336 U.S. 386 (1949), 121, Black Diamond Steamship Corp. v. Robert Stewart & Sons, Ltd.

Docket Nº:No. 121
Citation:336 U.S. 386, 69 S.Ct. 622, 93 L.Ed. 754
Party Name:Black Diamond Steamship Corp. v. Robert Stewart & Sons, Ltd.
Case Date:March 14, 1949
Court:United States Supreme Court
 
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Page 386

336 U.S. 386 (1949)

69 S.Ct. 622, 93 L.Ed. 754

Black Diamond Steamship Corp.

v.

Robert Stewart & Sons, Ltd.

No. 121

United States Supreme Court

March 14, 1949

Argued January 3-4, 1949

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

A vessel owned by the United States and chartered under a bareboat charter to an American corporation collided with a British vessel in territorial waters of Belgium. The British vessel sank with all of her cargo; her chief steward was killed, and the American vessel damaged the bank of the river. Owners of the British vessel sued the charterer of the American vessel in England, claiming damages of $1,000,000. Owners of the cargo of the British vessel sued the United States and the charterer of the American vessel in a federal district court for claims aggregating nearly $1,000,000. Alleging that the value of the American vessel was about $1,000,000, that the total claims would exceed that amount, and that their liability under Belgian law was limited to $325,000, the United States and the charterer petitioned the District Court for limitation of liability under R.S. § 4285, as amended, 46 U.S.C. § 185. The United States posted no bond, and the charterer posted a bond of only $325,000. The District Court dismissed the petition, and the Court of Appeals affirmed.

Held: the District Court should not have dismissed the petition, but should have required the charterer (but not the United States) to post a bond of $1,000,000, to guard against the possibility that American law, and not Belgian law, might be found to control the amount of liability. Pp. 388-399.

Page 387

1. R.S. § 4285 is applicable because the total amount of potential claims exceeds the fund available for their satisfaction, whether that fund be measured by the law of Belgium or of the United States. Pp. 393-394

2. Under 28 U.S.C. § 2408 and 46 U.S.C. § 743, the United States is not required to post a bond in a proceeding under R.S. § 4285. P. 394.

3. In view of the six-month limitation on proceedings under R.S. § 4285, the Court of Appeals, instead of affirming the dismissal, should have remanded the case to the District Court in order to give the charterer an opportunity to file a larger bond, since the defect was not jurisdictional. P. 395.

4. If the Belgian law is not merely procedural, but attaches to the right of recovery, and if it does not conflict with any overriding domestic policy, it is applicable in this case. Pp. 395-396.

5. The Belgian law having been pleaded, it must be proved as a fact, even though it is derived from the Brussels Convention of August 25, 1924, limiting the liability of owners of seagoing vessels. Pp. 396-397.

6. Upon remand, the question of what law governs the substantive limit of liability should be determined in advance of the proof of individual claims. Pp. 397-398.

7. If Belgian law is found to control, a $325,000 bond would suffice, but if American law is found to control, a $1,000,000 bond would be required. P. 398.

8. The District Court, in the exercise of its power to preserve the status quo pending appeal, should require the charterer to post a bond for the value of the ship and freight. Pp. 398-399.

167 F.2d 308, reversed.

A federal district court dismissed a petition of the United States and the charterer of one of its vessels for limitation of liability under R.S. § 4285, as amended, 46 U.S.C. § 185. The Court of Appeals affirmed. 167 F.2d 308. This Court granted certiorari. 335 U.S. 809. Reversed and remanded, p. 399.

Page 388

FRANKFURTER, J., lead opinion

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

We brought these cases here because they call for determination of important issues in the administration of admiralty [69 S.Ct. 624] law. 335 U.S. 809. They bring for review a decree of the Court of Appeals for the Second Circuit affirming the dismissal of a petition for limited liability brought in the United States District Court for the Eastern District of New York by the United States, as owner and the Black Diamond Steamship Corporation as bareboat charterer of the S.S. Norwalk Victory. 167 F.2d 308.

The facts controlling our decision are briefly these. On April 28, 1947, the Norwalk Victory, while proceeding down the Schelde River in the territorial waters of Belgium, collided with the British steamer Merganser. The Merganser sank with all her cargo; her chief steward was killed; in backing away from the Merganser. the Norwalk Victory struck and damaged the bank of the Schelde. Soon after the collision, the owners of the Merganser brought suit against Black Diamond in the High Court of Justice of England, claiming damages in the amount of $1,000,000. That is the only proceeding which has been brought abroad. On October 14, 1947, the owners of the cargo lost in the sinking of the Merganser brought suit in the Eastern District of New York; aggregate claims thus far filed total nearly $1,000,000.

