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GERARD CONSTR., INC. v. MOTOR VESSEL VIRGINIA

October 15, 1979

GERARD CONSTRUCTION, INC., Plaintiff
v.
MOTOR VESSEL VIRGINIA, her engines, boilers, etc.; PHILLIP N. MOSESSO, individually; DONALD A. FIX, individually; and PHILLIP N. MOSESSO and DONALD A. FIX d/b/a SLEPS RIVER TOWING COMPANY, Defendants



The opinion of the court was delivered by: SNYDER

Gerard Construction, Inc. filed an in rem action against the Motor Vessel Virginia on a claim for the balance due on the sale of the M/V Virginia to Phillip N. Mosesso and Donald A. Fix, individually and doing business as Sleps River Towing Company, and for fuel and oil furnished to her in the total amount of $ 57,064, with interest. The individual Defendants have filed a Motion to Dismiss and a Motion for Vacatur or Reduction of Security. The Motion to Dismiss will be granted in part, and the Motion for Reduction of Security will be granted.

I. BACKGROUND

 The M/V Virginia, a 1940 diesel-powered tow boat, was acquired by Gerard Construction, a marine contractor, in May 1978 as partial payment for monies due on the construction of a coal loading dock. Having little use for the vessel in its construction work, Gerard entered into negotiations with Phillip Mosesso and Donald Fix on January 5, 1979. The parties initially contemplated a lease-sale arrangement but, on January 16, 1979, they executed a "Bill of Sale". The purchase price was $ 67,500, with a $ 12,000 cash payment to be made on the date of sale and a promissory note of $ 55,500 due March 2, 1979. A separate promissory note was delivered, but neither a security agreement nor a mortgage agreement was executed.

 On January 17, 1979, at Mosesso's request, Gerard had a local distributor supply fuel and oil to the vessel. Gerard was billed and has since offered payment on this portion of the claim.

 The Defendants moved to dismiss the complaint on the basis that money due on a contract of sale of a vessel is not within the admiralty jurisdiction.

 II. DISCUSSION

 It is settled law that if a contract is related to a maritime service or a maritime transaction, action thereon is within admiralty jurisdiction. 1 Benedict on Admiralty ยง 182 (6th ed. 1974). There is, however, no bright line to be drawn from such a statement for " "when a high-level abstraction such as "maritime" has to be used to draw a line between concrete cases', the "test of maritime subject-matter' is difficult to apply." Jack Neilson, Inc. v. Tug Peggy, 428 F.2d 54 (5th Cir. 1970). The courts have held a contract for the Repair of a vessel is maritime, but a contract for the Construction or Rebuilding of a vessel is not, although the distinction between rebuilding and repair is often difficult to draw. See New Bedford Dry Dock Co. v. Purdy, 258 U.S. 96, 42 S. Ct. 243, 66 L. Ed. 482 (1922).

 Apparently, the "prevailing rule" is that a contract for the sale of a ship is not a maritime contract. See Atlantic Lines, Ltd. v. Narwhal, Ltd., 514 F.2d 726 (5th Cir. 1975); Richard Bertram & Co. v. Yacht, Wanda, 447 F.2d 966 (5th Cir. 1971); Flota Maritima Browning De Cuba, Sociadad Anonima v. Snobl, 363 F.2d 733 (4th Cir.), Cert. denied 385 U.S. 837, 87 S. Ct. 82, 17 L. Ed. 2d 71 (1966); The Ada, 250 F. 194 (2nd Cir. 1918); R. C. Craig Ltd. v. Ships of the Sea Inc., 401 F. Supp. 1051 (S.D.Ga.1975); Puamier v. Barge BT 1793, 395 F. Supp. 1019 (S.D.Va.1974); R. C. Craig Ltd. v. Ships of the Sea Inc., 345 F. Supp. 1066 (S.D.Ga.1972); Industrial Equipment and Maritime Services, Inc. v. M/V Mr. Gus, 333 F. Supp. 578 (S.D.Tex.1971); Camper & Nicholsons, Ltd. v. Yacht "Fontainebleau II", 292 F. Supp. 734 (S.D.Fla.1968). In some cases, although followed, the rule was subjected to pointed criticism. See, e.g., Jack Neilson, Inc. v. Tug Peggy, supra; Flota Maritima Browning De Cuba, Sociadad Anonima v. Snobl, supra; Flota Maritima Browning De Cuba v. The Ciudad De La Habana, 181 F. Supp. 301 (D.Md.1960). Thus, in a lease-purchase agreement, the maritime aspects are held separable and specific claims regarding lease aspects may be adjudicated in an admiralty court.

 In Jack Neilson, Inc. v. Tug Peggy, supra, the court characterized the prevailing rule as inconsistent with basic principles governing the admiralty jurisdiction. One year later, in Richard Bertram & Co. v. Yacht, Wanda, supra, the same court affirmed, Per curiam, a lower court's dismissal of an action in admiralty seeking to try title to a yacht, relying in part on the general rule. Four years after Richard Bertram Co., supra, the same court found that admiralty jurisdiction did not extend to contracts for sale of a vessel.

 Professor Moore strongly advocates bringing contracts for Sales of vessels within the admiralty jurisdiction. He summarizes his position (based in large part on the opinion of Chief Judge Thomsen in Flota Maritima Browning De Cuba v. The Ciudad De La Habana, supra ): the analogy to ship construction contracts (the basis of the rule) is of questionable validity. Apparently, a closer analogy could be drawn to agreements of charter and hire which are maritime contracts, and within the admiralty jurisdiction. 7A Moore's Federal Practice P .245(2) (2d ed. 1979).

 Gerard finds no definitive rulings by the United States Supreme Court or the Court of Appeals for the Third Circuit. However, several courts have held that a contract of sale of even a used vessel is not within admiralty jurisdiction, See, e.g., R. C. Craig Ltd. v. Ships of the Sea Inc., supra.

 Judge Joseph F. Weis, Jr., as a District Judge (now of the Court of Appeals for the Third Circuit), succinctly stated:

 
"Few admiralty doctrines have received more criticism and with so little effect as that which holds that agreements for the construction of vessels are not maritime contracts and, hence, not within the purview of admiralty jurisdiction. This holding has been repeated many times by decisions of the Supreme Court and ...

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