289 U.S. 261 (1933), 623, American Car & Foundry Co. v. Brassert

Docket Nº:No. 623
Citation:289 U.S. 261, 53 S.Ct. 618, 77 L.Ed. 1162
Party Name:American Car & Foundry Co. v. Brassert
Case Date:May 08, 1933
Court:United States Supreme Court

Page 261

289 U.S. 261 (1933)

53 S.Ct. 618, 77 L.Ed. 1162

American Car & Foundry Co.



No. 623

United States Supreme Court

May 8, 1933

Argued March 23, 1933




The statute limiting the liability of shipowners (R.S. 4283, 46 U.S.C. 183) is inapplicable to the case of the manufacturer of a vessel who has delivered it to a purchaser, retaining title merely to secure payment of the price, and who seeks protection against liability based on actionable negligence in the manufacture of the vessel. P. 263.

61 F.2d 162 affirmed.

Certiorari, 288 U.S. 596, to review the affirmance of a decree dismissing a libel seeking limitation of liability.

HUGHES, J., lead opinion

MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.

Petitioner, American Car & Foundry Company, a manufacturer of gasoline propelled yachts and cruisers,

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made a conditional sale of a cruiser to respondent. While respondent was cruising in the vessel on the waters of Lake Michigan, an explosion occurred midship, fire followed, and the vessel became a total wreck, and in consequence lay sunken and worthless. Alleging these facts, that respondent and other persons with him on the vessel had been injured, and that respondent's personal effects, as well as the vessel, its machinery, equipment and supplies were a total loss, and that all the alleged injuries and damages were occasioned and incurred without its privity or knowledge, petitioner filed this libel against respondent seeking limitation of liability under the Act of March 3, 1851, c, 43, § 3, 46 U.S.C. 183. Respondent filed exceptions upon the ground that the libel did not disclose that libelant was the owner of the vessel or engaged in maritime commerce, or any facts sufficient to show that libelant was entitled to the limitation. The District Court dismissed the libel, and the Circuit Court of Appeals affirmed the decree. 61 F.2d 162. This Court granted certiorari.

The libel disclosed that the sole relation of petitioner to the cruiser was that of manufacturer and vendor under a contract of conditional sale. Respondent gave his order for the cruiser to be delivered on the terms stated and subject to warranty against "defects in workmanship and material," which, by its terms, was limited to replacement of parts. The order was followed by a "conditional sale agreement," by which respondent acknowledged receipt of the boat in good condition and which provided for the payment of the balance of the purchase price within ninety days after delivery, and that, until such payment or tender, title to the boat should remain in the seller. Subject to the conditions of the agreement, the purchaser was entitled to the possession and use of the boat with the right on the part of the seller to retake it and its equipment in case of the purchaser's default. The purchaser

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was required to keep the boat insured with full marine coverage, to pay all taxes and charges, to comply with all applicable laws, and to hold the seller harmless from all "liability, claim, demand, cost, charge and expense in [53 S.Ct. 619] any way imposed upon or accruing to seller" by reason of the use or operation of the boat. The libel alleged that the vessel, when delivered to respondent, was "sturdy, safe, and seaworthy." The cause of the accident, except as above stated, is not shown. It appears to have occurred prior to any default on the part of respondent, and while he was operating the vessel on his own behalf. The libelant, while proceeding directly against respondent, sought limitation against all claims.

The statute1 limiting the liability of shipowners was enacted to encourage investments in ships and their employment in commerce. That purpose embraced, as petitioner insists, the promotion of shipbuilding, but it was not concerned with construction as a mere enterprise of manufacture, which itself was not a maritime activity (People's Ferry Co. v. Beers, 20 How. 393, 402; Edwards v. Elliott, 21 Wall. 532, 554, 557; Thames Co. v. The Francis McDonald, 254 U.S. 243, 244), but with the promotion of commerce and the encouragement "of persons engaged in the business of navigation" to the end...

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