American Insurance v. 356 Bales of Cotton
26 U.S. 511, 7 L. Ed. 242, 1 Pet. 511 (1828)
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Rule of Law:
Congress has the power to establish legislative courts in U.S. territories, which are not bound by Article III's judicial power limitations, and these territorial courts can exercise admiralty jurisdiction.
Facts:
- The ship Point a Petre, insured by American Insurance Co., was on a voyage from New Orleans to Havre de Grace.
- The ship was wrecked on the coast of Florida, and its cargo of 356 bales of cotton was saved by local inhabitants.
- The saved cotton was carried into Key West, where a court established by an Act of the territorial legislature of Florida ordered its sale to satisfy the salvors.
- The ship's owners abandoned the cargo to American Insurance Co., who then claimed the sale was invalid due to the court's incompetence.
- David Canter claimed the cotton as a bona fide purchaser under the decree of the territorial court, which had awarded seventy-six percent of the property's value to the salvors.
Procedural Posture:
- The American Insurance Co. (libellants) filed a libel in the District Court of South Carolina to obtain restitution of cotton.
- The District Judge pronounced the decree of the territorial court a nullity and awarded restitution to the libellants, deducting 50% salvage.
- Both the libellants and David Canter (claimant) appealed this decision.
- The Circuit Court reversed the District Court's decree, finding the proceedings of the court at Key West legal and transferring the property to the claimant.
- The libellants appealed the Circuit Court's decree to the Supreme Court of the United States.
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Issue:
Does the constitutional provision extending federal judicial power to admiralty and maritime cases preclude Congress from vesting admiralty jurisdiction in legislative courts created by a territorial legislature under its plenary power over U.S. territories?
Opinions:
Majority - Mr. Chief Justice Marshall
No, the constitutional provision does not preclude Congress from vesting admiralty jurisdiction in legislative courts created by a territorial legislature. The U.S. government possesses the power to acquire and govern territory, whether by conquest or treaty. Florida was ceded to the United States by Spain, and its governance falls under the clause of the Constitution empowering Congress "to make all needful rules and regulations, respecting the territory, or other property belonging to the United States." Under this plenary power, Congress established a territorial government in Florida, including a legislative council with legislative powers over "all rightful objects of legislation." The territorial court at Key West, established by the Florida legislature, was a "legislative Court," not a "constitutional Court" created under Article III of the Constitution. Article III courts are those in which the judicial power of the United States, as defined by the Constitution, is deposited, and whose judges hold office during good behavior. In contrast, judges of the Superior Courts of Florida held their offices for four years, indicating they were not Article III judges. Admiralty jurisdiction is a distinct class of cases under Article III, separate from cases "arising under the laws and Constitution of the United States." While admiralty jurisdiction in the states must be exercised by Article III courts, this limitation does not extend to the territories, where Congress, in legislating, exercises the combined powers of the general and a state government. Therefore, the territorial legislature was competent to establish the court, and the sale ordered by that court was valid, changing the property.
Analysis:
This case is a landmark decision establishing the doctrine of 'legislative courts' (also known as Article I courts), which are created by Congress under its specific enumerated powers (like governing territories) rather than under Article III. It significantly broadens the scope of congressional power to structure the judiciary in non-state jurisdictions, allowing for flexibility in governance. The distinction between 'constitutional courts' and 'legislative courts' remains critical for understanding the federal judiciary and the limits of judicial independence. This precedent clarifies that Article III's requirements, such as life tenure for judges, do not apply to courts in U.S. territories, thereby impacting the administration of justice in those areas.
