The District Court noted that
"[a] prerequisite to the existence of a maritime lien based on a
breach of contract is that the subject matter of the contract must
fall within the admiralty jurisdiction."
707 F.
Supp. 155, 158 (SDNY 1989). Relying on the Second Circuit's
decision in
Peralta Shipping Corp. v. Smith & Johnson
(Shipping) Corp., 739 F.2d 798 (CA2 1984),
cert.
denied, 470 U. S. 1031
(1985), the District Court concluded that it did not have admiralty
jurisdiction over the claim.
See 707 F. Supp. at 159-161.
In
Peralta, the Second Circuit held that it was
constrained by this Court's decision in
Minturn v. Maynard,
supra, and by those Second Circuit cases faithfully adhering
to
Minturn, to follow a
per se rule excluding
agency contracts from admiralty jurisdiction.
See Peralta,
supra, at 802-804. The District Court also rejected the
argument that Exxon should be excepted from the
Minturn
rule because it had provided credit necessary for the
Hooper to purchase the fuel, and thus was more than a mere
agent. To create such an exception, the District Court reasoned,
"
would blur, if not obliterate, a rather clear admiralty
distinction.'" 707 F. Supp. at 161, quoting Peralta,
supra, at 804. [Footnote
2]
Page 500 U. S. 607
The District Court denied Exxon's motion for reconsideration.
The court first rejected Exxon's claim that, in procuring fuel for
Waterman, it was acting as a seller, rather than an agent.
Additionally, the District Court declined Exxon's invitation to
limit the
Minturn rule to either general agency or
preliminary service contracts. [
Footnote 3] Finally, the District Court determined that,
even if it were to limit
Minturn, Exxon's contract with
Waterman was both a general agency contract and a preliminary
services contract, and thus was excluded from admiralty
jurisdiction under either exception.
See 717 F.
Supp. 1029, 1031-1037 (SDNY 1989).
The Court of Appeals for the Second Circuit summarily affirmed
the judgment of the District Court "substantially for the reasons
given" in the District Court's two opinions. App. to Pet. for Cert.
A2, judgt. order reported at 904 F.2d 33 (1990). We granted
certiorari to resolve a conflict among the Circuits as to the scope
of the
Minturn decision [
Footnote 4] and to
Page 500 U. S. 608
consider whether
Minturn should be overruled. 498 U.S.
1045 (1991). Today we are constrained to overrule
Minturn
and hold that there is no
per se exception of agency
contracts from admiralty jurisdiction.
II
Section 1333(1) of Title 28 U.S.C. grants federal district
courts jurisdiction over "[a]ny civil case of admiralty or maritime
jurisdiction." In determining the boundaries of admiralty
jurisdiction, we look to the purpose of the grant.
See Insurance
Co. v. Dunham, 11 Wall. 1,
78 U. S. 24
(1871). As we recently reiterated, the "fundamental interest giving
rise to maritime jurisdiction is
the protection of maritime
commerce.'" Sisson v. Ruby, 497 U.
S. 358, 497 U. S. 367
(1990), quoting Foremost Ins. Co. v. Richardson,
457 U. S. 668,
457 U. S. 674
(1982). This case requires us to determine whether the limits set
upon admiralty jurisdiction in Minturn are consistent with
that interest.
The decision in
Minturn has confounded many, and we
think the character of that three-paragraph opinion is best
appreciated when viewed in its entirety:
"The respondents were sued in admiralty, by process
in
personam. The libel charges that they are owners of the
steamboat Gold Hunter; that they had appointed the libellant their
general agent or broker; and exhibits a bill, showing a balance of
accounts due libellant for money paid, laid out, and expended for
the use of respondents,
Page 500 U. S. 609
in paying for supplies, repairs, and advertising of the
steamboat, and numerous other charges, together with commissions on
the disbursements, &c."
