EASTFIELD S. S. CO., Limited, v. McKEON et al., 201 F. 465

PARDEE, Circuit Judge (after stating the facts as above). On the general merits of this case we concur with the District Court in the conclusion that on the pleadings and proofs the respondents are liable to the Eastfield. Steamship Company, Limited, or its assignees for full damages resulting from breach of the charter party.

On the more or less technical question as to whether subsequent to the breach of the charter party and prior to the institution of this libel the Eastfield Steamship Company, Limited, had so sold and transferred its rights in the claim for resulting damages to the Field Line (Cardiff) Limited, that it had no longer any interest in the same, and therefore that the libel filed and prosecuted in its name must be dismissed, we do not concur in the opinion and decree of the District Court.

The proof in the case shows that the cause of action for breach of the charter against the respondents was originally in the Eastfield Steamship Company, Limited, in whose name the libel was filed and the suit prosecuted. Subsequent, however, to the breach and prior to the filing of the libel, there was a contract entered into between the Eastfield Steamship Company and four other steamship companies for the formation in England of the corporation of the Field Line (Cardiff) Limited, and the amalgamation of five single ship companies which had all been theretofore managed by Mr. William W.

Jones, who was appointed liquidator of each of the companies for the purpose of transferring each of the steamers to the new corporation, and Mr. Jones was in due course appointed chairman and managing director of that company, so that he then was managing director, not only of the old companies, but of the new one. The agreement under which the transfer was to be made was dated December 9, 1902, and was between the five different single ship companies as vendors and the Field Line (Cardiff) Limited, as vendee.

The substance of the agreement, material to the present consideration, was for the transfer to the vendee of:

(1) Sixty-four sixty-fourths shares of the five ships of the vendor companies; (2) the benefit of all contracts, agreements, and engagements existing or pending on the 30th day of June last (1902) entered into or held by the vendor companies, respectively, for the purpose of the working of, or otherwise in connection with the said steamships, respectively, including all contracts of marine insurance; and (3) all other, if any, the undertaking property, assets, and effects of every kind, including credit balances of the vendor companies as on that date.

As it was recognized that various matters would ha've to be done to complete the transfer and to vest in the vendee all that the vendors intended to convey, it was provided in clause 20 as follows: “The vendor companies, respectively, and their liquidator shall as soon as conveniently may he (but without prejudice to clause 17 hereof) execute and do at the expense of the purchasing company all such assurances and things as shall be reasonably required by the purchasing company for vesting in it the property hereby agreed to be transferred and for giving to it the full benefit of their agreement.” Clause 17 need not be considered as it dealt with a lien by the vendor companies on their property until the purchase money should be paid.

The only testimony in the case as to what took place after the agreement was made is that of Mr. Jones as follows: “Between the 9th December, 1902, and 7th April, 1903, the said conditions preliminary to sale and amalgamation were completed. The sale contingently agreed upon as aforesaid was determined and agreed as between the vendor companies and the purchasing company to be carried out, and in the following manner: As to the steamship Eastfield and .the other steamships before mentioned by transfers which were duly executed op the 7th April, 1903.

As to the other assets so agreed to be sold, by my realization and recovery as liquidator of the vendor companies and the transfer of the proceeds to the purchasing company, I being chairman and managing director of the purchasing company and liquidator of the vendor companies, this method of carrying out the sale of such last-mentioned assets was considered effective and sufficient, and a good performance of clause 20 of the agreement above cited for the due assurance of assets purchased.

This method was therefore followed and the liquidation of the several vendor companies was kept open and active for the purpose of so carrying out the sale. The cause of action sued upon, namely, breach of the charter dated July 19, 1901, arose in April, 1902, and a claim for damages had arisen at the date of the said agreement of December 9, 1902.