In their petition for limitation of liability, brought under R.S. § 4285, as amended, 49 Stat. 1480, 46 U.S.C.

Page 389

§ 185,1 the United States and Black Diamond allege the possibility that, in addition to the suit in the High Court of Justice and the suits by the cargo owners in New York, there may be suits in the courts of the United States by other cargo owners, by the personal representative of the Merganser's chief steward, and by the Belgian Government for damages to the bank of the Schelde and for the cost of removing the wreck of the Merganser from the river. These claims, they say, would exceed the value of the Norwalk Victory, which is about $1,000,000. But the petitioners, despite the provisions of R.S. § 4283, as amended, 49 Stat. 1479, 46 U.S.C. § 183,2 do not recognize

Page 390

the value of their ship as the limit of their liability. They insist, rather, that their liability is limited by the International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels, signed at Brussels on August 25, 1924.3 The Convention was ratified by Belgium on

Page 391

June 2, 1930, and took effect on June 2, 1931; it is alleged therefore to have been part of the territorial law of Belgium at the time of this [69 S.Ct. 625] collision in Belgian waters. On the basis of this Convention, the petitioners assert their maximum liability to be $325,028.79.

Accordingly, Black Diamond accompanied its petition for limitation of liability with a bond in the amount of $325,028.79. The United States, standing upon 28 U.S.C. § 2408,4 and § 3 of the Suits in Admiralty Act, 41 Stat. 526, as amended, 46 U.S.C. § 743,5 filed no bond. The District Court, holding that the privilege of limiting liability relates "not to the substantive rights giving rise to the liability, but to the remedy, and that is governed by the law of the forum," dismissed the petition of the ground that Black Diamond had not complied with R.S.

Page 392

§ 4285 by filing a bond in the amount of the value of the ship -- $1,000,000. The standing of the United States (which was not separately represented at that stage of the proceeding) was not considered.

Upon appeal, the petitioners were found to be in "a dilemma from which they cannot escape." 167 F.2d at 309. Reading the petition as alleging that the Belgian limitation attached to the claimants' substantive right to recover, and treating that allegation as proved for purposes of determining the sufficiency of the petition, the Court accepted arguendo the sum of $325,000 as "the limit of all their [petitioners'] liabilities." Id. But, though the Court of Appeals looked to the lex loci delicti for the substantive limit of liability, its next step was taken on the assumption that the conditions under which a petition praying for the injunction of other proceedings and a forum concursus may be filed are matters of procedure governed by the lex fori. It is a condition imposed by the lex fori, the court's reasoning continued, that a petition for limitation of liability is not available to a shipowner unless the aggregate of known and probable claims [69 S.Ct. 626] against him is greater than the value of his ship. As establishing this proposition, the court cited The Aquitania, 20 F.2d 457; Curtis Bay Towing Co. v. Tug Kevin Moran, Inc., 159 F.2d 273, and The George W. Fields, 237 F. 403. And it held these cases applicable on the ground that the maximum liability imposed by Belgian law was less than the value of the Norwalk Victory.

But the lower court found it unnecessary to pass finally on the question whether the Belgian limitation was in fact, controlling because, if it were not, petitioners would be impaled on the other horn of the dilemma: if the substantive law of the forum, rather than that of Belgium, applied, the limit of liability, by R.S. § 4283, would be the value of the vessel.

Page 393

Since the procedural law of the forum, moreover, requires the posting of a bond in the amount of potential liability, and since the bond proposed by petitioners was for less than a third of that amount, upon this hypothesis also they were dissentitled to proceed. The Court of Appeals accordingly affirmed the dismissal of the petition.

If the Court of Appeals' reliance upon The Aquitania, Curtis Bay Towing Co. v. Tug Kevin Moran, and The George W. Fields, supra, was, as we are convinced, under the circumstances misplaced, we escape its dilemma without wanting in respect for the wisdom of that most experienced of admiralty courts. Those cases, it is true, hold that, where the aggregate claims against a shipowner can by no possibility exceed the value of his ship, a proceeding under R.S. § 4285 will not lie. But...

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