Opinion
No. 15.
January 9, 1933.
Appeal from the District Court of the United States for the Eastern District of New York.
Petition by the W.E. Hedger Company, as owner of the steamtug Nat Sutton for limitation of liability, and libels in admiralty by David E. Leach, as owner of the Barge Bloomfield against the Hedger Transportation Company, Inc., and the steamtugs Nat Sutton and Holbrook, and by the Canada Atlantic Grain Export Company, Inc., against the Hedger Transportation Company, Inc., the steamtug Nat Sutton, the barge Bloomfield, and the barge Arthur L. Haber. From the decrees [ 42 F.2d 229], the Hedger Transportation Company, Inc., the steamtugs Nat Sutton and Holbrook, and the barges Bloomfield and Arthur L. Haber appeal.
Modified and affirmed.
Suits by the owner of a barge against a chatterer and tug for damages sustained by the barge while under charter and in tow of the tug and by the owner of the cargo damaged aboard the barge against the chatterer and the tug were consolidated and heard with a petition for limitation in behalf of the tug.
The Hedger Transportation Company, Inc., which will now be called the Transportation Company, chartered the barge Bloomfield from its owner, David E. Leach, on April 13, 1926, for use on the New York state Barge Canal during the season of 1926. At that time, and during all times now material, the Transportation Company had the tug Sutton under a contract with its owner, the W.E. Hedger Company, Inc., which will be referred to as Hedger. The Transportation Company manned, equipped, and supplied the Sutton. As to each of these boats, the Transportation Company unquestionably had all the rights of a demise chatterer.
On October 7, 1926, the Transportation Company entered into an agreement in writing with the Canada Atlantic Grain Export Company, Inc., which will be referred to as Canada-Atlantic, to furnish insurable canal tonnage for grain to be transported from Buffalo to New York. This contract, which was subject to the terms and provisions of the New York Produce Exchange Canal Grain Charter Party No. 1 as amended April 6, 1925, and April 1, 1926, called for the carriage of barley on one fleet of four barges.
On October 11, 1926, the Transportation Company made four barges available at Buffalo to carry the barley as it had agreed. They were the Bloomfield, the Arthur L. Haber, the Mercer, and the Lenahan. They were loaded, made up in tandem in the order named, in close coupled formation in the customary manner, and taken in tow by the tug Sutton on two hawsers about 60 feet in length. The tow was about 600 feet long. A Gilles wheel was rigged on the bow of the Haber and another on that of the Mercer to help steer by kinking the tow. The tow proceeded easterly on the canal without trouble until October 14th. When it arrived that day at Guard Gate No. 13, the tug went through the starboard draw. It then had to, and did, bear to port to gain the center of the channel, which was about 125 feet wide. The canal proper was about 200 feet across from bank to bank. About 600 feet easterly of the gate there is a bend in the canal of approximately 45 degrees to the south or to the starboard of this flotilla at that time. The Sutton made for the bend with an engine speed of about 2½ miles an hour. The speed was slightly increased over the ground by a favoring current. The tug rounded the bend, while the tow, changing its course but little, if any, kept on diagonally across the canal to the slope of the port bank where the Bloomfield in the lead fetched up on a submerged rock which was jammed into her forward port corner and held there, doing damage which caused her to leak. This let water in to wet and injure the cargo. None of the other barges or their cargoes sustained any damage. Although the Bloomfield was later injured again while in tow of the tug Holbrook, no appeal was taken from the decree of the District Court as to that, and we shall now ignore such later damage.
Leach, as owner of the Bloomfield, sued the Transportation Company and the Sutton to recover for the damage to the Bloomfield. Canada-Atlantic sued the Transportation Company, the Sutton, the Bloomfield, and the Arthur L. Haber, as the vessel having the steering wheel, to recover for the damage to the cargo. The Haber was never served and made no appearance. She is not now concerned in this appeal. Hedger, as owner of the Sutton, did not appear as claimant in either of the above actions but instead began a separate suit for limitation of liability. By an amendment to its answer in the action by Leach, and to its answer in the Canada-Atlantic action, the Transportation Company alleged that it was the lessee, operator, and charterer of the Sutton and the barges in her tow; that it manned, victualed, and supplied the Sutton at its own expense; and sought to have its liability limited to the pending freight as the entire value of its interest in the tug and barges. After consolidating these three actions and hearing them together, the District Court entered a decree dismissing the libel of Leach against the Sutton for damage to the Bloomfield and held the Transportation Company liable without limitation for that damage; held the Transportation Company primarily liable without limitation for the damage to the cargo of the Bloomfield and the Sutton secondarily liable therefor with limitation of liability. Leach did not appeal. The Transportation Company did appeal, and Hedger filed assignments of error.
Macklin, Brown, Lenahan Speer, of New York City (Horace L. Cheyney, of New York City, of counsel), for petitioner W.E. Hedger Co., Inc., Owner of Tug Nat Sutton.
