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EXXON CORPORATION v. CENTRAL GULF LINES

SUPREME COURT OF THE UNITED STATES No. 90-34 111 S. Ct. 2071, 500 U.S. 603, 114 L. Ed. 2d 649, 1991.SCT.43163 <http://www.versuslaw.com> decided: June 3, 1991. EXXON CORPORATION, PETITIONERv.CENTRAL GULF LINES, INC., ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT. Armand Maurice Pare, Jr., argued the cause for petitioner. With him on the briefs was Bradley F. Gandrup, Jr. Stephen L. Nightingale argued the cause for the United States as amicus curiae urging reversal. On the brief were Solicitor General Starr, Assistant Attorney General Gerson, Deputy Solicitor General Shapiro, Harriet S. Shapiro, and Richard A. Olderman. Francis A. Montbach argued the cause for respondents. With him on the brief was Karin A. Schlosser. Marshall, J., delivered the opinion for a unanimous Court. Author: Marshall


CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.

Marshall, J., delivered the opinion for a unanimous Court.

Author: Marshall

 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 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 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. ยง 971 (1982 ed.).*fn1 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.*fn2 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.*fn3 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*fn4 and to 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, 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, 367 (1990), quoting Foremost Ins. Co. v. Richardson, 457 U.S. 668, 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, in paying for supplies, repairs, and advertising ...


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