"The court below very properly dismissed the libel for want of
jurisdiction. There is nothing in the nature of a maritime contract
in the case. The libel shows nothing but a demand for a balance of
accounts between agent and principal, for which an action of
assumpsit, in a common law court, is the proper remedy. That the
money advanced and paid for respondents was, in whole or in part,
to pay bills due by a steamboat for repairs or supplies will not
make the transaction maritime, or give the libellant a remedy in
admiralty. Nor does the local law of California, which authorizes
an attachment of vessels for supplies or repairs, extend to the
balance of accounts between agent and principal who have never
dealt on the credit, pledge, or security of the vessel."
"The case is too plain for argument."
17 How.
58 U. S. 477. While
disagreeing over what sorts of agency contracts fall within
Minturn's ambit, lower courts have uniformly agreed that
Minturn states a
per se rule barring at least
some classes of agency contracts from admiralty.
See
n 4,
supra. [
Footnote 5]
Minturn appears to have rested on two rationales: (1)
that the agent's claim was nothing more than a "demand for a
balance of accounts" which could be remedied at common law through
an action of
assumpsit, and (2) that the agent had no
contractual or legal right to advance monies "on the credit,
pledge, or security of the vessel." The first rationale appears to
be an application of the then-accepted rule that "the
Page 500 U. S. 610
admiralty has no jurisdiction at all in matters of account
between part owners,"
The Steamboat Orleans v.
Phoebus, 11 Pet. 175,
36 U. S. 182
(1837), or in actions in
assumpsit for the wrongful
withholding of money,
see Archawski v. Hanioti,
350 U. S. 532,
350 U. S. 534
(1956) ("A line of authorities emerged to the effect that admiralty
had no jurisdiction to grant relief in such cases"). The second
rationale appears to be premised on the then-accepted rule that a
contract would not be deemed maritime absent a "hypothecation" or a
pledge by the vessel's owner of the vessel as security for debts
created pursuant to the contract. In other words, to sue in
admiralty on a contract, the claimant had to have some form of a
lien interest in the vessel, even if the action was one
in
personam. See e.g., Gardner v. The New Jersey, 9 F.
Cas. 1192, 1195 (No. 5233) (D. Pa.1806);
see generally
Note, 17 Conn.L.Rev. 595, 597-598 (1985).
Both of these rationales have since been discredited. In
Archawski, supra, the Court held that an action cognizable
as
assumpsit would no longer be automatically excluded
from admiralty. Rather,
"admiralty has jurisdiction, even where the libel reads like
indebitatus assumpsit at common law, provided the unjust
enrichment arose as a result of the breach of a maritime
contract."
350 U.S. at
350 U. S. 536.
Only 15 years after
Minturn was decided, the Court also
cast considerable doubt on the "hypothecation requirement." In
Insurance Co. v.
Dunham, 11 Wall. 1 (1871), the Court explained
that, in determining whether a contract falls within admiralty,
"the true criterion is the nature and subject matter of the
contract, as whether it was a maritime contract, having reference
to maritime service or maritime transactions."
Id. at
78 U. S. 26.
Several subsequent cases followed this edict of
Dunham and
rejected the relevance of the hypothecation requirement to
establishing admiralty jurisdiction.
See
North Pacific S.S.
Co. v. Hall Bros. Marine Railway &
Shipbuilding
Page 500 U. S. 611
Co., 249 U. S. 119,
249 U. S. 126
(1919);
Detroit Trust Co. v. The Thomas Barlum,
293 U. S. 21,
293 U. S. 47-48
(1934). [
Footnote 6]
Thus, to the extent that
Minturn's theoretical
underpinnings can be discerned, those foundations are no longer the
law of this Court.
Minturn's approach to determining
admiralty jurisdiction, moreover, is inconsistent with the
principle that the "nature and subject matter" of the contract at
issue should be the crucial consideration in assessing admiralty
jurisdiction.
Insurance Co. v. Dunham, supra, 11 Wall. at
78 U. S. 26. While
the
Minturn Court viewed it as irrelevant "[t]hat the
money advanced and paid for respondents was, in whole or in part,
to pay bills due by a steamboat for repairs or supplies," the trend
in modern admiralty case law, by contrast, is to focus the
jurisdictional inquiry upon whether the nature of the transaction
was maritime.
See e.g., Kossick v. United Fruit Co.,
365 U. S. 731,
365 U. S.
735-738 (1961).