Bigham, Englar, Jones Houston, of New York City (Leonard J. Matteson and Richard F. Shaw, both of New York City, of counsel), for libelant and claimant-appellee David E. Leach.
Otto Lyon, of New York City (Henry E. Otto and George V.A. McCloskey, both of New York City, of counsel), for libelant-appellee Canada Atlantic Grain Export Co.
Single Hill of New York City (Forrest E. Single and George B. Warburton, both of New York City, of counsel), for Transportation Co.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
The District Court found, without indicating on just what it predicated its conclusion, that the damage to the Bloomfield and its cargo was caused by the negligence of the Sutton. There is no reason to believe that conditions prevailing in the canal at the time and place of the grounding of the Bloomfield were other than those usually encountered by such a tug with such a tow, and, when it appeared that her flotilla was not taken around the bend without hitting the slope of the bank of the canal, the burden of proceeding to explain how that could have occurred without her negligence rested upon the Sutton. It must be taken for granted that prudent navigation under such conditions results in the safe navigation of the canal at this point by such a tug and tow times without number. As she failed to overcome the inference to be drawn from the fact that the Bloomfield did go aground, that the unusual occurred because she hauled the barge nearer the bank than due care permitted at her speed around the bend, the finding that her negligence caused the damage was justified. The Stirling Tomkins (C.C.A.) 56 F.2d 740; The Fred'k Lennig (C.C.A.) 45 F.2d 691; The Clarence P. Howland (C.C.A.) 16 F.2d 25; The Golden Age (C.C.A.) 6 F.2d 877; The W.G. Mason (C.C.A.) 142 F. 913. This damage was not caused by some unknown means at an unknown time and place with nothing on which to base an inference of negligence on the part of the tug as in Stevens v. The White City, 285 U.S. 195, 52 S. Ct. 347, 76 L. Ed. 699. See, also, The White City (C.C.A.) 48 F.2d 557.
As the servants and agents of the Transportation Company composed the crew of the Sutton, their negligence attributable to their employer was responsible for the damage to the barge and for this the Transportation Company is liable. Bushey Sons, Inc., v. Hedger Co. (C.C.A.) 40 F.2d 417; Cummings v. Penn. R.R. Co. (C.C.A.) 45 F.2d 152. Since the liability of the tug in rem for that damage was denied below and no appeal taken (see, however, The Calcutta (C.C.A.) 48 F.2d 110, as to liability) the claim of the Transportation Company of a right to limit its liability for the damage is all that remains to be considered in respect to the action brought by the owner of the Bloomfield. This cannot be decided without giving effect to the fact that the Transportation Company was not only the operator of the tug which had the barge in tow when the damage was done, but also then held that barge in its possession under a demise charter from the owner. Whatever the right of the Transportation Company, if any, would have been as chatterer of the tug to limit any liability imposed by law for the damage to the barge of another which was occasioned by the tug's negligent towing without the privity or knowledge of the chatterer and operator of the tug, and we leave that undecided, the damage to the barge, caused by its negligence while it had that boat under charter, with which we are now concerned, is not imposed by law upon it as the chatterer and operator of the tug, but by its charter of the barge. It can make no difference that the Transportation Company's negligence which caused the damage was that of its servants aboard the tug. That was, nevertheless, as much its negligence as charterer of the Bloomfield as though its negligence had been some other failure to exercise due care in respect to that barge. As charterer of the barge it made a personal contract with the owner and clearly has no right to limit its liability under that charter for the damage to the boat occasioned by its own negligence. Great Lakes Towing Company v. Mill Transp. Company (C.C.A.) 155 F. 11, 22 L.R.A. (N.S.) 769. Nor do we understand that it is now claimed that a charterer may take any benefit under the limitation statutes in restriction of his liability to the owner for his negligent damage to the chartered boat he is by his contract under obligation to redeliver. The Act of 1884 (see 46 USCA § 189) as construed with that of 1851 (see 46 USCA § 183 et seq.) "leaves him liable for his own fault, neglect, and contracts." Richardson v. Harmon, 222 U.S. 96, 106, 32 S. Ct. 27, 30, 56 L. Ed. 110. Were it otherwise, the owner of a boat would have little incentive ever to charter it.
