The Lysefjord, 263 F. 623

The Lysefjord

263 F. 623

| S.D.N.Y. | 1920

LEARNED HAND, District Judge (after stating the facts as above).

[1] The fifty-ninth rule, as drawn and as still applied in some circuits, is limited to collisions. In such cases, upon bringing in a third party, the case proceeds as if the co-tort-feasor had originally been made a *624party. The wrong committed by the third party raises an obligation of compensation running directly between the injured party — i. e., the libelant — and himself, or, if in rem, against the res brought in. But, of course, no procedural facilities can affect the substantive rights of the parties. Consequently where the rule applies, as it has long applied in this circuit, to cases sounding in contract, the direct relations must remain unaffected. In such cases the libelant usually has no legal obligations against any one but the promisor of the contract on which he sues, as well after as before the new parties are brought in. Similarly the third person brought in is under no obligation towards any one but the respondent who brings him in. The upshot of the series of petitions is only this: That in one proceeding, two, or, as in the case at bar, three, separate suits are tried out at once, the suit of the libelant against the original respondent and the suit of the respondent against the third party. No new obligations are created, and therefore this is all that there is to try. A single decree can adjust all the relief which the several litigations require, and if the second or third suits are protective only, the result is usually to give the libelant in fact his first relief against a party between whom and himself no obligation exists. However, that must not disguise the fact that the libelant cannot enlarge his rights because of the fifty-ninth rule, and that he gets process direct against the final party only through the chain of obligations terminating with him. The final liability continues necessarily to be measured by the contract of the last party with the next party back in the line.

[2] Such being the case, it is apparent that, as the petition of the Tropical Fruit Company sets up the breach of an obligation between itself and the owners, the single question is whether the owners, who would have had the benefit of the fifty-third rule, had they been sued by original libel, shall be deprived of it because they are brought in under the fifty-ninth rule. Obviously, if so, they lose a substantial right against a possibly insolvent party, to whom they may, it is true, be under obligation, but against whose claim their counterclaim is in effect a valid defense. This is contrary to every principle of equity, and should be avoided as far as possible. It would result in charging the owners in favor of the libelant without any set-offs, although as I have shown, the libelant can recover against the owners only in so far as the Tropical Fruit Company has a claim against them.

While the case is, so far as I can find, one of first impression, on principle it is quite obvious that the cross-libel is quite proper, and the exceptions will be therefore overruled.