This right of action was therefore one of the said assets agreed contingently to be sold by that agreement, and afterwards in April,, 1903, absolutely intended to be sold, and which came under the method of realization so determined upon as aforesaid between the vendor companies and the purchasing company, and consequently was never transferred or otherwise divested from the ‘Eastfield’ Steamship Company, Limited, but upon repudiation of liability by respondents the ‘Eastfield’ Steamship Company, Limited, exercised the right of action which they had advisedly and by agreement aforesaid retained, I having sole authority by the companies’ acts (for England) to use the name of the ‘Eastfield’ Steamship Company, Limited, in any proceedings for the enforcement of such right of action.” ■ From the testimony of Mr.

Jones, and from the language of clause 20 of the agreement, it appears that all parties considered that certain of the interests which were intended to be conveyed to the vendee did not vest in the vendee by the payment of the purchase price, but were to be specifically thereafter transferred; and the meth.od by which the assets other than physical property were to be transferred to the vendee was agreed between the liquidator of the vendor companies and the vendee to be by the realization and recovery of such assets by the liquidator and the transfer of the proceeds to the purchasing company.

And it seems that the liquidation of the various vendor companies was kept open for the very purpose of permitting the liquidator to realize on intangible assets and choses in action.

The claim of the Eastfield Steamship .Company against the respondents for damages for the breach of the charter party was such a chose in action that the title thereto would not pass by any general contract so as to be available to the vendee without a specific transfer or assignment in writing; so that, while under the contract or agreement of December 9, 1902, it was to be thereafter transferred as provided in clause 20 of the contract, the evidence shows that in April, 1903, when other assignments of ássets were made, no specific transfer of this claim was made, but that by and with consent of all parties in interest it was arranged that the liquidator was to realize and recover on the same and thereafter transfer the proceeds to the purchasing company.

As noticed above, the only evidence on the subject is that of Jones, the liquidator of all the consolidating companies, and is to the effect that this right of action was one of the said asset's agreed contingently to be sold, and afterwards, in April, 1903, absolutely intended to be sold, but which under the method of realization determined upon between the vendor companies and the purchasing company was never transferred or otherwise divested from the East-field Steamship Company.

As to the exact title retained in the Eastfield Steamship Company under the agreements made and the writings actually passed, the construction given by the parties thereto, as shown by their acts and conduct in carrying out the same, is generally very significant, if not controlling, and it is clear that the parties had a perfect right by subsequent agreement to vary the executive terms of their original contracts to suit themselves; and all this goes to support the evidence of Jones and his construction of the agreement and arrangement of the parties as to the transfer of the specific asset in question.

From all of which we conclude that as the cause of action was originally and without doubt vested in the Eastfield Steamship Company, and as the only evidence of any divestiture is that of Jones, which goes m> farther than to show an unexecuted agreement to transfer to the Field Line (Cardiff), Limited, the libel in this case was well brought and the same properly prosecuted in the name of the Eastfield Steamship Company, Limited, and that the objection that said company is not such a real party in interest that the libel may not be prosecuted in its name should be overruled, particularly as the case shows beyond doubt that the Field Line (Cardiff), Limited; the alleged transferee of the claim in suit is privy to the proceedings, and as such will be fully bound by any decree that may be rendered on the merits.

We do not think it necessary to review and attempt to harmonize the many authorities cited by the learned proctors in their elaborate briefs, nor those cited and relied upon by the District Judge with whose main proposition, that suits in admiralty should be prosecuted in the name of a real party in interest, we agree, for we decide this case upon the peculiar undisputed facts shown by the evidence.

We may'further notice that to maintain the exception' interposed would be to give too much effect to a mere technicality not prejudicially affecting the exceptors so far as the merits of the case are concerned, and, if allowed, only operating a hindrance and delay in the judicial proceedings necessary to establish the rights of the parties.

For these reasons, the decree dismissing the libel is reversed, and the case is remanded, with instructions to re-enter and re-establish the decree rendered, filed, and entered in the District Court on August 4, 1910, and thereafter to proceed according to admiralty rules and usages in ascertaining and decreeing the damages to which the libelant is entitled.