See also Krauss Bros. Lumber Co. v.
Dimon S.S. Corp., 290 U. S. 117,
290 U. S. 124
(1933) ("Admiralty is not concerned with the form of the action,
but with its substance").
Finally, the proposition for which
Minturn stands -- a
per se bar of agency contracts from admiralty --
ill-serves the purpose of the grant of admiralty jurisdiction. As
noted, the admiralty jurisdiction is designed to protect maritime
commerce.
See supra at
500 U. S. 608.
There is nothing in the nature of an agency relationship that
necessarily excludes such relationships from the realm of maritime
commerce. Rubrics
Page 500 U. S. 612
such as "general agent" and "special agent" reveal nothing about
whether the services actually performed pursuant to a contract are
maritime in nature. It is inappropriate, therefore, to focus on the
status of a claimant to determine whether admiralty jurisdiction
exists.
Cf. Sisson, 497 U.S. at
497 U. S. 364,
n. 2 ("the demand for tidy rules can go too far, and when that
demand entirely divorces the jurisdictional inquiry from the
purposes that support the exercise of jurisdiction, it
has
gone too far").
We conclude that
Minturn is incompatible with current
principles of admiralty jurisdiction over contracts, and therefore
should be overruled. We emphasize that our ruling is a narrow one.
We remove only the precedent of
Minturn from the body of
rules that have developed over what types of contracts are
maritime. Rather than apply a rule excluding all or certain agency
contracts from the realm of admiralty, lower courts should look to
the subject matter of the agency contract and determine whether the
services performed under the contract are maritime in nature.
See generally Kossick, supra, 365 U.S. at
365 U. S.
735-738 (analogizing the substance of the contract at
issue to established types of "maritime" obligations and finding
the contract within admiralty jurisdiction).
III
There remains the question whether admiralty jurisdiction
extends to Exxon's claim regarding the delivery of fuel in Jeddah.
We conclude that it does. Like the District Court, we believe it is
clear that, when Exxon directly supplies marine fuels to Waterman's
ships, the arrangement is maritime in nature.
See 707 F.
Supp. at 161.
Cf. The Golden Gate, 52 F.2d 397 (CA9 1931)
(entertaining an action in admiralty for the value of fuel oil
furnished to a vessel),
cert. denied sub nom. Knutsen v.
Associated Oil Co., 284 U.S. 682 (1932). In this case, the
only difference between the New York delivery over which the
District Court asserted jurisdiction,
see n 2,
supra, and the Jeddah delivery
was that, in Jeddah,
Page 500 U. S. 613
Exxon bought the fuels from a third party and had the third
party deliver them to the
Hooper. The subject matter of
the Jeddah claim, like the New York claim, is the value of the fuel
received by the ship. Because the nature and subject matter of the
two transactions are the same as they relate to maritime commerce,
if admiralty jurisdiction extends to one, it must extend to the
other.
Cf. North Pacific, supra, 249 U.S. at
249 U. S. 128
("[T]here is no difference in character as to repairs made upon . .
. a vessel . . . whether they are made while she is afloat, while
in dry dock, or while hauled up [on] land. The nature of the
service is identical in the several cases, and the admiralty
jurisdiction extends to all"). [
Footnote 7] We express no view on whether Exxon is
entitled to a maritime lien under the Federal Maritime Lien Act.
That issue is not before us, and we leave it to be decided on
remand.
The judgment of the Court of Appeals is reversed, and the case
is remanded for further proceedings consistent with this
opinion.
It is so ordered.
[
Footnote 1]
The relevant provision of the Federal Maritime Lien Act has been
amended and recodified at 46 U.S.C. § 31342.
[
Footnote 2]
In the same action, Exxon also claimed a maritime lien on the
Hooper for a separate unpaid fuel bill for approximately
42 tons of gas oil Exxon had supplied directly to the
Hooper in New York. The District Court held that, because
Exxon was the "supplier," rather than an agent, with respect to the
New York delivery, the claim for $13,242 fell within the court's
admiralty jurisdiction. The court granted summary judgment in
Exxon's favor on this claim. 707 F. Supp. at 161-162. This ruling
is not at issue here.
