American Insurance Co. v. 356 Bales of Cotton (Canter)

Supreme Court of the United States · 1828 · Federal Courts

26 U.S. 511 (1828)

Updated August 1, 2026

Federal Courtsterritorial courtsArticle IIIlegislative courtsadmiralty jurisdictionterritoriesFlorida territoryCongress territorial power

Facts

The plaintiffs had insured cargo aboard the Point a Petre on a voyage from New Orleans to Havre de Grace. After the ship was wrecked on the coast of Florida, the cargo was saved, taken to Key West, and sold to satisfy salvors under a decree of a court composed of a notary and five jurors created by an act of the Florida territorial legislature. The owners abandoned the cargo to the underwriters, who accepted and then challenged the sale on the ground that the tribunal lacked authority to transfer title. David Canter claimed the cotton as a bona fide purchaser under the territorial decree.

Issue

Whether the sale of the salvaged cargo at Key West validly changed title because it was ordered by a competent territorial tribunal. More specifically, the question was whether the Florida territorial legislature could validly create a court exercising the admiralty-related authority used to order the sale, consistent with the Constitution and laws of the United States.

Rule

Territorial courts created under Congress's power to govern territories are legislative courts, not Article III courts, and therefore may exercise jurisdiction, including admiralty jurisdiction, by virtue of Congress's territorial powers rather than Article III. The grant of jurisdiction over cases arising under the Constitution and laws of the United States does not itself include admiralty cases, because admiralty cases are a distinct constitutional category.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Congress organized the Territory of Pacifica and created a superior court whose judges serve six-year terms. The territorial legislature later authorized an inferior harbor court in Juneau to decide maritime salvage disputes arising from shipwrecks along the coast.

A cargo owner argues the harbor court's salvage decree is void because only Article III courts may exercise admiralty jurisdiction. How should a court rule?

Explanation. The majority held that courts created for territories are not Article III constitutional courts when their judges do not hold office during good behavior. Instead, they are legislative courts created under Congress's power to govern territories, and Congress may authorize them to exercise admiralty jurisdiction there. The limitation that admiralty in states must be exercised by Article III courts does not apply in the same way in territories.