ROYAL MAIL STEAM PACKET CO. v. COMPANHIA DE NAVEGACAO LLOYD BRASILEIRO.

District Court, E. D. New York. May 15, 1928.

1. Admiralty -Admiralty court can try or refuse to hear case only in exercise of judicial discretion according to law.

Admiralty court's decision to try or refuse to hear a case is not to be expressed arbitrarily, but only through exercise of judicial discretion according to law, as shown by court decisions.

2. Admiralty 5-Court may permit trial of suit for damages by collision in foreign waters in district wherein vessel was attached, if deemed necessary to do justice.

Federal court of district wherein vessel was attached in suit for damages by collision in foreign waters correctly exercises its discretion in allowing suit to be tried in such district, if it feels that it should be tried there to do justice, or best protect libelant's, as well as respondent's, rights.

3. Courts

513-Generally

choose forum, when there is choice. Generally, where there is a choice of forum, the libelant has the right of choice.

4. Admiralty 4-British libelant held entitled to trial of suit for damages by collision in Belgian waters in United States court.

British libelant, whose offer to settle dispute arising from collision between its ship and Brazilian ship in Belgian waters in either Belgian or English courts, if respondent gave security, was unavailing because of respondent's refusal to waive Belgian statutory limitation of liability to 200 francs per gross ton, held entitled to trial of damage suit in Eastern district of New York, wherein respondent's vessel was attached, in view of injustice arising from depreciation of Belgian currency since enactment of such law.

Laws of neither England nor Brazil having been invoked by British and Brazilian owners of vessels colliding in Belgian waters, question of limitation of liability, raised in damage suit brought in United States court, which acquired jurisdiction through attachment of respondent's vessel, should be decided according to law of forum, though Belgian law might be administered in such forum, on theory of lex loci, if properly alleged and proved.

10. Admiralty 4-United States court may retain jurisdiction of damage suit, acquired through attachment of foreign vessel, whether collision occurred in open sea or territorial water.

Place of collision between foreign vessels offers no obstacle to retention of jurisdiction of damage suit, acquired by United States court through attachment of respondent's vessel, whether collision took place in open sea or in any territorial water.

In Admiralty. Libel by the Royal Mail Steam Packet Company against the Companhia de Navegacao Lloyd Brasileiro, which moved for an order vacating an attachment and dismissing the libel. Motions denied, and jurisdiction retained.

Burlingham, Veeder, Masten & Fearey, of New York City (Van Vechten Veeder and A. Howard Neely, both of New York City, of counsel), for libelant.

Purrington & McConnell, of New York City (Frank J. McConnell and James D. Brown, both of New York City, of counsel), for respondent.

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law limiting liability to 200 francs per gross ton, the respondent, if ultimately found to be liable, and being allowed to institute this right to limit in Belgium, will be enabled to unjustly avoid a large portion of its liability, not because of the law, so far as the right to so limit is concerned, but because of a depreciation in the value of the franc.

Thus we have here a British ship and a Brazilian ship in collision. We have laws of four nations available, British, Brazilian, Belgian, and the United States of America. Neither of the first two have been adopted by the parties. The libelant has sought and first obtained the American forum. The respondent now seeks the Belgian forum. Why Solely because the law of Belgium is so favorable in the above respect to its right to limit liability. This would seem to be unjust to libelant.

[5] Respondent has done nothing in Belgium except the taking of a survey, and while, assuming the Belgian law to be the same as our law, in the absence of proof to the contrary, it might have had the right to institute its limitation proceeding in Belgium before any suit was brought by libelant (Ex parte Slayton, 105 U. S. 451, 26 L. Ed. 1066), it has not done so, and it is too late to do so, now that this court has acquired jurisdiction. [6] Respondent can in this suit, either by way of defense or as a separate proceeding, assert its right. The City of Norwich, 118 U. S. 468, 6 S. Ct. 1150, 30 L. Ed. 134. See practice originally laid down. Norwich Co. v. Wright Co., 13 Wall. (80 U, S.) 104, 20 L. Ed. 585.

[7] This court, however, having rightfully taken jurisdiction, will administer this right of respondent to limit according to the law of this forum. Norwich Co. v. Wright, supra. "If they [the colliding vessels] belong to different nations, having different laws, since it would be unjust to apply the laws of either to the exclusion of the others, the law of the forum—that is, the maritime law as received and practiced therein-would probably furnish the rule of decision." The Scotland, 105 U. S. 24, 26 L. Ed. 1001.

[8] The mere fact that there is but one claim is immaterial. White v. Island Transp. Co., 233 U. S. 346, 34 S. Ct. 589, 58 L. Ed. 993. [9] It may be very well claimed, if properly alleged and proved, that the foreign law applicable to the merits of the collision, on the theory of the lex loci, may be administered on the trial, in this forum; yet, as to this peculiar and statutory right of limitation of liability, the laws of the nations of neither of the owner parties having been invoked by them, it is and should be the law of this forum "that will furnish the decision."