[
Footnote 3]
The preliminary contract rule, which excludes "preliminary
services" from admiralty, was enunciated in the Second Circuit as
early as 1881.
See The Thames, 10 F. 848 (SDNY 1881) ("The
distinction between preliminary services leading to a maritime
contract and such contracts themselves have [
sic] been
affirmed in this country from the first, and not yet departed
from"). In the Second Circuit, the agency exception to admiralty
jurisdiction -- the
Minturn rule -- has been fused with
the preliminary contract rule.
See Cory Bros. & Co. v.
United States, 51 F.2d 1010, 1012 (CA2 1931) (explaining
Minturn as involving a preliminary services contract). In
denying Exxon's motion for reconsideration, the District Court
declined to "disentangle" the two rules, asserting that Circuit
precedent had established the rule of
Minturn "as a subset
of the preliminary contract rule."
717 F.
Supp. 1029, 1036 (SDNY 1989).
[
Footnote 4]
Compare E.S. Binnings, Inc. v. M/V Saudi Riyadh, 815
F.2d 660, 662-665, and n. 4 (CA11 1987) (general agency contracts
for performance of preliminary services excluded from admiralty
jurisdiction);
and Peralta Shipping Corp. v. Smith &
Johnson (Shipping) Corp., 739 F.2d 798 (CA2 1984) (all general
agency contracts excluded),
cert. denied, 470 U.
S. 1031 (1985),
with Hinkins Steamship Agency, Inc.
v. Freighters, Inc., 498 F.2d 411, 411-412 (CA9 1974) (per
curiam) (looking to the character of the work performed by a
"husbanding agent" and concluding that the contract was maritime
because the services performed were "necessary for the continuing
voyage");
and id. at 412 (arguably limiting
Minturn to general agency, as opposed to special agency
contracts);
and Hadjipateras v. Pacifica, S.A., 290 F.2d
697, 703-704, and n. 15 (CA5 1961) (holding an agency contract for
management and operation of a vessel within admiralty jurisdiction
and limiting
Minturn to actions for "an accounting as
such").
See also Ameejee Valleejee & Sons v. M/V Victoria
U., 661 F.2d 310, 312 (CA4 1981) (espousing a "general
proposition of law" that a general agent may not invoke admiralty
jurisdiction, while a special agent can).
[
Footnote 5]
As early as 1869, however, this Court narrowed the reach of
Minturn and cast doubt on its validity.
See The
Kalorama, 10 Wall. 204,
77 U. S. 217
(1869) (distinguishing
Minturn and allowing agents who had
advanced funds for repairs and supplies for a vessel to sue in
admiralty where it was "expressly agreed that the advances should
be furnished on the credit of the steamer").
[
Footnote 6]
These decisions were part of a larger trend started in the 19th
century of eschewing the restrictive prohibitions on admiralty
jurisdiction that prevailed in England.
See e.g., 46 U.
S. Clarke, 5 How. 441,
46 U. S.
454-459 (1847) (holding that the constitutional grant of
admiralty jurisdiction did not adopt the statutory and judicial
rules limiting admiralty jurisdiction in England);
The
Propeller Genesee Chief v. Fitzhugh, 12 How. 443,
53 U. S.
456-457 (1852) (rejecting the English tidewater doctrine
that "measure[d] the jurisdiction of the admiralty by the tide");
Insurance Co. v. Dunham, 11 Wall. at
78 U. S. 26
(rejecting the English locality rule on maritime contracts "which
concedes [admiralty] jurisdiction, with a few exceptions, only to
contracts made upon the sea and to be executed thereon").
[
Footnote 7]
As noted, the District Court regarded the services performed by
Exxon in the Jeddah transaction as "preliminary," and characterized
the rule excluding agency contracts from admiralty as "a subset" of
the preliminary contract doctrine.
See supra at
500 U. S. 607,
and n. 3. This Court has never ruled on the validity of the
preliminary contract doctrine, nor do we reach that question here.
However, we emphasize that
Minturn has been overruled, and
that courts should focus on the nature of the services performed by
the agent in determining whether an agency contract is a maritime
contract.