Flink v. Paladini
| Citation | 73 L.Ed. 613,279 U.S. 59,49 S.Ct. 255 |
| Decision Date | 05 March 1929 |
| Docket Number | No. 299,299 |
| Parties | FLINK v. PALADINI et al |
| Court | United States Supreme Court |
Messrs. H. W. Hutton and R. T. Lynch, both of San Francisco, Cal., for petitioner.
[Argument of Counsel from pages 59-61 intentionally omitted] Mr. Ira S. Lillick, of San Francisco, Cal., for respondents.
The petitioner suffered a severe injury on the high seas while employed as an engineer on the tugboat Henrietta belonging to A. Paladini, Incorporated, a corporation of the State of California. He sued the corporation and also the respondents, the stockholders of the same, seeking to hold the latter liable under the Constitution of the State, article 12, § 3, and the Civil Code, § 322, which provide that each stockholder shall be individually and personally liable for such proportion of all its debts and liabilities contracted during the time he was a stockholder, as the amount of stock owned by him bears to the whole of the subscribed capital stock. The respondents took proceedings in the District Court of the United States to limit their liability under the Acts of Congress, and the limitation was established by the Circuit Court of Appeals for the Ninth Circuit under R. S. § 4283 (Code, title 46, § 183 (46 USCA § 183)), and the Act of June 26, 1884, c. 121, § 18, 23 Stat. 57 (Code, title 46, § 189 (46 USCA § 189)) 26 F.(2d) 21. These statutes, it will be remembered, provide for the limitation of the liability of shipowners to the value of the vessel and pending freight, and of part owners to their proportional share. The argument of the present petitioner is that the stockholders of A. Paladini, Inc., were not the owners of the Henrietta and that their liability under the law of California was an independent one voluntarily assumed by contract, with which the Acts of Congress do not interfere.
The Circuit Court of Appeals disposed of the case after a thorough discussion. It is unnecessary to do more than to make a short statement of the points. The purpose of the act of Congress was 'to encourage investment by exempting the investor from loss in excess of the fund he is willing to risk in the enterprise.' (C. C. A.) 26 F.(2d) 24; Richardson v. Harmon, 222 U. S. 96, 103, 32 S. Ct. 27, 56 L. Ed. 110; Hartford Accident & Indemnity Co. v. Southern Pacific Co., 273 U. S. 207, 214, 47 S. Ct. 357, 71 L. Ed. 612. For this purpose no rational distinction can be taken between several persons owning shares in a vessel directly and making the same division by putting the title in a corporation and distributing the corporate stock. The policy of the statutes must extend equally to both. In common speech the stockholders would be...
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COMPLAINT OF BFT NO. TWO CORP.
...vessel." (Emphasis supplied) . . .. This same sort of broad construction was taken of the word owner in Flink v. Paladini, 1929, 279 U.S. 59, at page 63, 49 S.Ct. 255, 73 L.Ed. 613, where the Court "We are of the opinion that the words of the limitation acts must be taken in a broad and pop......
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...claimants effectively violated the injunction restraining the institution of suits against BEC. See Flink v. Paladini, 279 U.S. 59, 62-63, 49 S.Ct. 255, 255, 73 L.Ed. 613 (1929) (holding that the stockholders of a corporation owning a vessel are entitled to invoke the Limitation Act). The d......
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...purpose behind the Limitation Act was to protect the individual investor in commercial ship property. See Flink v. Paladini, 279 U.S. 59, 49 S.Ct. 255, 73 L.Ed. 613 (1929). The Act was passed in 1851 at a time in American legal history when entities with limited liability, like the corporat......
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