It plainly appears, therefore, that the rights of libelant will be seriously prejudiced by allowing the respondent to avoid this forum for such a purpose. The right to limit in Belgium is unfortunately so inadequate as to be unjust and unfair. [10] Nor does the place of the collision offer an obstacle to thus retaining jurisdiction, whether such collision took place in the open sea (The Belgenland, 114 U. S. 355, 5 S. Ct. 860, 29 L. Ed. 152) or in any territorial water (The Kaiser Wilhelm (D. C.) 175 F. 215; The Hallgrim, 1924, A. M. C. 1401, Eastern District, Judge Campbell). This case, there fore, is not the usual case, not infrequently appearing in this and other courts of this port. Neither of the parties is in Belgium. It will be equally as hard on the libelant as on the respondent in regard to witnesses. Both parties are familiar with business at, and known in, the port of New York. Both have ships coming here. The real issue presented by the motions is different from the ordinary question arising in such cases.

While the court is naturally cautious about taking jurisdiction of such cases, and it requires some sound reason for doing so, yet it seems to me, and I am satisfied that, it is the only fair and just thing to do in this case. I am unable to see how any hardship, not otherwise present in the forum respondent seeks, will be visited on either party, by approving the choice of this forum, first selected by libelant.

The motions are denied, and jurisdiction retained.

Illinois.

nois, as shown by the corporation's annual report, filed for the year 1927, as required by law, with the secretary of state of Illinois.

1928.

No. 800.

1. Commerce 69(1)-Franchise tax on corporations based on local business transacted does not unduly burden interstate commerce (Corporation Act III. § 105; Const. art. 1, § 8, cl. 3).

Corporation Act Ill. (Smith-Hurd Rev. St. 1927, c. 32) § 105, taxing profit corporations on basis of proportion of issued capital stock represented by business transacted and property located in state, does not, when applied to interstate railroad, unduly burden interstate commerce, in violation of commerce clause (Const. art. 1, § 8, cl. 3).

2. Commerce 69 (2)-Constitutional law

283-Taxation 37-Statute imposing corporate franchise tax held valid under commerce clause and due process clause as to railroad corporation having small percentage of capital locally invested (Corporation Act III. §§ 105, 107; Const. art. 1, § 8, cl. 3; Const.

Amend. 14).

Corporation Act Ill. (Smith-Hurd Rev. St. 1927, c. 32) § 107, imposing franchise tax on corporations having no property in state and transacting no business there, ranging from $10 on corporations having issued capital stock of $50,000 or less to $1,000 maximum on corporations having issued capital stock over $20,000,000, held not void as discriminatory or violative of commerce clause of Const. art. 1, § 8, cl. 3,

or due process clause of Fourteenth Amendment, as applied to railroad corporation having large amount of capital of which very small proportion was invested in state and which was required to pay such tax under Corporation Act Ill. (Smith-Hurd Rev. St. 1927, c. 32) § 105, which imposes license tax on corporations based on business transacted and property located in state, but provides that amount of such tax shall not be less than that required of corporations taxable under section 107 (Smith-Hurd Rev. St. 1927, c. 32).

under the Illinois Corporation Act, the plaintiff corporation was assessed $1,000, being the minimum tax provided by section 107 of said act.

Plaintiff alleges the tender and willingness to pay a tax of $135.21, the amount it claims due from it under section 105 of the

act, which provides a tax upon foreign corporations based upon the property owned in Illinois and business done in Illinois. Plaintiff seeks to enjoin the defendant from invoking any of the penalties and forfeitures for a failure to pay the tax as assessed and levied, upon the ground that section 107 of the Illinois Corporation Act, as applied to plaintiff, is illegal and violates plaintiff's constitutional rights. Plaintiff complains of the Illinois statute as follows: (1) It unreasonably interferes with and directly burdens interstate commerce; (2) it denies plaintiff the equal protection of the law; and (3) deprives it of property without due process. These assignments are based upon plaintiff's conclusion that its tax should have been assessed and extended under section 105 of the Corporation Act, when, in truth and in fact, the secretary of state extended it under section 107, which plaintiff claims is unconstitutional and void. Defendant moves to dismiss plaintiff's bill.

The two sections of the Illinois statute, as amended, and in force at the time in question and involved here, are as follows:

"Section 105. Each corporation for profit, including railroads, except insurance companies, heretofore or hereafter organized under the laws of this state or admitted to do business in this state, and required by this act to make an annual report, shall pay an annual license fee or franchise tax to the secretary of state of five cents on each one hundred dollars of the proportion of its issued capital stock, or amount to be issued at once,

Oscar E. Carlstrom, Atty. Gen. (B. L. Catron, Asst. Atty. Gen., of counsel), for defendant.

FITZHENRY, District Judge. Plaintiff is a railroad corporation, organized under the laws of Missouri, with a capital stock of $36,249,750. Of this total capital stock, .00746 per cent. is represented by property owned and business done in the state of Illi

erly located in this state, but in no event shall the amount of such license fee or franchise tax be less than that required by this act of corporations having no [tangible] property or business in this state.

"In the event that the corporation has stock of no par value, its shares, for the purpose of fixing such fee, shall be taken and considered at the amount of the consideration received or to be received by such corporation for such shares."