Exxon Corp. v. Central Gulf Lines, Inc.
1991 U.S. LEXIS 3022, 500 U.S. 603, 114 L. Ed. 2d 649 (1991)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An agency contract is not automatically excluded from admiralty jurisdiction. Instead, jurisdiction is determined by the nature and subject matter of the contract, specifically whether the services performed under the contract are maritime in nature.
Facts:
- Exxon Corporation had a long-standing fuel requirements contract with Waterman Steamship Corporation.
- Under the contract, Exxon could act as a direct seller of fuel or as Waterman's agent, arranging for local suppliers to provide fuel.
- In October 1983, Exxon acted as Waterman's agent to procure fuel for the vessel 'Hooper' in Jeddah, Saudi Arabia.
- Exxon arranged for Arabian Marine Operating Co. to deliver the fuel, paid Arabian Marine's invoice, and then invoiced Waterman for $763,644.
- Shortly thereafter, Waterman Steamship Corporation filed for Chapter 11 bankruptcy and never paid the full amount of the fuel bill to Exxon.
- Central Gulf Lines, Inc., the owner of the 'Hooper', agreed to assume personal liability for the unpaid bill if a court held the vessel itself liable for the cost.
Procedural Posture:
- Exxon Corporation filed suit against Central Gulf Lines, Inc. (in personam) and the vessel 'Hooper' (in rem) in the U.S. District Court for the Southern District of New York.
- The District Court, bound by precedent interpreting Minturn v. Maynard, held that it lacked admiralty jurisdiction over the agency contract and dismissed that part of the claim.
- The District Court denied Exxon's motion for reconsideration.
- The U.S. Court of Appeals for the Second Circuit summarily affirmed the District Court's judgment.
- The U.S. Supreme Court granted certiorari to resolve a conflict among the Circuits and to consider whether Minturn should be overruled.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a per se rule exclude agency contracts from federal admiralty jurisdiction, thereby barring a claim by an agent who procured and paid for fuel for a vessel?
Opinions:
Majority - Justice Marshall
No, a per se rule does not exclude agency contracts from federal admiralty jurisdiction. The Court overrules its 1855 precedent in Minturn v. Maynard, which had been widely interpreted as establishing such a rule. The Court reasoned that Minturn's underlying legal foundations—namely, that admiralty courts lacked jurisdiction over claims for 'a balance of accounts' or where there was no 'hypothecation' (pledge) of the vessel—have long been discredited by subsequent case law. The proper jurisdictional inquiry is not the formal status of the parties (e.g., agent vs. principal) but the 'nature and subject-matter of the contract.' Since procuring fuel is a fundamental maritime service essential to a vessel's voyage, a contract to provide that service, even when acting as an agent, falls squarely within admiralty jurisdiction, which exists to protect maritime commerce.
Analysis:
This decision eliminates an archaic and confusing exception to admiralty jurisdiction that had created splits among the circuit courts. By overruling Minturn, the Court replaced a rigid, status-based rule with a flexible, functional test that focuses on the substance of the transaction. This aligns agency contract jurisdiction with modern admiralty principles, promoting uniformity and better serving the core purpose of protecting maritime commerce by ensuring providers of essential ship services can access federal admiralty courts.