The cargo damage stands somewhat differently. As the Transportation Company was a private carrier of the grain, neither sections 1 or 2 of the Harter Act (46 USCA § 190 or § 191) are applicable. The G.R. Crowe (C.C.A.) 294 F. 506. It makes no difference whether section 3 (46 USCA § 192) applies to private carriage or not for the parties could make their own contract as to the carriage of this grain regardless of that, and so they did to the exclusion of the Harter Act. The Gerald A. Fagan (C.C.A.) 49 F.2d 215, 217. The Transportation Company personally agreed in the contract of carriage which it made with the owner of the grain that it would be responsible for all damage caused by its negligence or fault. Its negligence having caused the damage, its personal agreement to be responsible for damage so caused is binding upon it and excludes any right to limit liability arising from such negligence. The E.S. Atwood (C.C.A.) 289 F. 737; Pendleton v. Benner Line, 246 U.S. 353, 38 S. Ct. 330, 62 L. Ed. 770; The Loyal (C.C.A.) 204 F. 930; Luckenbach v. McCahan Sugar Refining Co., 248 U.S. 139, 149, 39 S. Ct. 53, 63 L. Ed. 170, 1 A.L.R. 1522. Though reluctance to extend the doctrine of personal contractual liability to exclude the operation of the limitation statutes was expressed in Capitol Transportation Co. v. Cambria Steel Company, 249 U.S. 334, 39 S. Ct. 292, 63 L. Ed. 631, the rule as already established was applied in that case. It might well be argued that, since the Limitation Act of 1851 (see 46 USCA §§ 183 et seq.) and that of 1884 (see 46 USCA § 189) are in pari materia, and the one supplements the other, Richardson v. Harmon, supra, damage to cargo caused by negligence of the carrier while the goods are in transit is recoverable from the carrier, if at all, by virtue of a maritime tort which the act of 1851 covers; that the test is not therefore one of personal contract as under the 1884 act, but rather one of privacy and knowledge. We think, however, that this position is not now available. In Richardson v. Harmon, supra, both acts were placed on the same footing in respect to personal contracts, and, while what is said there may have been dicta, it was expressly carried into the opinion in Pendleton v. Benner Line, supra, and, since an express warranty of seaworthiness will exclude the right to limit, we can perceive no reason why an express contract to be answerable for damage caused by negligence will not have like effect. In both cases the promiser must either show legal grounds which entitle him to be relieved from his contract as a binding obligation, or he must make good as he has promised to the extent of the provable damages.
The owner of the Sutton, Hedger, by its contract with the Transportation Company, empowered the latter "In the name, on behalf and for the account of the Owner, to negotiate, arrange and enter into any and all contracts or agreements for the regular and proper operation, employment and use, including the charter or hire of the property, or the towage, carriage and/or storage of mails, freights, cargoes, vessels and/or passengers, by, in, upon or about any of the property." The owner was to receive 95 per cent. of the net profits from the operation of the tug. Both the owner corporation and the operator corporation had the same president, and it may well be said, though it is not now of particular moment, that this was an inter-family arrangement. What is important is the fact that the Transportation Company could, as Hedger's agent, make a contract of carriage in behalf of Hedger. As the only way any corporation can make a contract is by an agent, it is plain that the Transportation Company could enter into a contract of carriage with Canada-Atlantic by virtue of its agency in behalf of Hedger that would be as binding upon Hedger as though made by any other agent, and, when made within the scope of the agent's authority, be as much the personal contract of Hedger as any contract a corporation can make. Though this contract of carriage was made in the name of the agent, it provided that "The boat owner and/or operator and/or carrier shall be responsible for their negligence or fault. * * *" So it was expressly agreed that the owner as well as the operator and carrier should "be responsible" for "their negligence." Had this contract been no more than one of towage, The Ice King (C.C.A.) 261 F. 897, would be applicable. Indeed, it is perhaps reasonable to say that the contract so far as the Sutton was concerned was only a promise to tow with due care for the breach of which liability may be limited as pointed out in The Soerstad (D.C.) 257 F. 130. Yet the liability for damages which flow from the breach of a promise only to tow without negligence arises wholly because the law imposes it when the promiser is shown to have failed to do as he agreed, while the liability of Hedger for the negligence of the Sutton rests upon the express contract of the owner to be responsible for that negligence. The difference may be slight, but it is as real as the difference between an obligation imposed by law as the result of circumstances and one expressly assumed by agreement. We do not need to consider what would have been the status of the Sutton had there been no such express contract. Its liability cannot be limited for the same reasons that have persuaded us to deny limitation to the Transportation Company. As the negligent operation of the Sutton by the Transportation Company caused the damage, the Transportation Company is primarily liable, and the liability of the Sutton secondary. The Harper No. 145, (C.C.A.) 42 F.2d 161. See, also, the E.S. Atwood, supra.
Damages were awarded on the basis of the New York value of the grain as of October 26, 1926. No reduction was made for what Canada-Atlantic would have had to pay for the carriage of the grain to New York if the carrier had delivered it there. This was $1,680. Had the grain been carried safely to New York, Canada-Atlantic would have had to pay the $1,680, and the net worth of the grain to it would have been the New York value less this amount. This should be deducted from the amount of the award which, having been made on the basis of New York value, now includes it.
Decree modified as to damages and to deny limitation to the Sutton for cargo damage; otherwise affirmed.